If you can’t feel the uncertainty and the volatility in the markets now, then you must be living under a rock.
But the important question is, does this equate to good trading opportunities?
Well, let me explain. Hi, I’m trader Tom, currency analyst at investing.com.
And now, I’m going to share with you all of my top trade setups for this week. And we’re also going to look at market dynamics.
So in this vid we are going to cover the relationship between and the indices. We’re also going to look at strength and the trading opportunities this is giving us. We’re also going to look at CHF pairs because they’re at some really nice levels. Also going to look at precious metals. They are flying as usual and the million-dollar question — what to do with the ? We’re going to take a look at that as well.
But let’s start with AUD/JPY and the indices. Because this is the . But if I show you any AUD pair, this is . is crazy strong. Let me show you any other AUD pair — — Aussie dollar is crazy strong.
Now if I show you any yen pair, let’s have a look at — yen is weak, we’re in this uptrend. Let’s have a look at another yen pair, — yen is weak.
Now why is that? Well to understand that we need to go to the indices and this is the S&P and this is the weekly chart.
Now this is that uncertainty and volatility we’re seeing in the market. Are we risk or risk off? And the market is just undecided. But ultimately, we are still bullish. We’re still in an uptrend. And if the indices are bullish, generally speaking, the Aussie dollar will be strong. And conversely, the Japanese yen will be weak because it’s a flight to safety. If the economy is bullish and in an uptrend and the economy is therefore good, yen will be weak.
Obviously, there are other factors that go into AUD strength and JPY weakness. But ultimately the relationship with the indices is an important one and it’s a correlation that you must be aware of and this is why we’re seeing this continued AUD strength and JPY weakness.
Now if the indices started falling then the opposite would be true — yen would become strong and AUD would become weak. Now as I said with the AUD pairs they are just too overextended. There literally isn’t one AUD pair that I would trade because they’re too overextended but there are a couple of yen weakness pairs that I’m looking at.
So the first one is because if we look at the weekly chart, we’re in this weekly uptrend. We’ve retraced to a nice area of support and we’ve got a very nice bullish weekly candle. If I zoom out, you can see this is also a really nice level in here. So NZD/JPY buys is my first trade idea.
If we look at the daily chart as well, you can see we were breaking down. And I was actually looking for sells. But now we’ve broken this level through here. We’re clearly in an uptrend and we’ve got all of this room to move into. So NZD/JPY buys.
If we look at the H4, you might have pretty much a trade setup on Monday. We’re in this nice H4 uptrend. If we start seeing bullish candles, could start buying in here, stops below these lows, look to take it higher.
You do need to be wary when trading the yen. There has been BOJ intervention and obviously if the indices start falling as I explained then the yen will become strong so we need to keep an eye out for these things. But ultimately technically NZD/JPY is a buy trade and it’s the same with .
Again if we start with the weekly we’re kind of in this uptrend stroke range now. We’re ranging between here and here. And again if I zoom in now you can see we had this nice bullish weekly candle. And the idea would be just to take it back to these highs. I’d be looking just to take it back up to here. In fact I’d probably aim for the 115 psychological level. So weekly is telling me I can buy.
If we look at the daily, we had a break of this level. We were in this downtrend and now we’ve kind of built into an uptrend. We’re now getting higher lows, higher highs, and we’ve got this room to move into. Again guys, we want to see confluence across multiple time frames. Weekly is in an uptrend range, daily is in an uptrend, and H4 is in an uptrend.
And also guys, while we’re on Canadian dollar, I am seeing CAD strength. So let’s have a look at a couple of Canadian dollar pairs while we’re here. Let’s start with and I took some profit off this last week.
Weekly chart — we are seeing an uptrend that turned into a downtrend stroke range really. Ultimately we’re between key levels but I still think we have more room to the downside and this 1.6000 psychological level.
Now if we go to the day chart, we’re in this daily range. If we get a nice pullback and then we come down, then we’ve got more than enough room to take it back down to these lows. So daily is also telling me we can sell.
If we now drop down to the H4, this could literally be a trade on Monday morning. Structure broke lower, retraced to resistance — nice sell setup.
So EUR/CAD sells. This continued CAD strength. I also like sells. And I’m actually in this trade.
Weekly chart shows reaction at resistance with bearish rejection. I think we’ve got more room to pull back before buyers return.
On the day chart we are in a range stroke downtrend. Broke structure, bearish daily candle — I started selling off the back of that. Targeting 0.8100 area.
That’s Canadian dollar strength.
CHF pairs are at very interesting levels. weekly — lots of buyers coming in at this level. — this level so far has held. So we’re at interesting levels with CHF in general.
The CHF pair I like first of all is . Price broke previous high, now in an uptrend and respecting trend line support. I’m already in this trade targeting previous highs.
— I also like this because of CAD strength. Weekly uptrend, higher highs, strong bullish catalyst candle. If support holds, move toward next resistance.
Now the dollar is tricky. For example, — I want to sell because we were in this uptrend and now we’ve had this selloff on the weekly and we’re just having a deep retrace. Potentially nice sells here.
This is also important when looking at yen pairs in general because this suggests yen strength. Everything is correlated.
Whereas — I want to sell and I’m in this trade. Reached key resistance level. Weekly uptrend but room to retrace. Targeting 0.5900.
Gold — weekly chart soaring. Monthly chart shows a big wick so buying into that is risky. Daily suggests buy. Overall more reasons to buy than sell.
Silver — broke key daily resistance. Buyers in control.
And finally . Weekly has broken key resistance — multiple resistance touches then break. Room back up to next level. If we get pullback and bullish candle, potential continuation higher.
Those are all of my top trades.
Have a great trading week.
