Forex Trading Opportunities for the Week Ahead 25 Jan 2016

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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. 

  • Sell GBP/USD. Trend  – MT is bear normal. We are sitting at the 2010 key level and have formed a bit of a weekly doji. If short, now is a good time to take partial profits and price action is giving us early signs that the MT may turn sideways. The news flow is poor and the pair has not responded to the bounce in stocks. Overall still best to remain short, but with caution.
  • Wait USD/JPY.  – MT is bear volatile. The daily MT has turned volatile (though bear normal would still be a fair call). On the weekly charts we have a bullish engulfing after a busted breakout, and with a chance of more BOJ stimulus and the bullish reversal week we have seen on stocks, the pair makes a tempting long-term contrarian buy. Just note that is it going to be tricky if you do buy, as I think stocks will come off again soon. Best to implement a plan that takes partial profits quite quickly and attempt to build a risk-free position. The risk/reward is quite good, even to the 2015 high it is about 1:3. Remain nervous about more risk off…but the probabilities are in favor of the trade.
  • Sell AUD/USD.  Trend –  MT is bear normal. Also a bullish engulfing week, but the daily MT is quite bearish, with the formation of a doji on Friday. AUD (and NZD) not doing what it should considering the bounce in stocks. This is a bearish sign for the pair.
  • Sell EUR/USD. – MT is sideways normal. EUR back in my “very interested” books again. ECB basically warned the market that they could well cut rates in March which is a fundamental catalyst. Additionally stocks bouncing should pressure the pair lower. What I like about short EUR is that even with the market volatility this year we have not seen EUR break higher. So if stocks do continue to fall, the trade may still work out. Sell a break below the lower Bollinger Band.
  • Sell NZD/USD. Trend – MT is bear fast. After an initial bounce, the pair sold off on Friday along with the AUD. This may have to do with the expectation that the RBNZ is going to be dovish in it’s statement next week.
  • Buy USD/CHF. Trend – MT is bull normal. The pair continues to grind higher and CHF should weaken along with EUR. Continue to buy.
  • Sell EUR/CHF. Reversal – MT is bull normal. The pair, while technically still a bull MT is very close to turning sideways. Drilling down on the price charts suggests that we have been sideways since the 15th. Still sticking with the reversal thesis from last week, and a good opportunity here back down to 1.0910.
  • Wait USD/CAD. – MT is bull volatile. We had a classic MT transition from bull fast to bull volatile last week, with candlestick price action giving us early warning on the turn. BOC did not cut rates and Oil bounced hard on Friday. I like to buy the pair again on this dip, as the rebound in oil should be temporary ( Oil fundamentals still very poor), but need to wait for a buy signal.
  • Wait EUR/GBP. – MT is bull volatile. I think need to wait here for more clarity.
  • Sell AUD/JPY.  Trend – MT is bear normal. AUDJPY sitting at minor resistance. Continue short but with caution because of the bullish patterns forming in stocks.
  • Sell NZD/JPY. Trend  – MT is bear normal. Continue short but with caution because of the bullish patterns forming in stocks.
  • Sell GBP/JPY.  Trend – MT is bear fast. Continue short but with caution because of the bullish patterns forming in stocks.
  • Wait EUR/JPY. –  MT is sideways normal. A failed attempt to push lower suggests that we may be stuck in a range for now.
  • Wait CAD/JPY.  – MT is bear volatile. Still want to continue to sell the pair, but for now, we need to wait for an entry.
  • Sell CHF/JPY. Trend– MT is bear normal. Continue to sell, but cautious of the MT turning sideways.
  • Wait GBP/NZD. – MT is sideways normal. Stuck in the middle of the range for now.
  • Buy EUR/NZD. Trend – MT is bull normal. I think we are going to turn sideways, possibly a buy, but only if there is a bullish candle formed. Low conviction.
  • Buy AUD/NZD. – MT is bull normal. A little bit of a grinding bull, buy on dips.
  • Wait EUR/AUD. – MT is bull volatile. Turning sideways. Wait for now.
  • Wait GBP/AUD. – MT is sideways volatile. Wait for now.
  • Wait AUD/CAD.  –  MT is sideways volatile. Wait for now.
  • Wait GBP/CAD. Trend –  MT is Bear normal. Wait for now. Look to sell, but be cautious.
  • Wait EUR/CAD.  –  MT is bull volatile. Wait for now
  • Sell NZD/CAD. Breakout – MT is bear normal. Look to sell the breakout.
  • Sell GBP/CHF. Trend – MT is bear normal. Continue to sell.
  • Wait CAD/CHF.  MT is sideways volatile. There is a major contrarian buy opportunity on the weekly charts. A double bottom, busted breakout and bullish engulfing week. These types of trades are often stopped out, but is you have the gumption to hold on if it does go for you, then you can have a big winner.
  • Wait NZD/CHF. – MT is bear normal. But a bullish engulfing week off support suggests a possible buy.
  • Wait AUD/CHF. – MT is sideways volatile. Wait for now. Long-term I like the pair higher still.

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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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