I plan my trading for the week ahead each weekend. Here are the Forex trading opportunities I will be stalking 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.
- Long GBP/USD. Reversal– MT is bear volatile. The pair formed a bullish candle last Monday that signaled our short call for last week was likely to be the wrong strategy. This proved to be the case with the pair trending higher and forming a bullish engulfing week. As we are in a bear volatile MT expect a pull back, but we should be heading higher. On super Thursday the BOE expressed no major concerns about domestic or global conditions, and the path to hiking rates will likely remain tied to the trajectory set by the Fed. There is lots of GBP data this week on the cards, so whatever happens we should get some decent moves, which should suit short-term traders.
- Waiting USD/JPY. – MT is bear normal. USDJPY has been heavily correlated to equity markets, though yen was buoyed by M&A activity early in the week. Later in the week Japanese policy makers started to talk about the requirement for more stimulus due to a slowing Japanese Economy. The bear MT is starting to turn sideways so a lot of caution on USDJPY this week.
- Short AUD/USD. Trend – MT is bear normal. Good employment data lifted the AUD near the end of last week. The pair is sitting on resistance at 0.7000. If equities recover or the fed does not lift rates the pair could break higher, though RBA minutes could pressure the pair. Overall prefer to stick with the trend and remain short.
- Waiting EUR/USD.– MT is sideways volatile. Depending on the outcome of the FOMC meeting this week, we could see the divergence (of monetary policy) theme reassert itself with the EUR weakening. A number of the bank research pieces I have read suggest that rates will be left on hold. With economic indicators looking good my thoughts are that rates should, and will be, raised as the US economy can sustain a 25 basis point hike. The problem is the waiting is causing a great deal of uncertainty in financial markets and it is probably best to get the hike done and dusted. If you have long-term USD positions you might want to buy option protection ahead of the announcement/and or tighten stops. In the long run the USD should still strengthen irrespective of a rate rise, but in the short-term expect volatility in what are proving to be very thin markets. The algorithms will have fun on the headline, we know that for sure (Algorithmic traders will buy or sell on the headline, creating wild swings, but the eventual direction will be decided not only on the headline but the contents of the report).
- Short NZD/USD. Trend – MT is bear normal. The RBNZ cut rates and there are increasing concerns about growth. Continue to look short.
- Waiting USD/CHF.– MT is sideways volatile. The long-term opportunity remains to the upside. Wait for a low-risk entry.
- Long EUR/CHF. Breakout – MT is sideways quiet. The pair has proven resilient to equity market sell-offs and there is no doubt Swiss officials would like to see it much high. We have had a breakout from the sideways quiet MT and the dips have been brought. Look to buy.
- Waiting USD/CAD. – MT is sideways normal. Oil continues to come under pressure and we expect the pair to head higher over the long-term. Look for a trade off the bottom of the range or a breakout above to initiate positions.
- Long EUR/GBP. Trend – MT is bull normal. Continue to buy for now, though I favor this pair as a sell over the medium to long-term.
- Short AUD/JPY.Trend – MT is bear normal. A similar technical picture to AUDUSD, so be extra careful of correlations. Continue short but be very cautious of equity market moves. A bounce will see the pair higher and a sell-off will lead to some good shorting opportunities.
- Short NZD/JPY. Trend– MT is bear normal. Shorts preferred.
- Waiting GBP/JPY. – MT is bear volatile. We a bullish weekly candlestick pattern but the pair looks risky to trade. Best to wait.
- Waiting EUR/JPY. – MT is sideways volatile. A bullish engulfing week suggests upside, but for now we are ensconced in a range.
- Long GBP/NZD. Trend – MT is bull quiet. Long, but only on dips to the mid Bollinger band and take profit quickly in this MT.
- Long EUR/NZD. Trend– MT is bull normal (Almost sideways normal). We are in a sideways MT on the 4 hour charts which suggests we wait for the break higher, or a dip to the bottom of the range before entering.
- Waiting AUD/NZD.– MT is sideways volatile. A nearly 300 pip move on Friday created a bullish engulfing week. We remain in the sideways MT for now but we can be looking for longs on dips for long-term positions only. Unless you really like it, then best to stay out and see my comments on AUDCAD below.
- Waiting EUR/AUD. – MT is sideways normal. Almost a bull normal but candle stick price action is quiet indecisive. Wait for now.
- Waiting GBP/AUD. – MT is sideways normal. We got the sideways MT we were anticipating. We like this pair as a long-term buy but wait for now.
- Waiting AUD/CAD. – MT is volatile bear. There is an interesting long-term buy here with the weekly reversal pattern after support was taken out at .91. Fundamentally if you like the AUD then this might be the pair to buy it against as you can earn the carry as opposed to pay it like you would on the AUDNZD (another long-term buy option vs. AUD). Might be worth a small position. Also this trade is not at the mercy of the Fed or an equity market sell-off as much as other currencies. Another option is to basket this trade with AUDCHF which is showing signs of bottoming and CHF is over-valued at current levels. You also earn the carry on CHF.
- Waiting GBP/CAD.– MT is sideways volatile. A bullish engulfing week pegs this as a long-term buy.
- Waiting EUR/CAD. – MT is bull volatile. Also a bullish engulfing week, but the weekly MT is volatile and EUR not my favorite long-term trade. But if you like EUR better than GBP, then you might want to buy this pair.
- Short NZD/CAD.Trend– MT is bear normal. Look short, this is a lower conviction trade.
- Short CAD/JPY. Trend – MT is bear normal. Look short, but be wary of a sideways MT forming.
- Short CHF/JPY. – MT is bear normal. Look short with low conviction. Three white soldiers bullish candlestick pattern and coming up on support so would wait for a reversal pattern to signal the entry.
- Waiting GBP/CHF.– MT is sideways normal. Wait for now.
Analysis to read:
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.
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