Forex Trading Ideas (Week 28 2018)

Welcome back to InvestWhizz as we publish some trading ideas for your reference along the weeks to come.

Before we continue further, do remember to read the disclaimer below this article. Forex trading is a leveraged product and as such it may not be suitable to all.

Back to the topic, Market has been rather volatile for swing trading of late, as such we have reduced our trading entries to finding quality stocks with good businesses and strong balance sheet capabilities.

However we do realise some potential forex pairs which we will like to bring to your attention

Let’s take a look at DXY (Dollar Index)

The above chart shows the possible reversal of the USD in the coming week as it was not able to break up from the resistance for 2 weeks (and more). The rejection on last friday coincides with most XXXUSD at their various support zone.

Our view is so long as DXY doesn’t break up, we are seeing it moving down to 93.6. Breaking further, we can even see 92 in the making. Until then, we prefer to address this step by step.

As per mentioned, we saw various XXXUSD pairs at their support zone. So let us bring your attention to EURUSD and AUDUSD

      

EURUSD – arguably the most traded pair in the forex market and at this current price, it is struck at a no man’s land between the support and resistance. However given its price action and volume accumulated at the support zone, we have conviction that this can easily hit the resistance. We have a position (1.16) in this and will be looking to take profit if there is a rejection in the daily chart. Should the price action break the resistance, we will add one more position and ride it to the next resistance (likely the 1.2 zone).

AUDUSD – In the daily TF, we can see HH and HL being made. As such despite its overall bearish structure, we are seeing possible upwards swing so long as the support doesn’t break. We also have a position in this pair (0.734). We are planning to take a medium term position for this to reach 0.768. From the weekly chart perspective, the bulls and bears are still fighting among themselves. Thus to eradicate any irrational position taking, we will just let it run until the price action rejects it and we will take any profit then.

Up next is an interesting cross pair which we chanced upon but not yet taken any position in:

GBPCHF – a minor cross pair which we seldom trade on but we do see a potential breakup from the resistance given the build up. A retracement to the 1.31xx zone or a retest of a possible break up from the current resistance looks good for a long position. The build up looks good and one has to just remain patient and take position only when the ball is at your court.

 

Lastly have fun trading and investing.

A word of caution is to stay calm and be patient while waiting for your trade plan to work out. So long as you do not overleverage and have a detailed trading plan, you will be fine.

 

Cheers,

Joseph

 

Disclaimer:

RISKS ASSOCIATED WITH FOREX TRADING

Trading foreign currencies can be a challenging and potentially profitable opportunity for investors. However, before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience, and risk appetite. Most importantly, do not invest money you cannot afford to lose.

There is considerable exposure to risk in any foreign exchange transaction. Any transaction involving currencies involves risks including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of a currency. Investments in foreign exchange speculation may also be susceptible to sharp rises and falls as the relevant market values fluctuate. The leveraged nature of Forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. Not only may investors get back less than they invested, but in the case of higher risk strategies, investors may lose the entirety of their investment. It is for this reason that when speculating in such markets it is advisable to use only risk capital.

Risk Disclaimer for Forex Trading

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.