The Biggest Opportunity on the Board, 1000 Pips up for Grabs

By Mark Shawzin07/08/2020

I’ve put together a shortlist of trading pairs for you this week.

These are based on my observation of the relatively weak currencies versus their stronger counterparts:

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In today’s market environment, on balance, the strongest currencies are the New Zealand dollar (NZD), Australian dollar (AUD), Swiss franc (CHF), Japanese yen (JPY), and Canadian dollar (CAD).

On a relative basis, the weakest currencies are the Great British pound (GBP), the Euro (EUR) and the US dollar (USD).

It, therefore, follows that you want to pair the strongest against the weakest. This creates the best trading pairs as follows: GBPCHF, USDJPY, EURNZD, and NZDUSD. You want to short the first three pairs and buy the last one.

These are the most tradeable pairs for this summer. Today I’ll examine several of the constituent pairs and currencies in detail.

Let’s start with the USD as a standalone against a half dozen of the most liquid pairs in the form of the USDI (the US Dollar Index):

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During the peak of the coronavirus panic, we had a liquidity crisis which I believe represented the peak for the US dollar following a long ten-year uptrend.

That’s why I believe that over the course of the next few days, weeks, months, and years, we’ll see the US dollar traverse lower. Not right now, but soon. At the moment USDI is tracing out what looks like a head and shoulders top with some major support near current levels and then an additional support level farther down.

The real action will start when the neckline of that head and shoulders is tested and broken.

So what are the early indicators that this will happen?

NZDUSD (the New Zealand dollar versus the US dollar) looks like a strong candidate to foretell future price action:

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For the last 10 years, we’ve seen a major downtrend in NZDUSD including a double top continuation pattern that suggested that once the neckline was pierced the pair was going lower. NZDUSD did in fact drop significantly after that neckline failed.

But now the pair has snapped back into a trading range. I feel we’re looking at a potentially busted trading pattern by this point. By “busted trading pattern”, I mean that the earlier bear price pattern is “busted” as a new bull pattern forms and suggests a new uptrend in opposition to the earlier one.

NZDUSD is showing an asymmetric double bottom with a pronounced left shoulder and a potential right shoulder forming right now. This creates an inverted head and shoulders pattern.

Once NZDUSD can breach the neckline around the 0.68 level, the earlier double top price pattern will be busted and that will confirm new upward momentum in the pair.

Over time, I expect NZDUSD to go higher over time and any dips should be considered buying opportunities.

Now here’s USDJPY (the US dollar versus the Japanese yen):

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If you’ve read previous reports of mine, you’ll know I’m very bearish on USDJPY due to a number of bearish price patterns starting with the double top in 2015 which was eventually confirmed as part of a head and shoulders price pattern. Once this pair breached the 116 area, it’s been in a bear market ever since.

I expect the lower edge of the current descending triangle will be taken out eventually, although USDJPY could continue to trade sideways for a while yet.

In fact, I wouldn’t be surprised to see USDJPY perhaps trade back up to the 109 area – the upper edge of the triangle. If this happens I would look at it as an extra opportunity to add to my existing short.

I remain very bearish on USDJPY because I strongly believe that ultimately, this pair is going lower over the long term.

I don’t know anybody that could have predicted today’s state of the markets, just several months ago.

The strongest currencies are becoming the weakest, and the weakest are emerging as the strongest.

This power shift is causing craziness, confusion, and opportunity.

In this week’s markets, I identified several huge opportunities (and shared one that will 1000-pip potential).

But most importantly, understand the simple slide that I share at the beginning of this week’s session, and you’ll have the tools that you need to successfully trade over the next 12 weeks.

Here’s what was covered:

  • The 5 strongest currencies, 3 weakest currencies and 4 pairs to trade – I start by giving you a simple yet powerful overview of what’s happening in the live markets
  • The highly obscure currency that is currently the strongest on the board (nobody – including myself – could have predicted this six months ago!)
  • Why the US Dollar will go lower, and what I’m expecting over the next few weeks, months and years
  • What’s a “Busted Chart Pattern?” – I share a real-life example of a “Busted Price Pattern” and how to navigate it in choppy waters
  • Is this historic power currency in TROUBLE? My predicted timeline of destructiveness with a breakdown of what I predict over the following weeks, months and years
  • What’s a “Busted Chart Pattern?” – I share a real-life example of a “Busted Price Pattern” and how to navigate it in choppy waters
  • What happens when STRONG takes on WEAK, and why the NZDUSD is like me playing Tennis against Roger Federer
  • What the “Descending Triangle” means on the USDJPY and where this currency pair is going to next
  • (Watch from 12.50) – is this the biggest opportunity on the board right now? Why 1000 pips are up for grabs for the brave!
  • Why is the NASDAQ at an all-time high even though the US has had the worst GDP decline on record? Hint: it’s because the THING that many traders rely on is utter BS.
  • Plus much more

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Hi, I'm Mark Shawzin. After working on Wall Street as a trader for 23 years, and managing private client accounts for the past 13 years, I've put together my 21 most powerful Forex strategies.

21 Forex Power Strategies by Former Merrill Lynch Trader

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