FX Trading Ideas for the Week: October 12-16, 2020

By Aiza Belle | 12 October 2020 | |
Calm Before the Storm

Calm before the storm. Markets are muted this Monday, especially with both US and Canada's bank holiday today. However, expecting increased volatility as we head towards US election day.

Important economic events for monitoring this week: 

  • clues from BoE Gov. Bailey regarding UK and EU trade deal, as well as readiness of UK banks regarding negative rates (like Japan) -- although BoE is expected to hold its current 0.10 interest rate, BoE's general dovish tone supports the possibility of a 0 or negative interest rate in the near future
  • mostly from the US, namely: CPI, PPI, Philadelphia Fed Manufacturing Index, Unemployment Claims, Retail Sales and Consumer Sentiment -- expecting these to cause increased volatility on USD pairs for the week, so should be more cautious and avoid trading right before the news
  • Australia's Employment Change and Unemployment Rate numbers to be released this week
  • China's trade balance report
  • expectation on ECB President Lagarde to affirm ECB's dovishness especially with certain Euro zones currently under threat of the virus' 2nd wave (and further reinforcing my general bearish bias on Euro for the succeeding weeks).

Disclaimer: This only serves as general analysis and guide for the week, based on current market situation, but shouldn't be treated as financial advice. Do your own research and refer to our Disclaimer policy here.

In general, riding the existing strength of JPY this week, while riding the possible continued bearishness of other currencies like the EUR and AUD, and at the same time try not to get hunted down by smart money regarding SL and avoid fakeouts during USD news events this week.

Texts in this color are comments added in Oct 20.

AUDCAD - Wait for possible bearish reversal near 0.97 then sell | dropped down earlier than expected to 0.93 without recovering to 0.97 first because of dovish RBA despite better labor figures last week

AUDCHF - Wait for breakout from the triangle past 0.6617 before buying short-term | buying not triggered thankfully at 0.6617 level as pair dropped down to 0.645 instead of breaking out on the upside

AUDJPY  - Wait for pullback near 77 before selling | similar to AUDCAD, went down towards 74 earlier than expected (-61.8 fibonacci level and also last month's low)

AUDNZD - Wait for pullback near 1.085 or higher then sell | slightly rallied at 0.86 near its daily 38.2 fibonacci level before dropping towards 1.07

AUDUSD - Wait for better entry near 0.725 then sell | similar to AUDCAD and AUDJPY, dropped earlier from 0.722 down to 0.707

CADCHF - Ride possible range-bound bounce from 0.69 to 0.67 | moved in a narrower range than expected between 0.6899 and 0.696

CADJPY - Ride consolidation from 80.5 down to 78 | it did consolidate from 80.5 however only up to 79.4 last Thursday before starting to recover again by Friday

CHFJPY - Ride possible pullback soon from 116 down to 115 | had a pullback indeed from 116 down to 114.8 last Friday before starting to move up again this week

EURAUD - Ride possible short-term drop to 1.60 or wait for confirmation before buying | AUD was weaker overall last week, and EURAUD showed signs of bullishness by Thursday and it now continues to move up to 1.67 (38.2 fibonacci level)

EURCAD - Wait near 1.55 | it went down to 1.14 last Wednesday before starting to move up again now (currently at 1.552) but not as bullish as EURAUD

EURCHF - Ride bearish momentum down to 1.072 or wait for breakout or bounce at 1.07155 before selling/buying  | EURCHF actually even moved down further to 1.069 last Thursday and it then started moving sideways (and uncertain where to next) until now

EURGBP - Wait for better entry near 0.92 then sell | similar to most Aussie pairs, EURGBP dropped earlier than expected but only up to 0.90 last Wednesday before bouncing up again now

EURJPY - Wait for better entry near 125 then sell | similar to EURGBP, it dropped earlier down to 123 (0 fibonacci level in monthly chart) by Thursday and started bouncing up by Monday

EURNZD - Wait near 1.776 | EURNZD moved down to 1.7579 by Wednesday but started moving up again by Thursday and now at 1.79

