FX Trading Ideas for the Week: October 19-23, 2020

By Aiza Belle | 19 October 2020 | | Share:

Whatever economic events are happening this week are surely gonna be overshadowed by House Speaker Nancy Pelosi.  (Updated on October 26, 2020 to add comments regarding how prices actually moved).

Pelosi set a Tuesday deadline over the weekend about the 2nd stimulus deal. The way I actually understand it is: she and the democrats want a higher amount -- $2.2 trillion -- to be passed before the US elections, so that whoever's gonna win by November (most likely Biden) won't have to carry the blame regarding any repercussions about that 2nd stimulus.

Trump and the Republicans, on the other hand, conservatively agree on $1.8 trillion, which they hope is reasonable and hopefully won't cause the US dollar to plunge down further, but Pelosi insisted that amount isn't enough at all among other things they don't agree on in the deal.

Related post: Analysis About the US Dollar in the Coming Weeks Ahead 

Looking at it realistically, it's more probable that they won't reach a deal and the next stimulus from the US government is going to be pushed back to 2021. Hopefully, this won't be one of the major causes of possible civil unrest or anything of that sort especially with the coming Christmas season, and people look forward optimistically instead towards a working vaccine soon while looking for other means to earn money online and staying safe.

Side note: we really need to learn celebrating Christmas from a non-materialistic standpoint especially I'm highly worried about the usual increased crime and robbery around this season too (except for some parts of the world thanks to more awareness through media and increased vigilance by the police authorities), and pair that with high unemployment because of this pandemic-- it's a lethal combination.

Anyway, here are some other important economic events for this week:

• RBA releasing its Monetary Policy Minutes (in just a few minutes as I type this post lol -- I expect RBA to continue being dovish though as they look into buying more bonds and implementing more quantitative easing, while considering extending support to the labor market)
• UK recently implemented its Three-Tier lockdown and though its effect might not reflect right away on upcoming CPI and PMI figures later this week, it most likely will by next month
• Canada's month-on-month CPI change and Retail Sales figures to be released soon (but expected to be steady)
• New Zealand CPI change expected to be higher than prior quarter's
• EU's PMI figures which are all forecasted to be conservatively lower than prior period especially it is also less likely for the UK and EU to meet post-Brexit deal any time soon

Disclaimer: This only serves as my general analysis and guide for the week, based on current market situation, but it's best to do your own research and refer to our Disclaimer policy here. This shouldn't be taken as financial advice. Trade at your own risk.

Texts in this color are comments added in Oct 20.

Expecting a dovish RBA to continue driving AUD down, while chance for EUR to be in a suspended/wait mode state (before a probable bearish slide down resumes if not later this week after PMI, then next week), while GBP starts the week with a promising recovery which is most likely to continue unless UK's CPI and PMI figures differ from forecast later this week.

AUDCAD - Wait for rally near 0.94 or ride bearish momentum up to 0.92 | dropped only up to 0.925 by Tuesday before suddenly bouncing up and recovering by Wednesday, currently at 0.935 now

AUDCHF - Sell near 0.65 |  dropped up to 0.63714 on Tuesday before rallying by Wednesday like AUDCAD, currently at 0.645

AUDJPY - Ride possible short-term rally from 74.450 or just wait | started a conservative rally from 74.2 by Wednesday and remains flat now at 74.6

AUDNZD - Continue selling down to 1.05790-1.06 | dropped down but up to 1.065 only

AUDUSD - Wait near 0.71 | reached 0.70208 low last Tuesday before rallying by Wednesday but only up to 0.71581, currently now at 0.712

CADCHF - Wait near 0.695 | moved sideways in a narrower range and currently at 0.68798

CADJPY - Wait near 80 | bounce down from 80.5 and didn't breakout its downward trendline, currently at 79.756

CHFJPY - Wait for better entry near 114 or lower then buy up to 117-118 | goes up from 115 last Tuesday but only up to 116.5 before consolidating now at 115.9

EURAUD - Wait for confirmed range-bound bearish bounce from 1.655 - 1.668 then sell | spiked at 1.68272 last Tuesday, past its 38.2 weekly fibonacci level, before dropping to 1.655 by Friday

