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. While the long-term uptrend is intact we remain in a sideways MT. NFP data was strong on Friday, in particular wages rose 0.4% last month. This is supportive of the divergence theme and all but confirms a rate hike this month. USD has been benefiting from safe-haven flows as emerging markets suffer. President Trump is ready to go with 200 Billion in Tariffs in China and has 267 Billion more in the pipeline. He has now set his sights on Japan which is causing jitters. Overall the picture remains bullish USD, look for opportunities to buy. Watch for retail sales and inflation data this week.
- Wait GBP/USD. – MT is sideways normal. The GBP is one of the best performing currencies at the moment on optimism that there will be a Brexit deal done in time (Q4 is the deadline). Of course, volatility over Brexit sounds bites is likely to remain high. Yields and data has also been supportive of the GBP and I am looking for signs of bottoming vs. the USD and I like buying GBP vs. the crosses.
- Wait USD/JPY. – MT is sideways normal. The pair is caught between risk-off flows on the back of emerging markets and trade wars and economic and monetary policy divergence. Technically I favor a move back towards 115, but it’s not high conviction given the current market conditions.
- Sell AUD/USD. Trend– MT is bear normal. We have broken though the key 0.72 level on the back of NFP. Importantly, the pair has been ignoring positive data (GDP) which is normally a strong bearish sign. Mortgage rates have been raised by Australian banks due to high funding costs and the housing market remains under pressure which provides a negative wealth effect. Additionally, the pair is being sold on the back of trade war concerns. Keep selling, but do watch-out for a strong technical bounce considering the importance of this support level.
- Wait EUR/USD. – MT is sideways volatile. We remain in a sideways volatile MT. Data has not been great out the EU. Concerns around Italy’s populist government have lessened slightly with Italian Bond yields falling in the past week, but the risk is still there. There is an ECB meeting this week. Draghi remains concerned around inflation and not much is expected from the meeting. I continue to look for opportunities to sell EURUSD.
- Sell NZD/USD. Trend– MT is bear normal. We remain in a bear MT. Data has not been great with dairy prices falling. The pair seems to be driven mostly by risk-off concerns and USD flows at the moment. Of course the RBNZ remains dovish and hedgers now have to pay negative carry when buying NZD vs. USD with the rise in US rates.
- Sell USD/CHF. Trend – MT bear normal. While we remain in a bear MT some profit taking is prudent here with NFP forming a bullish piercing candle which means we have a minor double bottom in place. The main drive of CHF is risk-off on the back of emerging market contagion and trade war concerns.
- Wait USD/CAD. – MT is sideways normal. Data has been less supportive of CAD in recent times with both GDP and Employment data coming in below expectation. In saying that Fridays employment data was not as bad as it seemed on the surface with the losses being in part-time jobs, while full-time employment actually gained. NAFTA negotiations are ongoing, though the noise does seem to be positive
- Wait EUR/GBP. – MT is sideways volatile. We have a busted break of the key .90 level and the formation of a weekly reversal pattern. The topping action has now moved into the sideways volatile phase and we need it to settle down into a sideways normal/ quite phase next. I am stalking selling opportunities on the pair.
- Sell EUR/CHF. Trend – MT is bear normal. Continue to sell.
- Sell AUD/JPY. Trend – MT is bear normal. Continue to sell.
- Wait NZD/JPY. – MT is sideways normal. Wait.
- Wait GBP/JPY. – MT is sideways volatile. Wait.
- Wait EUR/JPY. – MT is sideways volatile. Wait.
- Wait CAD/JPY. – MT is sideways normal. Wait.
- Buy CHF/JPY. Trend – MT is bull normal. Continue to buy.
- Buy GBP/NZD. Trend – MT is bull normal. Continue to buy.
- Buy EUR/NZD. Trend – MT is bull normal. Continue to buy.
- Sell AUD/NZD. Trend – MT is bear normal. Continue to sell.
- Buy EUR/AUD. Trend – MT is bull normal. Continue to buy.
- Buy GBP/AUD. Trend – MT is bull normal. Continue to buy.
- Sell AUD/CAD. Trend – MT is bear normal. Continue to sell.
- Buy GBP/CAD. Trend – MT is bull normal. Continue to buy.
- Buy EUR/CAD. Trend – MT is bull normal. Look to buy.
- Sell NZD/CAD. Breakout – MT is bear normal. Look to sell.
- Sell GBP/CHF. Trend – MT is bear normal. Continue to sell.
- Sell CAD/CHF. Trend – MT is bear normal. Look to sell.
- Sell NZD/CHF. Trend – MT is bear normal. Continue to sell.
- Sell AUD/CHF. Trend – MT is bear normal. Look to sell.
- Wait USDSGD. – MT is sideways normal. Wait.
- Wait USDCNH. – MT is sideways normal. Wait.
- Wait Gold. – MT is sideways normal. Wait.
- Wait Oil. – MT is sideways normal. Wait.
- Wait S&P 500. – MT is bull volatile. Wait.
- Sell DAX. Trend– MT is bear normal. Look to sell.
- Wait Nikkei. – MT is sideways normal. Wait.
- Sell T-Notes. Breakout – MT is bear normal. Look 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.