I gave myself a much-needed weekend break to shake off the bad vibes from last week’s trading. Now I’m ready to take the forex market head on! Here’s what I plan to do in the coming trading days.
The dollar finished the week lower against most of its counterparts. Aside from the rally in risk sparked by positive reports from Europe, the currency gave up ground to its counterparts following a couple of bad news on the domestic front.
For one, the FOMC sounded more dovish than expected, hinting that committee members aren’t so keen on removing stimulus measures as markets initially thought. On top of that, data U.S. data such as the advance GDP and NFP reports failed to impress traders.
That being said, I believe that the rallies we saw last week would carry on in this week’s trading. Against the higher yielders, I will be looking to short the dollar. But against the yen and the pound, I’ll be looking to go long on the dollar.
Stochastic indicates that USD/CHF is already overbought. However, I think that we’ll see the pair pullback higher before it continues trading lower. I have my eyes around .9120, the area where I think that the 50% Fibonacci retracement level and 100 SMA would coincide. Should price show any signs of resistance around that level I’ll probably pull the trigger and jump in on a short!
I’m going to maintain my bearish bias on GBP/USD. The pair took another huge dive last Friday, and price seems to have stalled at the 1.5700 area. With the Stochastic showing that the pair is oversold, I believe we’ll see a small pullback. I’m watching this pair carefully to possibly jump in the medium-term downtrend.
That’s it for this week’s pre-week market analysis. Feel free to let me know your own thoughts about the market!