Forex Trading Opportunities for the Week Ahead 19 November 18: FXRenew

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. 

• Wait or sell DXY.  – MT is sideways normal. We have a classic busted breakout and early formation of a double top on the weekly chart. This is a clear sign we may well be looking at an inflection point for the USD. Of particular note, there has been supportive data out of the US yet the currency has sold off. This is a strong bearish sign. The key driver of the recent uptrend in the USD was economic and monetary policy divergence. The extent of this may well now be priced in. We are hearing less hawkish murmurings from the Fed. Trump is ham-stringed in implementing growth policies domestically after the mid-term elections. It is unclear how protectionist trade policy will ultimately impact the dollar, but some pundits do suggest it is a clear attempt at a soft dollar policy by the US administration. The upshot of all this is that looking to short the USD from these levels could be a decent longer-term play.

• Wait GBP/USD. – MT is sideways volatile. The brexit situation has become very messy. An agreement was reached with the EU only for the chief negotiator of the agreement to resign. GBP sold off 2% on the day. Now there is likely to be a vote of no confidence in Prime Minister May, which she may well not survive. This all throws a huge spanner in the works of theBbrexit process and should lead to further GBP weakness.

• Wait USD/JPY. – MT is sideways normal. We have transitioned into a sideways MT on the pair after Fridays sell-off. The main driver was dovish Fed speak. We remain in the long-term bull MT, but it may be best to wait for now. If equities continue to fall, selling USDJPY should be a good option. Note, US bonds are pressing recent highs which is looking bearish USDJPY.

• Buy AUD/USD. Trend –  MT is bull normal. The bull MT continues on the Aussie. This is supported by strong employment data, optimism around trade talks between the US and China and a weak USD on the back of adjusting rate hike expectations. We have broken the longer-term downtrend. Continue to buy.

• Wait or buy EUR/USD. –  MT is sideways normal. Similar to DXY (in reverse) there is a busted breakout and double bottom in place on the weekly chart of EURUSD. As outlined above this is on the back of USD weakness. But importantly, the bad news for the EUR is very much priced in. The Italian budget is not likely to be an issue until later in 2019 (the earliest sanctions may be placed), the market is aware of Brexit risks. Data has not been good but the price has been ignoring it (a strong bullish sign when combined with the technical pattern). The ECB seems committed to ending asset purchases in December (a form of tightening). If we do get a major stock market rout, as a funding currency, the EUR may be an attractive option. These factors suggest a longer-term contrarian buy may be a good strategy.

• Buy NZD/USD. Trend –  MT is bull normal. Kiwi continues to be one of the strongest currencies. Falling mortgage rates have supported the pair as has optimism over China/US relations and USD weakness. What started as adjustment in positioning has really grown some legs. Continue to buy.

• Wait or sell USD/CHF.  – MT bull volatile. After taking out the key 1.00 level and the recent high at 1.0067, the bull MT has failed. We have formed a major reversal pattern on weekly charts off this key level. A contrarian sell is a decent option.

• Wait USD/CAD. – MT is sideways normal. The pair has failed at resistance at 1.32. CAD has remained one of the weaker currencies. Part of this is due to the recent 25% fall in oil prices. Western Canada Select is near record lows (it trades as a significant discount to WTI). We can’t forget that the central bank is hawkish and if data comes in decent this week (CPI and retail sales) then CAD could play catch up.

• Wait EUR/GBP.  – MT is sideways volatile. Volatility in the pair has been massive and we may well retest 0.91 soonish given the mess that Brexit is in. Tread carefully.

Crosses

• Wait EUR/CHF. – MT is sideways normal. Wait.
• Buy AUD/JPY. Trend – MT is bull normal. Continue to buy.
• Buy NZD/JPY. Trend – MT is bull normal. Continue to buy.
• Wait GBP/JPY. – MT is sideways volatile. Wait.
• Wait EUR/JPY. – MT is sideways quiet. Wait.
• Wait CAD/JPY. – MT is sideways quiet. Wait.
• Wait CHF/JPY. – MT is sideways quiet. Wait.
• Sell GBP/NZD. Trend – MT is bear fast. Continue to sell.
• Sell EUR/NZD. Trend – MT is bear normal. Continue to sell.
• Sell AUD/NZD.  Trend – MT is bear normal. Continue to sell.
• Sell EUR/AUD. Trend – MT is bear normal. Continue to sell.
• Sell GBP/AUD. Trend – MT is bear normal. Continue to sell.
• Buy AUD/CAD. Trend – MT is bull normal. Continue to buy.
• Wait GBP/CAD. –  MT is sideways volatile. Wait.
• Wait EUR/CAD. – MT is sideways quiet. A breakout above 1.5050 could be a good option with oil prices where they are.
• Buy NZD/CAD. Trend – MT is bull normal. Continue to buy.
• Wait GBP/CHF. – MT is sideways volatile. Wait.
• Wait CAD/CHF. – MT is sideways quiet. Wait.
• Buy NZD/CHF. Trend – MT is bull normal. Continue to buy.
• Buy AUD/CHF. Trend– MT is bull normal. Continue to buy.

Other Markets

• Wait USDSGD.  – MT is sideways normal. Wait.
• Wait USDCNH. – MT is sideways normal. Wait.
• Sell Gold. Trend  – MT is bear normal. Continue to sell.
• Sell Oil. Trend – MT is bear normal. Continue to sell.
• Wait S&P 500. – MT is sideways volatile. Wait
• Wait DAX. – MT is sideways normal. Wait.
• Wait Nikkei. – MT is sideways volatile. Wait.
• Wait T-Notes. – MT is sideways normal. Wait.

View bank reports and fundamental analysis in the chatroom (members only)

View the chatroom 

Economic calendar for the week ahead:

View economic calendar

(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.