I plan my trading for the week ahead each weekend. Here are the Forex trading opportunities I will bestalking 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.
- Buy DXY Trend – MT is bull normal. The dollar index has broken out into a bull MT. This is on the back of the ECB’s dovish monetary policy statement (EUR weakness), continued optimism around tax reform and the belief that the Federal Reserve will continue to hike rates in 2018 (the monetary policy divergence theme). President Trump is close to selecting a new Fed chair in 2018 and it looks like the remaining candidates will be good for the dollar. North Korea concerns have died down for now, but they could rear their ugly head at any time, so keep that in mind. Technically we have a head and shoulders bottom off major support and a clean break into a bull MT. Look to buy.
- Wait GBP/USD. – MT is sideways quiet. The twin drivers of Brexit and rate hike expectations remain in play. With a decent chance of a rate hike this coming week by the BOE, only brexit concerns are capping GBP buying. We continue to get mixed messages around Brexit and if the BOE surprises and does not hike then GBPUSD should head a fair bit lower. Data has been good from the UK this week. We could well remain range bound until the event on Thursday.
- Buy USD/JPY. Trend – MT is bull normal. Technically we have some topping action, though we have not taken out stops above the 114.50 resistance. Broad macro themes continue to drive the pair and Fridays sell off may be in response to demand for yen on the crosses and weaker US bond yields. The picture is mixed so caution is required despite the buy call.
- Sell AUD/USD. Trend – MT is bear normal. We had the anticipated sell off last week on the back of poor Aussie data and USD strength. Despite Fridays bounce, the bear MT is intact as are the drivers of a placid RBA and weakness in the Iron Ore price. There is also some political turmoil in Australia which is not helping things. Continue to sell.
- Sell EUR/USD. Trend – MT is bear normal. The Euro is a clear sell after the ECB came out dovish in their highly anticipated statement on QE reduction. While asset purchases were reduced, the statement clearly showed a desire to leave rates lower for longer and left the door open for continues QE. In Spain, the prime minister fired the Govt of Catalonia after they declared Independence and a new Govt is to be elected. The situation is messy and supportive of the downtrend.
- Sell NZD/USD. Trend – MT is bear normal. The kiwi is sitting just above major support and we need to be cautious of a bounce here given the rapidness of the fall. Concerns continue around the new Govt, specifically a new mandate for the RBNZ which makes it more difficult to hike rates. Economic performance continues to be tepid. Trade carefully as much of the bad news is priced in and we are at support, but no major bottoming signs yet.
- Buy USD/CHF. Trend – MT is bull normal. EURCHF continues to rise and the dovish ECB is bearish CHF. Stocks keep rising. Continue to buy but be careful of the large bearish candlestick that formed on Friday.
- Buy USD/CAD. Trend – MT is bull normal. The BOC came in dovish with their monetary policy announcement and that combined with USD strength has push the pair higher. Keep buying.
- Wait EUR/GBP. – MT is sideways normal. The picture looks bearish EUR, but caution needs to be had ahead of the BOE’s super Thursday.
Crosses
- Wait EUR/CHF. – MT is bull normal, but we have fallen back inside the range and EUR weakness is a concern.
- Wait AUD/JPY. – MT is sideways normal. Wait.
- Sell NZD/JPY. – MT is bear normal. Continue to sell.
- Wait GBP/JPY. – MT is sideways normal. Wait.
- Sell EUR/JPY. Reversal– MT is sideways normal. A minor double top has formed on daily and weekly charts. Look to sell.
- Sell CAD/JPY. Trend – MT is bear normal. But be careful of Friday’s bullish Doji.
- Sell CHF/JPY. Trend – MT is bear normal. Look to sell.
- Buy GBP/NZD. Trend – MT is bull normal. Continue to buy.
- Buy EUR/NZD. Trend – MT is bull normal. Be careful, low conviction.
- Buy AUD/NZD. Trend – MT is bull normal. Look to buy.
- Wait EUR/AUD. – MT is sideways normal. Wait.
- Wait GBP/AUD. – MT is sideways normal. Wait.
- Wait AUD/CAD. – MT is sideways normal. Wait.
- Buy GBP/CAD. Trend – MT is bull normal. Look to buy.
- Wait EUR/CAD. – MT is bull volatile. Wait.
- Buy NZD/CAD. Contrarian – MT is bear normal. Minor double bottom in place, look to buy.
- Buy GBP/CHF. Trend – MT is sideways normal. Wait.
- Wait CAD/CHF. – MT is sideways quiet. Wait.
- Wait NZD/CHF. – MT is sideways volatile. Wait or high risk buy.
- Wait AUD/CHF. – MT is sideways normal. Wait.
Other Markets
- Wait Gold. – MT is sideways normal. Wait.
- Buy Oil. Trend – MT is bull normal. Look to buy.
- Buy S&P 500. Trend – MT is bull normal. Continue to buy.
- Buy DAX. Trend – MT is bull normal. Continue to buy.
- Sell T-Notes. Trend – MT is bear normal. Continue to sell.
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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.