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.
- Buy DXY Trend – MT is buy normal. The dollar index is bouncing off the key 92.00 level and we have broken out into a bull MT above 93.00… but the breakout is not strong and a sell-off early next week will see us quickly back into a sideways market type. The dollar has strengthened on the back of a more hawkish Federal reserve and market participants are hopeful that President Trump will be enable to enact tax reforms. North Korea has been relatively quiet which has also helped. But for the DXY to trend to confirm we really need to see the Euro sell off and while we are in a bear MT in the Euro, the momentum is not strong. Look to buy for now but caution if we fall back below 93.00.
- Buy GBP/USD. Trend – MT is bull normal. While we remain in the bull market type, there is a pull-back and we need to wait for a bullish technical pattern before initiating new long positions. Data has not been great out of the UK and is challenging the BOE’s desire to hike rates this year. Market participants are still concerned about Brexit and Moody’s cut the UK’s credit rating on the back of these concerns. Additionally, we have seen broad-based USD strength drive the pair lower.
- Buy USD/JPY. Trend – MT is sideways normal. The BOJ is retaining its dovish stance as expected and the Yen continues to weaken. We do need to be concerned with geopolitical risk, but otherwise we can expect the pair to head towards the 114.50 key level.
- Sell AUD/USD. Trend – MT is sideways normal. We got the move below 0.79 that we where targeting in last weeks report. The RBA remains dovish and Iron ore, gold and copper are selling off. There is concerns around China after a recent credit rating downgrade. Look to sell, but note there is support close by at .78.
- Sell EUR/USD. – MT is bear normal. The Euro continues to fail to hold the key 1.20 level and has broken out into a bear MT. Chancellor Merkel won the German election but not with as much support as she hoped and is in need of forming a relatively weaker coalition government. I do get the sense that the EURO is extended at these levels. After all, the Federal Reserve is cutting their balance sheet while the ECB is growing theirs. The Fed is likely to hike rates again a year earlier than the ECB. But data remains good in the Eurozone and the US has the after effects of two hurricanes to content with. The weekly Euro bull MT still holds and sentiment has been clearly bullish EUR and bearish dollars for a long time. So the picture is mixed. Overall though, I like to sell.
- Wait NZD/USD. – MT is sideways normal. The election result turned out in favor of the National party but they did not get the majority they need to govern alone. This is a blow to the NZ economy and the Kiwi, as to govern a coalition with an anti-immigration party will likely need to happen. Immigration has been a key driver of growth in New Zealand. Otherwise, data is not great in my homeland and the RBNZ is dovish. If USD catches a bid, then expect NZDUSD to come off too.
- Wait USD/CHF. – MT is sideways normal. We bounced for a third time off major support at 0.9450 and formed a large bullish reversal pattern. This is indicative of further upside, but we want to see a close above 0.9700 to confirm the bull MT. Fundamentally, the SNB remains extremely dovish and would like to see the Franc weaken further.
- Wait USD/CAD. – MT is bear volatile. Data has not been great and the BOC have put a damper on the timeline for another hike.
- Sell EUR/GBP. Trend – MT is bear normal. With the change in tone from the BOE, it puts the BOE on track to raise rates before the ECB. Concern remains around Brexit and we look to be consolidating here. Technically this is to be expected after the sharp sell-off and the bearish outlook remains intact.
- Wait EUR/CHF. – MT is sideways volatile. Wait.
- Wait AUD/JPY. – MT is bull volatile. At key resistance and weekly reversal pattern has formed.
- Buy NZD/JPY. Trend – MT is bull normal. Continue to buy.
- Buy GBP/JPY. Trend – MT is bull normal. Some profit taking would be appropriate here.
- Buy EUR/JPY. Trend – MT is MT is bull normal. Continue to buy.
- Buy CAD/JPY. Trend – MT is bull normal. Continue to buy.
- Buy CHF/JPY. – MT is bull normal. Continue to buy.
- Buy GBP/NZD. Trend – MT is bull normal. Continue to buy.
- Wait EUR/NZD. – MT is sideways normal. Wait.
- Sell AUD/NZD. Trend – MT is bear normal. Continue to sell.
- Buy EUR/AUD. Trend – MT is bull normal. Look to buy.
- Buy GBP/AUD. Trend – MT is bull normal. Continue to buy.
- Sell AUD/CAD. Trend – MT is bear normal. Continue to sell.
- Buy GBP/CAD. Trend – MT is bull normal. Continue to buy.
- Wait EUR/CAD. – MT is sideways normal. Wait.
- Wait NZD/CAD. – MT is sideways volatile. Wait.
- Buy GBP/CHF. Trend – MT is bull normal. Continue to buy.
- Wait CAD/CHF. – MT is sideways normal. Wait.
- Wait NZD/CHF. – MT is sideways volatile. Wait.
- Sell AUD/CHF. Reversal – MT is sideways volatile. Continue to sell.
- Sell Gold. Trend – MT is bear normal. Look to sell.
- Buy Oil. Trend – MT is bull normal. Continue to buy.
- Buy S&P 500. Trend – MT is bull normal. Continue to buy.
- Buy DAX. Trend – MT is bull normal. Continue to buy.
- Sell T-Notes. Trend – MT is bear normal. Look to sell.
View bank reports and fundamental analysis in the chatroom (members only)
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.