Hi, I have just got back from a 2 week break and as ever in this situation am slightly out of psynch with the markets.
To get round this situation I wait a few days before I find the “rhythm” of the markets.
This week more so than ever.
Price is at extreme highs and lows on many pairs and Fridays NFP news looks likely to make the $USA even stronger. The price of the $USA may simply keep shooting upwards which means those not in trades will find it difficult to get an entry and yet I have a sneaking suspicion/hope that we will see some pull backs.
On the face of it the headline US jobs figures look very positive (they are some of the most manipulated figures on the planet) and they are one of the forces that will drive the Fed to raise interest rates sooner rather than later BUT analysts will be poring over the break down this weekend and MAY decide things are not quite as rosy.
The majority of new jobs are going to older workers, many are low paid and or part time and as ever excludes over 2 million “discouraged workers” – those who have been unemployed for over 18 months and are rated as not looking anymore! Here are a few links to articles which examine the NFP data in greater detail: Bloomberg
Whatever happens this week the FOMC release will be the most volatile period and best avoided at all costs. Analysts will be listening closely for the phrase “considerable time” in relation to expected interest rate rises. If they don’t say it watch the $US race up! Already there were dissenting voices last month and the NFP news may well see a more hawish tone from Fed members.
The Forex Week Ahead
Caveat. I will probably wait until after FOMC before getting involved and won’t trade Euro gaps down at the open as they may not pull back-Be very careful
Caveat 2: I usually do my analysis on a Sunday, this week was not possible SO if some major news release, natural disaster, invasion or terrorist attack was to take place in the next 24 hours then ignore this post!
Euro/$ I said a couple of weeks ago that my 1st target on this pair was 1.2500, well we are there already. 1.200 is my next one but its very difficult to get in if you are not already. I show in the video other Euro pairs that may well give better entries but 1.2800 I will short if there is a pull back.
The other option to consider is wait for a break and close below 1.2400 (MAJOR monthly trend line), followed by a pullback on a daily candle close
Euro/Gbp tends to break then pull back more and Gbp has had negative news the last few weeks. Best place as ever would be a short at 0.8000 but intra day I will watch around 0.7950 on a 4 hour chart
Other option is break and close below current low on a daily, followed by an M2 pull back entry
Euro/Cad: Fundamentally the Euro is a lot weaker than the Cad, but the latter has had a run of worse than expected data. I prefer a pull back to 1.4350 for multiple reasons as explained in the video. Other option is a clear break and close below 1.4000 on daily then pull back
Euro/Chf: The Swiss National Bank have been intervening in this pair for 3 years now and its costing them a fortune! IF they stop supporting at 1.200 this could fall 1000 pips and VERY quickly! Explained in the video
Wikipedia Currency Intervention
$/Chf THIS pair may be a better bet than the Euro as its oppositely correlated (goes up if Euro is going down). Its broken and closed above monthly 55ema so a pull back there to 0.9520 would be good for a long. Other option is long above recent high on a pull back. This one could go 500+ pips to a monthly trend line that’s over 10 years old!
Gbp/$ Another pair in free-fall. Again I need a pull back though you could short after a break of the low. My preferred area to get involved is 1.6230
Gbp/Cad: As per previous analysis it has been bouncing down from 1.8150 for months and did it again last week for 200 pips! Unless or until it breaks that and 1.7750 are the areas for me as shown in the video
Aud: Freefall but stopped at a double bottom. Swing traders will be looking for longs but not for me. I need a pull back and 0.900 is a long way back but I will wait or walk away.
Aud/Yen. Spent the last week bouncing off a 200 ema and 78.6% fib I need a pull back and 96.30 is the place for me. Alternatively consider shorts if it breaks and closes below 98.80
/$Yen: Set off without me I need a big pull back and 105.00 is it
Cad: At a double top but weak Cad data and strong NFP could see it break this time. I prefer a pull back and 1.0850 is the place. If it breaks the highs after FOMC I will then look for a pull back to long
Euro/Yen: Possible swing trade at 140.00
Euro/Nzd: On watch list to short, leaving for now
Nzd/Cad: Looking to short at 0.9000
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
Weekly Outlook Video:
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