Forex Trading Opportunities for the Week Ahead 3 October 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. 

Majors

  • Wait DXY  – MT is sideways normal. The dollar remains range bound for now. While there was some dollar strength on the back of risk off last week due to Deutche Banks woes and good U.S. data, Fridays recover in the share price of Deutche saw gains erased. Focus for the coming week is fourfold: Deutche bank, U.S. election, Oil and NFP. I still think we will see the dollar index test 100, but not in a hurry.
  • Sell GBP/USD. – MT is bear normal. The pound continues to sell off on the back of good data. Look for opportunities to short on a break of 1.29. Monthly, weekly and daily charts are all bear normal MT.
  • Wait USD/JPY.  MT is sideways normal. The near term outlook for the yen is mixed. We remain in a sideways MT with clear support at the key 100 level. The BOJ will not want to see much more yen strength (though that does not mean that they will do anything about it) and we could easily see more risk-off in the coming week given the critical nature of the Deutche bank situation.  Overall I favor looking for buying opportunities around the 100 level, as long as stocks don’t tank.
  • Wait AUD/USD.  –  MT is sideways volatile. Price action on the Aussie is painting a mixed picture with a bearish engulfing (due to risk-off) followed by a bullish hammer (due to the recovery in Deutche). The RBA meets this week, the first meeting for the new Governer Lowe. For now we can expect Lowe to remain wary of cutting rates further, so the neutral tone should be maintained.  Overall, unless we get a sudden bout of risk-off (possible!) we can expect the price action in the Aussie to remain mixed ahead of NFP. Supportive forces include the OPEC agreement to cut production (which you should remain extremely skeptical about), resilience in copper, the obvious positive yield and the neutral RBA. Negative forces include the pressure on the Iron Ore price, recent good US data and the Deutche bank situation.  Technically the pair is in a monthly, weekly and daily sideways MT.
  • Wait EUR/USD.  –  MT is sideways normal. Fridays bullish reversal came on the back of the rise in the price of Deutche bank shares where there was some noise that the 15 million USD settlement figure might end up more like 6 billion. But we don’t have any great reason to trust the analysts whom come up with this figure. Analyst’s work for banks and broker and shares going down is not something they want. It is also important to note that Deutche bank is only one of three European banks being pursued by the U.S. govt for a settlement and that the European banking system is already in trouble (think Italian banks!) and is being further squeezed by the low rate environment. Expect bank issues to pressure Europe for some time to come.  Technically we are in the middle of daily, weekly and monthly sideways MT’s so we lack direction here. Fundamentally, the current account balance of the Eurozone is quite positive which adds a supportive flow, and risk-off (counter-intuitively) could be supportive due to repatriation and unwinding of the carry trade. Bund yields remain repressed compared to their US counterparts which is bearish the EUR. Wait for now, though my preference is to trade a break of 1.11 as long as we have a fundamental catalyst (this could be Deutche bank or NFP), though I am a nervous bear given the EURO’s resilience in the face of what should have been quite bearish news with Deutche bank.
  • Wait NZD/USD. – MT is sideways normal. Economically, the NZ economy continues to outperform despite the strong Kiwi Dollar and any dovish talk from the RBNZ is largely being ignored. Technically of concern is the formation of a monthly hammer, though we remain in a weekly bull MT. We have found support near 72.20 in the face of risk-off and good US data and considering NZ’s economic performance, the recovery in the dairy price and the attractive yield further upside should not be a surprise. I prefer to look to buy the kiwi vs, the crosses given the event risk in USD this week.

  • Wait USD/CHF.  – MT is sideways normal. Nothing new to add here, though I expect long CHF to be a good play if stocks sell off.
  • Wait USD/CAD.  – MT is sideways normal. Monthly weekly and daily charts remain range bound. The pair initially sold off on the back of the Oil production cut announcement, but the lack of detail and markets skepticism have seen a lack of follow though. Watch the oil price for direction leading into Friday’s US and Canadian data.
  • Buy EUR/GBP. Trend – MT is bull normal. We can continue to buy the pair but be quick to sell if the news flow turns negative on Deutche bank.

Crosses

  • Wait EUR/CHF. – MT is sideways normal. I like this as a sell if we get negative EUR sentiment.
  • Wait AUD/JPY. – MT is sideways normal. Wait for now, but i like this as a long-term buying opportunity.
  • Wait NZD/JPY. – MT is  bear volatile. Wait.
  • Wait GBP/JPY.  – MT is sideways normal. A good sell below 1.2950 on risk-off.
  • Wait EUR/JPY. MT is sideways normal. Wait.
  • WaitCAD/JPY. – MT is bear volatile. Wait, bouncing off key support.
  • Wait CHF/JPY.  – MT is sideways normal. Wait.
  • Wait GBP/NZD.  – MT is sideways normal. Look to sell on a break of 1.76.
  • Wait EUR/NZD.  – MT is sideways normal. Wait.
  • Buy AUD/NZD. Trend – MT is bull normal. We now have divergent monetary policy between the RBNZ (dovish) and the RBA (neutral). Look to buy, scale-in, keep stops wide.
  • Wait EUR/AUD. – MT is sideways volatile. Wait for now.
  • Sell GBP/AUD. Trend – MT is bear normal. Continue to sell for a move towards 1.66. Add on a break of 1.6850.
  • Buy AUD/CAD. Trend–  MT is bull normal. Continue to buy but careful of the weekly hammer off resistance at 1.01.
  • Wait GBP/CAD. –  MT is sideways normal. Wait for now.
  • Wait EUR/CAD. –  MT is sideways volatile. Wait.
  • Wait NZD/CAD.  – MT is sideways normal. Wait.
  • Sell GBP/CHF. Trend – MT is bear normal. Continue to sell.
  • Wait CAD/CHF.  – MT is sideways normal. Wait.
  • Wait NZD/CHF. – MT is bear volatile. Wait or contrarian buy with minor double bottom in place.
  • Wait AUD/CHF. – 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.

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