Forex Trading Opportunities for the Week Ahead 31 October 2015

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. 

• Wait DXY  – MT is sideways normal. Last weeks GDP numbers came in above expectations at 2.9%. Next week brings us the FOMC meeting, ISM data and Non-farm payrolls of course the following week is the Election. The upshot is that the Fed is not likely to hike rates in next week due to the proximity of the election, but data has been strong enough for them to signal a hike in December. Expect USD bullish sentiment to continue.

• Sell GBP/USD. Trend– MT is bear normal. The pound remains in both a daily and weekly bear MT though we are now ensconced in a consolidative phase. This week we have “Super Thursday”, with no action expected from the BOE. Look to sell the pair near 1.2320 or on a break of 1.2050. A confirmed upside break above 1.24 would invalidate the trade for now, though long-term expect the downtrend to continue.

• Wait USD/JPY. – MT is sideways normal. USDJPY is close to breaking out into a daily bull MT with only the sell off in the last few hours of the week putting paid to momentum. We could see where buying a dip would be appropriate. Longer-term traders may want to wait for the weekly bull MT to be confirmed on a break of 106. This week we have BOJ where not much is expected.

• Wait AUD/USD.  –  MT is sideways normal. The price action at the moment in the AUD is of great interest. If we look at a weekly chart, we are clearly contained within a weekly sideways quiet MT. This MT often precedes a move of some magnitude. There is also heavy resistance at these levels. This week we could see the dual whammy of the RBA cutting rates and the Fed signaling a rate hike in December. Look to trade a break of .7550 (aggressive) or .7500 (conservative) if the fundamentals align (i.e. we get the expected monetary policy divergence). The obvious targets are .72 followed by .68.  My concerns for this trade will be the increase in the Iron Ore price and the capital outflows from China making their way into Australia (and NZ). Ultimately, I think we see AUD back to .60, but that will likely take a stock market sell off which is due, but not yet begun.

• Wait EUR/USD.  –  MT is bear normal. Despite just holding onto the bear normal MT, price action on the EUR is not pretty for bears. The weekly charts have issued a buy signal in my model and until that is invalidated I think it is best to play it safe and sit on the sidelines. Contrarians may even consider buying here looking for a move back toward 1.14. But fundamentally the pair should be driven by the USD leg this week, so if we get good job data or a hawkish Fed then the reversal pattern could easily fail.

• Wait NZD/USD. – MT is sideways normal. The kiwi continues to remain robust depsite bullish USD data and bearish NZD data. Wait for now.

• Sell  USD/CHF.  Reversal – MT is bull normal. Tuesday saw a bearish hammer after a busted breakout and on Friday we saw follow thorough. We need to be wary of the SNB selling CHF if the EURCHF gets back down the 1.08 level, although it is not a given that the SNB will act. This week we have Canada employment data which if poor should continue the trend.

• Buy USD/CAD.  Trend – MT is sideways normal. The weekly and daily bull MT continues, although technically we need to be way to the two spinning tops that have formed on the daily charts. Oil came off 2% off Friday and we can expect further downside. Continue to buy.

• Wait EUR/GBP. – MT is sideways normal.  After looking like it was going to sell off the pair has recovered somewhat on EUR strength. I prefer looking for opportunities to buy.

Crosses

• Wait EUR/CHF. – MT is sideways volatile. Could also be called a bear normal MT. Sell if you like.
• Wait AUD/JPY. – MT is sideways normal. Wait.
• Wait NZD/JPY. – MT is  bull normal. But price action suggests caution. Buy on dip.
• Sell GBP/JPY.  Trend – MT is bear normal. A nice consolidation phase here. Sell on a break of the 4 hour sideways MT (below 126.00).
• Wait EUR/JPY. – MT is sideways normal. Wait.
• Wait CAD/JPY. – MT is sideways volatile. Wait.
• Wait CHF/JPY.  – MT is sideways normal. Wait.
• Sell GBP/NZD.  Trend – MT is bear normal. Sell.
• Wait EUR/NZD.  – MT is sideways volatile. Wait.
• Wait AUD/NZD. – MT is sideways normal. Wait or sell on a break of 1.0550.
• Wait EUR/AUD. – MT is bear volatile. Wait.
• Sell GBP/AUD. Trend – MT is bear normal. Sell on a break or 1.5750.
• Buy AUD/CAD. Trend–  MT is bull normal. Continue to buy but careful here if RBA cut.
• Wait GBP/CAD. –  MT is sideways normal. Wait for now.
• Wait EUR/CAD. –  MT is sideways volatile. Wait.
• Wait NZD/CAD.  – MT is sideways volatile. Wait.
• Sell GBP/CHF. Trend – MT is bear normal. Continue to sell. Quite like the look of this one.
• Wait CAD/CHF.  – MT is sideways volatile. Wait.
• Wait NZD/CHF. – MT is sideways volatile. Wait or sell in this MT.
• Wait AUD/CHF. – MT is bull volatile. Wait or continue to sell.

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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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