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.
- Buy GBP/USD. – MT is bull normal. The head and shoulders pattern we have been tracking has completed, and the pair has broken out into a bull normal MT. Brexit concerns still exit, so it is likely to be a choppy ride. Note the breakout was a result of both GBP strength and across the board USD weakness on the back of a slide in economic performance and the market not believing the Fed will raise rates until the end of the year. GBP economic data will be important next week if the rally is to continue. GBP has been ignoring negative news in recent times so watch the response to next weeks data carefully.
- Sell USD/JPY. – MT is bear fast. We have seen close to a 600 pip slide in USDJPY in the 2 days since BOJ disappointed on Thursday. While shorting is correct in this MT we are in “too far, too fast” territory so need to be very careful of BOJ intervention. I do think that intervention is an outside chance though, until we get to 105 or even 100. But with this risk in mind Keep position sizes small.
- Wait AUD/USD. – MT is sideways normal. The aussie sold off heavily on the back of poor inflation data last week. This has lead some speculators to believe that the RBA will cut rates on Tuesday. I don’t expect the cut to eventuate and in the current weakening USD environment we can expect the range bound market to hold with a bias towards the upside if the RBA hold. Of note is the improvement in commodity prices with Iron Ore and precious metals holding onto recent gains. On the flipside equity markets have begun to sell off as they often do near the top of sideways volatile MT. If the sell-off gains momentum that will pressure AUD.
- Wait EUR/USD. – MT is sideways normal. The Euro improved last week on the back off weak US data and good European GDP numbers. We are pressing towards the key 1.1465 level which is likely to be taken out before the pair attempts to reverse. A sustained break of this level moves us to bull MT with the potential for a move initially towards 1.17. Note that risk-off in stocks is still supporting the EUR (Though I do think this relationship will eventually reverse). Talking more broadly about the USD and the divergence trade we have discussed here previously; the BOJ, ECB and Fed are effectively on hold, so until we start to see some momentum pick up with either Fed raising of BOJ and ECB easing then don’t expect too much juice from the theme. There also seems some agreement between central banks not to overtly weaken their currency (i.e. engage in currency wars). I think this is to do with avoiding China un-pegging from the USD (which would not be at all the preferred option by more involved). This is both bullish or at worse neutral EUR and JPY.
- Wait NZD/USD. – MT is sideways volatile. A more dovish than expected RBNZ saw the pair bounce last week. We remain in the volatile phase and it’s best to wait for now for a clear technical trend to emerge.
- Wait USD/CHF. – MT is sideways volatile. Best to wait in this market type. The pair likely to trade in sympathy with the EUR.
- Buy EUR/CHF. Trend – MT is bull normal. Bull normal MT holding continue to buy, but not much conviction here yet.
- Sell USD/CAD. Trend – MT is bear normal. With a continuation of the rise in oil, there is no need to change our short recommendation.
- Sell EUR/GBP. Trend– MT is bear normal. while we have switched to bear normal, I would suggest waiting for confirmation of the downside. If the short-term bullish movement we saw on Friday continues, we will enter into a sideways volatile MT, and you don’t really want to be short near the bottom of a sideways volatile MT.
- Wait AUD/JPY. – MT is sideways volatile. Wait for now.
- Wait NZD/JPY. – MT is sideways volatile. Wait for now.
- Wait GBP/JPY. – MT is sideways volatile. Wait for now. This trade will probably have legs if the bull MT on GPBUSD continues.
- Wait EUR/JPY. – MT is sideways volatile. Wait for now.
- Wait CAD/JPY. – MT is sideways volatile. Wait for now.
- Sell CHF/JPY. Trend– MT is bear fast. Look short very carefully.
- Wait GBP/NZD. – MT is sideways volatile. Bearish price action near the top of the Bollinger Band in this MT suggests caution.
- Wait EUR/NZD. – MT is sideways normal. Wait for now.
- Sell AUD/NZD. Trend– MT is bear fast. But trade with a lot of caution, downside momentum could reverse if RBA does not cut rates on Tuesday.
- Wait EUR/AUD. – MT is sideways volatile. Support held and we are now sideways volatile. Wait.
- Buy GBP/AUD. – MT is bull fast. Look to buy, caution ahead RBA required.
- Sell AUD/CAD. – MT is bear fast. Look to sell, caution ahead RBA required.
- Sell GBP/CAD. Trend – MT is bear normal. Continue to sell but lower conviction, as we are turning sideways.
- Sell EUR/CAD. Trend– MT is bear normal. Continue to sell, but careful of a minor bottoming pattern in place.
- Sell NZD/CAD. Trend– MT is bear normal. Continue to sell.
- Buy GBP/CHF. Trend – MT is bull normal. Continue to buy, but wait for a a clear buy signal, as we could be turning sideways volatile.
- Buy CAD/CHF. Trend– MT is bull normal. Continue to buy but with caution as we are failing ahead of resistance.
- Wait NZD/CHF. – MT is sideways normal. Wait for now.
- Wait AUD/CHF. – MT is sideways volatile. Wait for now.
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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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