As a currencies trader, I track the eight major world currencies, the USD, EUR, JPY, GBP, AUD, NZD, CAD & CHF. There are two specific attributes I analysis for each currency that help me generate trade ideas.

The first attribute is Market Structure. I have an objective, rules based system that allows me to identify if an asset is structurally bullish, structurally bearish or structually a mess and an asset to keep away from!

The second attribute is divergence between assets. In simple terms, I am looking for two assets, or in this case, currencies, that are structurally doing the opposite of each other and the more sychronised they are in their opposing movement, the more I am interested! I could probably do a better job of describing what this looks like in reality but as I have the patience of a monk and only ever trade picture perfect trades, I will let my screen grabs do all the explaining!

Lets get into what potential trade ideas I have spotted today that may (or may not!) give opportunities in the coming days based on the two key attributes described above starting with the structural aspect.

US Dollar (DXY Index)

As per the screenshot below, I have identified that after several weeks throughout October and November of bullish structure indicated by the DXY index making higher highs and higher lows and nicely riding the 20 moving average on the daily chart, at the beginning of December, the DXY made a significant bearish push and structural shift to the downside and is currently making a pullback, possibly towards the 20 moving average.

I believe factors contributing to this current US Dollar weakness is in part due to the Federal Reserves discussions around interest rate cuts and the current weaker than expected inflation being experienced by the US economy.

These technical and macro elements combined indicate to me the possibility that there may be opportunities in the coming days and weeks to look for trades in the currencies market where the US Dollar can be shorted.

Canadian Dollar (CXY Index)

As per the screenshot below, I have identified that after several months, from late July to late November, of bearish structure indicated by the CXY index making lower lows and lower highs, and reasonably nicely riding the 20 moving average on the daily chart, at the beginning of December, the CXY made a significant bullish push and structural shift to the upside and is currently making a pullback, possibly towards the 20 moving average.

I believe one of the key factors contributing to this current Canadian Dollar strength is in part due to a combination of the Bank of Canada remaining neutral on interest rates and the current weakness being seen with the US Dollar as discussed above, which makes the Canadian Dollar appear stronger as a direct comparison of the two assets.

These technical and macro elements combined indicate to me the possibility that there may be opportunities in the coming days and weeks to look for trades in the currencies market where the Canadian Dollar can be longed.

New Zealand Dollar (ZXY Index)

As per the screenshot below, in almost identical circumstances as the Canadian Index, I have identified that after several months, from late July to late November, of bearish structure indicated by the ZXY index making lower lows and lower highs, and reasonably nicely riding the 20 moving average on the daily chart, at the beginning of December, the ZXY made a significant bullish push and structural shift to the upside and is currently making a pullback, possibly towards the 20 moving average.

I believe one of the key factors contributing to this current New Zealand Dollar strength is in part due to the Royal Bank of New Zealand maintaining a higher interest rate compared to central banks around the world making the New Zealand an attractive investment for those seeking higher yields.

These technical and macro elements combined indicate to me the possibility that there may be opportunities in the coming days and weeks to look for trades in the currencies market where the New Zealand Dollar can be longed.

Now that based on market structure, synchornised and strong shifts in structure have been identified with these three currency indices, lets look at how divergence can be used to identify trade opportunities when comparing these assets.

USDCAD Trade Idea

As per the screenshot below, combining US Dollar weakness and Canadian Dollar strength identified when analysing each currencies respective index chart as above, the USDCAD currency pair offers a potential fantastic shorting opportunity. USDCAD has made a significant bearish push and structural shift and is currently pulling back, possibly to near the 20 moving average where there may be potential shorting opportunities over the coming days and weeks.

NZDUSD Trade Idea

As per the screenshot below, combining US Dollar weakness and New Zealand Dollar strength identified when analysing each currencies respective index chart as above, the NZDUSD currency pair offers a potential fantastic long opportunity. NZDUSD has made a significant bullish push and structural shift and is currently pulling back, possibly to near the 20 moving average where there may be potential long opportunities over the coming days and weeks.

I will keep a close eye on both of these currency pairs, USDCAD & NZDUSD for opportunities based on a well synchronised and structurally similar divergence of US Dollar weakness and Canadian Dollar & New Zealand Dollar strength.