Forex trading: What’s coming next week
The last column I wrote was on October 12, and it was followed a quiet fortnight in the forex market. The two weeks following that combined to create the slowest month long period that I can recall in the forex markets. The trends were unclear and any small movements had no follow through.
I decided to take a week out from the markets, which was a great break from a personal viewpoint, but was still relatively uneventful for the markets with equity markets closed on hurricane lockdown in the early part of the week. The good news is that now I am back in action and finally the markets are too!
New Zealand dollar
The kiwi held support at the bottom of its range beautifully and once again, contrary to popular opinion has finally broken out convincingly to the upside. On October 12, I predicted that NZDUSD would trade no lower than 81.00. On October 23 it made a low of 81.007 – how is that for accuracy?
The daily, weekly and monthly charts for the kiwi are among the strongest charts around and I am expecting prices over 83.00 in the coming days and 84.00 to be tested in the coming weeks. As I type we are trading at 82.75.
The US Dollar Index (USDX) has continued the tug of war between buyers at sellers around its key level of 80.00, so far with no signs of a clear winner. My prediction here does not change - as long as the USDX is below 80.00, I am bearish the US dollar and bullish almost everything against it. Above 80.00 I am short term bullish but longer term the US Dollar is likely to continue its decline.
Key currency pairs to watch this week
NZDJPY – A great trend and already moving a bit ahead of NZDUSD. Trading at 66.35 as I type, expect to see it at 68.00 and above in the coming weeks.
GBPUSD - at the time of writing my last column Cable was trading at 1.6040 and I expected it to go hold 1.600 and go higher. Right now it is trading at 1.6130 and I expect it to go higher still. In both the short term and the long term, GBPUSD is providing great opportunities to the upside.
USDCAD – parity plays with the short term trend around the 1.0000 mark continue to provide great short term trading opportunities. Short trades are the preference for me but I will take both if the setup is strong enough.
Last column’s predictions – Right or wrong?
AUDUSD bounced back from the rate cut and my 1.0600 target is looking good although not achieved yet. GBPUSD continues to perform as expected and rolls on into this week’s predictions. EURUSD is trading only slightly higher than it was at the last column and this is the key reason the USDX has not moved much either. I maintain my long term bullish stance.
EURAUD rallied only slightly above 1.2600 and is now in decline. Wrong on that one!
• 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. For training on the forex markets or to learn more, visit www.tradewithprecision.com