EURUSD - Wait for bearish confirmation near 1.19 before selling | similar to other EUR pairs, this dropped earlier but only down to 1.167 (almost but didn't touch the 61.8 weekly fibonacci level) by Thursday and started rallying by Monday this week

GBPAUD - Wait for better entry near 1.835 then sell | it did move its way up to 1.835 by this week (currently at 1.8375 now) -- waiting for confirmation of reversal before selling, else ride short-term rally up to 1.85-1.87

GBPCAD - Wait near 1.71 | it dropped down to 1.69 by Wednesday but started recovering on the same day and moved sideways ever since

GBPCHF - Short at possible bounce near 1.193 | dropped early from 1.19110 (didn't touch 1.193 at 38.2 fibonacci) down to 1.1745 by Friday and remained sideways

GBPJPY - Wait for possible rally towards near 140 or bearish confirmation candles before selling | similar to GBPCHF, it didn't have enough bullish momentum to rally up to 140 but moved downwards to 135.4 by Friday and started bouncing up again by Monday

GBPNZD - Wait for bearish bounce confirmation near 1.97 before selling | same with GBPCHF and GBPJPY, didn't touch 1.97 anymore (-38.2 fibonacci) but dropped down to 1.934 by Wednesday, before recovering right away on the same day and continued moving up and now reached 1.974 

GBPUSD - Wait near 1.306 | similar to other GBP pairs, it started dropping down to 1.28713 by Wednesday and also recovered the same day, however not as bullish as GBPNZD remained ranging early this week

NZDCAD - Wait near 0.87 | rallied up to 0.87755 before continuing its downward momentum and now wat 0.86605 and may continue down to 0.86, we'll see

NZDCHF - Wait for either recovery at 0.61 or breakout past 0.60 before selling | it did rally up to 0.61 before dropping down and currently at 0.59730, possibly on its way to almost 0.59 this week, we'll see

NZDJPY - Wait for better entry near 70 or breakout at 68.5 before selling | rallied past it 70 (0 fibonacci level) up to 70.404 before dropping to 69.2 by Thursday and remained sideways early this week

NZDUSD - Wait for rally to 0.67 then sell | only rallied up to 0.668 before continuing dropping to 0.657 and continued moving sideways

USDCAD - Ride bearish momentum up to 1.305 | contrary to a bearish USD in general, it recovered up and rallied up to 1.32559 by Thursday and slowly bouncing down again and followed its downward trendline by Friday

USDCHF - Continue riding bearish momentum up to near 0.9055 | similar to USDCAD, it rallied instead up to 0.91606 before started dropping early this week

USDJPY - Wait for breakout past 105 or rally towards 107 first and bearish confirmation before selling | unlike other USD pairs, USDJPY dropped to 105 but didn't have a bearish breakout and simply bounced up from there to 105.5 (-61.8 fibonacci in weekly chart)

XAUUSD - Wait for better entry near 1900 or lower before riding trend up to 1965 | gold dropped down to 1885 and continued moving sideways instead of resuming its huge rally last Oct 9.

XAGUSD - Wait near 25 | formed a shooting star candle at 25.555 before reversing down by Tuesday and continued moving sideways near 24.7 (0 fibonacci)

XTIUSD - Wait for breakout past 39 or bounce near 41 before selling | started rallying to its previous high at 41.59

USDZAR - Wait for bullish confirmation near 16.2 before buying | rallied by Wednesday but only up to 16.7 and consolidated again early this week instead of continue climbing up its downward trendline at around 16.90

USDMXN - Wait for bearish confirmation and ride short-term recovery towards 21.5-22, else ride bearish trend and possible break out up to 20 | rallied and spiked up past its 0 fibonacci and reached 21.51 before dropping down last Wednesday and reaching 21.07 by Friday 

Overall it was a great week last week, most pairs moved as expected except for USD pairs like USDCAD (still a loss there, most likely will close this week, just waiting for it to go down further) and USDCHF (previously unrealized loss but glad it's unrealized gain now). Monitoring it now to see if it will touch my TP or if I should manually close it already and lock in gains.

USDCHF turnaround October 2020

Featured image by C Boyd of Unsplash.


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