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 sideways normal. The GBP continued to weaken last week on the back of domestic political pressures and poor data. While we remain somewhat range bound vs. USD, I continue to see opportunities to sell GBP vs. the crosses. BOE event this week and if they add to the dovish rhetoric it could push the pair back into a bear market type.
- Sell USD/JPY. Trend – MT is bear fast. Last weeks plan to sell the breakout worked well. As traders were expecting BOJ intervention, and none came the move was quite fast. We still need to be wary of BOJ, but from both macro and technical point of views the pair is well poised to continue lower. It’s important to note that negative interest rates in Japan are proving deflationary (removing supply from the market) as it forces an already yield starved aging population to hoard cash even more. Eventually we should see USDJPY much higher, but history tells us that deflation is tricky beast to fight and that yen bears can get badly burnt if they don’t follow the price action. Additionally, there may be some accord between central banks to avoid engaging in practices that weaken their currency. Perhaps China have threatened to un-peg their currency from the USD if “currency wars” don’t settle down?
- Wait AUD/USD. – MT is sideways normal. As is to be expected after a strong trend and topping price action, AUDUSD has now turned range bound. The RBA did not signal a clear intention to lower the currency at last week’s meeting, and overall was relatively positive. For now, I wait, though I am prepared to take small shorts on a confirmed break below .7400.
- Wait EUR/USD. – MT is sideways volatile. EURUSD remains range bound with six (count em!) spinning tops around the key 1.1400 level. With a mixed technical picture and no fundamental driver I prefer to wait to see what the Federal Reserve and ECB say before forming a near-term view. Bigger picture my belief is the divergence theme and regional issues will come back into play and we see EUR much lower.
- Buy NZD/USD. Trend– MT is bull slow. The Kiwi remains in a grinding uptrend. Buy small positions taking the majority off if we get back up to .6950, alternatively it may be best to wait. Fundamentally of note, was a small increase in dairy prices. Watch for Chinese GDP to provide a directional clue. Low conviction.
- Sell USD/CHF. Trend– MT is bear normal. Despite the strong Franc, the Swiss economy has been resilient with over-all growth of 0.9% in 2015. Headline inflation is also rising which reduces the need for the SNB to take further action. Continue to sell.
- Wait EUR/CHF. – MT is sideways quiet. EURCHF is on the cusp of turning back into a bear market type. The positive performance of the Swiss economy may be putting paid to any thoughts of the currency reaching the SNB’s 1.20 target anytime soon.
- Sell USD/CAD. Trend – MT is bear normal. We continue to just hold onto the bear MT in CAD on the back of a 5% surge on oil on Friday. Sentiment still remains positive CAD and negative USD so a spike, if not not a confirmed move below 1.2800 should not be a surprise.
- Buy EUR/GBP. Trend – MT is bull normal. Continue to buy. In this market type a small amount of profit taking after Friday’s pause would be appropriate, but otherwise continue to buy.
- Sell AUD/JPY. – MT is bear fast. Look to sell.
- Sell NZD/JPY. Trend – MT is bear fast. The pair sold off heavily after last weeks reversal pattern, turning all the way from a “busted” bull into a fast bear. Continue to sell, but the best approach is possibly to use a stop sell below .7260 as we are sitting at support.
- Sell GBP/JPY. – MT is bear fast. We got the anticipated breakout and should continue to sell.
- Sell EUR/JPY. – MT is bear fast. Look to sell.
- Sell CAD/JPY. – MT is bear fast. But caution if Oil continues to bounce.
- Sell CHF/JPY. – MT is bear fast. Look to sell but I think there are better opportunities to buy yen.
- Sell GBP/NZD. – MT is bear normal. Continue to sell, but we may be getting some bottoming price action .
- Wait EUR/NZD. – MT is sideways normal. Wait for now.
- Wait AUD/NZD. – MT is sideways normal. Wait for now.
- Buy EUR/AUD. – MT is bull normal. We had a breakout from the sideways quiet last week. Look to buy.
- Sell GBP/AUD. – MT is bear normal. Continue to sell on the back of a weak GBP.
- Sell AUD/CAD. – MT is bear normal. Breaking out into a bear normal MT. Look to sell, and should go well if Oil continues to strengthen.
- Sell GBP/CAD. – MT is sideways normal. Bottoming attempts have failed and the bear market type has resumed.
- Wait EUR/CAD. – MT is sideways normal. Wait.
- Wait NZD/CAD. – MT is sideways normal. Wait.
- Sell GBP/CHF. Trend – MT is bear normal. Continue to sell
- Wait CAD/CHF. – MT is sideways normal. Wait
- Wait NZD/CHF. – MT is sideways normal. Wait.
- Sell AUD/CHF. – MT is bear normal. Look to sell, may have legs to get back to 0.6800.
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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.
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