Forex Trading Opportunities for the Week Ahead 28 January 19
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. The USD is stuck mid-range and direction remains unclear. Data remains decent out of the US (thought not as robust as it has been). The US Govt has reopened for three weeks while talk of a border wall is discussed. Trade talks are set to continue with China this coming week despite reports that the two parties are “miles” away from a solution. The Yuan strengthened, which was seen as a bearish USD driver on Friday. Nervousness about the rate hike trajectory for 2019 is weighing on the dollar. Additionally, a report came out from the WSJ that the Fed may unwind it’s balance sheet less than expected. This moved the market significantly on Friday. This means less quantitative tightening than was forecast which is USD Dovish and positive for stocks. Next week we get NFP and a FOMC meeting. It’s not anticipated that their will be any movement in interest rates but we may see some greater acknowledgement of the downside risks in the press conference. Overall, similar to last week don’t have much conviction in the USD either way from here so prefer to wait.
- Buy GBP/USD. – MT is bull normal. GBP has been the big mover in the currency markets. The pair is rising as the risk of a no deal “hard exit” by end of March has been reduced. Strong labor data and some positive talk from the BOE helps too. Of course GBP has been very much oversold as well. Lets not forget that Brexit headline risk is far from over and we are reaching a key resistance level. Bonds yields are GBP bullish over EUR and USD. Overall I like to continue to buy GBP.
- Wait USD/JPY. – MT is sideways normal. With stocks recovering you may have expected USDJPY to be stronger. But USD weakness is really holding the pair back. Wait for now.
- Wait AUD/USD. – MT is sideways volatile. The AUD had a interesting week. The pair was sold when NAB (one of the big four Australian banks) raised interest rates, citing funding pressures. This was seen as a sign that the next move from the RBA will be to cut rates. Sentiment is also starting to focus ever so more on the problems in the Australian housing market. But a rate cut is far from a done deal, and unless conditions deteriorate, it’s more likely that rates remain on hold. Weak china data did not help the pair either. I do think there is a number of bearish factors for the Aussie, but before getting excited about shorting the pair, we do need a bit more clarity on where the USD is heading.
- Wait EUR/USD. – MT is sideways normal. The EUR continues to struggle with poor economic data. This lead to a more dovish sounding ECB and a sell-off. The pair recovered on Friday with USD weakness the main driver. I think best to wait.
- Wait NZD/USD. – MT is sideways normal. It turned out to be a good week for the Kiwi after a hotter than expected inflation report. Kiwi may end up being one of the better options to buy against USD. Dairy prices were up 4% at the last auction, there may be a pick-up in GDP on the back of increased govt spending and the RBNZ is not looking to cut rates (but not hike them this year either). US Stocks are up 12% this year which is good for risk currencies. The NZ stock market remains strong. China and trade wars is a risk, but lower growth in China is more the new normal (as China wants to reduce leverage in the financial system, which comes at the cost of growth, but it ultimately a safer path).
- Wait USD/CHF. – MT sideways volatile. MT theory suggest that there is a fair chance of a sell-off here for a move back towards 0.9750. But with stocks recovering I’m not sure this would be the best play. CHF has been under-performing compared to other major pairs. Wait for now.
- Wait USD/CAD. – MT is sideways normal. A slew of poor data and a steady oil price meant that CAD sold off in the last week. That was until Friday when the pair joined in the bearish USD party. I think we can expect more consolidation here, unless oil breaks above $55.
- Sell EUR/GBP. – MT is bear normal. After taking out the 0.8650 target, we can expect a period of consolidation here, so be careful of a bounce.
- Wait EUR/CHF. – MT is sideways normal. Wait
- Wait AUD/JPY. – MT is sideways normal. Wait.
- Buy NZD/JPY. – MT is bull normal. Look to buy.
- Buy GBP/JPY. – MT is bear normal. Continue to buy.
- Wait EUR/JPY. – MT is sideways normal. Wait.
- Wait CAD/JPY. – MT is sideways normal. Wait.
- Wait CHF/JPY. – MT is sideways normal. Wait.
- Buy GBP/NZD. – MT is bull normal. Continue to buy.
- Sell EUR/NZD. – MT is bear normal. Look to sell.
- Wait AUD/NZD. – MT is sideways normal. Wait.
- Wait EUR/AUD. – MT is sideways normal. Wait.
- Buy GBP/AUD. – MT is bull normal. Look to buy.
- Wait AUD/CAD. – MT is sideways normal. Wait.
- Wait GBP/CAD. – MT is sideways volatile. Wait.
- Wait EUR/CAD. – MT is sideways normal. Wait.
- Wait NZD/CAD. – MT is sideways normal. Wait.
- Buy GBP/CHF. – MT is bull fast. Continue to buy.
- Buy CAD/CHF. – MT is bull normal. Continue to buy.
- Buy NZD/CHF. – MT is bull normal. Look to buy.
- Buy AUD/CHF. – MT is bull normal. Continue to buy.
- Wait USDSGD. – MT is sideways normal. Wait.
- Sell USDCNH. – MT is bear normal. Continue to sell.
- Buy Gold. – MT is bull normal. Look to buy.
- Buy Oil. – MT is bull normal. Look to buy.
- Buy S&P 500. – MT is bull normal. Continue to buy.
- Buy DAX. – MT is bull normal. Continue to buy.
- Buy Nikkei. – MT is bull normal. Continue to buy.
- Wait T-Notes. – MT is bull volatile. Wait.
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Economic calendar for the week ahead:
(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.