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 normal. There has been a stiff rejection of the upside over the last week on the back of uncertainly about the US Election result. Despite good US job data on Friday which is suggestive of rate Hike in December, the week ahead will be dominated by the US Election. Polls are giving it a 70/30 split in favor of Clinton. A Clinton victory should see a continuation of USD strength and boost equities (unless we get a taper tantrum). A Trump victory should see a weakening of the USD, in particular against the EUR and JPY and a sell off in equities.
- Buy GBP/USD. Trend– MT is bull normal. The GBP has bounced after a high court ruling deeming that PM May needs to consult parliament before triggering article 50, putting her March timeline in doubt. Additionally, the BOE came out with less dovish language. This has lead to a switch in trend at least in the short-term. Look to buy, but of course caution required around the election.
- Wait USD/JPY. – MT is sideways normal. USDJPY will be dictated by the election result this week. A Trump victory is bearish, while a Clinton victory should allow the market to refocus on a December rate hike by the Fed, and would be supportive of the pair..
- Wait AUD/USD. – MT is sideways normal. The weekly MT is sideways quiet. With the higher yield on the AUD and the RBA shifting to a neutral stance, we are primed for a bullish breakout. For the bullish scenario to play out we require a Clinton victory and continuation of the current environment. A Trump victory would likely be bearish for the pair due to risk-off. Look to trade a confirmed break above .7775 on a Clinton victory. A break below 0.74 on global risk-off is also a good play.
- Wait EUR/USD. – MT is sideways volatile. Like USDJPY, price action in the EUR will be dictated by the upcoming Election. Technically, on the weekly charts we had a busted breakout and you can expect a move back towards 1.1350.
- Buy NZD/USD. Trend – MT is bull normal. Despite the high chance of a rate cut this week from the RBNZ, the kiwi remains buoyed by positive data, yield and immigration. Look to buy, but careful of the election.
- Sell USD/CHF. Trend– MT is bear fast. My belief is that the SNB will struggle to hold back the tide in the event of global risk-off. Look for this move to continue back down towards 0.95, but watch the response to a Clinton victory. Note that if Clinton wins and the market focuses on a rate hike, we could still have risk-off (a taper tantrum) which drives the pair lower.
- Buy USD/CAD. Trend – MT is sideways normal. I prefer to buy a dip here rather than be in at market. Oil was down 9% last week and CAD data was poor but we have a bearish reversal pattern forming. When price does not do what it should then we need to approach the market with a healthy dose of caution. The long-term trend and fundamentals still support a move higher.
- Buy EUR/GBP. Reversal– MT is sideways normal. We have a lower time frame reversal pattern off support, look to buy this week. Lower conviction.
- Sell EUR/CHF. Trend – MT is bear normal. Look to sell.
- Wait AUD/JPY. – MT is sideways normal. Wait.
- Buy NZD/JPY. Trend – MT is bull normal. Continue to buy.
- Wait GBP/JPY. – MT is sideways quiet. A bullish breakout above 1.2950 on a Clinton victory could be a good play.
- Wait EUR/JPY. – MT is sideways normal. Wait.
- Sell CAD/JPY. Trend – MT is bear normal. Look to sell.
- Buy CHF/JPY. Trend – MT is bull normal. Look to buy.
- Wait GBP/NZD. – MT is sideways normal. Wait.
- Wait EUR/NZD. – MT is sideways volatile. Wait.
- Sell AUD/NZD. Trend – MT is bear fast. Look to sell and keep stops tight in this MT.
- Wait EUR/AUD. – MT is bull volatile. We have a weekly bullish reversal pattern here. A good long-term play if AUDUSD keeps below .7775.
- Buy GBP/AUD. Breakout – MT is bull normal. A base is in place here. Look for upside this week.
- Buy AUD/CAD. Trend– MT is bull normal. Continue to buy but careful of Friday’s hammer.
- 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 fast. Look to buy.
- Wait GBP/CHF. – MT is sideways normal. Wait.
- Wait CAD/CHF. – MT is bear fast. Look to sell. A good option if you want to stay away from USD.
- Wait NZD/CHF. – MT is sideways volatile. Wait.
- Wait AUD/CHF. – MT is bull volatile. Wait.
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.