Forex Trading: A Look At Last Week And The Week Ahead

I think there was a bit more of a trend in the market this week with some of the major pairs. After last weeks ridiculous swings that saw the EUR/USD drop 824 pips, an in incredible decline in the GBP/USD by 1423 pips, a more solidified market has arrived. Here are the total pip movement for the majors this week:

Majors
• EUR/USD | +111 pips
• USD/JPY | +490 pips
• GBP/USD | +216 pips
• USD/CHF | -45 pips
• AUD/USD | +494 pips
• USD/CAD | -606 pips

The one pair that stands out in my mind is the correction seen for the strength of the USD/CAD pair. This pair had to come down, because it was way overbought and I posted that exact sentiment in the previous Forex Brunch post. You just can’t keep going at that pace, and my indicator said that it was time to give back some of those gaudy gains.

I am not surprised that the EUR/USD had a nice rally until October 29th. And I was expecting a retracement at the beginning of October 30th, but not down to the 1.2700 level. The strength of the US dollar right now is a direct result of the Euro weakness. If the US dollar were just overall strong, then we would have seen a decline in the GBP/USD and AUD/USD.

Next Week’s Specials

I am going to be quite honest when I say that I have no idea which direction the US dollar is going to trade this week. Looking at the news that will be important for the dollar this week, I see the Institute for Supply Management (ISM) Manufacturing PMI report on Monday at 11:00 AM. This economic health indicator is undoubtedly going to come in with a number under 50, indicating market retraction. The forecast for this number is 41.6, lower than the previous number of 43.5. I would avoid trading around this number. I am very intrigued by this because the last time I said the GDP numbers would be bad, I was very humbly surprised. This resulted in a quick, sharp spike of the dollar, with it leveling off rather quickly.

A look at the crosses

What do you do when you don’t like the majors that involve the US dollar? You trade the crosses!! I’m looking at the charts and I’m liking what I see, and I should be able to provide some good setups in my forex signals for all of those who have signed up. I’ve already posted about why I hate to trade the Sydney session, so I will wait until the market calms down on Sunday to setup any trades.

Subscribe by RSS Subscribe by Email