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In view of the major geopolitical events that are currently taking place, we need more than ever to be studying what is going on in the world and what effect those events will have on currencies.

The Malaysian jet incident, ongoing crisis in Syria which the west seems happy to avoid, Iraq who have oil so far more important, Israels attacks on Gaza- the world is currently entering a very unsafe period where anything can change on an hourly basis and as traders we need to be aware of the implications.

I explain in greater detail in todays video & there is the further announcement by the Argentinians & Chinese of $Billions of loans from the latter to the former AND in my opinion, even more important the agreement to trade using the Yuan rather than the $USA. One of the reasons that the USA is still seen as the reserve currency of the world is the fact that most international transactions use that currency. Earlier this year the Russians & Chinese agreed to trade in their own currencies which simply sped up the process of moving away from the $USA.

The Chinese tend to plan for 100′s of years ahead. The western politicians on the other hand, whose main priority is to be re-elected every few years, only make short term decisions and actions. China has spent the last 5 years since the financial crash, buying up huge areas of South America and Africa. Both countries are mineral rich and Argentina has a lot of prime farm land. China has also invested heavily in road and rail connections in said countries. Why? They need to transport the aforementioned goods to the ports.

Fx Analsyis for the Week Ahead

The Malaysian jet situation and the confused situation on the ground could spark a major international incident at any time and therefore I will only be in one trade at a time. Furthermore there is a lot of red flag news and especially speeches where financial big wigs often enjoy toying with analysts which can result in big, illogical swings.

However there are still potential trades to be had from my preferred longer time frames AND on some pairs that I don’t usually study. Why am I looking at them? Fundamentals lead me there. then the technicals gave great entries.

Gbp/$ Broke the major area BUT the BoE has now tried to talk it back down again as no government wants their currency to be too strong as it negatively impacts sales of exports. So what to do? 1.7000 is still an obvious major area for price to at least bounce off and if you are trading intra day then watch it. However I prefer a pull back to 1.6950 which has a confluence of important indicators. 50% of weekly fib, daily 55ema and bollinger and a weekly trend line. One note of caution there is major macd divergence on the daily which could signify a bigger pull back. If the first trade fails I will look to long at 1.6700. Be careful. The Euro has similar set ups and these potential bounces back up could be what are known as “dead cat bounces” – ie a limited move before a further fall. SO only take one at a time and get stops to entry asap

Euro/$ I really don’t like this pair at the moment. Apart from the usual political machinations we have the further issue of the Ukranian situation which could blow up at any second. I explain in the video the numerous options including a triangle break out, BUT I will leave alone unless it breaks and closes below 1.3400 on a daily candle, THEN I will be interested to short for a potential big fall down. If it simply moves back up I will look elsewhere.

One to watch but not a forward order for me.

Chf: In recent weeks lots of winning shorts at 0.9000 for “multiple reasons” and it could do it again. However there are clues on the weekly chart that price may finally break this area. If it does I will wait until a close above 0.9040 for what could then become a big move, explained in the video.

Euro/Gbp:  Well on its way to my Christmas prediction of 0.7500 – its been in the same channel for a year and we are currently bouncing off it, ideal of course is big pull back to 0.8200 unlikely so shorter term pull back to 0.800 has worked well in recent weeks so should once m0re.

AUD Currently bouncing between 0.9350 and 0.9500 so look for trades there, but In my post on 29th June  I went into great detail about the possibilities on this pair. THAT is probably still the best strategy as it currently looks very messy.

Euro/Yen Price has clearly fallen below 140.00 and technically & fundamentally looks bearish. I need a pull back and 138.00 is my preferred zone to do business.

Aud/Yen Too messy, leaving alone.

S/Yen: If the geopolitical events see a rush from a “risk on environment to risk off”, that could see the Yen strengthen dramatically so a tricky one. In the meantime, technically its been very simple, longs off 101.30 have worked for weeks and until it stops then thats the place. If it breaks down then  I will long @ 100.00 fingers in fire, whole number support and resistance, 55ema weekly 61.8%, but again could be a “dead cat bounce” so be careful. If 100.00 breaks I will only short on a clear break below on a daily candle – but there is a ton of clear air below which could see it drop like a stone.

The flip side (always prepare for all eventualities) is if it breaks and closes above 102.80 I will long.

Cad I am still long from 3 weeks ago and its gone nowhere  my bias is still long BUT if the 55 ema crosses over the 200 ema on the daily I will start to think of shorts and close my current trade.

gbp cad, I show in the video how 1.8140 has given some great trades and could again and why it is technically a very strong area. Also keep you eye on gbp/aud triangle range, which has a low risk high reward potentials as does the Gbp/Nzd – all explained in the video. Only be in one Gbp trade at a time.

New members please note: If I am looking to take a trade long, at for example 1.5000 , I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.

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regards, Marc Walton

fx analysis