Forex Trading Opportunities for the Week Ahead 22 October 18

I plan my trading for the week ahead each weekend. Here are the Forex trading opportunities I will be stalking this week.

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. While we do remain in the bull MT, Fridays bearish engulfing candle suggests we will be turning sideways. Given that we are in a weekly sideways quiet MT too, it is prudent to be patient for the moment and wait. Fundamentally, there is not too much new. The Fed remains hawkish despite President Trumps protests. US bond yields remain elevated. Stocks have started to bounce but volatility remains high and a further sell-off is quite possible. The US did not name China a currency manipulator.
  • Wait GBP/USD. – MT is sideways normal. There is some optimism a Brexit deal is close to being done, but not enough to stop May calling for an extension to the current Brexit time-frame. The main sticking point remains the Irish border. Technically we are sitting mid-range so best just to wait for now.
  • Wait USD/JPY. – MT is sideways volatile. JPY has started to bottom out and if stocks recover the pair may head back towards 115.00. Given the volatility in stocks and the muted nature of the recover so far I prefer to wait for re-test of the low around 111.60 before looking for longs. Ideally this re-test would be in combination with bullish price action in stocks. Aside from risk on/off, the bullish drivers for a pair remain in-tact with Japanese inflation remaining tepid.
  • Sell AUD/USD. Trend –  MT is bear normal. AUD remains under pressure. This is despite positive employment data and rising iron-ore and gold prices. Note there is little resistance before 0.68. China data has not been great which does not help the pay. In saying this my conviction is not great that we head lower immediately and I would prefer to sell a rally.
  • Wait EUR/USD. –  MT is bear normal. While we do remain (just) in a bear MT the the rejection of the prior low at 1.1430 and the formation of a bullish engulfing candle suggest we may well be turning sideways for now. Given that we are in the middle of the broader range (1.18-1.13), patience may now be the best option. The main story in the Eurozone is the Italian budget. The budget is not likely to be approved by the EU and a revision will be sought. This is unprecedented so who knows where this will all end up. Note that any resolution will be a long drawn out affair. The other potential driver is a tax to be applied to Spanish banks of 1% of their mortgage portfolio (as part of a court ruling). This could be applied retrospectively on about 160 Bln of loans issued over the last 4 years and hurts the already struggling banking sector. ECB is upcoming this week and analysts are warning to watch for a more dovish tone.
  • Wait NZD/USD. –  MT is bear volatile. On the back of a budget surplus and now a positive inflation surprise, NZD has been finding some traction. This may be surprising given the risk-off environment, but we need to remember that NZD is less correlated with equities as it is no longer a carry trade proposition. The currency has been preforming well vs. AUD which helps provide some strength. The next selling opportunity is 0.67, if we break above that we are back in a bull MT.
  • Buy USD/CHF.  Trend – MT bull normal. Despite the sell-off in equities, USDCHF barely fell, which is a bit surprising given CHF’s typical safe haven status. If stocks hold up then there is a good opportunity for the pair to head back towards parity and beyond.
  • Wait USD/CAD. – MT is sideways normal. CAD is struggling on poor data including an inflation and retail sales misses. This leads to the theory that the upcoming hike from the BOC is going to be a “dovish hike”. Note a double top is forming on Oil and the oil market rhetoric has shifted from extremely bullish to one of concern. Prices remain elevated enough for now, but if this sell-off continues to play out then this adds to the bearish picture for CAD.
  • Wait EUR/GBP.  – MT is bear normal. I am looking for a selling opportunity from these levels. Ideally a strong move back below 0.88 or a strong rejection of 0.8850.

Crosses

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

Other Markets

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

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(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.

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