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. DXY is back in the middle of the range after rejecting the low. The Federal Reserve hiked rates by 0.25% and the chance of a further rate hike in December is now being priced at around 75%. Monetary policy and economic performance divergence continues to drive the market. As well as the rate hike, US GDP came in at over 4%, the strongest level in 4 years. Next week we can expect a decent NFP. At this point the trade war does not seem to be impacted the economy and sentiment is more focused on monetary policy and economic performance. I maintain my bullish USD view.
- Wait GBP/USD. – MT is sideways normal. We have been knocked out of the bull MT on the back of USD strength. This is despite some decent data and hawkish speak from from the BOE. The Irish border remains the sticking point on Brexit. Watch out for May’s speech at the end of this weeks Tory party conference.
- Buy USD/JPY. Trend – MT is bull normal. USDJPY continues to rise in the risk-on environment after trade war and emerging market concerns lessened and on the back of the Fed’s rate hike. US Bond yields and stocks remain elevated. Continue to buy.
- Wait AUD/USD. – MT is sideways normal. The Aussie is being driven by the USD at the moment. Next week, we have RBA and China PMI’s. Don’t expect much from the RBA.
- Wait EUR/USD. – MT is sideways normal. We got the reversal off 1.18 we had been watching for. EUR is struggling due to the divergence theme, as well as the Italian budget. Core inflation came in slightly weaker than expected, contradicting the ECB Draghi’s comment that we are seeing “vigorous” acceleration in inflation. In a week where rates were hiked in the US, this underscores that peak divergence is likely a way off yet. The Italian budget came in with a 2.4% deficit, higher than was hoped for by market participants and could lead to a confrontation with the EU and/or more political turmoil in Italy. We can expect the EUR to continue to slide.
- Wait NZD/USD. – MT is sideways normal. Despite the prior weeks GDP beat, the RBNZ maintained their dovish tone, citing downside risks. Aside from that the pair was driven by USD strength. Further downside can be expected.
- Buy USD/CHF. Trend – MT bull normal. CHF performed the worst against the US last week, bouncing rapidly after the FOMC meeting. We have now shifted back into a bull MT and can look for buying opportunities.
- Wait USD/CAD. – MT is sideways volatile. Good GDP numbers and hawkish speak about a rate hike in October by the BOC saw strong gains across the board yesterday for CAD. We need to remember that with the US doing well it benefits Canada (their largest trading partner) and the BOC likes to keep rates similar to the US when it can. NAFTA talks are still ongoing but sentiment has shifted to the rate hike. CAD a good option I think, in particular vs. the crosses.
- Wait EUR/GBP. – MT is sideways volatile. The topping price action continues to play out on EURGBP. I like a speculative long-term short on the pair, but we need to wait for the volatility to subside first.
Crosses
- Buy EUR/CHF. Trend – MT is bull normal. Look to buy.
- Wait AUD/JPY. – MT is sideways volatile. Wait.
- Wait NZD/JPY. – MT is sideways volatile. Wait.
- Buy GBP/JPY. Trend – MT is bull normal. Continue to buy.
- Buy EUR/JPY. Trend – MT is bull normal. Continue to buy.
- Buy CAD/JPY. Trend – MT is bull normal. Continue to buy.
- Wait CHF/JPY. – MT is bull volatile. Wait.
- Wait GBP/NZD. – MT is sideways normal. Wait.
- Sell EUR/NZD. Breakout – MT is bear normal. Look to sell.
- Wait AUD/NZD. – MT is sideways quiet. Wait.
- ‘Wait EUR/AUD. – MT is sideways quiet. Wait.
- Wait GBP/AUD. – MT is sideways normal. Wait.
- Wait AUD/CAD. – MT is sideways normal. Wait.
- Sell GBP/CAD. Breakout– MT is bear normal. Look to sell.
- Sell EUR/CAD. Breakout – MT is bear normal. Look to sell.
- Wait NZD/CAD. – MT is sideways normal. Wait.
- Wait GBP/CHF. – MT is sideways normal. Wait.
- Buy CAD/CHF. Trend – MT is bull normal. Look to buy.
- Buy NZD/CHF. Trend – MT is bull normal. Look to buy.
- Buy AUD/CHF. Trend – MT is bull normal. Look to buy.
Other Markets
- Wait USDSGD. – MT is sideways normal. Wait.
- Wait USDCNH. – MT is sideways quiet. Wait.
- Wait Gold. – MT is sideways quiet. Wait.
- Buy Oil. Trend – MT is bull normal. Look to buy.
- Buy S&P 500. Trend – MT is bull normal. Continue to buy.
- Wait DAX. – MT is sideways volatile. Wait.
- Buy Nikkei. Trend – MT is bull normal. Continue to buy.
- Sell T-Notes. Trend – MT is bear normal. Continue to sell.
View bank reports and fundamental analysis in the chatroom (members only)
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.