Forex Trading Opportunities for the Week Ahead 5 August 2019

-edited

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. 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 bull normal. The Fed as was widely expected delivered a quarter point cut and the US Dollar rose instead of falling. The reason for it was that Powell in his speech hinted that this isn’t necessarily the start of a series of cuts, given the continuing strength in the labour market and uptick in retail sales confirm there is resilience in the US economy. Also, to note, is that the decision to cut wasn’t unanimous with 2 of the 12 voting members being against it. The positivity however was short lived, and the index relinquished virtually all the gains after President Trump brought the market’s attention back to the ongoing trade dispute with China announcing a new set of tariffs to be implemented next month. On the chart we saw first a decisive break of 0.98 resistance pushing up to nearly 0.99 only to then end the week back to just above 0.98. With not much in the economic calendar this coming week, Fedspeak and trade related news headlines will be the likely drivers.
  • Wait GBP/USD. – MT is bear normal. The Pound after closing below 1.24 the previous week sunk sharply lower on Monday putting in the largest one day drop this year. It now seems to have found temporary support at 1.21 and at least a small counter trend move can be expected before the market proceeds to test lower levels. In the absence of a catalyst for a complete course reversal we should be looking to be sellers on any retracement. On the data front this week we have Services PMI and GDP, both are likely to come in on the soft side.
  • Sell USD/JPY. – MT is bear normal. The pair not only rejected resistance at 109 but ended the week closing below recent support at 107 making a test of longer-term support at 105 a very plausible scenario.
  • Sell AUD/USD  MT is bear fast. The Aussie has now closed lower for 11 consecutive sessions, I haven’t checked but I am willing to guess that such a losing streak hadn’t occurred at least since the GFC struck. On Friday however the chart printed a doji candle indicating a potential weakening of the downside momentum as the market flirts with the low of January’s flash-crash. This week the RBA meets on Tuesday but not changes are expected after it cut rates twice in June and July. The monetary policy statement at the end of the week might be of more interest.
  • Wait EUR/USD  MT is bear normal. The Euro broke below 1.11 support after the FOMC meeting but printed a hammer reversal candle the following day. While the outlook remains bearish it is preferable to sell on a retracement. In terms of macroeconomic data, we have informative releases from Germany with factory orders, industrial production and trade balance all due this week.
  • Sell NZD/USD.  MT is bear normal. The Kiwi similarly to the Aussie has also fallen hard of late but not quite as low. The RBNZ is in an easing cycle and a rate cut is widely expected at this week’s meeting. Speculation is more about the timing of a further cut. Employment data which is due out the day before the Central Bank will help fuel such speculation.
  • Wait USD/CHF.  – MT is sideways normal. The false break of 0.9950 on Thursday following Trump’s tariffs announcement turned out to be a good shorting opportunity given the effect it had on the equity markets. If the Swissie does not hold recent support at 0.98 further downside is on the cards. For the time being however we might still remain in a period of consolidation.
  • Wait USD/CAD. – MT is bull normal. The Loonie seems to be finding resistance at the 1.325/1.330 zone printing a reversal candle on Friday after better than expected trade data. It could turn out to be a shorting opportunity, however for the time being we would still prefer to be buyers on a pullback. Canadian Employment data, due at the end of the week, will be the most important release for the pair.
  • Wait EUR/GBP. – MT is bull normal. Volatility has expanded considerably in the pair propelling the Euro to a two year high versus the British Pound. The move appears over extended, however the still unresolved Brexit issues make it difficult to take a contrarian bet on the Pound’s strength at least until the chart prints a more convincing reversal pattern.

Crosses

  • Sell EUR/CHF. – MT is bear normal.
  • Sell AUD/JPY. – MT is bear fast.
  • Sell NZD/JPY. – MT is bear fast.
  • Sell GBP/JPY.  MT is bear fast.
  • Sell EUR/JPY.  MT is bear fast.
  • Sell CAD/JPY. – MT is bear normal.
  • Sell CHF/JPY. – MT is bear normal.
  • Sell GBP/NZD. – MT is bear normal.
  • Wait EUR/NZD. – MT is sideways normal.
  • Sell AUD/NZD. – MT is bear normal.
  • Buy EUR/AUD.  – MT is bull normal.
  • Wait GBP/AUD. – MT is sideways normal.
  • Sell AUD/CAD.  MT is bear fast.
  • Sell GBP/CAD.   MT is bear quiet.
  • Wait EUR/CAD. – MT is bear normal.
  • Sell NZD/CAD. – MT is sideways normal.
  • Sell GBP/CHF. – MT is bear normal.
  • Sell CAD/CHF.   MT is bear normal.
  • Sell NZD/CHF.   MT is bear normal.
  • Sell AUD/CHF.  MT is bear fast.

Other Markets

  • Buy Gold. – MT is bull normal.
  • Sell Oil. – MT is bear normal.
  • Sell S&P 500.  – MT is bear normal.
  • Sell DAX. – MT is bear normal.
  • Sell Nikkei. – MT is bear normal.
  • Buy T-Notes. – MT is bull normal.

(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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