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.
- Sell DXY. Breakout – MT is bear normal. We have broken out into a bear MT, but as of yet there has been no follow though and DXY is holding 0.94 support. If we see a continuation of the sell off below 0.94 then the move could have some legs, but as of now we may well push back into a sideways MT. With FOMC (and a rate hike) upcoming, consolidation is the more likely leading up to the event on the 26th Sep, with direction after that dictated by the Fed’s outlook. On the trade war front, tariffs have been implemented at a lesser rate (10% rather than 25%) and despite China firing back with tariffs of their own, market participants saw the lower level as a positive outcome. Overall, the sell call is a low conviction one until we move below 0.94 and I am watching for reversal opportunities off this level.
- Buy GBP/USD. Trend – MT is bull normal. Brexit talks have swung from positive to negative with the Irish boarder and economic ties the main sticking points. GBP sold off on Friday when PM May said a no deal would be better than a bad deal. Of course this type of speak is to be expected during a negotiation (she is not going to say we would be happy with a bad deal). Importantly, the market has been ignoring positive GBP data and is still very responsive to Brexit news. Technically, we are just holding onto the bull MT, but if we head back below 1.30 it would be over for now.
- Buy USD/JPY. Trend – MT is bull normal. USDJPY continue to rise in the risk-on environment after trade war and emerging market concerns lessened. US Bond yields are above 3% and US stocks are making new highs. Japanese stocks have broken out and are pressing towards recent highs too. Continue to buy.
- Wait AUD/USD. – MT is sideways volatile. The pair bounced strongly on back of positive risk sentiment and USD weakness. Nothing much local has driven the move. Wait for now.
- Buy EUR/USD. Breakout – MT is bull normal. The pair broke out into a bull MT on the back of positive risk sentiment and USD weakness. We still need to clear the 1.18 hurdle and this may be dictated by FOMC. In-fact I see 1.18 as a potential level for a reversal if we get a strong enough reversal pattern. Euro-zone data continues to be tepid and the ECB remains dovish. Italy is in the spotlight over a potential confrontation with the EU, depending on how much deficit they bake into their budget. The budget is also causing come internal political strife in Italy as the coalition jockeys over spending levels. Lower conviction buy until we clear 1.18 and as mentioned a potential selling opportunity.
- Wait NZD/USD. – MT is sideways normal. The big news out of NZ last week was a GDP beat. This could be important because it was well above the RBNZ’s forecast and it could impact their dovish outlook. If it does, we could see a greater recovery in the Kiwi.
- Sell USD/CHF. Trend – MT bear normal. The bear MT continues. SNB met last week and did not change their language despite the recent appreciation of the CHF which has allowed the trend to continue.
- Wait USD/CAD. – MT is sideways normal. We are now pressing the lower end of the range on the back of what is seen as a positive outlook for NAFTA negotiations, a potential October rate hike and a rising oil price. Wait for now.
- Wait EUR/GBP. – MT is bear volatile. Fridays sell-off in GBP gave back over two weeks of gains in the pair. I still like it lower in the long-term but we may well retest the high at 0.91 given Brexit uncertainly.
Crosses
- Sell EUR/CHF. Trend – MT is bear normal. Continue to sell.
- Wait AUD/JPY. – MT is sideways volatile. Wait.
- Wait NZD/JPY. – MT is sideways normal. Wait.
- Buy GBP/JPY. Trend – MT is bull normal. Continue to buy.
- Buy EUR/JPY. Trend – MT is bull normal. Look to buy, but watch out for Friday’s bearish hammer.
- Buy CAD/JPY. Trend – MT is bull normal. Look to buy.
- Buy CHF/JPY. Trend – MT is bull normal. Continue to buy.
- Wait GBP/NZD. – MT is bull volatile. Wait.
- Wait EUR/NZD. – MT is sideways normal. Wait.
- Wait AUD/NZD. – MT is sideways quiet. Wait.
- Wait EUR/AUD. – MT is sideways normal. Wait.
- Wait GBP/AUD. – MT is bull volatile. Wait.
- Wait AUD/CAD. – MT is sideways normal. Wait.
- Wait GBP/CAD. – MT is sideways normal. Wait.
- Wait EUR/CAD. – MT is sideways normal. Wait.
- Wait NZD/CAD. – MT is sideways normal. Wait.
- Wait GBP/CHF. – MT is sideways normal. Wait.
- Wait CAD/CHF. – MT is sideways normal. Wait.
- Wait NZD/CHF. – MT is sideways normal. Wait.
- Wait AUD/CHF. – MT is sideways normal. Wait.
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. Continue to buy.
- Wait DAX. – MT is bear volatile. Wait.
- Buy Nikkei. Trend – MT is bull normal. Continue to buy.
- Sell T-Notes. Trend – MT is bear normal. Continue to sell.
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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.