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Trade Setups This Week for Big News Week

January 22, 2024
Frank Cabibi

Lots of news this week could spark several trade setups that we'll cover today. Some of these pairs are listed as strong bullish scores on the EdgeFinder, and here's what they are.

EURNZD starts off the week at a +10 very bullish score. The Euro area has a number of PMI data coming out this week which will need to be higher in order to grow bullish sentiment. On top of this, the BOE will report interest rate decision and rate statement.

Odds are that they will keep rates the same at 4.5%, but the statement will likely decide the narrative. For most cases including Europe, central banks are hesitant to raise rates any more than the current level. A goal for a soft landing means that battling inflation should not come at the cost of collapsing the economy.

GBPAUD is also a strong bullish score on the EdgeFinder. The UK is expecting mixed PMI data from higher manufacturing and lower in the services sector. Similar to EUR, a higher number than expected will likely result in GBP strength as the number of producer buyers is expanding.

Price looks to be in a solid uptrend on the 1D timeframe. This pair is currently sitting at +9 as the economy score keeps the overall score from a +10 or higher. Right now, the PMI study is at 0 due to declining data in both the UK and Australia.

AUDCHF is the EdgeFinder's strongest bearish reading at -12. It appears that the scanner is mostly bearish on AUD and NZD as they seem to be in the pairs with our strongest readings. All factors point to lower demand for Aussie except the labor market category and interest rates.

COT is selling AUD, buying CHF, retail is majority long this pair, seasonality points to negative gains this month and next. Price is up about 1.75% from its most current lows, so what we could be seeing is another setup for short plays against AUD.

Retail Spotlight

Retail looks to be majority bearish CHF, EUR and GBP. These are reasons to why those currencies will perform strongly, especially if COT is buying.

Smart Money Spotlight

Smart money is selling just about everything except GBP. Every other asset is either mostly unchanged or strongly sold. The US indices saw a drastic decrease in their net change pointing to bearish sentiment. On top of this AUD and CAD are losing bullish traction.

Fundamental Spotlight

The PMI study on GBPAUD is 0 for now until this Wednesday. If manufacturing PMI comes in higher than expected for the UK, the score will change to a stronger bullish reading. The expectation is that it will.

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