Forex Trading Opportunities for the Week Ahead 7 January 2019

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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. 

  • Sell DXY. Trend  – MT is bear normal. There are a number of factors to consider with the USD coming into the new year. Firstly, rate hike expectations have been adjusted downward with the market now pricing in cuts rather than hikes in 2019. in his first speech of the year, Fed governor Jerome Powell came across dovish and empathized the need to be patient. While suggesting there will be cuts in 2019 may be a bit premature, the picture has become bearish USD. The US Government is currently shut down which is a drag on growth, but as yet is not greatly impacting markets. Over the New Year period of low liquidity, the stock market has been experiencing some rather volatile movements and US indices have shifted into weekly bear MT’s. This has been driven by poor china data/ trade war concerns. A flash crash in JPY and AUD was partially sparked by an apple sales warning (Apple itself sold off 10%). There is some positive sentiment about upcoming US/China trade talks which saw stocks and risk assets bounce into the weekend.  Importantly, US bond yields have been falling in response to the risk-off environment which is bearish USD. Jobs data came in strong on Friday, which, combined with Powell’s dovish speak was a relief to the stock market. Overall, the outlook is a bit mixed and tricky, but I favor USD weakness.
  • Wait GBP/USDTrend – MT is sideways normal. Brexit news has taken a bit of a back seat over the Xmas period. The next step is a parliament vote on Prime Minister May’s plan which should be on about 15th or 16th of Jan. If the vote is not successful then the UK faces the prospect of a hard Brexit in March. I think best to stay away from the pair until we get a bit more clarity.
  • Wait USD/JPY. – MT is bear fast. USDJPY has benefited from risk-off flows over the holiday period. On Thursday, the bottom fell out of the pair after some Tirkish Lira selling and an Apple sales warning (blaming a slow down in China). This saw a low of around 105.00 (depending on the broker). We have subsequently bounced back to 108.50. This has happened along with a strong recovery in stocks. Weakening US yields have been supportive of JPY. I remain bearish, but if stocks continue to bounce and we trade back above 109.00 then I would wait for a strong bearish signal for the trend to resume.
  • Wait AUD/USD. –  MT is sideways normal. The AUD traded down nearly 300 pips during the flash crash on Thursday, but has subsequently recovered around 400 pips from the low. The Aussie was helped by the recovery in stocks, positive China data and positive sentiment around trade talks between the US and China.
  • Wait EUR/USD. –  MT is sideways quiet. The EUR remains range bound. There is some hawkish talk coming from ECB officials whom believe monetary policy is too accomodative. Risks to growth still exist.Wait for a break above 1.15.
  • Wait NZD/USD. –  MT is bear normal. The kiwi is in a bear MT, but there is a fair chance that we move out of it shortly. Kiwi is being supported by improving dairy prices, better china data, positive trade war sentiment and recovering stocks.
  • Sell USD/CHF.  – MT bear normal. The swissie is benefiting from the risk-off environment and a weaker USD.
  • Wait USD/CAD. – MT is bull volatile. A big bearish engulfing week indicates that we will see further selling in the pair. Canadian Job data was decent and the oil price has been rising on the back of production cuts by OPEC. Bond yields have been moving back in favor of CAD. A good option to sell for short-term traders.
  • Wait EUR/GBP.  – MT is sideways normal. Technically a move below 0.8950 provides a selling opportunity. But probably safest to wait for now given the Brexit risks.

Crosses

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

Other Markets

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

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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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