Forex Trading Opportunities for the Week Ahead 5 December 2016

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. 

• Buy DXY  Trend – MT is bull normal. The dollar index continues to hold above the key 100 level. While there is somewhat of a pull-back/consolidation here, it is to be expected. For now the key bullish drivers continue to exist with Friday’s (average) jobs report likely enough for the Fed to hike rates this month. Sentiment remains bullish on the back of the Trump election win. If we do start to trade back below 100 for a few days we will need to reassess the bullish outlook. My base case is some consolidation likely this week.

• Buy GBP/USD. – MT is bull normal. The cable continues to bottom here, and is gaining some upward momentum. News has not been significantly good so the bullish price action signifies underlying demand. I prefer to be long GBP against the crosses.

• Buy USD/JPY. Trend – MT is bull normal. We have flipped back from the fast market type to a normal one. We can expect the bullish momentum to continue but the movement is now likely to be more choppy, so be a bit cautious about timing the entry.

• Sell AUD/USD. Trend –  MT is bear normal. We remain in the bear MT, though price is clearly consolidating here. We have RBA this week where rates are likely to be kept on hold. The Australian economy is ticking along, but it’s not in the greatest position, despite some stabilization in the price of metals. I certainly think we (eventually) head lower from here.

• Sell EUR/USD.  Trend –  MT is bear normal. This weekend we have the Italian referendum, which may well see Prime Minister Renzi step down (if we get a NO vote). But don’t assume and don’t trust the media, it could easily be a YES, which could see the oversold EUR bounce. The Austrian Election is also on, in which euro-skeptics may come to power. Neither of the above mean that we will see another member exit from the Euro-zone (just yet) but it won’t be welcomed by European bureaucrats. Importantly, there is an ECB meeting this week which could see an extension of the stimulus program which will be supportive of European bonds, further adding to the divergence case. Given the technical level we are at (see chart below) and the sharp down move we have had, a further bounce in the EUR could be expected. But I see that as a temporary bounce and ultimately favor a break lower and a move toward parity and beyond.

• Buy NZD/USD. Reversal – MT is sideways volatile. We got the expected bounce last week and while I think the move will be temporary (with a monthly bearish hammer dominating proceedings), we should head higher here before resuming the downtrend.

• Wait USD/CHF.  – MT is bull normal. We have a minor double top in play off a resistance level. This may result in some downside or at least some choppy price action for now, though we remain in a bull market type.

• Sell USD/CAD.  Trend – MT is bear normal. We had a trend reversal after a late night phone call between Saudi Arabia and Russia’s chief oil ministers resulted in OPEC announcing a cut in the production of oil. Oil has soared on the news, but I remain skeptical that it is going to amount to much over the long-term. For now though, sentiment is bullish CAD and we can expect CAD strength in particular if Oil can hold about the key $50 mark.

• Sell EUR/GBP. Trend – MT is bear normal.  We continue towards the .8330 target which should be taken out this week. Afterwards, and depending on this weekends results, I think the pair heads much lower still.

Crosses

• Sell EUR/CHF. Trend – MT is bear normal. Bearish hammer on Wednesday in this MT should see a move back towards 1.0680.
• Buy AUD/JPY. Trend – MT is bull normal. Continue to buy, but with caution.
• Buy NZD/JPY. Trend – MT is bull fast. Continue to buy.
• Buy GBP/JPY.  Trend – MT is bull normal. Continue to buy.
• Buy EUR/JPY. Trend – MT is bull normal. Continue to buy but on a dip only as we had a bearish engulfing day on Friday (now is a good time for longs to scale out a little bit at least).
• Buy CAD/JPY. Trend – MT is bull normal. Continue to buy, but note we are at resistance.
• Buy CHF/JPY.  Trend – MT is bull normal. Continue to buy but on a dip only as we had a bearish engulfing day on Friday.
• Wait. GBP/NZD. – MT is sideways normal. Wait.
• Sell EUR/NZD. Trend – MT is bear normal. Look to sell.
• Wait AUD/NZD. – MT is sideways normal. Wait, though the above analysis suggests the pair is a sell this week (buying Kiwi, selling Aussie).
• Wait EUR/AUD. – MT is sideways normal. Wait.
• Buy GBP/AUD. Trend – MT is bull normal. Continue to buy.
• Sell AUD/CAD. Trend–  MT is bear normal. Continue to sell.
• Wait GBP/CAD. –  MT is sideways normal. Wait.
• Sell EUR/CAD. –  MT is bear normal. Look to sell.
• Wait NZD/CAD.  – MT is sideways volatile. Wait.
• Buy GBP/CHF. – MT is bull normal. Continue to buy.
• Wait CAD/CHF.  – MT is sideways volatile. Wait.
• Wait NZD/CHF. – MT is sideways volatile. Wait.
• Wait AUD/CHF. – MT is sideways normal. Wait.

View bank reports and fundamental analysis in the chatroom (members only)

View the chatroom 

Economic calendar for the week ahead:

View economic calendar

(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.

The post Forex Trading Opportunities for the Week Ahead 5 December 2016 appeared first on www.forextell.com.