Forex Trading Opportunities for the Week Ahead 22 Jan 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. 

• Sell DXY. Trend – MT is bear normal. Despite the prospect of a number of rate hikes in 2018, rising bond yields, tax reform and a relatively hawkish Fed, the USD continues the fall it began at the beginning of 2017. Of note, sentiment is now focused on the impending U.S. government shutdown. If a shutdown occurs it should be bearish for the USD, while in practice it will not impact the economy much.

• Buy GBP/USD. Trend – MT is bull normal. There is more optimism around about the prospects of a soft Brexit, which, along with rising GILT yields and USD negative sentiment, is driving the bull MT. Be careful of a pull-back here after Friday’s rejection of the weekly high.

• Sell USD/JPY.  Trend – MT is bear normal. While in practice it is nothing major, the market has latched onto a reduction in bond purchases by the BOJ. This combined with negative USD sentiment has pushed the currency into a bear market type. Continue to sell.

• Buy AUD/USD. Trend –  MT is bull normal. Positive data, global risk-on and general USD weakness has seen the AUD rise consistently this year. Data has been good from both Australia and China. We have taken out the key 80 figure and there is some topping action here suggestive of a temporary pull-back.

• Buy EUR/USD. Trend –  MT is bull normal. Similar to other USD pairs, there is a some topping action in place. This is not suggestive of a major top, but of a temporary pull-back, unless we trade back below 1.20. Key risks for the EURUSD bull MT is if Germany fails to form a new government and they need to go to the polls again. Secondly, the ECB meets this week and they may come out and talk the currency down, by siting concerns about inflation and suggesting a cautious outlook for rates.

• Buy NZD/USD. Trend –  MT is bull normal. The kiwi has bounced off key support at 0.68 and a strong bull MT is in place. We can look for a move back towards 0.75. This has been on the back of improving commodity prices, global risk on, and USD weakness. Dairy prices were up close to 5% in the last week which is greater than we have seen for a while. The prime minister is having a baby, though that should not impact things much.

• Sell USD/CHF. Trend – MT is bear normal. The CHF has been one of the weakest currencies across the board, but has gained against the USD in sympathy with the EUR. Look for a move towards 0.95, but careful of some bottoming price action here.

• Sell USD/CAD. Trend – MT is bear normal. We are close to forming a sideways MT here with the downward momentum arresting. We had a classic buy the rumor sell the news response to the BOC’s rate hike. The tone was too cautious for the markets liking. NAFTA concerns linger and weigh on the currency. Low conviction short for me now.

• Sell EUR/GBP.  Breakout – MT is bear normal. The pair entered into a bear MT on Wednesday, but there has been no continuation as yet. Expect a move towards 0.87 in the coming week.

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.  Breakout – MT is bull normal. Look to buy.
• Wait EUR/JPY. – MT is sideways normal. Wait.
• Wait CAD/JPY.  – MT is sideways normal. Wait.
• Wait CHF/JPY.  – MT is sideways volatile. Wait
• Wait GBP/NZD.  – MT is sideways normal. Wait.
• Sell EUR/NZD. Trend – MT is bear normal. Continue to sell.
• Wait AUD/NZD. – MT is sideways normal. Wait.
• Wait EUR/AUD. – MT is sideways normal. Wait.
• Wait GBP/AUD.  – MT is sideways quiet. Wait.
• Buy AUD/CAD. Trend –  MT is bull normal. Look to buy.
• Buy GBP/CAD. Trend –  MT is bull normal. Look to buy.
• Wait EUR/CAD.  –  MT is sideways volatile. Wait.
• Buy NZD/CAD. Trend – MT is bull normal. Look to buy.
• Buy GBP/CHF. Breakout – MT is bull normal. Look to buy.
• Wait CAD/CHF. – MT is sideways normal. 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

• Sell USDSGD Trend – MT is bear normal. Continue to sell.
• Sell USDCNH  Trend – MT is bear normal. Continue to sell.
• Buy Gold. Trend – MT is bull normal. Continue to buy.
• Wait Copper. – MT is sideways quiet. Wait.
• Buy Oil. Trend – MT is bull normal. Continue to buy.
• Buy S&P 500. Trend – MT is bull normal. Continue to buy.
• Buy DAX. – MT is bull normal. Look to buy.
• Buy Nikkei. Trend – MT is bull normal. Continue to buy.
• Sell T-Notes.  Trend – MT is bear normal. Continue to sell.

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(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.