I plan my trading for the week ahead each weekend. Here are the Forex trading opportunities I will bestalking this week.
Note that this is my current view, but if market conditions change my view can change too. Generally I will trade in alignment with what I have noted here, though I will wait for a set-up before I enter. I base my view on technical and fundamental information. This is my beliefs and you are welcome to have opposite ones. Having a plan is more important than the actual direction for me.
- Wait DXY – MT is bear normal. Despite the shift into a bear MT, we want to clear key support at 98.80 before selling the USD. While US data has not been great I do not expect it to impact the trajectory of rate hikes with two more expected this year. President Trump has had issues in his first 100 days implementing his policies, in particular on Healthcare and immigration, now we need to watch closely if his proposed tax cuts can make it though the process. At the same time, some progress has been make towards his agenda. Deregulation has begun which should eventually be a huge boon to the market and Trumps negotiation tactics seem to be yielding fruit on the trade front, without any extreme outcomes. The dollar has fallen vs. the EUR after a market friendly first round of the French Election and GBPUSD is bottoming, both of which are contributing to the index’s weakness. But questions remain if the EUR in particular can hold onto gains in the face of ongoing monetary policy divergence. Wait for now.
- Buy GBP/USD. Trend – MT is bull normal. The bull market type continues with the next target around 1.34. This is on the back of mixed data, which is a sign of underlying strength. Continue to buy.
- Wait USD/JPY. – MT is sideways normal. A reduction in risk aversion after the first round of the French Election and the failure of bonds to confirm the bull MT (just yet) has seen the pair flip back into a sideways MT. I see a buying opportunity if the price trades though 112.70.
- Wait AUD/USD. – MT is sideways normal. We came close to breaking into a bear MT, but have now reversed and formed a bullish candle pattern so caution for shorts is advised until we retest recent lows. Iron ore has recovered slightly which is supporting the pair, as it weaker US data. Watch for the RBA this week. My preferred strategy is still to sell through .7440 for a move back down towards .7200.
- Wait EUR/USD. – MT is sideways volatile. A clear victory for Macron over Le Pen in the first round of the French Election and subsequent polls suggesting a clear margin in the second round have boyed the Eur and we are sitting right at the key 1.09 level. The ECB met last week and reiterated their dovish stance. A technical breakout through 1.0970 should yield some further upside but I would look to take partial profits quickly as I question the EUR’s longer-term resilience.
- Sell NZD/USD. Trend – MT is bear normal. The Kiwi was weak across the board over the previous week (notably vs. the AUD) and the pair traded though our short entry point. There was no major catalyst to the move, though concerns exist around the impact of President Trumps protectionist policies. There is a dairy auction this coming week and the trend has been one of small gains. We are sitting right at support so watch for a reversal here, otherwise continue to sell.
- Wait USD/CHF. – MT is sideways volatile. The SNB will be happy about the outcome of the French Election which saw EURCHF pop higher. Whether gains can be held I am not sure and there continues to be relentless demand for CHF. USDCHF has formed a minor bottoming pattern which is suggestive of some upside but it is mid range so we need to treat it with caution. Wait for now.
- Buy USD/CAD. Trend – MT is bull normal. The Canadian dollar traded through the key 1.36 level on the back of NAFTA cancellation concerns (which were later somewhat diminished) and a falling Oil price. We need to watch for a reversal back though 1.36 otherwise continue to buy. Note a small bearish hammer did form on Friday, but given month end and a look at the internal price structure, it needs confirmation.
- Sell EUR/GBP. Trend– MT is bear normal. Despite popping higher after the weekend, the Bear MT has resumed and we can look for a re-test of the .83 level (unless we see EUR breakout vs. the USD).
Crosses
- Wait EUR/CHF. – MT is sideways volatile. Price action including the gap give me caution, so best to wait.
- Wait AUD/JPY. – MT is sideways normal. Wait.
- Wait NZD/JPY. – MT is sideways normal. Look for a break of .7540 to sell.
- Buy GBP/JPY. – MT is bull normal. Look to buy.
- Wait EUR/JPY. – MT is sideways volatile. Wait.
- Sell CAD/JPY. Trend – MT is bear normal. Continue to sell.
- Wait CHF/JPY. – MT is sideways volatile. Price action is supportive of a bearish reversal from these levels but would want to see a break of 111.40 first.
- Buy GBP/NZD. Trend – MT is bull normal. Continue to buy.
- Buy EUR/NZD. – MT is bull fast. Look to buy, but watch out for a reversal from here.
- Wait AUD/NZD. – MT is sideways normal. Wait.
- Buy EUR/AUD. Trend – MT is bull normal. But price action is indicative of a temporary reversal. Buy on a dip only.
- Buy GBP/AUD. Trend – MT is bull normal. Continue to buy.
- Wait AUD/CAD. – MT is sideways volatile. Wait for now.
- Buy GBP/CAD. Trend– MT is bull normal. Continue to buy.
- Buy EUR/CAD. – MT is bull normal. Look to buy.
- Wait NZD/CAD. – MT is sideways normal.Wait.
- Buy GBP/CHF. Trend – MT is bull normal. Continue to buy.
- Sell CAD/CHF. Trend – MT is bear normal. Look to sell but on a pull-back only.
- Sell NZD/CHF. Trend – MT is bear normal. Look to sell.
- Sell AUD/CHF. Trend – MT is bear normal. Look to sell but on a pull-back only.
Other Markets
- Wait Gold. – MT is sideways normal.Wait.
- Wait Oil. – MT is sideways volatile. Wait.
- Wait S&P 500. – MT is sideways normal. Wait.
- Buy DAX. Breakout – MT is bull normal. Look to buy.
- Wait T-Notes – MT is sideways normal.Wait.
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Economic calendar for the week ahead:
(MT = Market Type: Click for more information on market types.)
Trend: Market is trending in the direction I have listed and I expect it to continue.
Reversal: I am looking for a reversal against the current trend.
Breakout: The currency pair is breaking out of a range.
About the Author
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders (get free access). He is the owner of www.fxrenew.com a provider of Forex signals from ex-bank and hedge fund traders (get a free trial). If you like Sam’s writing you can subscribe to his newsletter.