GBP/USD
The cable has put in a strong bottom at 1.92. We could easily see a move to 1.96 this week. This market is in a wide trading range between 1.92 and 1.98 and until it moves out of that range we will be trading the chop. That means we do the opposite of what we do in a trending market. In a trending market you buy new highs and sell new lows. In a choppy market you sell highs and buy lows. For now the path of least resistance remains up. Continue to trail your stops with the market.

EUR/USD
The Euro really took off last week and is about to test the 2006 highs. If we can break out above 1.3365 then we could test the al time highs from 2004. This week all we are looking for is a move above 1.3365. We will do it in what might seem like an odd way. We will sell the Euro short between 1.3325 and 1.3350 and run stop and reverse orders at 1.3375. That way if we are not able to break out we will have a short trade on from the highs and if we do break out then we will have a long on from the break out point.

USD/JPY
This pair has been all over the place ever since it was blamed for the stock market sell off a few weeks ago. For the week ahead we see greater upside potential than downside so look for long trades. Rising support lies at 116.23, longs near that point with stops below it are the trade we see this week. Remain cautious with this pair as volatility is very high and therefore the risks in this pair are much higher as well. Tight stops will most likely not work with this increased volatility so look to options as an alternative way to trade this pair with better risk management while volatility is so high.

USD/CHF
This pair failed to meet our objective of 1.24 but our trailing stop took us out at a profit none the less. The importance of using trailing stops cannot be overstated. Near term this pair could fall under more pressure and move back towards 1.19. Sell short above 1.21 with stops at or near 1.2155.

AUD/USD
The Aussie finally pushed through .8000. Longer term I believe this market will rally well above this point but near term I must advocate caution. This market has a tendency to head fake a number of times before pushing through so here much like the JPY options may be the best bet. Buying the .80 call is a great way to position for follow through without betting the farm.

USD/CAD
I remain very bearish this pair and see a break below 1.17 coming this week. Sell short between 1.1750 and 1.18 with stops at 1.1834.

Derek Frey is Head Trader at Odom & Frey Futures & Options.

Risk Disclaimer
Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures and options.