Forex Trading Opportunities for the Week Ahead 9 May 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. 

  • Wait GBP/USD.  – MT is bull volatile. The bearish engulfing candle on Tuesday after the completion of the reverse head and shoulders pattern discussed last week, indicates that the pattern is now “busted”. Unlike in the previous two weeks, the pair has started to sell-off in response to poor UK data –  but to be fair, perhaps not as much as it should. Manufacturing, construction and serviced data have all come in weak. Coming up, we have the BOE’s May meeting where a dovish outcome is expected. Of note is a weekly bearish engulfing pattern after a failed attempt to break though resistance. Wait for now, but with a slight bearish bias.
  • Sell USD/JPY. Trend  MT is bear normal. Broad-based USD strength and dismal data out of Japan saw the pair bounce after the previous week’s 600 pip in two days slide. Note that stocks sold off last week and typically the yen strengthens when this happens, but that was not the case this time. I am also concerned about the risk of intervention, though I still view it as an outside chance rather than the base case (for the reasons outlined in last weeks report). Continue to sell but watch carefully the response to risk-off in stocks and keep positions very small due to the outlier risk of intervention.
  • Sell AUD/USD. Trend–  MT is bear normal. The RBA surprised markets with a rate cut that saw the pair break through the key 0.75 level and shift into a bear MT. Iron Ore and Copper sold off ( though precious metals remain robust) and it looks like there will be more downside, which is bearish AUD. Given the speed of the fall in the currency (around 500 pips in just over two weeks), some caution needs to be had but otherwise this is a higher conviction short.
  • Wait EUR/USD.   – MT is sideways normal. EURUSD is of major technical interest at the moment after the formation of a weekly hammer which indicates a failed break of the weekly sideways MT that has been in play since April 2015.  This was matched on the daily charts by a hammer after the failed break of resistance at 1.15. Fundamentally, I am still concerned about the weakening of the divergence trade theme (discussed last week). In saying that, the pair has sold off despite some risk-off in stocks (which is a reverse of the recent relationship with risk-off) and the poor job data out of the US on Friday. Watch for a break of 1.12 for a transition into a bear normal MT to go short.
  • Wait  NZD/USD. – MT is sideways volatile. A minor double top is in place on the kiwi which often leads to some selling. Dairy prices continue to be weak and the RBNZ is in easing mode. A break of .6800 will take us back into bear MT territory and presents a good selling opportunity.
  • Wait USD/CHF. – MT is sideways volatile. Last week, we saw a pin candle off support which is a technical entry in a sideways volatile MT. I expect this pattern to continue to dominate until we get to .98.
  • Buy EUR/CHF. Trend – MT is bull normal. Bull normal continues, look to buy for a move towards 1.12.
  • Wait USD/CAD. – MT is bear volatile. Oil is showing signs of topping, and Canada posted it’s largest trade deficit on record as well as weaker than expected employment numbers. This has lead to a large bounce in the pair. We are now in volatile MT territory which suits short-term traders. Unless we have a rapid sell-off in Oil, we can now expect the pair to chop around and form a sideways MT. I will then be stalking a long entry.
  • Wait EUR/GBP. – MT is sideways normal. We are now turning sideways and are stuck mid-range so I think best to wait for now.
  • Sell AUD/JPY.  Trend– MT is bear fast. Look to sell but careful of a bounce in this MT, and we are also at support.
  • Wait  NZD/JPY. – MT is sideways volatile. Sitting at support. A break of Friday’s low is of a fair amount of interest, but caution required in Yen crosses.
  • Wait GBP/JPY. – MT is sideways volatile. Wait for now.
  • Wait EUR/JPY.  MT is sideways volatile. Wait for now. A break of support also looks interesting here.
  • Wait CAD/JPY. – MT is sideways volatile. Wait for now.
  • Sell CHF/JPY. Trend– MT is bear normal. Continue to sell.
  • Wait GBP/NZD. – MT is sideways volatile. Wait for now.
  • Wait EUR/NZD.  – MT is sideways normal. Wait for now.
  • Sell AUD/NZD. Trend– MT is bear normal. Continue to sell.
  • Buy EUR/AUD.  Trend – MT is bull fast. Buy, but careful after such as rapid move.
  • Buy GBP/AUD. – MT is bull normal.  Continue to buy.
  • Sell AUD/CAD. –  MT is bear normal. Continue to sell, but likely we will turn sideways.
  • Wait GBP/CAD. –  MT is bull normal. But little hammer requires caution. Prefer to the upside though.
  • Wait EUR/CAD. –  MT is bear volatile. Wait.
  • Wait NZD/CAD. – MT is sideways normal. Wait.
  • Buy GBP/CHF. Trend – MT is bull normal. Continue to buy, but careful as we are turning sideways.
  • Wait CAD/CHF.  – MT is bull volatile. Wait.
  • Wait NZD/CHF. – MT is sideways normal. Wait for now.
  • Wait AUD/CHF.  – MT is sideways volatile. Wait for now.

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Economic calendar for the week ahead:

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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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