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 sideways quiet. The DXY continues to display bottoming price action and we have now formed a sideways quiet MT. There are a number of drivers at the moment. Firstly, we there is going to be a rate hike by the Federal Reserve this week. Market participants will be interested in the accompanying statement and dot plot to determine the likelihood of three vs. four hikes this year. Secondly, there is ongoing talk of a trade war with President Trump calling out China for intellectual property theft and threatening tariffs. If this escalates it could be USD and risk bearish. Next, there have been a number of reshuffles in Trump’s cabinet, but market sentiment has not really focused on this. Obviously the big event is FOMC and I like to buy on a breakout above 91.00.
- Wait GBP/USD. – MT is sideways normal. The GBP remains range bound for now, though there is underlying strength in the price action with the Three White Soldiers candlestick pattern off support at 1.38 continuing to play out. This could be an important week for the GBP with firstly a BOE meeting and secondly with a key date in Brexit negotiations. The BOE has been relatively hawkish and the market is pricing in a 80% chance of a rate hike in May. Look for confirmation this week. Brexit negotiations have been progressing and we may see a sign-off on moving to the next phase of the process this week. Note there are some geopolitical tensions between the UK and Russia, after a ex-Russian spy was murdered on UK soil which led to the UK expelling Russian Envoys from the country. Look for a move through 1.40, but note that I prefer buy GBP vs EUR and the crosses.
- Wait USD/JPY. – MT is sideways normal. While technically the pressure remains on USDJPY, we have a number of long tail candles showing support at 1.06. This is indicative of bottoming, but it is not strong enough to signal a buy. There is some political turmoil in Japan with Prime Minister Abe involved in a corruption scandal due to a real estate deal. We are seeing some signs of risk-off in stocks. Both of these factors are keeping USDJPY subdued, despite rising US yields. I do expect that we will see a snap back to this correlation with yields after the recent divergence and I like to buy USDJPY above 1.0750.
- Sell AUD/USD. Breakout – MT is bear normal. The bigger picture bearish technical pattern continues to play out with an aggressive sell-off in the pair in the last two days of the week. This has pushed AUDUSD into a bear MT. While we are a minor support and we do need to watch for a bounce, 0.7500 is the next logical target. Sentiment has flipped back to negative on the AUD on the back of USD strength, risk-off concerns and a RBA in no hurry to raise rates.
- Wait EUR/USD. – MT is sideways quiet. While we remain range bound the price action is not constructive for the EUR. The pair remains under pressure with the ECB firmly committed to low rates for longer. This is of course divergent with both the US and UK and this week is likely to be a telling week to see if sentiment refocuses on the divergence theme. If it does I think the pair has quite a way to fall. Look for a breakout below 1.22 to sell.
- Wait NZD/USD. – MT is sideways normal. The Kiwi, along with the Aussie, sold off heavily in the last two days of the week. Unlike the AUD there was a fundamental catalyst with weak GDP numbers released. Dairy prices have been anemic, and the building industry has come under pressure. The RBNZ remains dovish and there is expected to be no change in this stance is this weeks coming meeting.
- Buy USD/CHF. Trend – MT bull normal. The SNB reiterated its commitment to low rates and intervention last week, but this is nothing new. I do expect the pair to continue to rise barring any risk-off shocks.
- Buy USD/CAD. Trend – MT is bull normal. We have blasted through resistance at 1.29 and technically there is nothing to stop a move back towards 1.08. CAD is struggling on the back of ongoing NAFTA concerns, dovish comments from the BOC governor and USD strength. Continue to buy.
- Wait EUR/GBP. – MT is sideways normal. After a busted breakout attempt at .8950, we have seen the pair move steadily lower. This could be a sign that with Brexit tensions easing the market is refocusing on the divergence in monetary policy between the UK and Europe. Note that we still remain within the weekly sideways quiet MT and I do expect the eventual breakout to lead to a strong move. I do expect the breakout to be lower, but either way is tradeable. Selling through .8750 is my preferred option.
Crosses
- Buy EUR/CHF. Trend – MT is bull normal. Continue to buy.
- Wait AUD/JPY. – MT is sideways volatile. Wait.
- Sell NZD/JPY. Trend – MT is bear normal. Continue to sell.
- Sell GBP/JPY. Trend – MT is bear normal. Continue to sell, but careful.
- Sell EUR/JPY. Trend – MT is bear normal. Continue to sell.
- Sell CAD/JPY. Trend – MT is bear normal. Continue to sell.
- Sell CHF/JPY. Trend – MT is bear normal. Continue to sell.
- Wait GBP/NZD. Breakout – MT is bull normal. Look to buy.
- Wait EUR/NZD. – MT is sideways quiet. Wait.
- Wait AUD/NZD. – MT is sideways quiet. Wait.
- Wait EUR/AUD. Trend – MT is bull normal. Look to buy.
- Wait GBP/AUD. Trend – MT is bull normal. Look to buy.
- Buy AUD/CAD. Trend – MT is bull normal. Continue to buy, but with caution.
- Buy GBP/CAD. Trend – MT is bull normal. Continue to buy.
- Sell EUR/CAD. Trend – MT is bull normal. Look to buy.
- Buy NZD/CAD. Trend – MT is bull normal. Continue to buy.
- Buy GBP/CHF. Trend – MT is bull normal. Continue to buy.
- Wait CAD/CHF. – MT is bear volatile. Wait.
- Buy NZD/CHF. Trend – MT is bull normal. Continue to buy, but very careful
- Wait AUD/CHF. – MT is sideways normal. Wait.
Other Markets
- Wait USDSGD – MT is sideways normal. Wait.
- Wait USDCNH – MT is sideways normal. Wait
- Wait Gold. – MT is sideways normal. Wait.
- Wait Oil. – MT is sideways normal. Wait.
- Wait S&P 500. – MT is sideways normal. Wait.
- Wait DAX. – MT is sideways normal. Wait or contrarian buy.
- Wait Nikkei. – MT is sideways normal. Wait or contrarian 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.