Forex Trading Opportunities for the Week Ahead 4 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. Fundamentally GBPUSD remains one of the best performing major currency pairs. Currently, the technicals are not matching up to the fundamentals, primarily due to concerns that rate hike expectations will continue to be pushed out by the BOE. Continue short until 1.4550 where we need to reassess.
  • Sell USD/JPY. Trend – MT is bear normal. The pair is benefiting from risk off flows, but it would not surprise me if we see a base form around this level, unless equities continue to fall. Fundamentally, I like buying USDJPY which I expect to make it way back up toward 200 over the next few years.
  • Wait AUD/USD.  –  MT is sideways normal. We are sitting nearish the middle of a sideways quiet market type. I still prefer selling AUD vs. USD. Iron Ore prices are getting hammered and China remains an issue. Look to short near the 0.7380 or wait for a break below 0.7100.
  • Wait EUR/USD. – MT is sideways normal. The Euro has remained range bound over the Xmas break. The currency should head lower (based on the divergence of central bank policies and economic performance), but there has been a change in the expectations of easy monetary policy from the ECB which has been driving the pair higher. Wait and see what happens in the new year.
  • Buy NZD/USD. Trend – MT is bull normal. MT analysis suggests buying on dips, but we are sitting at a key level so caution advised. I still think the kiwi is benefiting from international flows seeking yield, or looking to ride the NZ stock market which is one of the strongest technically (the strongest possibly) of the developed markets. But the fundamentals are not great in NZ with dairy prices below cost,  so it should not be a surprise if the RBNZ does cut rates further. If we get a whiff of this happening then we are better positioned for a fall in pair at these levels, as it will catch market participants off guard. Also risk-off in the NZ stock exchange (if we get it) will hurt the pair as international investors pull their funds.
  • Buy USD/CHF. Breakout – MT is sideways quiet. After bottoming in mid to late December, we saw a sideways MT form. At the very end of the last trading week, the price broke above the key 1.0000 level. If we hold above this on Monday, we will see a return of the bull MT. Look to buy the breakout. Fundamentally, the key point to remember is the SNB’s commitment to weaken the pair and the fact that that rates are negative. Big monetary policy divergence with the US and I severely doubt it’s all priced in.
  • Wait EUR/CHF. – MT is sideways normal. Keep buying near the bottom of the range and selling near the top. Longer-term I like the pair much higher. SNB will be unhappy with the pair at these levels, nearly 12 cents below the prior floor.
  • Buy USD/CAD. Trend – MT is bull normal. After a strong breakout and move toward 1.40, we have entered a period of consolidation. Canada is not in good shape due to the low oil price, which I don’t see recovering. The flow on effects of this could easily see further easing from the BOC. A stop buy above 1.4030 is probably not a bad option for those who want to get on this trend.
  • Buy EUR/GBP. Trend – MT is bull normal. The pair is benefiting from a chance in monetary policy expectations from both the BOE and ECB. Longer-term I still like the pair lower, but for now the approach is to buy. .7500 offers a very juicy target.
  • Wait AUD/JPY.  – MT is sideways normal. Wait for now.
  • Wait NZD/JPY.  – MT is sideways normal. We are at a major resistance level. If equity markets sell-off and/ or the NZDUSD comes off then this could be a good risk/reward short. Keep an eye on stock markets.
  • Sell GBP/JPY.  Trend – MT is bear normal. Keep going short.
  • Sell EUR/JPY. Breakout –  MT is bear normal. Breaking out into a bear normal MT, look to go short.
  • Sell GBP/NZD. Trend– MT is bear normal. Continue short.
  • Wait EUR/NZD. – MT is sideways normal. I do like this pair lower, but we are still holding onto the sideways MT for now. Sell a break below 1.5750. A good play if stocks are robust in the new year.
  • Sell AUD/NZD. Trend – MT is bear normal. But some bottoming here so caution required if we close back above 1.0700
  • Wait EUR/AUD. – MT is sideways normal. Wait for now.
  • Sell GBP/AUD. Trend – MT is bear normal. Look to sell.
  • Buy AUD/CAD. Trend –  MT is bull normal. Extreme caution here as the trend has been very strong and we see a bearish weekly hammer. Take decent profits if you are long.
  • Wait GBP/CAD.  –  MT is sideways normal. Wait for now.
  • Sell EUR/CAD. Reversal –  MT is sideways normalA weekly spinning top and bearish engulfing after taking out resistance provide a selling opportunity.
  • Buy NZD/CAD.  Trend – MT is bull normal . Same as AUDCAD.
  • Sell CAD/JPY. Trend – MT is bear normal. Holding below key 87.00 support for now. Look to sell a move below 86.20.
  • Sell CHF/JPY. Breakout – MT is bear normal. Sell the breakout.
  • Sell GBP/CHF. Trend – MT is bear normal. Some signs of bottoming so sell with caution.
  • Wait CAD/CHF.  – MT is sideways normal. Just turning sideways so wait.
  • Waiting  NZD/CHF. – MT is sideways normal. Almost turning bull MT. I like to buy the pair on a break of .6900.
  • Waiting AUD/CHF. – MT is sideways normal. Wait for now.

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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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