Forex Trading Opportunities for the Week Ahead 9 Apr 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 DXY.  – MT is sideways quiet. The dollar index remains in the sideways quiet MT. The main focus at the moment is the ongoing tit-for-tat trade tariffs between the US and China. There has been no de-escalation as yet so trade war fears are hindering market sentiment. Of course, no tariffs have been implemented at this point, so at this stage it is all talk and there is a suggestion that it’s part of President Trump’s negotiation tactics and nothing much will come of it. In the meantime equity markets seem particularly unnerved, currencies not so much. On Friday we had Non-farm Payrolls. There was a headline miss but a detailed look at the report suggests that not too much can be read into it. Technically we have a reversal pattern off the top of the range which is indicative of more downside. I do expect the range to hold for now.
  • Buy GBP/USDTrend – MT is bull normal. Despite poor data on Thursday, the GBP was the strongest currency pair on Friday. There was no particular catalyst. A bullish response after bad news is often quite a strong bullish signal. We have seen a bullish engulfing candlestick pattern which suggests we have more upside, first towards 1.4250 and then 1.4300. Watch for BOE speak for indications of the likely May rate hike.
  • Wait USD/JPY.  – MT is sideways normal. We have a bottoming pattern in place with the formation of a reverse head and shoulders. The first attempt to break though the level failed on the back of renewed fears of a trade war and the headline employment number miss. Participation may be down, or perhaps there is a fair bit of underlying demand as given the strong negative response in the stock market, we might expect USDJPY to be lower. But traditional risk on/off correlations are certainly not as strong as they were. I believe this is due to the changing interest rate environment. Note that North Korea fears have subsided and we do have a significant divergence in monetary policy between the US and Japan, which is USD bullish.
  • Sell AUD/USD. Trend –  MT is bear normal. The Aussie continues it’s slow grind lower. Despite some OK data, sentiment is focused on trade fears, falling metal prices and the growing yield differential between US and Australia. Continue to sell.
  • Wait EUR/USD. –  MT is sideways quiet. There was a slew of poor data out of Europe which reminds market participants that the recovery in the region is far from strong. Technically, we have held support at 1.2240 and formed a bullish engulfing candlestick pattern. This suggests we will remain range bound for now. I do like to sell a break below 1.2220
  • Wait NZD/USD. –  MT is sideways normal. The Kiwi remains within the range that began in Feb. Trade fears are not good for the Kiwi, but demand on the AUDNZD cross and a surprise bounce in milk powder prices have helped the pair remain in the middle of the range. I prefer shorts below 0.7150.
  • Buy USD/CHF. Trend – MT bull normal. We remain in the bull MT. Risk-off/on is a key driver of CHF, so while I expect the bull MT to continue, we need to watch out for a continuation of the sell-off in stocks.
  • Wait USD/CAD. – MT is sideways normal. The main focus for the Canadian dollar is the prospect of a successful conclusion to NAFTA negotiations. Both camps are talking of a deal, likely within the next 2 weeks to 30 days. Canadian employment data was decent, but it failed to help CAD. Note that oil is putting in a double top, if this plays out if could pressure CAD.
  • Wait EUR/GBP.  – MT is sideways normal. We are very close to breaking out of the extended weekly sideways quiet market type we have been harping on about in this report. I hope for a period of consolidation around the low before a breakout in order to find a lower risk entry.

Crosses

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

Other Markets

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

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Economic calendar for the week ahead:

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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.

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