Forex Trading Opportunities for the Week Ahead 17 September 18: FXRenew

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. 

• Buy DXY. Reversal – MT is sideways quiet. A busted break of the low at 94.50 is suggestive of more upside to come and can be used as an entry signal, alternatively a trader could wait for a break of 95.50 for a bull MT to resume. The USD struggled for most of last week due to some weaker inflation data and a temporary easing of trade war fears. But the bullish drivers remain. Fed speak was hawkish and the market ignored a weaker than expected retail sales on Friday to create a bullish engulfing candle. Despite more trade talks with China being tabled, it’s going to be difficult to get any sort of outcome. U.S. Bond yields are firming on further rate hike expectations and US stocks remain elevated, both of which are supportive of USD strength. There is an opportunity to buy here for a good risk/reward move back to 97 and then beyond.

• Buy GBP/USD. Trend – MT is bull normal. The GBP is one of the best performing currencies at the moment on optimism that there will be a Brexit deal done in time (Q4 is the deadline) – the Irish border remains a key sticking point. Of course, volatility over Brexit sounds bites is likely to remain high. Yields and data has also been supportive of the GBP and I continue to see signs of bottoming though I much prefer to buy GBP v. the crosses.

• Buy USD/JPY. Trend – MT is bull normal. With the lifting of some risk-off concerns (trade wars, Turkey) the pair has broken back out into a bull market and I look for a continuation of the move towards my long-term target at 115.00.

• Sell AUD/USD. Trend–  MT is bear normal. After rising in the first 4 days of last week on the back of an easing in risk and some good data, the pair finished the week with the formation of a bearish engulfing candle. This came on the back of hawkish Fed speak on Friday. This provides a selling opportunity for a move towards the key 0.7000 figure and then towards the low at 0.6830. The drivers of the move are monetary policy divergence (with US yields now above AU yields), trade war concerns in respect to China and falling house prices. It’s important to note the pair has been broadly ignoring positive data which is usually quite a bearish sign.

• Wait EUR/USD. –  MT is sideways quiet. The consolidation has entered the quiet phase. After initially rising last week on the back of lifting risk concerns and a less dovish than expected ECB meeting, the pair has forming a bearish engulfing candle on Friday. The outlook and data does not match the upbeat tone of ECB president Draghi and there are reports this has been acknowledged by some policy makers who prefer a more cautious tone. Long-term I think we have plenty of downside in the pair and I continue to look for selling opportunities off 1.18 or though 1.15.

• Sell NZD/USD. Trend–  MT is bear normal. We remain in a bear MT. The pair is being driven mostly by risk-off concerns and USD flows at the moment. Of course the RBNZ remains dovish and hedgers now have to pay negative carry when buying NZD vs. USD with the rise in US rates.

• Sell USD/CHF.  Trend – MT bear normal. While we remain in a bear MT we may well turn sideways in the coming week. We have had another rejection of the low on Friday and if we do see a continuation of USD strength (from Friday) then we can expect USDCHF to join in too.

• Wait USD/CAD. – MT is sideways normal. We are stuck mid-range and this is reflective of market participants uncertainty around NAFTA. On the one hand it looks like a deal is getting done, on the other hand President Trump is playing hard ball. One of the key sticking points in access to the Canadian Dairy market. Data has also not been as supportive of CAD. The Oil price does remain high as well, but overall, sentiment is focused on NAFTA.

• Sell EUR/GBP. Trend – MT is bear normal. We have a busted break of the key .90 level and the formation of a weekly reversal pattern. The sell off has continued and we are now in a bear MT.  I am stalking selling opportunities on the pair.

Crosses

• Sell EUR/CHF. Trend – MT is bear normal. Continue to sell.
• Wait AUD/JPY.  – MT is bear volatile. Wait.
• Wait NZD/JPY. – MT is sideways normal. Wait.
• Buy GBP/JPY. Trend – MT is bull normal. Look to buy.
• Wait EUR/JPY. – MT is sideways normal. Wait.
• Wait CAD/JPY.  – MT is sideways normal. Wait.
• Buy CHF/JPY. Trend – MT is bull normal. Continue to buy.
• Buy GBP/NZD. Trend – MT is bull normal. Continue to buy.
• Buy EUR/NZD. Trend – MT is bull normal. Continue to buy.
• Wait AUD/NZD.  – MT is sideways quiet. Wait.
• Buy EUR/AUD. Trend – MT is bull normal. Continue to buy.
• Buy GBP/AUD. Trend – MT is bull normal. Continue to buy.
• Sell AUD/CAD. Trend – MT is bear normal. Continue to sell.
• Buy GBP/CAD. Trend –  MT is bull normal. Continue to buy.
• Wait EUR/CAD.  – MT is sideways normal. Wait.
• Sell NZD/CAD. Trend  – MT is bear normal. Continue to sell.
• Wait GBP/CHF. – MT is sideways normal. Wait.
• Sell CAD/CHF. Trend  – MT is bear normal. Continue to sell.
• Sell NZD/CHF.  Trend – MT is bear normal.  Continue to sell.
• Sell AUD/CHF.  Trend – MT is bear normal. Continue to sell.

Other Markets

• Wait USDSGD.  – MT is sideways normal. Wait.
• Wait  USDCNH.  – MT is sideways quiet. Wait.
• Wait Gold. – MT is sideways quiet. Wait.
• Wait Oil. – MT is sideways normal. Wait.
• Buy S&P 500. Trend – MT is bull normal. Look to buy.
• Sell DAX. Trend – MT is bear normal. Continue to sell.
• Buy Nikkei. Breakout – MT is bull normal. Look to buy.
• Sell T-Notes. Trend – MT is bear normal. Continue to sell.

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(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.