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Home / Market Analysis / January 8: The Best Forex Plays And Setups For The Next Week

January 8: The Best Forex Plays And Setups For The Next Week

We saw lots of back and forth in the markets last week and trading hasn’t been easy. But it’s great to see the progress the guys in our trading room made over the past few months and most are seeing a huge improvement in their trading and performance.

On the higher timeframes, especially the daily and 4H, it does look a little bit noisy on most pairs but I think there are still a few good opportunities on the 4H charts these days. I did add more 1H plays to my current screening process, though.

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My two trades

I had two trades last week. I outlined the whole process behind the AUD/USD long trade in the Wednesday article and video. It was a mix of a squeeze on the USDX and bullishness on Gold, in addition to a technical reversal setup. AUD/USD found resistance at 0.734 where it failed to break above it multiple times. Very nice trade overall. The short USD/JPY didn’t go anywhere and I ended up scratching it for a slight loss ahead of my stop loss. Price found support at 115 and then went back against 116. Overall, I still believe that there is room to go lower, but now we have to sit back and wait it out. The US Dollar could see more bullishness after the solid job report last week.

Not a bad week and considering the good payoff ratio, there is not much to complain about. I always try to drive this point home: focus on getting 1-3 great trades a week and try not to screw up in the meantime. It’s really all you need 🙂

trades

 

Video analysis

So many people seem to enjoy the video analyses that I do each week so let’s start with a few selected pairs here in this video where I share my thought process. Also, make sure to subscribe to our YouTube channel for more weekly trading videos.

 

 

USD Index

The 103.50 level to the upside held on the USD Index as anticipated and we had a decent squeeze on Tuesday which then causes the USD weakness early in the week. Price has moved back up into the 102 resistance area with a strong move on Friday. NFP was mixed but average hourly earnings are up which shows strength in the US economy. This is also giving investors confidence that more interest rate hikes are possible which is bullish for the US Dollar.

Long term I am more bullish but as long as the resistance holds, it signals a lack of strength. There are a few USD short setups going forward but we need a stronger move lower. I am trying to get into more bullish USD setups and they happen more on the 1H chart these days.

dollar

 

EUR/AUD

The EUR/AUD is in a downtrend with a recent consolidation. The technicals are very clear here and I am looking for a continuation on a break of the trendline. It’s a basic setup but it makes sense in the larger picture. It’s not a classic reversal setup, but with the new Tradeciety education program, we will get more into advanced trendline and transition patterns.

euraud

 

EUR/JPY

There are plenty of JPY setups building up right now and I have only included some of them in this watchlist. I urge you to do a scan for yourself and check the different JPY setups. It’s a good learning opportunity.

The daily chart on the EUR/JPY seems very interesting. More Euro weakness could trigger the short here and also help the EUR/AUD setup from above. The support is very well defined and a break of the level is my ‘transition’ point where I will shift from neutral to bearish.

eurjpy

 

GBP/CHF

Another consolidation pattern on the GBP/CHF, similar to the EUR/AUD. After a short term downtrend after the trendline break, price wasn’t able to break below 1.25. There was a major squeeze last week but price also wasn’t able to push much higher which tells me that there could be more bearishness.

Price is gravitating towards 1.25 and a break could open the room for more bearishness. Note that this isn’t the classic reversal setup but you can see how this fits into the larger picture and it’s important to understand how to find those ‘transitioning’ points and consolidations during a trend. This way you can improve your playbook over time by looking at different patterns.

gbpchf

 

GBP/JPY

Another very nice JPY setup. On the daily chart, we can see the shift in direction: we went from strong uptrend to reversal, to breaking and retesting the 20 SMA. 143 is the support that keeps price from selling off further. Right now, I am neutral but a break of the level can change that quickly.

gbpjpy

 

USD/CAD

The USD/CAD is hanging somewhere in between levels and I personally would like to see a deeper push into 1.31685 before thinking about a bullish move. This is one of the few USD pairs where I could see a bullish USD scenario next week. I don’t expect a major reversal here but it could set up a decent opportunity and go with the longer term USD bullish outlook.

usdcad

 

USD/JPY

The last JPY pair for this watchlist. 115 is the key level here and as long as we stay between 118.50 an 115.00 we are in a neutral zone. You should be aware of as many of the JPY setups as possible next week because once it starts to unfold, you can either split your risk across different trades or go for the one that looks the most promising.

usdjpy

 

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Risk disclaimer: The information presented on Tradeciety are for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. Tradeciety cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions. Risk disclaimer.

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8 comments

  1. Well done your analysis hit the nail right in the head I really love it. It would be stupid of me not to subscribe as your insight is so on point. Thank you for taking your time to give back, we really need more people like you.

  2. Great job Rolf! My alerts will be for GBP/AUD and GBP/CHF bear positions.

  3. what do you mean by neutral?

  4. Great content as always; thanks Rolf!

    For a setup like EUR/AUD above, where would you place you initial stop? Would you set it some small distance above the bottom of the broken wedge, above the 20 SMA, or would you go all the way above the recent high (like 1.4470 area)?

  5. AUDCAD seems going up….what do you think?

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