As if the markets aren't crazy enough now, what with the Middle East conflict going on, we had another little surprise and that was the BOJ intervention which sent the yen crazy.
Now, on the back of all of this chaos, do we have some trade setups? Yes, we do. Let's go check them out. Trader Tom here, currency analyst at vesting.com.
And now I'm going to share with you all of my top trade picks for this week. We're going to start by taking a look at this Bank of Japan intervention and what that meant for the yen and do we have some trades on the back of that.
We're also going to look at the US dollar because it's at some really interesting levels across the majors. I'm also going to share with you all of my top trade picks and these mainly involve euro and pound trades. Let's take a look. Let's dive in.
So let's start with this BOJ intervention and just look at the yen pairs. This was EUR/JPY. Look at Thursday's candle on a daily basis that dropped over 500 pips.
If you look at GBP/JPY, it dropped an incredible amount of pips in a day. That was clearly BOJ intervention. I think they've even come out and said it was them.
Now, it hasn't led to trades across all of them. Some of them are bouncing into support. But the trade I do like, or two of the yen pairs I do like, is NZD/JPY.
If we start with the chart on a weekly basis, this is why I like NZD/JPY because this is one of the yen pairs that is actually in a downtrend on a weekly basis.
So we're in a downtrend on a weekly basis. We've got these lower highs, lower lows. We had that big bearish reaction. Now, looking at that candle on a weekly basis, it's a bit of a doji. We got a big bottom wick, big top wick.
If we go down to the chart on a daily basis now and get some more confluence, we'll see why we like sells. We’re in a downtrend on a weekly basis; we’re at a resistance level; we had a big selloff and we’ve got room to move into on a weekly basis. So we like those things.
If we go to the chart on a daily basis now, that big selloff led to a daily structure break. We were in this uptrend. It just kept hitting that weekly resistance up here and then we had the big BOJ selloff.
So we’re in a downtrend on a daily basis and I think we can potentially sell this all the way down to here. But I want a deeper retrace into here. That would be more preferable to trade from there.
So let’s drop down to the H4 timeframe and see where we can trade from. This is our smart river which is part of our indicator. You can see structure on H4 is still in this downtrend as well.
This level here is going to be really interesting on Monday. If I start getting a big bearish wick rejection in here, something like this, I will start selling NZD/JPY back down to these lows, if not further.
So this could be a trade literally Monday morning. We’ll keep an eye out for this. The volatility at the moment is crazy. So we could see some big gap ups or gap downs. This could put a different complexion on this trade. But ultimately we want to sell NZD/JPY.
The other yen pair I like is USD/JPY.
If we start with the chart on a daily basis, this bad boy dropped over 500 pips in a day. So yeah, crazy moves as we know. But let’s start with the chart on a weekly basis.
This became a downtrend because we had this consolidation. It was clearly in an uptrend. It became a downtrend. And then just as quickly, to show how volatile the markets are, it became an uptrend again. Then we got consolidation.
The BOJ intervention has meant a breakout of this consolidation with room to move into. This would be my target back down to here. Big bearish candle breaking all of these lows.
If we look at the chart on a daily basis now, like with a lot of the yen pairs, we had a daily structure break. You can see this level through here. All these last lows on the yen. This would be a good area to start to trade from.
We’ve broken all of these lows. If we get a pullback into here or any of this area and we start to see bearish candles, I think we can take it back down to these last lows if not back down to this 155 psychological level. So USD/JPY sells as well.
If we look at the H4 timeframe, I do like to be with H4 structure. So we might not be in yet. If price does want to retrace and we come up into these resistance levels, then ultimately I’ll be waiting for something like this and we get a break of structure and then we can start selling USD/JPY.
So those are the yen pairs I like. What a crazy week for the yen.
Let’s now take a look at US dollar pairs.
US dollar pairs are at interesting levels. NZD/USD is at an interesting level for sells. USD/CAD is at interesting levels for buys. Both of these suggest US dollar strength from these levels, which goes against USD/JPY, but yen has become its own animal.
Let’s have a look at AUD/USD. All of these US dollar majors are at interesting support and resistance levels. We are starting to see a bit of a bearish reaction on a daily basis.
The problem here is we’re still in an uptrend with AUD/USD, but sellers have come in. If I showed you the candle on a weekly basis, you’d be like I do not want to sell that. And I don’t blame you. This is the problem. We’ve got levels on a daily basis but on a weekly basis it is going against that idea. And because it’s the end of the month, you should always look on a monthly basis. That is just looking like a buy trade for AUD/USD.
So there’s a lot of conflict with US dollar pairs.
Again, let’s have a look at EUR/USD. On a monthly basis we’re just ranging. On a weekly basis we’ve started to bounce off resistance but the candles show indecision. On a daily basis, even more confusion.
So it’s really difficult to know what to do with the US dollar and I’m just going to let it play out over the week and see what happens.
If EUR/USD starts to break this level, then I’m interested in selling and trading US dollar strength. But if price starts to break above these levels, then I’ll become interested in US dollar weakness. So it’s a case of letting the week play out with US dollar pairs.
Now let’s start with some Swiss franc pairs.
On a weekly basis we are clearly in this downtrend. We’re starting to see big bearish candles. Swiss franc got some strength and it sort of piggybacked on that yen strength we saw. Swiss franc is a flight to safety. So I’m very much interested in selling EUR/CHF on a weekly basis.
Downtrend, bearish candles, we’ve had a nice deep retrace to our smart river, room to move into.
If we drop down to the chart on a daily basis, you can see how confused the markets are. At this point, if we just follow structure and trend, we were in a downtrend. Then we broke that high and went into an uptrend. Then a couple of days later the market comes shooting down.
This is a perfect example of why markets are tricky right now. But ultimately because of the structure on a weekly basis, we want to sell this market.
Now what I’m going to wait for with EUR/CHF is for the downtrend to be proven. We need to break this level. Then we get a retest and then we can take it lower. So we need a break there.
I also like GBP/CHF sells. On a weekly basis we’re in a downtrend. Price retraced and has been hovering around resistance. This looks like a liquidity grab. Big bearish candle at resistance.
On a daily basis we were in a downtrend and then moved into an uptrend; and we still are; but if we get a break of structure during the week, I will be a seller down to the lows.
NZD/CHF is similar. On a weekly basis shows a range at the top with a bearish reaction. So it makes sense to sell back down. But on a daily basis and on weekly basis are not aligned yet. We need structure to break first.
Now a couple of Canadian dollar pairs.
CAD strength is still there. Every time I mention CAD strength, I look at crude oil. On a daily basis, oil is still in an uptrend and sitting at support. So oil still looks like a buy trade.
So CAD is still strong. The pairs I like are EUR/CAD.
On a weekly basis we’re in a downtrend with lower highs and lower lows. Lots of sellers in the market. We are at support, but I still think there is room to move lower if this conflict continues.
On a daily basis it’s messy. We are in a downtrend. This is the last significant high. I want my stop loss above here. So I need a retrace before I can sell lower.
GBP/CAD is similar but cleaner. On a weekly basis shows a downtrend and I prefer this pair because there is more room before support. Target is 1.8350.
On a daily basis we are consolidating. If we break the low and retest, I will take price lower. Even 50 to 60 pips is enough room to trade.
On the H4 timeframe it’s ranging. If we break these lows, I want a retest and then I’ll look to sell down to 1.8350.