There’s been some decent moves for trend traders in the markets last week, but are some of these trends starting to show signs of weakness?
With the US Government shutdown and a lack of CoT data, the currency strength meter is the only tool we can use as of now.
The four key currencies at the moment all have now reached reversal zones, which means they are either extremely strong or extremely weak.
Let’s take a look at what to watch:
Strong Currencies
My currency strength meter highlights these currencies as the strongest as of last week:
USD: The longer the US Government shutdown goes on, the weaker USD should get according to history. Longer than two weeks and we could see USD weakness follow through. This is also reflected in the csm data this week moving from +7 to +5.
AUD: The Aussie claims back the +7 spot for now, showing the momentum is still behind it. Do we want to bet against this yet? At the moment I don’t think so.
Weak Currencies
Looking at the opposite side of the strength meter now, these are the weakest of last week:
NZD: As stated last week, kiwi remains the weakest now at -5 in a key reversal zone, but the reversal doesn’t look on just yet.
CAD: In Canada the data is seemingly getting worse, unemployment rose to 7.1% last month and is expected to reach 7.2% this week. Alarming levels for this economy. Ultimately this could lead to further rate cuts.
Markets to watch
Based off of the above these are the currency pairs on my trading watchlist:
Bullish | Bearish |
AUDNZD | NZDUSD |
AUDCAD | NZDCHF |
USDCAD | CADCHF |
Remember this is just a starting point, check in with the fundamentals and technicals and make sure you look for markets trending.