Forex Trading Opportunities for the Week Ahead 11 November 2019

Here is Massimiliano's Market Type Analysis for the week ahead

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. These are 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 – The Dollar Index gained every session this week reacting from support at the August low around 0.97. It seems it took the market a few days to take in the Fed’s more optimistic tone expressed in the statement that followed the latest rate cut at the end of October. It also helped that the ISM Non-Manufacturing PMI came in above expectations in the context of a general upbeat mood regarding the imminent “Phase 1” deal with China which pushed US equities to new highs. The Trade War headlines are likely to continue to dictate short term gyrations this week while CPI data and Retail Sales are the main macro releases.
  • Wait GBP/USD. – MT is sideways normal – Watch the reaction at 1.27 – A Brexit extension was granted until January 31, now the focus shifts to the upcoming parliamentary election on December 12. Since the Brexit drama is temporarily on hold the market seems to have started paying attention again to Central Bank communications and economic data. The BOE this week left rates on hold with a split vote and downgraded its growth forecast for the UK economy. As a result, Cable slipped below recent support at 1.28 and appears on its way to test potential support at 1.27. The coming week’s calendar is busy with GDP, Employment, CPI and Retail Sales data the highlights.
  • Buy USD/JPY. – MT is bull normal – Watch if it holds above 109 – The BOJ at the end of October downgraded its forecast for GDP and inflation labelling it as a form of easing, this and a general improvement in risk sentiment reflected in strong equity markets have given support to the pair. A consolidation above the recent break through 109 would open the door to higher prices toward 110 first and then 112.
  • Wait AUD/USD. – MT is bull normal – Watch for a reaction at 0.68 – Following the October rate cut the Aussie put in place a fourth rejection of 0.67 indicating that the pair might have found a bottom. The catalyst to potentially justify higher prices came shortly after in the form of the U.S. – China positive trade talks in Washington. Subsequent data also showed a modest fall in the unemployment rate which gave the pair enough strength to push through resistance first at 0.68 and then at 0.69 above which though has now failed to consolidate following disappointing Retail Sales figures. The RBA kept rates on hold and repeated that the economy has “reached a gentle turning point” but lowered its growth expectations. There is still an easing bias in place but at this stage no further cuts are expected at least until February 2020. This week we will see updates on business and consumer confidence, and importantly on employment and wage data.
  • Wait EUR/USD. MT is sideways normal – Watch 1.10 for potential support – While conditions remain dire for the European economy the Euro recently had benefited from the prospect of a positive resolution to the Brexit saga as well as from broad USD weakness. Over the past couple of weeks data whilst still weak has been improving and there is hope the new ECB President Christine Lagarde, might be able to convince the Governments of richer European countries like Germany and the Netherlands to adopt long called for fiscal stimulus measures. The surge in USD strength however has now seen the pair falling from resistance just below 1.200 to potential support at 1.100.
  • Wait NZD/USD. MT is sideways normal – Watch for support at 0.630 -Together with the Aussie the Kiwi has benefitted from the recent improvement in risk sentiment following the positive U.S. – China trade talks. Whilst the economic backdrop remains weak the aggressive RBNZ action back in August seems to have started filtering through to the consumer with a pick-up in in the housing market, including new constructions approvals, and an uptick in inflation readings. The September quarter however has shown a rise in the unemployment rate, albeit from historically low levels. The Kiwi failed to break through resistance at 0.6450 and is now approaching potential support at 0.630. Before the next Monetary Policy meeting on November 12 there is another important piece of data which may determine whether a further rate cut is warranted, that is the quarterly RBNZ Inflation Expectations.
  • Wait USD/CHF. – MT is sideways normal – Watch reaction around 1.000 – For the past four months price action in the Swissie has been contained in a 3% range between parity and 0.97. Recently however movement has been limited to the upper part of this wider range with 0.985 acting as support in four occasions. The pair is once again approaching parity.
  • Wait USD/CAD. – MT is sideways normal – The dovish hold by the Bank of Canada and the downgrade of the forecasts within its quarterly Monetary Policy Report at the end of October have now been followed by a series of disappointing data releases. As a result, the Loonie closed the week breaking through resistance at the 1.315 – 1.320 zone. If the recent USD strength continues, we could see the pair moving up toward the next resistance area at 1.335.
  • Wait EUR/GBP. – MT is bear normal. The downtrend which kicked off in mid-August resumed strongly after a 2 week pause thanks to the emerging Brexit deal. The Euro however seems to have been benefiting also from the easing in geopolitical tensions, Brexit and the US/China Trade War. With the Brexit deadline extended and an upcoming UK election on December 12 the pair has been consolidating just above 0.86 for almost 4 weeks now. This past week the Pound has suffered from a dovish hold by the BoE but that was counterbalanced by a weakening of the Euro vs the USD resulting in a net movement of just about 12 pips. This protracted low volatility consolidation will likely see a breakout at some point and it is not to be assumed now that it will be to the downside. We might have to wait for some election related headlines to see any significant movement.

Crosses

  • Wait EUR/CHF. – MT is sideways normal – Consolidating around 1.100 support.
  • Buy AUD/JPY. – MT is bull normal – Watch 0.75-0.76 resistance zone.
  • Wait NZD/JPY. – MT is sideways quiet – sitting at 0.69 support.
  • Wait GBP/JPY. MT is sideways quiet – Consolidating, buy above 141.
  • Wait EUR/JPY. MT is sideways quiet – Consolidating above 120 support.
  • Wait CAD/JPY. – MT is sideways normal – finding resistance at 83 support.
  • Wait CHF/JPY. – MT is sideways normal – Watch 110 – 110.5 resistance
  • Wait GBP/NZD. – MT is sideways quiet – Consolidating.
  • Wait EUR/NZD. – MT is sideways quiet – May be reacting to 1.73 support.
  • Buy AUD/NZD. – MT is bull normal – Watch 108 support.
  • Wait EUR/AUD. – MT is bear normal – Watch current inside bar break direction.
  • Wait GBP/AUD. – MT is sideways normal – Watch 1.85 support.
  • Wait AUD/CAD. MT is bull normal – May be rejecting 0.91 resistance.
  • Wait GBP/CAD. MT is bull normal – Support 1.67, resistance 1.71.
  • Wait EUR/CAD. – MT is sideways normal. Watch 1.45 support.
  • Wait NZD/CAD. – MT is bull normal.
  • Wait GBP/CHF. – MT is sideways quiet. Consolidating.
  • Wait CAD/CHF. MT is sideways normal.
  • Wait NZD/CHF. MT is sideways quiet.
  • Buy AUD/CHF. MT is bull normal. Watch 0.685 resistance.

Other Markets

  • Sell Gold. – MT is bear normal. Low volatility breakout.
  • Buy Oil. – MT is bull normal.
  • Buy S&P 500. – MT is sideways normal. Making new all-time highs.
  • Buy DAX. – MT is bull normal.
  • Buy Nikkei. – MT is bull normal.
  • Sell T-Notes. – MT is bear normal. Low volatility breakout.

(MT = Market Type: Click for more information on market types.)

About the Author

Massimiliano Andrighetto is a currency trader and member of the team at FxRenew. If you like his writing you can follow it here. You can also get Free access to the Advanced Forex Course for Smart Traders.

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