Watchlist and trade plans for week starting the 20th of August 2018.
Potential for very high volatility, the news is USD focused but particularly the FOMC is liable to make all pairs very volatile.
CPI affecting the Yen is of mild interest but CPI releases can tend to be non events.
GBPJPY
After a 700 pip run down to current price GBPJPY has started to show some signs of selling pressure ebbing. Interestingly, this is happening very close to the close price of the Brexit week and a coulpe of the weeks following that.
It seems fair to assume that the closing price of the most volatile week in a decade on this pair may be significant when we trade back at that price and we may see price starting to run up strongly from this support level.
We find the cmplimenting pattern in the form of a bullish butterfly pattern potentially forming and completing in that area. This price formation will give good buying opportunities in the 139.50 area.
There may be some good opportunities trading in the preceeding price action if we see a pattern like this forming.
These types of patterns tend to throw out various bluff moves before the actual move starts and these can be in the form of volatile swings price swings in the established range.
These bluff move swings would be consistent of the formation of a butterfly double spike out pattern which we have the early formations of.
If this sort of pattern is to form, we may see it forming via an AB=CD marginal spike out pattern to the highs. This whipsaw sort of price action would be consistent with the choppy price action we can see before spike lows and reversals.
I will be looking for main swing trades of establishing long at 140.50 if price drops to there and establishing short 141.10.
These moves may come off the FOMC volatilty. We may see it swing from down to 140.50, make a fakeout rally into 141.10 and then plummet to 139.50 where support is found and the market bounces back and closes the week strong.
This sort of “cut up” move on FOMC and other high impact news events is far from uncommon, especially on the Yen pairs that can often react in a whipsaw like fashion. The ideal scenario would be to be able to establish long 140.50 some time Tuesday or early Wednesday and limit order to sell a spike high to 141.10 and limit to buy a spike low 139.40.
If the market is quiet and mostly ranges early in the week, I will be looking for possible spikes down into 140.50 on the FOMC news release and see if I can fill long on pending orders there to see if it is possible to catch these three main swings.
AUDUSD could be around the end of the first leg of a two leg correction pattern in the downtrend we have seen recently.
The pending order level to sell the end of this correction would be 0.7380 and if price is to travel to that area there may be some good swings to be caught in the intraday action up to there.
I will be looking for selling opportunities if there are topping patterns forming around 0.7340 offering good risk:reward trades and be looking for buying opportunities around 0.7290 on bottoming patterns offering good risk:reward opportunities.
If these swings form, I will look for smaller chart trend continuation trades within the swings.
This is written at the weekend and the market is subject to gaping. If it does, it may well gap to open close to one of the referenced areas and, if so, I will be looking for this trades early in the week (probably around London open Monday).
If we are approaching the lower level referenced here late Tuesday to early Wednesday this may be a good level to accumulate a position for a potential spike on the FOMC rates decision on Wednesday, proving high risk:reward opportunities if the long positions can be established in the quieter market conditions and then exited on upward volatility on the news release.
