EUR and USD continue to be the strongest pairs on both timeframes, and AUD and JPY the weakest. So ideally looking to trade EURAUD, EURJPY or AUDUSD or USDJPY.
GBPCHF – I do like this one now. The STAM environment is still S1S. Notice the lower highs and lower highs. And each time that there is a high tail, price drops off. On the 4H chart, price retraced sharply from the 200 MA. Is this a valid setup? Yes, it is in a S1S environment. No, it is not trading strength v weakness – GBP and CHF are sitting right in the middle of the rankings on both daily and weekly time horizons. No there has not been a significant retracement, in fact the chart as a whole is not showing a strong trend. There is a lot of consolidation and yes, there does seem to be a channel but it’s not trending as nicely as we would like for the STAM strategy. And there is no strong bearish PA. Finally, even if there was a setup, it is now only a few hours to the BOE interest rate announcement and just over 24 hours to NFP. (see the chart above)
EURGBP (open position) – so far so good, today there is BOE rate decision at noon, ECB rate decision at 12.45pm and ECB press conference at 1.30pm – expect some price movement – observe what happens to the spread during the trade – how wide does it go?
EURUSD – this one could also suddenly change to S1S (like Cable) – the momentum on the weekly chart may change this week – however the two pairs are currently the strongest ones – so I don’t want to trade those against each other.
AUDUSD – still a S1S, but waiting for a big retracement – maybe the pair will rally following NFP, and we sell it after that, sometime in the middle of next week.
USDJPY – this pair has rallied a lot, we now need to wait for US dollar to weaken again before it converts into a S2S environment.
AUDJPY – continues in S2S environment, but is still effectively trading sideways. No setup.
Action: No new orders into the market. Keep an eye on reaction to the BOE and ECB meetings today. Today the analysis took me just around 30-45 minutes. Nice!