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 bear normal. Despite the daily bear MT in play, we have a technical buying opportunity. We have tested the key 100 level and formed a minor daily double bottom and a weekly bullish hammer. Action on individual currencies is also suggestive of a shift back to more bullish USD sentiment. Stock markets are up, with participants buying into the Trump reflation trade idea and bonds remain bearish. Both of these are supportive of the USD. President Trumps first actions have focused on trade and securing US borders. While the market seems to think President Trumps trade polices such as taxes on imports etc will be a negative influence on the USD (due to reduced global trade) I believe they will have quite bullish USD implications in the long run. Rather, FX markets await more information on Trumps Fiscal policy. This week the focus is on back on the Fed with the FOMC meeting on Wednesday and NFP employment data on Friday. Look for the FOMC to support the USD. Keep eyes on President Trump.
- Buy GBP/USD. Trend – MT is bull normal. We have shifted into a bull normal MT on the daily charts after putting in a major double bottom. This week the focus shifts from Brexit to the BOE meeting on Thursday. Data has been decent out of the UK and we can expect a neutral tone from Carney. Look to buy the pair with the next target being 1.28
- Buy USD/JPY. Trend – MT is bear normal. We have a minor double bottom in place which provides a buy signal in a weekly bull MT. IT’s expected that the BOJ will keep monetary policy unchanged this week and with stocks breaking out to new highs and US bonds continuing their downtrend conditions are quite supportive of shorting the Yen (buying USDJPY)
- Wait AUD/USD. – MT is bull normal. While we are just holding onto the bull MT here, there are signs or topping in the pair. Metal prices have been supporting the Aussie, but inflation data has been weak, raising the question if there will be another rate just by the RBA. This is not likely to happen soon (because of concerns over the housing market bubble) but this idea, along with the higher AUD (it’s too high for the RBA) and USD strength limits the upside in the pair. In-fact a break below .75 exposes significant downside.
- Buy EUR/USD. Trend – MT is bull normal. The pair ended flat for the week with the formation of a weekly Doji. The daily bull MT is holding despite euro weakness against other currencies. There is GDP data this week and lot of other releases, but nothing too major. Look for USD sentiment to drive the pair. Lower conviction buy.
- Buy NZD/USD. Trend – MT is bull normal. The bull MT remains, though we had a bearish engulfing day on Thursday which should give bulls some cause for concern as it came on the back of a positive data surprise. There is no follow through yet, but a break below .72 leaves the door open for a fair bit of downside.
- Wait USD/CHF. – MT is bear normal. A sideways quiet MT has formed on the 4 hour chart right on the key 100 level. Look for a break each way to determine direction. Note that the EURCHF is breaking down, but this could mean that we see the SNB step in to continue it’s battle to weaken the Swissie.
- Wait USD/CAD. – MT is sideways volatile. The main talking point the the Canadian dollar is President Trumps Keystone pipeline announcement. This was a bullish development for the Canadian dollar and it saw USDCAD trade off. Oil also remains near the top end of the recent range supporting the currency. As we are in the middle of a sideways MT, I suggest sitting this one out for now.
- Wait EUR/GBP. – MT is bull volatile. We can continue to expect the pair to trade lower with the next target at .83.
- Sell EUR/CHF. Breakout – MT is bear normal. Look to sell but with caution in case the SNB steps in.
- Buy AUD/JPY. Trend – MT is bull normal. Continue to buy.
- Buy NZD/JPY. Trend – MT is bull fast. Continue to buy. Watch for a break of resistance at .8375
- Wait GBP/JPY. – MT is bear volatile. Buy above 1.46.
- Wait EUR/JPY. – MT is sideways normal. Wait.
- Wait CAD/JPY. – MT is sideways normal. Wait.
- Wait CHF/JPY. – MT is sideways normal. Wait.
- Sell GBP/NZD. Trend – MT is bear normal. Continue to sell.
- Sell EUR/NZD. Trend – MT is bear normal. Continue to sell. Can add below 1.4650.
- Wait AUD/NZD. – MT is sideways normal. Wait.
- Wait EUR/AUD. – MT is sideways volatile. Wait
- Wait GBP/AUD. – MT is bear volatile. Wait.
- Buy AUD/CAD. Trend – MT is bull normal. Continue to buy.
- Wait GBP/CAD. – MT is bear volatile. Possible long-term buy, weekly double bottom in place.
- Wait EUR/CAD. – MT is sideways normal. Wait.
- Buy NZD/CAD. – MT is bull normal. Look to buy
- Wait GBP/CHF. – MT is sideways normal. Wait.
- Wait CAD/CHF. – MT is sideways normal. Wait.
- Wait NZD/CHF. – MT is sideways volatile.
- Sell AUD/CHF. Reversal – MT is sideways volatile. Weekly Doji and daily bearish piercing pattern suggests sell in this MT.
- Wait Gold. – MT is bull normal. But a bearish engulfing week suggests caution.
- Wait Oil. – MT is sideways normal. Wait. Note that Oil traders are incredibly long at this point in time, a contrarian signal that often leads to a sell off.
- Buy S&P500. Breakout – MT is bull normal. Look to buy. Markets buying to into the Trump reflation trade and America first rhetoric and policies.
- Wait T-Notes – MT is sideways normal. Wait or buy after bullish hammer at bottom of the range.
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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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