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 Trend – MT is bear normal. The dollar bounced slightly last week, but not enough to knock it out of the current bear MT. The main event for the dollar will be rate hike expectations ahead of the the June 14th meeting. The market is pricing in a 100% chance of a June hike, and given tight employment market conditions it is likely. In saying that inflation data has not been great so we can perhaps expect a “dovish hike” scenario. On the Trump front, it’s looking like the dollar cannot expect much of a bump this year from his policies, which may struggle to see the light of day.
- Sell GBP/USD. Breakout – MT is bear normal. The GBP came under pressure last week after the Torie’s lead was reduced to 5% in recent polls. It looks like the election may not produce a stronger government which is concerning to the markets. There was a very sad terrorist attack in the UK resulting in a number of deaths and security concerns may also be weighing on the pound. The GBPUSD has flipped into a bear MT and we can look to sell through 1.2770.
- Wait USD/JPY. – MT is sideways normal. There are conflicting forces at play with stocks clearly in risk-on mode but US bond yields are weakening. Thus we are seeing relatively muted price action and it is best to wait for now until we see a resumption of the trend.Look to sell below 109.80.
- Wait AUD/USD. – MT is sideways normal. Moody’s came out and downgraded China’s credit rating for the first time since 1989 over debt concerns. Iron Ore is also continuing its sell-off. These factors are weighing on the Aussie and we saw both a bearish hammer on Tuesday and a bearish engulfing candle on Thursday, both of which are indicative of more downside in this MT.
- Buy EUR/USD. Trend – MT is bull normal The Euro continues to rise on the back of the unwinding of political risk in the Eurozone and rising inflation expectations, which have lead to some more hawkish comments from ECB President Draghi. Continue to buy, though it would be prudent to wait for a dip first. 1.13 is the logical next target.
- Buy NZD/USD. – MT is bull normal. We had our expected break through .6880 and this has lead to our first target at .7050 resistance. We are currently holding just above this level and more upside can be expected. The NZD is benefiting from improving data. In particular Fonterra, the worlds largest Dairy company that sells NZ’s milk products is raising it’s pay out to farmers. Continue to buy with .7375 being the next target.
- Sell USD/CHF. Trend – MT is bear normal. We need some caution here as a minor reversal pattern looks to be forming, but overall we can continue to sell on a rally.
- Sell USD/CAD. Trend – MT is bear normal. It was an interesting week for the Canadian dollar with the Bank of Canada meeting resulting in a sell-off in the pair followed by a bounce after an underwhelming OPEC meeting the following day. We need to watch oil closely but otherwise we can continue to sell. Bigger picture technical studies are also suggestive of more downside to come.
- Buy EUR/GBP. Trend– MT is bull normal. The pair continues to gain, this time on the back of election concerns and we can look for a move first towards .8780.
Crosses
- Wait EUR/CHF. – MT is bull volatile. Wait.
- Wait AUD/JPY. – MT is sideways normal. Wait.
- Wait NZD/JPY. – MT is bull volatile. Wait.
- Sell GBP/JPY. Breakout – MT is bear normal. Look to sell.
- Buy EUR/JPY. Trend – MT is bull normal. Continue to buy, but be careful as there is a minor topping pattern in play.
- Wait CAD/JPY. – MT is sideways normal. Wait.
- Buy CHF/JPY. Trend – MT is bull normal. Continue to buy, but be careful as there is a minor topping pattern in play.
- Sell GBP/NZD. Trend – MT is bear normal. Look to sell.
- Wait EUR/NZD. – MT is bull volatile. Wait.
- Sell AUD/NZD. – MT is bear fast. Look to sell.
- Buy EUR/AUD. Trend – MT is bull normal. Continue to buy, but watch out for Friday’s hammer. Buy on a dip only.
- Wait GBP/AUD. Trend – MT is sideways normal. Wait.
- Wait AUD/CAD. – MT is sideways volatile. Wait for now.
- Wait GBP/CAD. Trend – MT is bear normal. Look to sell.
- Buy EUR/CAD. Trend – MT is bull normal. Continue to buy, but careful as we may well turn sideways here very soon.
- Wait NZD/CAD. – MT is sideways normal. Look to buy above 0.9570.
- Sell GBP/CHF. – MT is bear normal. Look to sell.
- Wait CAD/CHF. – MT is bear normal. But bottoming here so caution required.
- Wait NZD/CHF. – MT is bear volatile. Wait.
- Sell AUD/CHF. Trend – MT is bear normal. Continue to sell, but watch out for the bullish hammer, sell on a rally preferred.
Other Markets
- Wait Gold. – MT is sideways volatile. Wait.
- Wait Oil. – MT is sideways volatile. Wait.
- Buy S&P 500. Trend – MT is bull normal. Look to buy.
- Sell DAX. Trend – MT is sideways normal. Wait.
- 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.