Forex Trading Opportunities for the Week Ahead 5 Feb 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 bear normal. We had choppy price action on DXY last week, and while we still remain in the downtrend there are signs of a reversal here. The week ended with a bang for the USD after NFP came in with both a headline number and average hourly earning beat. This saw sharp gains in the USD against most currency pairs (although they were limited vs. the EUR). The NFP results came on the back of a hawkish leaning Fed statement in Yellen’s last meeting, which confirmed the prospects for several rate hikes in 2018. On the political front, spending and debt ceiling will come to the fore, but we need to watch sentiment to see if the market focuses on that or if this new bullish dollar momentum will take hold. Bonds yields continue to rise. Wait for now.

• Wait GBP/USD. – MT is bull normal. We have a minor double top in place which is suggestive of a correction in the coming week. If we get a bullish reversal then the wait call can shift back to buy. The main event for the GBP in the coming week in the BOE’s monetary policy meeting and inflation update. Recent meetings have been hawkish so market participants are looking for more of the same. Brexit concerns have eased but still linger and there are headlines about Prime Minister May’s job security which could weigh on the pair. GILT yields continue to rise.

• Sell USD/JPY.  Trend – MT is bear normal. While the pair bounced on NFP, the movement was shallower than most other currencies except EUR. No bottoming pattern has formed and we remain in the bear MT. Stocks had their worst day since 2016 and normally you would expect USDJPY to sell-off in tandem, but this was not the case. If stocks continue the slide we could see the bear MT resume so the sell call remains in play. Just be cautious, and if we close and remain above 110.50 the sell call is cancelled.

• Sell AUD/USD. Reversal –  MT is bull volatile. Last week, we talked about the likelihood of a reversal off the key .81 level. We got the candle pattern we were looking for with a “three black crows” formation. Poor data out of Australia and strong NFP numbers saw the pair slide dramatically on Friday. Technically, with no support in the way, we can look for a move back to .75. Falling stocks markets are typically bad for the AUD as well. Watch out for RBA meeting this week.

• Buy EUR/USD. Trend –  MT is bull normal. The bull MT remains in-tact on the EUR though we have not yet cleared the supply indicated by bearish hammer that formed on the 25th of Feb. Data continues to be good out of Europe and Friday’s sell-off was comparatively shallow vs. the USD. We are still looking for Germany to form a new government. Bunds yields continue to rise. EUR may be best played vs. the crosses this week.

• Buy NZD/USD. Trend –  MT is bull normal. We have topping action in play on the Kiwi and Fridays sell-off was strong. We have a RBNZ meeting this week. Data has not been great out of NZ and the Central Bank probably won’t like the recent rise in the currency. While from a technical point of view, we still have the possibility for a move toward the key .7550 level, a move back through .7250 would be indicative that a minor top is in place and the buy call would be cancelled.

• Sell USD/CHF. – MT bear normal. Data has been good out of Switzerland and despite talk of SNB intervention, the pair remains in a bear MT. If the selling in global stocks continues we can expect further CHF strength, though the better play is probably against the crosses.

• Wait USD/CAD. – MT is sideways normal. we have a number of bullish candle patterns in place and the week ended with a large reversal. This is indicative of a least a temporary bottom and we can expect the pair to rise. Oil price remain strong, but NAFTA has not yet been resolved. There are a number of pieces of data this week to look for. Ideally we want to see a move back above 1.2550 before switching bullish or back below 1.2250 for the bear trend to resume.

• Wait EUR/GBP.  – MT is sideways normal. We remain firmly back within the range. Note we have developed a weekly sideways quiet MT, when these breakout, they tend to lead to a strong move. Wait for now and stalk the breakout.

Crosses

• Sell EUR/CHF. Trend – MT is bear normal. Continue to sell.
• Sell AUD/JPY. Breakout – MT is bear normal. Look to sell.
• 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.
• Wait CAD/JPY.  – MT is sideways normal. Wait.
• Buy CHF/JPY.  – MT is bull fast. Look to buy.
• Buy GBP/NZD. Trend – MT is bull normal. Continue to buy.
• Buy EUR/NZD. Trend  – MT is bull normal. Look to buy.
• Wait AUD/NZD. – MT is sideways normal. Wait.
• Buy EUR/AUD. Trend – MT is bull normal. Continue to buy.
• Buy GBP/AUD. Trend – MT is is bull normal. Look to buy.
• Wait AUD/CAD. –  MT is sideways volatile. Wait.
• Buy GBP/CAD. Trend –  MT is bull normal. Continue to buy.
• Buy EUR/CAD. Trend  –  MT is bull normal. Look to buy.
• Buy NZD/CAD. Trend – MT is bull normal. Continue to buy.
• Wait GBP/CHF.  – MT is sideways normal. Wait.
• Sell CAD/CHF. Trend – MT is bear normal. Continue to sell.
• Sell NZD/CHF. Trend – MT is bear normal. Continue to sell.
• Sell AUD/CHF.  Trend – MT is bear normal. Continue to sell.

Other Markets

• Sell USDSGD Trend – MT is bear normal. Continue to sell, but with caution.
• Sell USDCNH  Trend – MT is bear normal. Continue to sell.
• Wait Gold.  – MT is sideways normal. Wait.
• Buy Oil. Trend – MT is bull normal. Continue to buy.
• Wait S&P 500. – MT is bull volatile. Wait.
• Sell DAX. Trend – MT is bear normal. Look to sell.
• Sell Nikkei. Trend – MT is bear normal. Look to sell.
• Sell T-Notes.  Trend – MT is bear normal. Continue to sell.

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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.