Forex Trading Opportunities for the Week Ahead 21 January 19

Sam Eder'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. 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 bear volatile. The the USD bounced strongly last week on the back of a rising stock market. While its not really supposed to work this way, with falling stocks the Fed became more dovish and the market started to price in rate cuts in 2019. With stocks rising, rate hikes are now being pricing back in by the markets. Of course, this is a catch 22 as one of the main reasons stocks were said to be falling was because of the rate hikes scheduled in for 2019. The US Government shutdown is ongoing and no resolution is in sight – there is not much impact on financial markets as yet. Anyway, for me, the picture looks mixed and unclear and I think its best to wait on the sidelines. Do note that last weeks rise did form a bullish engulfing week, so if anything we can expect the USD to rise this coming week.
  • Buy GBP/USD. – MT is bull normal. Despite Fridays sell-off the GBP remains in the bull MT. Even though Prime Minister May lost the Brexit plan vote by over 200 votes and subsequently had to survive a vote of no confidence, the GBP has risen. This does show some signs to underlying demand and should give confidence to bulls. A potential driver of this move has been optimism that even though this plan did not go through, there will be no hard Brexit. More Brexit news will dominate headlines in the coming week with Parliment debates on May’s plan B on Monday and May likely seeking an extension of the exit date (currently in the end of March). Note, that UK data may be supportive of the currency next week with wage growth expected to rise.
  • Wait USD/JPY. MT is bear volatile. With equities, bond yields and the oil price rising and trade talk optimism USDJPY continues to rise.
  • Wait AUD/USD.   MT is sideways volatile. The AUD has recovered well from the flash crash and is moving higher on trade talk optimism and a recovery in risk assets. We remain in a sideways volatile MT and MT theory suggests these levels provide a selling opportunity. There has been some reports that Trump is keen on a deal with China on trade, but this has subsequently been denied. Consumer confidence data has soured which is not helping the currency.
  • Wait EUR/USD.   MT is sideways normal. The EUR has failed to sustain the breakout and falling back toward the middle of the recent range. A bearish engulfing week suggests more downside is likely. Weak data has been EUR’s undoing. This may be reflected on Thurday’s ECB meeting. Best to wait.
  • Wait NZD/USD.  MT is sideways volatile. We saw the reversal off the top of the Bollinger Band that we outlined last week. Kiwi has been one of the worst performing currency pairs. This is despite a nice 4.2% increase in dairy prices. GBP growth may pick up slightly in 2019 on the back of government spending. A move back down towards 0.66 should not be out of the question in the near-term.
  • Wait USD/CHF.  MT bear volatile. The pair has rallied on the back of USD strength and the continued rise is risk assets. Looking at EURCHF, I get the sense that we may be bottoming out and that we may get some sustained CHF weakness from here, in particular if EURCHF can close above 1.1350.
  • Wait USD/CAD. MT is sideways volatile. CAD is consolidating after the rapid start to the year. Oil is continuing its rapid rise, up 18% this year. The BOC remains one of the more hawkish central banks. More CAD strength should not be a surprise. Possibly CAD v JPY or NZD are the best options this week.
  • Sell EUR/GBP. MT is bear normal. We have broken out into a bear MT and can expect a move back towards 0.8650.

Crosses

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

Other Markets

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

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

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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