Currency Pairs Determine Forex Trading Success – The difference between success and failure in Forex trading is very likely to depend upon which currency pairs you choose to trade each week, and not on the exact trading methods you might use to determine trade entries and exits.
Each week I am going to analyze fundamentals, sentiment and technical positions in order to determine which currency pairs are most likely to produce the easiest and most profitable trading opportunities over the next week. In some cases, it will be trading the trend. In other cases, it will be trading support and resistance levels during more ranging markets.
Big Picture 8th December 2019
In my previous piece last week, I forecasted that the best trades would likely be the S&P 500 Index following a daily (New York) close above 3154 and long of the USD/JPY currency pair following a daily (New York) close above 109.50. We did not get such daily closes last week, therefore there was no trade.
Last week’s Forex market saw the strongest rise in the relative value of the New Zealand Dollar, and the strongest fall in the relative value of the U.S. Dollar.
Fundamental Analysis & Market Sentiment
Fundamental analysts are leaning in favor of the view that the recent quarter-point cut in the U.S. interest rate will be the last cut for a while, with Jerome Powell signaling there are likely to be no further cuts and maintaining an upbeat take on the U.S. economy.
The U.S. economy is still growing, but there are some fears of a pending recession. A major issue concerning sentiment on the U.S. and global economies is the trade dispute between the U.S. and China, with the U.S. using the treating of new tariffs later this month as leverage in negotiations.
There is increasing hope that a deal will be signed soon which should be positive for the U.S. stock market. The benchmark U.S. stock index, the S&P 500, ended the week not far from its all-time high price.
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There are a few long-term trends in the Forex market, notably bullish trends in the GBP/USD and NZD/USD currency pairs, and a bearish trend in the EUR/GBP currency cross. I am wary of trading EUR/GBP short and prefer to trade GBP/USD long.
The long-term bullish breakout made by the GBP/USD last week is driven by the fact that opinion polls are showing a strong government victory should happen in next Thursday’s election, which would resolve the Brexit impasse. Continue reading
