Forex Trading Opportunities for the Week Ahead 12 August 2019

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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 Dollar Index is now back to a sideways market type after it failed to successfully push through 0.98 resistance, thanks mostly to President Trump’s trade war with China which this week morphed into a currency war. The People’s Bank of China let the Us Dollar soar above the politically sensitive level of 7 vs the Chinese Yuan for the first time in over a decade, as a counter measure to soften the impact of Trump’s new tariffs. And that sparked the American President to call again on the Fed for more substantial rate cuts to bring the green back down and make it more competitive, while labelling China as a currency manipulator. The market now expects the Federal Reserve to cut 2 more times by the end of the year. We could see further headline driven losses in the US Dollar but as we head into the height of the northern hemisphere’s summer there might be a bit of a lull. This coming week we have some top-shelf macroeconomic data reports with CPI, Retail Sales and some Industrial updates which are worth watching as they may or may not support Trump’s call.
  • Sell GBP/USD. – MT is bear normal. Can the Pound get any lower? It seems it can. The Sterling is in a bear market type in all timeframes, daily, weekly and monthly, as it approaches the important 1.200 psychological level. With the UK and European Parliament both in summer recess Brexit has been on the back burner but data has disappointed with the preliminary June quarter GDP coming in negative. The coming week is data-heavy with Employment, Inflation and Retail Sales reports. Watch for any miss on those.
  • Sell USD/JPY. – MT is bear normal. The 105 support area and the January 3 flash crash low are likely to be tested sooner rather than later and a break below those levels would open the door to a test of much lower prices towards 100.
  • Wait AUD/USD. –  MT is bear normal. The Aussie last week ended a record long losing streak finding support at 0.67 just under the January flash-crash low. Here it formed a reversal pattern which is more likely than not to have some follow through in the coming days. It is therefore best to wait for the Aussie to pull back a little further before looking at selling again. The RBA, as expected, left rates on hold at 1% while June saw Australia posting the largest Trade Surplus on record. Iron Ore prices however have fallen sharply since the July peak, it will be interesting to see if that will be reflected in the July Trade Balance. In the coming week, data to pay attention to is on Consumer Sentiment, Wages Price Index and Employment.
  • Wait EUR/USD. –  MT is sideways normal. Over the past four sessions the Euro has been battling trying to push above resistance at 1.120 closing the week right on it. It’s worth keeping an eye on the pair this week, if prices start falling back we could see a move to retest the recent low toward 1.100. The political turmoil in Italy and data releases on German Economic Sentiment and GDP growth figures provide downside risk for the Euro.
  • Wait NZD/USD.–  MT is bear normal. The RBNZ has surprised the market in a big way by cutting rates by 50 basis point, despite solid Employment figures with unemployment reaching an eleven year low of 3.9%. It is becoming clear that the trade war is going to impact Chinese demand for New Zealand products, confirmed by a decline in dairy prices at the Global Dairy Trade Auction held on Tuesday. The Central Bank has therefore decided to take decisive pre-emptive action in the face of a deteriorating global outlook. The sharp fall following the release found support at 0.64 around last year’s low. If the Kiwi closes below that level we could see further downside toward the 2015 lows. However, the price action also suggests the possibility that the pair might have found a bottom at least for the time being.
  • Sell USD/CHF.  – MT is bear normal. The pair re-tested the 0.97 level and has remained contained below 0.98 over the past three sessions. A move lower from here at least toward 0.96 is the most likely scenario in the short term.
  • Wait USD/CAD. – MT is bull normal. The Loonie found resistance at 1.33 with the Canadian Dollar supported by a recovery in oil prices in the latter part of the week. Employment data however was disappointing with unemployment ticking up to 5.7%. We would still prefer to be buyers but in the short-term lower prices are a possibility particularly if oil recovers further.
  • Wait EUR/GBP.  – MT is bull normal. Volatility has expanded considerably in the pair with the Euro closing the week at a level not touched since 2009 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 recovery at least until the chart prints a convincing reversal pattern.

Crosses

  • Sell EUR/CHF. – MT is bear normal.
  • Wait AUD/JPY.  – MT is bear normal.
  • Wait NZD/JPY. – MT is bear fast.
  • Sell GBP/JPY. – MT is bear normal.
  • Sell EUR/JPY. – MT is bear normal.
  • Wait CAD/JPY. – MT is bear normal.
  • Wait CHF/JPY.  – MT is bear normal.
  • Sell GBP/NZD. – MT is bull normal. The Pound continues to be weak and the NZD might have found a bottom.
  • Wait EUR/NZD. – MT is bull fast.
  • Sell AUD/NZD. – MT is sideways normal.
  • Sell EUR/AUD.  – MT is bull normal. A reversal pattern has formed at long term resistance and AUD might have found a bottom.
  • Sell GBP/AUD. – MT is sideways normal.
  • Wait AUD/CAD. – MT is bear normal.
  • Sell GBP/CAD. –  MT is bear quiet.
  • Wait EUR/CAD. – MT is bull normal.
  • Sell NZD/CAD. – MT is bear normal.
  • Sell GBP/CHF. – MT is bear normal.
  • Wait CAD/CHF.  – MT is bear normal.
  • Sell NZD/CHF.  – MT is bear fast.
  • Wait AUD/CHF.  MT is bear normal.

Other Markets

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