Forex Trading Opportunities for the Week Ahead 9 July 18: FXRenew

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 normal. The reversal pattern mentioned last week has continued to play out and we look to be heading back towards at least 93. Weekly charts show a strong topping pattern is now in place. The U.S. implemented trade tariffs against China on Friday and China immediately retaliated. The first real shots in the trade war have been fired. So far the USD response has been bearish (this is inline with the historical response to trade wars) and an escalation may well see the bearish momentum continue. I don’t think either party really wants this to escalate so we will see. the NFP headline number came in good but average hourly earnings growth was flat. This also pressured the USD as market participants try to determine if there will be two or three more rate hikes this year. With a decent but not great result, and considering the FOMC’s concern about the escalating trade wars, we may see only the two hikes.

• Wait GBP/USD. – MT is bear normal. GBPUSD continues to bottom with a reverse head and shoulders pattern in place on daily charts and bullish candlestick patterns on weekly charts. There is an increasing chance of a rate hike in August and BOE Governer Carney seems hawkish. With the economy recovering and improving data, Brexit concerns remain the main drag on the pair. There was some good news on that front on Friday with Prime Minister May getting her latest proposal through cabinet, but we are yet to see if the EU agrees. Look to buy above 1.3320 on the completion of the head and shoulders pattern.

• Wait USD/JPY. – MT is sideways quiet. The pair has moved into a sideways quiet MT. Poor JPY data and risk on in stocks are keeping a lid on JPY gains despite USD selling off. Look for opportunities to sell JPY vs. the crosses.

• Buy AUD/USD. Contrarian –  MT is bear normal. After first breaching the low, the reversal pattern mentioned last week has continued to play out. While the price action is bullish, fundamentals are not the best with a neutral RBA, falling house prices (which could have systematic risks) and average data. Risk on in stocks (where the ASX is outperforming) and general USD weakness seems to be the main drivers in this oversold market.

• Wait EUR/USD. –  MT is sideways normal. Last weeks reversal continues to play out. Note we now have a 3 white soldiers reversal pattern in place on weekly charts confirming the bottom is in place. With an easing of political tensions, some hawkish speak from the ECB and general USD weakness, the pair is likely to head higher at least towards 1.1850. Of great concern would be an implementation of tariffs on European automobiles by President Trump – watch out for news on this.

• Wait NZD/USD.  –  MT is bear normal. A strong reversal pattern has formed on weekly charts off the key 0.67 level. Dairy prices were down 5% last week, but note that the weak NZD has been helping the dairy sector so it’s not as gloomy as it seems on the surface. Note also that so far the trade war between the US and China has been helping the sector too. But if things escalate further the dynamic will likely change. I like to look for contrarian opportunities to get long NZD. In particular vs. CHF and JPY.

• Wait USD/CHF.  – MT sideways quite. We continue to consolidate below the key 1.00 figure. With rising stocks and with EURCHF breaking out into a bull MT, I prefer to look for a breakout above 1.00.

• Wait  USD/CAD. – MT is sideways volatile. The double top mentioned in last weeks report continues to play out. There is likely to be a rate hike next week by the BOC with another on expected later in the year. Oil prices continue to rise. NAFTA concerns are still on the table so watch that space.

• Wait EUR/GBP.  – MT is sideways quiet. We have rejected the recent high at 0.8850 with the formation of a bear doji. This is suggestive of GBP strength.

Crosses

• Buy EUR/CHF. Breakout – MT is bull normal. Look to buy.
• Buy AUD/JPY.  Reversal – MT is sideways volatile. Busted breakout off the bottom of the range provides a buying opportunity.
• Buy NZD/JPY. Contrarian  – MT is bear normal. Double bottom in place. Contrarian buy.
• Buy GBP/JPY. Reversal – MT is sideways normal. Bullish reversal off the low. Continue to buy.
• Wait EUR/JPY. – MT is sideways normal. Buy above 1.30.
• Wait CAD/JPY.   – MT is sideways normal. Wait.
• Wait CHF/JPY.  – MT is sideways quiet. Wait.
• Buy GBP/NZD. Trend – MT is bull normal. Continue to buy.
• Wait EUR/NZD. – MT is bull normal.  Failing at resistance. Wait.
• Sell AUD/NZD. Reversal – MT is sideways volatile. Look to sell
• Buy EUR/AUD. Trend – MT is bull normal. Continue to buy.
• Buy GBP/AUD. Trend – MT is bull normal. Look to buy but watch out as we may soon turn sideways
• Sell AUD/CAD. Trend – MT is bear normal. Continue to sell.
• Wait GBP/CAD. –  MT is sideways normal. Wait.
• Wait EUR/CAD. – MT is sideways normal. Wait.
• Sell NZD/CAD. Trend – MT is bear normal. Continue to sell.
• Wait GBP/CHF. – MT is  sideways quiet. Buy above 1.32.
• Wait CAD/CHF. – MT is sideways volatile. Wait.
• Wait NZD/CHF.  – MT is bear normal. Reversing off major support.
• Wait AUD/CHF.  – MT is sideways normal. Minor double bottom in place.

Other Markets

• Wait USDSGD.  – MT is bull volatile. Wait.
• Buy USDCNH. Trend – MT is bull normal. Continue to buy.
• Sell Gold. Trend – MT is bear normal. Continue to sell.
• Buy Oil. Trend – MT is bull normal. Continue to buy but watch out for the topping action.
• Wait S&P 500. – MT is sideways normal. Wait.
• Sell DAX. Trend – MT is bear normal. Continue to sell.
• Wait Nikkei. – MT is sideways normal. Wait
• Buy T-Notes. Trend – MT is bull normal. Continue to buy.

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(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.