Forex trader: What’s coming next week
New Zealand dollar
The forex markets have had a very choppy fortnight and during the last week NZD/USD has suffered from choppiness more than most. The kiwi right now is in a tight range with short-term support holding it above 81.50 all week. The higher timeframe weekly and monthly charts still look very bullish and regardless of a quiet fortnight, I remain long term bullish for now. In the short-term we are bullish so long as the Kiwi can hold 81.50. If we break down through this level then expect prices to retreat as far as the big number of 81.00 where longer term support should be found.
The USD also has been sideways and the US Dollar Index (USDX) has tried to push onward in both directions but failed. 80.00 on the USDX remains key and we are trading below that right now. As long as the USDX is below 80.00, I am bearish the US dollar and bullish almost everything against it, including the Kiwi as per above and Sterling as per below. Longer term the US Dollar decline seems destined to continue, even though in the short term we are seeing some consolidation.
Key currency pairs to watch this week
With markets lacking direction, the charts are harder to pick this week so just focusing on my favourite two pairs:
GBP/USD - Has tested support at 1.6000 many times in the last 72 hours and rejected it each time which shows there are buyers at that level. With the candles now turning bullish, I am expecting a rally higher on Cable this week from the current price of around 1.6040 as I type.
EUR/AUD – A strong Euro and a weak Aussie - the latter eventuating from mining industry concerns and an RBA rate cut last week – is a high probability trade right now. EURAUD has had a decent sell-off over the last week into a key level of 1.2600 and looks set to rally from here. 1.2800 could be on the cards.
Last column’s predictions – Right or wrong?
The RBA rate cut also cut my chances of been right on the AUD/USD rally in the short term but in the medium to long term I maintain my 1.0600 target. GBP/USD rolls on to this week as per above. GBP/JPY moved nicely in my direction and was a great short-term trade, minus any long-term follow through.
Finallly, no column is complete without a mention of the mighty EUR/USD – this will remain bullish as long as the USDX remains bearish. They are virtually the inverse of each other most of the time. The Euro trades at 1.2935 vs USD as I type and I will continue to be bullish, even in spite of recent lack of direction, so long as it remains above 1.2800. Holding this level means the uptrend will remain intact and I don’t like swimming against the tide.
Nick McDonald teaches everyday people how to become a trader using technical analysis and charting techniques to trade in forex markets, stock indices and commodities
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