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.
- Waiting GBP/USD. – MT is sideways volatile. While longer-term GBPUSD is potentially a buy, for now we are stuck in a sideways volatile MT so prefer to wait until we reach one of the edges. Fundamentally the BOE is providing hawkish signals, i.e. they see limited impediments to raising rates.
- Waiting USD/JPY. – MT is sideways normal. With equity markets selling off after the FOMC announcement last week this pair could head lower. Long-term we certainly see more USD strength on the back of the divergent monetary policy and economic conditions between the USA and Japan. Wait for now.
- Short AUD/USD. Trend – MT is bear volatile. After the pair climbed higher over the last couple of weeks we saw sellers step in on Friday, forming a bearish hammer candle. The pair is still a macro short and should come under pressure from equities next week. What may hold up the trade, is the RBA’s comfort with the current rate setting (they are worried about the property market). Though with global conditions deteriorating this could lead to a negative surprise.
- Waiting EUR/USD.– MT is sideways normal. Railroad tracks formed on Thursday and Friday indicate the momentum is likely to the downside. As mentioned previously, divergent monetary policy will be the key driver of this trade, but for now best to wait for a clearer trend to breakout (it can be dangerous selling in the middle of range). The fed meeting has had mixed responses with some commemorators calling it “dovish” while others suggesting it was a “hawking hold”. My thoughts are it is good for the USD as firstly, if rates are not raised it is because of worry about global conditions which is USD bullish. Secondly, I think the market interpreted the statement as more dovish than intended and we might see a correction of these expectations by fed officials indicating that a rate hike is still quite possible this year (the market is only pricing in a 12.5% chance of a rate hike this year). Of course take note of the price action to make sure it validates this thesis.
- Waiting NZD/USD. – MT is sideways normal. .6450 looks to be capping the upside and improving dairy auctions have been buoying the pair. We expect the rebound in prices to be temporary with the best opportunities to the downside. Wait for now, stalking shorts at the top of the range.
- Waiting USD/CHF.– MT is sideways normal. The pair looks interesting with a bullish piercing pattern after a “busted breakout” (failed attempt to break through support). But like the euro we are worried that we are stuck in the middle of a wider range so prefer to wait for a clearer trend to establish itself.
- Long EUR/CHF. Trend– MT is bull quiet. Continue to look long.
- Long USD/CAD. Reversal – MT is sideways normal. Some commentators have mentioned that the BOC is sounding more hawkish than it has done in the past, but as we expect oil to head lower, the bullish case for CAD is not that strong. Of course if Oil rises then CAD may strengthen. Technically a very large hammer signals a buy but the risk/reward is not that great so only small longs recommended until the sideways MT is broken.
- Waiting EUR/GBP. – MT is sideways normal. A break lower will signal a buy and we prefer to sell at the top of the range.
- Short AUD/JPY. Trend – MT is bear normal. A bearish engulfing after the fed signals a sell. Also with similarly bearish patterns across equity markets we expect the pair to come under pressure (AUDJPY often acts as a proxy for the “risk-on, risk-off”).
- Waiting NZD/JPY. – MT is sideways normal. Shorts preferred off the top of the range or a break lower.
- Short GBP/JPY. Trend – MT is bear volatile. Bearish engulfing following a hammer off resistance signals a sell.
- Waiting EUR/JPY. – MT is sideways volatile. A bearish engulfing also signals a sell but the technical pattern continues to be messy. Prefer shorts.
- Waiting GBP/NZD. – MT is bull quiet. Long, but only on dips to the mid Bollinger band and take profit quickly in this MT.
- Waiting EUR/NZD. – MT is sideways normal. Bearish engulfing signals a sell but the risk/reward is not there on this trade as yet. Don’t want to be top picking.
- Short AUD/NZD. Reversal– MT is sideways volatile. A spinning top and bearish engulfing signal a short trade back to the lower end of the range. Decent risk/reward here but perhaps not the best option for AUD shorts. Either “basket the risk” with other AUD shorts or wait.
- Waiting EUR/AUD. – MT is sideways normal. Wait for now.
- Waiting GBP/AUD. – MT is sideways normal. Wait for now.
- Waiting AUD/CAD. – MT is volatile bear. The strength in this pair is indicative that CAD is perhaps the best short at the moment. AUD is weak but strong against CAD (CHF also weak across the board).
- Waiting GBP/CAD.– MT is sideways volatile. A bullish engulfing week two weeks ago peg this as a long-term buy, but shorter-term traders wait for now.
- Waiting EUR/CAD. – MT is sideways volatile. Wait for now.
- Waiting NZD/CAD. – MT is sideways normal. Wait for now.
- Short CAD/JPY. Trend – MT is sideways normal. Look short based on bearish engulfing off the top of the range.
- Short CHF/JPY. – MT is bear normal. Look short based on the bearish engulfing pattern.
- Waiting GBP/CHF.– MT is sideways normal. Wait for now.
Analysis to read:
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.