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.
Majors
- Wait DXY – MT is sideways normal. Comments from Fed officials last week did little to clarify rate hike expectations, and the dollar sold off heavily against the EUR. Traders want to see more from the Fed, given the recent improvement in employment data, but they are just not getting it. This week in the dollar we have the Jackson Hole symposium where the focus will be on Janet Yellen speech on Friday for (you guessed it) clues on when the next rate hike will be (ain’t life fun in the golden age of the central banker).
- Wait GBP/USD. Trend – MT is sideways normal. The attempt to break out into a bear MT failed and we are now back into a sideways MT (just). This failure was on the back of resilient data from the UK consumer. I suspect any optimism is overdone at this point, as we need to see more data before any concrete outlook can be formed. For now the situation remains uncertain, which should weigh on the pair.
- Wait USD/JPY. – MT is sideways volatile. USDJPY triggered the key 100 level again last week. This was on the back of USD weakness, rather than JPY strength. The yen itself seems rather directionless with the perception being that perhaps the BOJ and Abe don’t have much firepower left to achieve their inflation and growth targets (this should not be a surprise). The BOJ increased it’s purchases of Japanese stock ETF’s. After taking over the Japanese Govt bond market (see how the liquidity has dried up), it’s attention is focused on the stock market (of course this is not a new thing either). I still prefer to buy at the 100 level that I have been mentioning here as a strategy for the last few weeks (as long as stocks keep near highs), but wait patiently for a clear bullish reversal from this area before triggering an entry.
- Buy AUD/USD. Trend – MT is bull normal. We got the sell off suggested in last weeks report and have slightly bounced off the mid Bollinger Band, which was the buy strategy mentioned. I still think buying in the correct approach, though the two weekly hammers give me pause. Moody’s cut the ratings of five Australian banks, and economic reports lacked oomph. But with Iron Ore and Stocks staying bid, and with the Aussie being one of the only remaining yield plays for currency traders, buying from these levels remains a decent strategy.
- Buy EUR/USD. Trend – MT is bull normal. Further cracks are appearing in the European banking system, this time as a result of negative deposit rates from the ECB. Negative rates squeeze banks and individuals leading to generally unproductive behaviors. Data from the EU is relatively muted and it is expected to remain so. There is a fair bit on the cards so we should see some movement pre-Yellen on Friday. Look to buy and lock in some profits to create a risk-free (or low risk) trade before Friday.
- Wait NZD/USD. – MT is sideways volatile. The kiwi is bumping up against resistance at 0.73 after a 19% lift in whole milk prices (12% from the last dairy auction as a whole, and up 30% in the last month) and some decent jobs data. Stocks remain near highs and we are in a weekly bull MT, so I favor an upside break of 0.73 at this point, targeting .7500 then .7740.
- Sell USD/CHF. Trend – MT is bear normal. The SNB has continued to intervene in the EURCHF pair since it removed the floor in Jan 2015, but this has failed to see the pair markedly higher. Eventually the SNB may have to abandon this policy of intervention (if it’s balance sheet expands beyond acceptable limits), but that should be a gradual shift resulting in an orderly slide, not sudden like in ’15. That is likely some time away though, in the meantime we can look for a move towards 0.9440 on USDCHF, which may then present a buying opportunity.
- Sell USD/CAD. – MT is bear normal. Oil continued to trend higher, driving USDCAD lower, before poor retail sales data on Friday saw the pair bounce. We can continue to sell tactically for a move towards 1.2660. Long-term, I think Oil will breach the low at $26 and prefer to buy a break higher above 1.32 on USDCAD. In saying that the massive head and shoulders pattern forming on the weekly chart could present a real selling opportunity if the correct fundamental conditions exist at the time.
- Buy EUR/GBP. Trend – MT is bull normal. We are holding the key .8600 level. Continue to buy.
Crosses
- Wait EUR/CHF. – MT is sideways normal. Wait for now.
- Wait AUD/JPY. – MT is sideways normal. Wait for now.
- Wait NZD/JPY. – MT is sideways normal. Wait for now. One of the radar for a buy for a break above .7450
- Sell GBP/JPY. Trend – MT is bear normal. Continue to sell, but unless stocks come off, it should be GBP weakness that carries this trade and not JPY strength.
- Wait EUR/JPY. – MT is sideways normal. Sitting mid range. Wait for now.
- Wait CAD/JPY. – MT is sideways normal. Wait for now.
- Wait CHF/JPY. – MT is sideways normal. Wait for now.
- Sell GBP/NZD. Trend – MT is bear normal. Look to sell, prefer on a confirmed break of 1.77.
- Wait EUR/NZD. – MT is sideways quiet. Wait for now, another one of interest on a break into a bear MT on a close below 1.54.
- Wait AUD/NZD. – MT is sideways volatile. Wait for now.
- Wait EUR/AUD. – MT is sideways normal. Last weeks contrarian buy saw gains to the opposite side of the range. Wait for now.
- Sell GBP/AUD. Trend – MT is bear normal. We got the bounce anticipated last week. Friday’s hammer on the re-test of the breakout level should now see the resumption of the downtrend
- Wait AUD/CAD. – MT is sideways volatile. Wait for now, but look for a buying opportunity in this MT now the lower Bollinger Band has been hit.
- Sell GBP/CAD. Trend – MT is bear normal. Continue to sell.
- Wait EUR/CAD. – MT is sideways normal. Wait for now.
- Wait NZD/CAD. – MT is sideways normal. Wait for now.
- Sell GBP/CHF. – MT is bear normal. Continue to sell.
- Wait CAD/CHF. – MT is sideways normal. Wait for now.
- Wait NZD/CHF. – MT is sideways normal. Wait for now
- Wait AUD/CHF. – MT is sideways normal. Wait for now.
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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.
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