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.
- Sell DXY.– MT is bear normal. The drivers for the USD have not changed. Declining rate hike expectations and a more cautious Fed have seen the pair continue to sell off. A recovery in risk assets on the back of rising oil prices and trade talk optimism has seem the USD weaken against the commodity currencies in particular. The US government is still shutdown while President Trump negotiates for a wall on a the border between the US and Mexico. This is not yet impacting financial markets. Overall, with sentiment focuses on rate hike expectations we can expect the USD to continue to weaken.
- Wait GBP/USD. – MT is bull normal. Next Tuesday the House of Commons will likely vote against Prime Minister May’s Brexit plan. But despite this, GBP has been rising on a likely extension of the March 29 exit day. The challenge though, is what happens next. A number of scenarios are possible some good but some very bad (for GBP), so despite the breakout into a bull MT, its perhaps best to wait. If you do want to buy GBP then my favored play would be GBPCHF given the recovery in risk and the strong technical pattern.
- Sell USD/JPY.– MT is bear normal. With equities, bond yields and the oil price rising and trade talk optimism USDJPY has remained steady, while both USD and JPY have sold off against the commodity currencies. We can continue to look for short trades, if any sell off is accompanied by by falling stocks and bond yields.
- Wait AUD/USD. – MT is sideways volatile. The AUD has recovered well from the flash crash and is moving higher on trade talk optimism and a recovery in risk assets. This move was supported by positive data on Friday. We remain in a sideways volatile MT and MT theory suggests that a bearish candle formation from these levels provides a selling opportunity.
- Buy EUR/USD. – MT is sideways normal. The EUR has broken out of the long-term sideways MT on the back of declining rate hike expectations in the US, but has pulled back to just below the breakout level. Economic performance in the Eurozone is holding the pair back from further gains, but if the breakout level holds a move towards 1.18 should not be a surprise.
- Wait NZD/USD. – MT is sideways volatile. Like the Aussie, the Kiwi is benefiting from positive risk sentiment and a little bit of improving local data. But also like the Aussie MT theory tells us we need to watch for any selling signals from these levels.
- Sell USD/CHF. – MT bear normal. The choppy downtrend continues and we remain in the bear MT. If we trade above 0.9850 then the call changes to wait.
- Wait USD/CAD.– MT is sideways volatile. CAD has benefited from the the 11% rally in oil since the start of the year. In-fact we are up 20% from the low in December which pushes oil into the classic definition of a bull market. This rise in oil and the weaker USD have been the key drivers with the market ignoring a somewhat cautionary tone from the BOC when they left rates on hold this week. Like the other commodity currencies MT theory suggests that we need to be cautious of a bounce from here. Though, unless oil sells off again any recovery should be temporary.
- Sell EUR/GBP.– MT is bear normal. We have broken out into a bear MT, and while its quite risky given Brexit, the risk reward on this play is quite good.
Crosses
- Wait EUR/CHF. – MT is sideways normal. Wait
- Wait AUD/JPY.– MT is bear volatile. Wait.
- Wait NZD/JPY. – MT is bear normal. Wait.
- Sell GBP/JPY. – MT is bear normal. Continue to sell.
- Sell EUR/JPY. – MT is bear normal. Look to sell.
- Wait CAD/JPY.– MT is bear volatile. Wait.
- Sell CHF/JPY. – MT is bear normal. Continue to sell.
- Wait GBP/NZD. – MT is sideways normal. Wait.
- Wait EUR/NZD. – MT is sideways normal. Wait.
- Buy AUD/NZD. – MT is bull normal. Continue to buy.
- Wait EUR/AUD. – MT is sideways volatile. Wait.
- Wait GBP/AUD. – MT is sideways normal. Wait.
- Wait AUD/CAD. – MT is sideways normal. Wait.
- Wait GBP/CAD. – MT is sideways volatile. Wait or buy.
- Wait EUR/CAD.– MT is sideways volatile. Wait.
- Sell NZD/CAD. – MT is bear normal. Continue to sell.
- Buy GBP/CHF.– MT is bull normal. Look to buy.
- Wait CAD/CHF. – MT is sideways volatile. Wait.
- Wait NZD/CHF. – MT is bear volatile. Wait.
- Wait AUD/CHF. – MT is bear volatile. Wait.
Other Markets
- Sell USDSGD. – MT is bear normal. Continue to sell.
- Sell USDCNH. – MT is bear normal. Look to sell.
- Buy Gold.– MT is bull normal. Continue to buy.
- Buy Oil. – MT is bull normal. Look to buy.
- Wait S&P 500. – MT is sideways volatile. Wait.
- Wait DAX. – MT is sideways normal. Wait.
- Sell Nikkei. – MT is bear normal. Continue to sell.
- Buy T-Notes. – MT is bull normal. Continue to buy.
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(MT = Market Type: Click for more information on market types.)
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.