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 DXY Trend – MT is sideways quiet. Despite the formation of a sideways quiet market type on the dollar index, we have seen USD strength against most major currencies. This is on the back of increased optimism around President Trumps proposed tax reforms. Last week his budget bill was passed which is seen as positive sign for tax reform. Central bank members continue to put on a hawkish front and a rate hike is highly likely in December with more to come next year. Fed Chair Yellen is likely to be replaced by a new chair in the new year. Odds are the new chair will favor the continuation of gradual rate hikes. Importantly, US Bond yields are up and looking strong. Meanwhile, North Korea tensions still exist, but they have not escalated. There is an outlier risk of something happening there, but until it does I suspect market participants will focus on tax reform, yield, and rate hike expectations. Overall I continue to like to buy dollars, with more conviction this week.
- Wait GBP/USD. – MT is sideways normal. The twin drivers of Brexit and rate hike expectations remain in play. With a decent chance of a rate hike next month by the BOE, only brexit concerns are capping GBP buying. Some positive comments from German Chancellor Merkel at the end of the week have eased concerns over Brexit and we are seeing GBP strength, in particular on the crosses, where I favor buying opportunities.
- Buy USD/JPY. Breakout – MT is bull normal. There is an election in Japan this weekend where Prime Minister Abe is expected to come out the landslide victor. The only question is if he can improve his current position of strength or not. This, combined with no escalation of geopolitical tensions in North Korea, steadily rising global stocks and improving US bond yields should see the pair continue to rise.
- Wait AUD/USD. – MT is sideways normal. I do continue to expect the Aussie to fall on the back of USD strength. though I prefer to wait for a breakout of the .7700 figure. Iron Ore is under pressure and there are some lingering concerns around China. On the plus side, AUD is benefiting from anti-NZD flows, the RBA remains benign and employment data is good.
- Wait EUR/USD. – MT is sideways quiet. The Euro has been range bound leading into this weeks big announcement by the ECB on how much they will reduce asset purchases. There is an opportunity each way depending on how the market interprets the statement. Meanwhile concerns around Catalonia’s independence bid remain but Spanish Prime Minister Rajoy’s firm hand has keep any slide in the Euro in check.
- Sell NZD/USD. Trend – MT is bear normal. We have a new government in NZ, with NZ First siding with Labor. This is seen as the less business friendly option and there is uncertainty around exactly what the new policies will be and the make up of the government. With USD strength in the picture, NZDUSD is a clear sell.
- Buy USD/CHF. Trend – MT is bull normal. We have broken out to new highs on USDCHF after ignoring a series of bearish reversal candles around the .9750 figure. Continue to buy
- Buy USD/CAD. Breakout – MT is bull normal. Negative CAD data and USD strength have pushed us into the first bull MT since early May. Importantly we are trading back above the key 1.25 level and bigger picture technical are suggestive of more upside to come. Look to buy.
- Wait EUR/GBP. – MT is sideways normal. Brexit concerns have seen the reversal pattern formed the previous week fail. This pair will likely be driven by news in the coming week.
Crosses
- Wait EUR/CHF. – MT is sideways normal. Wait, a weak bearish hammer suggests a technical selling opportunity, but I am not a great fan.
- Wait AUD/JPY. – MT is sideways normal. Wait.
- Sell NZD/JPY. – MT is bear normal. Look to sell.
- Wait GBP/JPY. – MT is sideways normal. Wait.
- Buy EUR/JPY. Breakout – MT is bull normal. Look to buy.
- Wait CAD/JPY. – MT is sideways quiet. Wait.
- Wait CHF/JPY. – MT is sideways normal. Wait.
- Buy GBP/NZD. Trend – MT is bull fast. Look to buy.
- Buy EUR/NZD. Trend – MT is bull normal. Look to buy.
- Buy AUD/NZD. Trend – MT is bull fast. Look to buy
- Wait EUR/AUD. – MT is sideways normal. Wait.
- Buy GBP/AUD. Reversal – MT is sideways normal. Look to buy.
- Wait AUD/CAD. – MT is sideways normal. Wait.
- Wait GBP/CAD. – MT is sideways quiet. Wait.
- Buy EUR/CAD. Breakout – MT is bull normal. Look to buy.
- Sell NZD/CAD. Trend – MT is bear normal. Look to sell.
- Wait GBP/CHF. – MT is sideways normal. Wait.
- Wait CAD/CHF. – MT is sideways quiet. Wait.
- Wait NZD/CHF. – MT is sideways volatile. Wait.
- Wait AUD/CHF. – MT is sideways normal. Wait.
Other Markets
- Wait Gold. – MT is sideways normal. Wait.
- Wait Oil. – MT is sideways normal. Wait.
- 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.
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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.