Hi,
This week we had a big sell-off on the USD, this is because of the CPI news coming lower than expected. This is a clue that the rate hikes have worked and the FED are on track to bring inflation down to their overall target. I think it’s an overreaction as the $ has been sold off heavily. This did affect some very good setups that we had.
We have to be very careful with some set ups as its not a time to pick tops and bottoms. It can be very dangerous. An example is the USDCHF, 0.87600 was an area of interest as it had bounced off there a few times. But there were no multiple reasons for the stop. With the $ weakness we saw it break right through the support and that would have been a loser. Stay with the trend as its your friend.
Even Marc Chandler thinks the market has exaggerated. In his recent articles, he has spoken about the recent moves and what to expect next week and going forward. Would suggest to have a read through those.
After Dramatic Week, Capital Markets are Stabilizing
For the Millionth Time, Markets Exaggerate
The Forex Week Ahead+++++++++++++++++++++++
For the week ahead, Tuesday we have the CAD CPI and US core retail sales release at the same time. So make sure not to trade those pairs or wait at least an hour before you look to enter. Then Wednesday same thing for the GBP, you have the CPI release. This is huge news for the GBP has the BOE is under pressure to bring inflation down. If the number comes higher than estimated then it’s a clue what they might do in the next meeting. Lastly Thursday you have the AUD and USD unemployment release.
MAJORS
Keep watching the $index it is now at a major “make your mind up” area once again on the weekly charts. It is now stuck at the 55EMA and you have the 200 EMA just above it. If it could break above that we could be looking at $ strength.
Remember I am looking for “A” grade trades from weekly & daily charts that I can place the orders and then just walk away. A “B” grade is one that I will watch on 4 hour timeframes to see how it reacts if it hits my zone.
EUR/USD: I need a pullback to 1.0760 for a long. Intraday I would watch 1.10800 for a long on the 4HR multiple reasons there.
USD/CHF: Huge move, too far away, leaving it alone.
Do not take the Euro/$ & Chf at the same time. They are correlated so it’s the same “bet.”
GBP/USD: It doesn’t make sense considering the fundamentals. But 1.2930 would be the first area for long and even better 1.28100.
AUD/USD: NZD looks more interesting because of R:R, watch the video.
NZDUSD: Major break of a trendline. I would look to long at 0.6270 and 0.6230
USD/CAD: It all depends on the starting position before the news, watch the video for more clarity.
USDYEN: Too risky to trade right now, walk away.
CROSSES
Some are A grades where I will place forward orders, most pairs have “areas of interest.” I have a lot of similar crosses so be very careful with the correlation.
EURGBP: Shorting again at 0.8625.
EURAUD: Needs a big pullback to 1.58 area.
GBPAUD: Correlated with GBPNZD, Looking to long around 1.8860.
AUDJPY: A grade long at 92.10, multiple reasons.
Ashley will look at some of the other cross pairs in Tuesday’s live session
As always, remember correlation!
M3 -Shorter timeframes.
I do my analysis on daily and weekly charts first and make a note of the MAJOR areas of support and resistance. Then copy them onto Pierre’s Earth and sky template. Then I make a note of the weekly & monthly pivots points and add them to the charts. You will see lots of opportunities line up during the week. The important thing then is to select a bias for the next few days and do NOT take trades if the price is too near a trend line or pivot. Ideally, you want to buy when the price is near a major support and or pivot point line and has the potential to make at least 40 pips. Vice versa for a short.
New members, please note: If I am looking to take a trade long, 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.
We are NOT a “tipping service” our aim is to teach you how to trade for yourself.
Watch the video below for more detailed explanations of this week’s analysis and trade plan (click the 4 arrows bottom right to view full-screen):
Kind regards,
Marc