EURCAD - Wait near 1.54 | continued moving sideways between 1.55-1.56

EURCHF - Wait for possible rally near 1.075 and confirmation before selling again down to 1.06315-1.065 | short-term rally at 1.07 by Tuesday up to 1.07486 last Thursday, but started moving sideways instead of continuing its downward momentum

EURGBP - Wait for confirmed breakout past 0.90 then sell | instead of breaking out past 0.90, it bounced up to 0.91484 last Tuesday, only to reverse immediately the following day, and continued being volatile sideways now

EURJPY - Wait near 124 | continued moving sideways between 123.3 - 125

EURNZD - Wait near 1.77 | started moving up from 1.766 but to 1.80 psychological ceiling (and 0 weekly fibonacci level) before bouncing down to 1.766 again, currently at 1.769

EURUSD - Wait near 1.175 | started recovering from 1.70 instead of moving down further to 1.165 (61.8 weekly fibonacci level) but only up to 1.188 last Wednesday and remained sideways until now near 1.18 

GBPAUD - Wait for better entry near 1.81 then ride short-term rally up to 1.85-1.87 | started moving up from 1.819 last Monday but only up to 1.85 before pulling back by Thursday

GBPCAD - Wait near 1.71 | hinted a continued bullish upward trend in the daily chart last Wednesday from 1.697 to 1.728 before pulling back the following day and now price sits at 1.713

GBPCHF - Wait near 1.186 | dropped down to 1.171 only to do a sudden upward movement last Wednesday similar to GBPCAD from 1.172 up to 1.19 (almost touching its 38.2 weekly fibonacci level) before consolidating now at 1.178

GBPJPY - Wait for better entry near 135 then buy | conservative rally from 135.919 up to 137.667 before consolidating now at 136.5

GBPNZD - Wait near1.96 | continued its upward trend up to 1.98 (past 1.975 which is it -38.2 weekly fibonacci level) before pulling back and now price is near 1.945

GBPUSD - Wait near 1.30 | similar to other GBP pairs above, hinted a continued upward trend by Wednesday but only up to 1.317 (instead of all the way up to 1.33 (near 38.2 weekly fibonacci level) before pulling back by Thursday

NZDCAD - Wait near 0.87 | bounced back right away last Wednesday too from 0.86275 instead of continuing down its previous low at 0.86 and still moving up now at 0.87978

NZDCHF - Wait near 0.605 | similar to NZDCAD, started rallying last Wednesday from 0.595 and consolidated now at 0.605 (which is its -38.2 fibonacci level in weekly chart)

NZDJPY - Wait near 0.699 | continued moving sideways near 70 (0 weekly fibonacci level)

NZDUSD - Wait near 0.665 | similar to other NZD pairs, rallied last Wednesday too but only up to 0.67 instead of 0.675 (100 fibonacci level in the weekly chart)

USDCAD - Ride bearish momentum up to 1.305-1.31 | dropped up to 1.308 last Wednesday before going sideways, and began rallying today and at 1.316 now

USDCHF - Wait near 0.91 | continued going down to 0.905 (-61.8 fibonacci level in its weekly chart)

USDJPY - Wait near 105.35 | dropped down last Wednesday to 104.58 before moving sideways and currently now at 104.9

XAUUSD - Wait for better entry near 1900 or lower before riding trend up to 1965 | remained flat moving sideways at 1895 near its 0 weekly fibonacci level around 1850

XAGUSD - Wait near 25 | also flat like gold near 25 at its current 0 weekly fibonacci level

XTIUSD - Wait for confirmed bearish bounce near 41.345 before selling | spiked at 41.909 before dropping down and now at 39.127

USDZAR - Wait for bullish confirmation near 16.2 before buying | continued its downward momentum up to 16.15 last Friday before creating an inverted hammer, and hinting a rally now at 16.26

USDMXN - Wait for bearish confirmation and ride short-term recovery towards 21.5-22, else ride bearish trend and possible break out up to 20 | continued its downward trend up to 20.85 last Friday

No deal as expected between Pelosi and Trump (what's new). AUD pairs had been less bearish than expected though and started recovering during the latter part of the week, while GBP continued its upward bullish streak it started last Monday. Despite conservative gains in my AUD trades, very happy about how USDCAD and oil played out last week.

Feature image by Elena M. of Unsplash.