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 quiet. The dollar index continues to remain range-bound. This week’s developments include hawkish Fed minutes, an easing of trade tensions between the US and China and the potential of a US led attack on Syria in response to the use of chemical weapons. Overall the performance of the USD has been mixed, reflecting the lack of certainty among market participants (as can be seen by the fact we are sitting in the middle of a range that began in Jan). Overall, given the monetary policy divergence and the bark but no bite of President Trump’s trade rhetoric, I do like to look for long USD opportunities. My preferences are against EUR, JPY and AUD.
- Buy GBP/USD. Trend – MT is bull normal. The bullish candlestick pattern mentioned last week played out and the first objective at 1.4250 was taken out, with room still to go until the recent high at 1.4350. The pair has been brought despite average data, which is a bullish sign. Brexit negotiations are out of the headlines for now and there is the expectation of a rate hike in May. Watch out for market moving UK data this week.
- Buy USD/JPY. Breakout – MT is bull normal. The reverse head and shoulders pattern is continuing to play out. JPY is weak across the board but lack of USD buying means that the breakout though the neckline has limited momentum and a small doji candlestick pattern has us sitting at the breakout level. This may be due to pre-weekend profit taking with traders uncomfortable to hold though the weekend in case something happens in Syria. Aside from that and considering the easing of trade war fears, the de-escalation of the potential conflict with North Korea and the growing monetary policy divergence, I like to buy the pair.
- Wait AUD/USD. – MT is sideways normal. We have moved into a sideways MT, but the attempt to reverse into a bull MT failed on Friday with the formation of bearish hammer. While pre-weekend price action can be suspect, the bullish drivers are not really there just now for the AUD. Metal prices remain weak, the RBA is in no hurry to raise rates and the interest rate differential is now in the favor of the USD. On the plus side China imports have been strong and trade war concerns have eased. I still like AUD lower toward 0.75.
- Wait EUR/USD. – MT is sideways quiet. We are back mid range on the pair after rejecting the bottom of the range. Data has not been great out of the EU and there is some thought that the ECB will remain dovish for longer. Wait for now.
- Buy NZD/USD. Trend – MT is bull normal. An easing of trade fears and cross related demand on AUDNZD has pushed the pair into a bull market type. Technically there is some concern with the formation of a small doji on Wednesday and a Bearish Engulfing candle on Friday at the first resistance hurdle. Aside from easing trade war fears, there is no great catalyst. The RBNZ remains dovish, data is not great and dairy prices have been tepid. Wait for a resumption of the trend before getting long, but this is not a high conviction play for me.
- Buy USD/CHF. Trend – MT bull normal. We remain in the bull MT. Risk-off/on is a key driver of CHF, so while I expect the bull MT to continue, we need to watch out for a continuation of the sell-off in stocks.
- Sell USD/CAD. Trend – MT is bear normal. The main focus for the Canadian dollar is the prospect of a successful conclusion to NAFTA negotiations. The BOC meets this week and considering the likelihood of a new NAFTA, decent data and a rising oil price we may find them a bit more positive than last time.
- Wait EUR/GBP. – MT is sideways normal. After waiting a very long time, we have broken out of the weekly sideways quiet MT. I am looking for a move towards 0.8300.
- Buy EUR/CHF. Trend – MT is bull normal. Continue to buy.
- Buy AUD/JPY. Trend – MT is bull normal. Look to buy, but be careful of Fridays bearish hammer.
- Buy NZD/JPY. Trend – MT is bull normal. Continue to buy.
- Buy GBP/JPY. Trend – MT is bull normal. Continue to buy.
- Wait EUR/JPY. – MT is sideways normal. Wait.
- Buy CAD/JPY. Trend – MT is bull normal. Continue to buy.
- Wait CHF/JPY. – MT is sideways normal. Wait.
- Wait GBP/NZD. – MT is sideways normal. Wait.
- Sell EUR/NZD. Trend – MT is bear normal. Look to sell.
- Sell AUD/NZD. Trend – MT is bear normal. Continue to sell.
- Wait EUR/AUD. – MT is sideways normal. Wait.
- Wait GBP/AUD. – MT is sideways quiet. Wait.
- Sell AUD/CAD. Trend – MT is bear normal. Look to sell.
- Wait GBP/CAD. – MT is sideways normal. Wait.
- Sell EUR/CAD. Trend – MT is bear normal. Continue to sell.
- Wait NZD/CAD. – MT is sideways quiet. Wait.
- Buy GBP/CHF. Trend – MT is bull normal. Continue to buy.
- Buy CAD/CHF. Trend – MT is bull normal. Continue to buy.
- Buy NZD/CHF. Trend – MT is bull normal. Continue to buy.
- Wait AUD/CHF. – MT is bull normal. Wait.
- Wait USDSGD – MT is sideways quiet. Wait.
- Wait USDCNH – MT is sideways normal. Wait.
- Wait Gold. – MT is sideways normal. Wait.
- Buy Oil. Trend – MT is bull normal. Look to buy.
- Wait S&P 500. – MT is sideways normal. Wait.
- Wait DAX. – MT is sideways normal. Wait.
- Wait Nikkei. – MT sideways normal. Wait.
- Wait T-Notes. – MT is sideways normal. Wait.
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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.