Upcoming trade plan 20th Jan 2014

January 20, 2014 in Forex Analysis

The currency market was quiet last week and now seems to be in ‘wind up’ mode  where the bulls and the bears are kicking the ball between each other and it is been played in an increasingly tighter range in the center of the pitch signaling a very indecisive market. Typically the longer the market winds up, the bigger the move out of the wedge when it comes. The energy for the break is usually supplied by a longer time frame participant entering the market rather than the typical retail trader crowds or other daily participant . On Friday, there was a hint that the bulls may get the ball when the dollar index pushed back above 81. The market is focused now on the pace of the Fed’s taper wind down and traders will be watching US economic data closely for directional clues. Since it is the Martin Luther King holiday in the USA today, US markets are closed so I am not expecting to see much action today.
EURUSD – This looks like a sea of randomness right now. Any trade here is to close to a 50:50 directional bet so it is time for patience in waiting for better odds.

GBP/USD – Similar to EURUSD. Tomorrow (Tuesday) and Thursday, there is quite a bit of event risk so I will be watching those events for market breaks.

EUR/GBP – Related to the above a lot of retail money has been buying the floor in this pair. This suggests further downside is possible as the retail trader stops provide fuel for the move.

USD/JPY – The BOJ is past the halfway point in reaching its 2% inflation target and there is a BOJ rate decision coming up this week. The market may wait for this decision and any new info. on more stimulus (which the market seems to be pricing in). If BOJ disappoints, the Yen is likely to rally and vice versa.

EUR/JPY and GBP/JPY – These have similar indecisive behavior and similar drivers to USDJPY so we watch & wait for now.

AUD/USD – This pair has been acting weakly with the professional money selling the pair (talk of RBA rate cuts fueling the move) and once again retailers have been fighting the trend, foolishly trying to pick a bottom like moths to a flame.

AUD/NZD – As pointed out last week, I am long this pair on a PSAR add trade. I am looking for a big winner trend trade on this one.

Comments are closed.