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.
- Sell DXY Trend – MT is bear normal. The main event for the dollar last week was non-farm payrolls. The headline number beat expectations with 222K jobs added and upward revisions to prior months. The concern is that wage growth remains weak. Overall, the results mean the Federal Reserve should continue to be hawkish and focus on the positive. This should support the dollar against most currencies, excepting the EUR. But what we must note is the limited response to the results with real gains only vs. JPY and GBP. Considering this and the current bear MT, I issue a cautious sell, with a decent chance of is turning sideways here. My focus certainly would be on buying Dollar vs. Yen out of the bunch
- Wait GBP/USD. – MT is sideways volatile. MT theory is playing out here with the sharp move toward the top of the range, followed by the bearish engulfing day and subsequent sell-off. MT theory suggests that the most likely outcome is now a move back towards 1.26 before we settle into a less volatile sideways phase. The sell-off last week was supported by poor data out of the UK, giving doubt to the BOE’s newly hawkish stance. This is one to watch, as if we do ignore the poor data (or get good data) and we move above 1.31 then I think there could be some decent upside.
- Buy USD/JPY. Trend – MT is bull normal. The BOJ, in contrast to their counterparts around the globe, maintains a stubbornly dovish stance. This makes it the counter currency of choice at the moment and I do expect the bull trend to continue, in particular if US bond yields continue to rise. Of importance is the failure of USDJPY to sell-off despite some pretty volatile price action in stocks. This suggests that underlying demand is quite high.
- Wait AUD/USD. – MT is sideways normal. Aussie sold off last week on the back of the RBA. There was hope that the RBA would shift to a more hawkish stance given what its global counterparts have been up to, but no cigar. Iron Ore prices rose slightly last week but overall they remain weak. Some less than impressive China data and the risk-off in stocks have also been weighing on the pair. We are back sitting mid range and may well be entering a consolidative phase here.
- Buy EUR/USD. Trend – MT is bull normal. The Euro continues to rise on the back of ECB hawkishness. Importantly, this hawkishness is supported by good data, lending credibility to the view of the central bank. From a macro point of view I am not super enthused about the European Unions long-term prospects. We need to remember the issues with Italian banks, Greek debt, political instability, immigration etc all still remain. But for now sentiment is focused on the ECB and the trend is up so buying is the correct approach.
- Wait NZD/USD. Trend – MT is bull normal. The bearish price action continues but the uptrend is not yet broken, though we are quite likely to turn into a sideways MT in the coming week. The dairy action last week was slightly negative. Kiwi is still attractive from a yield point of view, but I would not be looking for fresh entries here.
- Wait USD/CHF. Trend – MT is bear normal. CHF continues to trail the EUR in term of it’s price action and with EURCHF rising, I prefer to focus on EUR rather than CHF.
- Sell USD/CAD. Trend – MT is bear normal. Despite the weakness in Oil and concerns over trade, the Canadian dollar is benefiting from some good data and the expectation that the Central bank may even hike rates this coming week. Continue to sell.
- Wait EUR/GBP. – MT is sideways normal. On the fundamental front we have divergence in economic performance between the Euro-zone and the UK. This has us testing the top of the recent range and key resistance at .8850. A concerted break above this level could see us head towards .9050 then .9200. Look to buy above .8920.
Crosses
- Buy EUR/CHF. Trend – MT is bull normal. Continue to buy.
- Buy AUD/JPY. Trend – MT is bull normal. Continue to buy.
- Buy NZD/JPY. Trend – MT is bull normal. Continue to buy.
- Buy GBP/JPY. Trend – MT is bull normal. Continue to buy.
- Buy EUR/JPY. Trend – MT is bull normal. Continue to buy.
- Buy CAD/JPY. Trend – MT is bull normal. Continue to buy.
- Buy CHF/JPY. Trend – MT is bull normal. Continue to buy.
- Sell GBP/NZD. Reversal – MT is sideways normal. Bearish engulfing off the top of the range suggests sell.
- Wait EUR/NZD. – MT is sideways normal. Wait.
- Wait AUD/NZD. – MT is sideways normal. Wait.
- Wait EUR/AUD. – MT is bull normal. Look to buy.
- Sell GBP/AUD. Reversal – MT is sideways normal. Bearish engulfing off the top of the range suggests sell.
- Sell AUD/CAD. Trend – MT is bear normal. Look to sell.
- Sell GBP/CAD. Breakout– MT is bear normal. Look to sell.
- Wait EUR/CAD. – MT is sideways normal. Sell below 1.4610.
- Sell NZD/CAD. Trend – MT is bear normal. Look to sell.
- Wait GBP/CHF. – MT is sideways normal. Wait.
- Buy CAD/CHF. Trend – MT is bull normal. Continue to buy.
- Wait NZD/CHF. – MT is sideways normal. Sell below .6935.
- Buy AUD/CHF. Reversal – MT is sideways normal. Bullish engulfing off the bottom of the range suggests buy.
Other Markets
- Sell Gold. Trend – MT is bear normal. Look to sell.
- Wait Oil. – MT is sideways normal. Wait.
- Wait S&P 500. – MT is sideways normal. Wait.
- Sell DAX. Trend – MT is bear normal. Continue to sell.
- 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.