Ahh, exciting times! We just had a crazy busy week, jam-packed with high impact economical data (interest rate decisions for the Fed, BoJ, RBA and BoE, NFP data and much more). And just as I’m writing this, we’re heading into US election week! I took a week off from trading last week since these high-risk events are quite hard to predict and I’m in the business of making profits, not trying to guess what the outcome of some central bank policy could be 😉
For the upcoming week, I’ll probably be very careful as well and will definitely not be trading US pairs since the US election on Tuesday might shake quite a few things up! Ever since the “flash crash” on GBP a couple of weeks back – combined with uncertainty on Brexit, I’m also very careful with GBP pairs. Aside from the presidential election, next week’s economical news will feature swissy unemployment figures and GBP inflation report hearings on Tuesday, the NZD interest rate decision on Wednesday, ending the week with a speech from Stephen Poloz, governor of the bank of Canada on Friday.
Nevertheless, we can still look out for the best setups of the week in our forex outlook. This week, I’m keeping an eye on the following pairs:
Follow my published ideas on TradingView.
During the second half of October, EURCAD has been in a really nice and clean uptrend. We can see at least 4 swings in an uptrend that has been going strong for a while now and might be overextended. It is also nearing a resistance level. This level has been tested before during a previous swing, so traders will likely be looking at what happens. Last week, we could see some price action to the downside, but it seemed that the market wasn’t ready to make a turn in the opposite direction yet.
Things I look out for besides that clean uptrend are the pinbar on Friday, indicating that price was rejected at the red horizontal line at around 1.49590. RSI, while a bit premature, shows a divergence (price makes higher highs, while RSI makes lower highs). This is also a good sign that the uptrend might be on its last legs.
I’ll be looking out for strong bearish breaks below the 1.48500 level before I get in this trade. After all, I want to see confirmation first that the uptrend is done, but signs are pointing in the right direction so far.
The AUDCAD has been dancing around the 1.02780 level as of late. Multiple pushes down have been attempted but none was successful so far. This could be a sign that price wants to move higher, but there’s still a fair chance of a reversal in the making. Price is currently at a resistance level as well.
Again, we can see a big RSI divergence, while price action shows multiple tops. I will want to see the pair moving lower a fair bit before I will get the confidence that a reversal has started, for now we wait on the sidelines and watch the price action.
Next up is a nice opportunity to buy CADJPY. The pair has been in a range for a while (minus one short dip out and back in on the last swing). It is now at the bottom of that range and it seems that price is at least taking a breather while deciding on which direction to follow. I’m just keeping an eye on this chart and while there’s a fair chance that price might move even lower, we could also see a reversal. It’s a bit too early to say now, the best we can do is look for price action that confirms that the market might be ready to push higher.
I’ve been keeping an eye on AUDSGD for a couple of weeks now. After the first peak at the 1.07100 level, there was already an opportunity to short this pair, but the move down didn’t take too long. Nevertheless, for a shorter term setup this could already have paid off with a nice trade.
We can see that the pair is currently in a downwards triangle, which supports my idea that price could be ready to move lower. As with triangle setups, I will want to see the price move below the black horizontal line around 1.05670 before I get in.
Good luck trading!
What setups are you looking at? Share your thoughts in the comments!
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