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 bull normal. While we have entered a bull MT, but there is clear topping price action with a minor double top and formation of a bearish hammer. The drivers of the USD remain mixed and unclear. Trade talks with China is progressing with some optimism out there, but a positive conclusion is not yet certain. Price action on this news has been mixed for a long time and I am not sure how much a resolution or lack there of will impact the USD. While data in general remains ok, retail sales came in with a big miss on Thursday. This should encourage the Fed to stick with their message of patience about rate hikes. What may support DXY is weakness in the EUR, but otherwise the dollar looks like more of a sell than a buy to me.
- Buy GBP/USD. – MT is sideways volatile. A bullish engulfing candle off the lower Bollinger Band (and prior support turned resistance) is indicative of GBP strength. There is not much progress at all with regards to Brexit talks, but the market is hopeful that there will be an extension to the rapidly approaching end of March exit deadline. Prime Minister May is engaging in Brinkmanship with her position that there will be no extension unless a deal is reached. I like to buy GBPUSD from here, but this trade certainly has it’s risks.
- Wait USD/JPY. – MT is bull normal. We have broken out into a bull MT but Thursdays bearish candlestick, along with the topping pattern in DXY suggests caution should be had. Importantly bond yields remain flat. On the positive side, stocks are rising steadily. But price action is not correlating with the movements in stocks yet.
- Buy AUD/USD. – MT is sideways normal. Optimism that there could be the framework of an agreement between the US and China or that the deadline for additional tariffs has been benefiting the Aussie. Both Iron Ore and Gold have maintained the uptrend. TypicallyAUDUD has a high correlation with gold and the Aussie may well play catch up. Positive China data has helped the pair. Price action is suggestive of a long-term bottom in AUD. I would have preferred a re-test of 0.70, but given the rejection of the prior low at 0.71, Aussie looks like a good buying opportunity to me.
- Wait EUR/USD. – MT is sideways volatile. A long pin candle just ahead of support along with the accompanying price action suggests that the low may hold for now. A cautionary note is Bunds yields remain within a steady downtrend and have shifted well in favor of USD. There is more emerging political risk in Spain as a snap election has been called. Data out of the Euro-zone remains weak. Given price action has been responding negatively to negative news this should cap any gains in the pair.
- Wait NZD/USD. – MT is sideways normal. The RBNZ has acknowledged the improvements in the outlook for NZ with a less dovish monetary policy statement. Price was up significantly after the event and has subsequently maintained the gain. Technically, I don’t have entry given the price action, but shorter-term traders in the current week ahead may find this one of the better options to focus on.
- Wait USD/CHF. – MT sideways volatile. The topping action we saw on DXY is mirrored on USDCHF. This is despite stocks rising significantly on Friday. If you like it, this is an interesting opportunity to sell.
- Sell USD/CAD. – MT is sideways normal. Oil has risen through the key $55 figure again. Data has been mixed in previous months but there was a huge jobs beat in January. BOC remains relatively upbeat. Given anticipated USD weakness and the price action, CAD looks like a sell.
- Sell EUR/GBP. – MT is bear normal. The bearish price action looks much stronger this week than it did last week. Look to sell targeting 0.8630.
Crosses
- Wait EUR/CHF. – MT is sideways normal. Wait.
- Wait AUD/JPY. – MT is sideways normal. Wait.
- Wait NZD/JPY. – MT is sideways normal. Wait.
- Wait GBP/JPY. – MT is MT is sideways quiet. Wait.
- Wait EUR/JPY. – MT is sideways quiet. Wait.
- Wait CAD/JPY. – MT is MT is sideways normal. Wait.
- Wait CHF/JPY. – MT is sideways quiet. Look to buy a break above 110.50.
- Sell GBP/NZD. – MT is bear normal. Look to sell.
- Sell EUR/NZD. – MT is bear normal. Look to sell.
- Sell AUD/NZD. – MT is bear normal. Look to sell.
- Wait EUR/AUD. – MT is sideways normal. Wait.
- Wait GBP/AUD. – MT is sideways normal. Wait.
- Sell AUD/CAD. – MT is bear normal. Continue to sell, low conviction.
- Wait GBP/CAD. – MT is sideways volatile. Wait or buy.
- Sell EUR/CAD. – MT is bear normal. Look to sell.
- Wait NZD/CAD. – MT is sideways normal. Wait.
- Wait GBP/CHF. – MT is sideways normal. Wait
- Buy CAD/CHF. – MT is bull normal. Look to buy.
- Wait NZD/CHF. – MT is sideways normal. Wait
- Wait AUD/CHF. – MT is sideways normal. Wait
Other Markets
- Wait USDSGD. – MT is sideways normal. Wait
- Wait USDCNH. – MT is sideways normal. Wait
- Buy Gold. – MT is bull normal. Continue to buy.
- Buy Oil. – MT is bull normal. Look to buy.
- Buy S&P 500. – MT is bull normal. Continue to buy.
- Wait DAX. – MT is sideways normal. Wait
- Buy Nikkei. – MT is bull normal. Look to buy.
- Wait T-Notes. – MT is sideways normal. Wait.
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Economic calendar for the week ahead:
(MT = Market Type: Click for more information on market types.)
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.