Forex Trading Opportunities for the Week Ahead 18 July 2016

B-JUL-18

I plan my trading for the week ahead each weekend. Here are the Forex trading opportunities I will be stalking 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. 

Majors

  • Wait DXY  – MT is sideways volatile. The dollar index remains within the long-term technical structure, suggestive of a move back towards 100. The USD finished the week strong on the back of better than expected retail sales data and safe haven flows due to the attempted coup in Turkey. At this stage the coup looks to have failed so we may see a risk-on bounce on Monday. Look to buy on a breakout of 96.80.
  • Sell GBP/USD. Trend – MT is bear normal. There is a new UK government which should add some stability to markets. This may perhaps not be the case for the pound which bounced last week (prematurely) on the failure of the BOE to cut rates. Much of the move was unwound on Friday after comments from officials that suggest a large stimulus package is on the cards. Continue to sell.
  • Wait USD/JPY. Trend – MT is sideways volatile. We got the bounce and sideways MT we have been anticipating since the key 100 level was hit a couple of weeks ago. With the catalyst of more monetary stimulus from the BOJ, and US stocks breaking out into a bull MT, it may now be a good time to consider building a long yen position. Look to buy near the lower end of the recent range and sell near the top while accumulating a core long position. Watch for a continuation of the US equity bull.
  • Wait AUD/USD.  –  MT is sideways normal. My view remains mixed on the AUD. We have a decent chance of a rate cut in August, depressed iron ore prices and slow global growth on the one hand. On the other we have the AUD’s relatively high yield, risk-on in stocks and surging gold prices. Local data does not help clear the picture. Technically we have a potential double top forming on the daily charts. Wait for now.
  • Sell EUR/USD.  Trend–  MT is bear normal. We are close to turning sideways here, but I still favor the downside. In particular look to sell on a break below 1.10. The US still has the only central bank in tightening mode, and with stocks at new highs, it gets harder to hold off raising rates – despite the tricky global picture.  Of note in the EU is the situation with the Italian banking system (it is bust), the fallout from the coup attempt in Turkey (Turkey is closely related to the immigration situation in Europe) and the ongoing Brexit concerns and ramifications. I expect the news flow to remain negative. The ECB is not likely to ease further just yet, but they will stand ready if the situation worsens.
  • Wait NZD/USD.  – MT is sideways normal. Technically we have a double top forming. Fundamentally, the RBNZ has called an unscheduled meeting to update its economic assessment. This unusual step could be for a number of reasons, but perhaps it is to do with announcing measures to cool the housing market. For now it may be best to wait and see.  If it is anything less than a rate cut (unlikely) then we may see a bounce.
  • Buy  USD/CHF. Trend – MT is bull normal. Not much new to add here fundamentally. Technically we are now in a bull MT so buying is appropriate. Use a conservative approach with part of your capital on a dip and a wide stop.
  • Wait USD/CAD.  – MT is sideways normal. Oil bounced last week but is hanging on to it’s bear MT status. The BOC remains relatively upbeat at the moment so the currency is remaining within it’s current range. I still like to buy a breakout into a Bull MT on a close above 1.3150 in conjunction with a sell-off in oil. The longer the consolidation the stronger the eventual trend.
  • Wait EUR/GBP. Trend– MT is bull volatile. I think best to wait on this one for now, though if push come to shove I would favor buying.

Crosses

  • Wait EUR/CHF.  Trend– MT is sideways normal. Wait for now.
  • Sell AUD/JPY. Reversal – MT is sideways volatile. Technical sell in this MT with bearish engulfing off busted resistance, but I only like if stocks come off with it.
  • Wait NZD/JPY. – MT is sideways volatile. Wait for now.
  • Sell GBP/JPY. Trend – MT is bear normal. Continue to sell.
  • Wait EUR/JPY.  – MT is sideways volatile. Wait but I do favor selling.
  • Wait CAD/JPY. – MT is sideways volatile. Wait.
  • Wait CHF/JPY.  – MT is sideways volatile. Wait.
  • Sell GBP/NZD. Trend – MT is bear normal. We bounced strongly off the 1.77 target. I like to sell still but lower conviction now.
  • Sell EUR/NZD.  Trend – MT is bear normal. Again still like to sell but lower conviction. Keep this one on your radar if the RBNZ special update comes to nought.
  • Wait AUD/NZD. – MT is sideways volatile. Wait.
  • Sell EUR/AUD.  Trend– MT is bear normal. Two spinning stops near the key level suggest a fair chunk of profits should be taken by now if short.
  • Sell GBP/AUD. Trend – MT is bear normal. Continue to sell, but with caution.
  • Wait AUD/CAD. –  MT is bull volatile. Can look to buy dips but lower conviction. Will likely turn sideways.
  • Sell GBP/CAD. Trend –  MT is bear normal. Continue to sell.
  • Wait EUR/CAD. –  MT is sideways normal. Wait for now.
  • Wait NZD/CAD. – MT is bull volatile. Wait for now.
  • Sell GBP/CHF. Trend – MT is bear normal. Continue to sell.
  • Wait CAD/CHF.  – MT is sideways normal. Wait for now.
  • Wait NZD/CHF. – MT is bull volatile. Wait for now
  • Wait AUD/CHF. – MT is bull volatile. Wait for now.

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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.

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