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 mighty buck slide initially last week on the back of very poor services PMI data, but by the end of the week hawkish talk (talking about raising rates) by Fed officials has seen the odds of a September rate hike increase by 16% to 38%. But perhaps speaking louder than the price action in the dollar is the the price action in stocks and bonds. Stocks broke out of the sideways quiet MT that had developed over the last few weeks to the downside (a re-emergence of the taper tantrum), and bonds sold off heavily. These three factors (hawkish talk, stocks down, bond down) combine to suggest to me it is prudent to prepare of dollar strength. Watch for Fed Speak on Monday and Retail Sales on Thursday.
- Sell GBP/USD. – MT is sideways normal. It is a big week ahead for the pound, but plenty of data and the BOE meeting on Thursday. Technically we have a busted breakout attempt which has formed a weekly hammer, which along with expected dollar strength, risk-off in stocks and continued uncertainty around Brexit presents a selling opportunity. Not a lot is expected from this weeks BOE meeting, so the risk is a bearish surprise.
- Buy USD/JPY. Trend – MT is bull normal. After selling off on the back of poor US non-manufacturing ISM data and “wait and see” comments from BOJ officials, the USD recovered somewhat to end the week, though the technical picture is not strong. Note that the risk-off in equities would normally see JPY strength (and it likely will on the crosses) but as the sell-off is on the back of a US rate hike, the USD may hold up against the JPY (as it did on Friday).
- Wait AUD/USD. – MT is sideways normal. The bearish breakout in stocks and USD strength will be the over-riding factors to watch on this pair in the coming week. We also have some China data. I prefer to have a bearish bias at this point.
- Wait EUR/USD. – MT is sideways normal. As expected the ECB did not do much at last weeks meeting. We remain range bound so best to wait. Again, I think USD and stocks will be the key driver of this pair in the coming week.
- Wait NZD/USD. – MT is sideways normal. The Kiwi broke out to the upside, but the sell-off in stocks saw the breakout fail and we now have a weekly bearish hammer in play. We can now look for a move back down to around the 70 handle.
- Wait USD/CHF. – MT is sideways volatile. The SNB meets this week but not much is expected. We can watch for risk-off in stocks to drive CHF higher, though I think better opportunities will be on the crosses.
- Wait USD/CAD. – MT is sideways normal. We continue to remain range bound, as does Oil which sold off heavily on Friday. Long-term I prefer to be buying CAD and selling oil, but patience required for now in this MT.
- Wait EUR/GBP. – MT is bear normal. The bear MT failed last week and we have now turned sideways again. Given the price action on the GBPUSD, I do favor buying, but watch out for all the data coming up this week.
- Buy EUR/CHF. Trend – MT is bull normal. The bull MT continues for now, but it’s a choppy one and risk-off in stocks may drive the pair lower.
- Wait AUD/JPY. – MT is sideways normal. Wait for now, may be a good selling opportunity for short-term traders on the back of risk-off.
- Wait NZD/JPY. – MT is bull normal. Minor topping pattern and risk off in stocks suggest a healthy dose of caution required here.
- Wait GBP/JPY. – MT is bull normal. But caution as turning sideways as we have risk-off in stocks and bearish price action on GBPUSD.
- Buy EUR/JPY. – MT is bull normal. Continue to buy with caution or preferably wait.
- Wait CAD/JPY. – MT is sideways normal. Could be a good sell this week for short-term traders.
- Wait CHF/JPY. – MT is sideways normal. Wait
- Wait GBP/NZD. – MT is sideways quiet. Wait.
- Wait EUR/NZD. – MT is bear volatile. We sold off as expected before a bullish engulfing off support cancelled the bearish outlook.
- Sell AUD/NZD. Trend – MT is bear normal. If think if you like kiwi fundamentals (as I do) then this could be one of the better ways to play it at the moment.
- Wait EUR/AUD. – MT is sideways normal. Wait for now.
- Wait GBP/AUD. – MT is sideways normal. Wait for now.
- Wait AUD/CAD. – MT is sideways volatile. Wait for now.
- Wait GBP/CAD. – MT is sideways volatile. Wait for now.
- Wait EUR/CAD. – MT is sideways normal. Wait for now.
- Buy NZD/CAD. Trend – MT is bull normal. Also another possibly good option if you like to buy kiwi, but do note the major resistance level we are sitting at.
- Wait GBP/CHF. – MT is sideways normal. A possibly good play for short-term traders this week if stocks continue to sell-off.
- Wait CAD/CHF. – MT is sideways normal. As above
- Wait NZD/CHF. – MT is bull volatile. Wait, or possible sell on risk-off.
- Wait AUD/CHF. – MT is sideways normal. Good option for short-term traders to sell if stocks continue to head lower.
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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.
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