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 27th November 2016
Last week, I predicted that the best trades for this week were likely to be long USD against the JPY, AUD, CHF and EUR. The average result of these trades was positive but at only 0.22%. The result was dragged down by the strong performance of the AUD, and the USD performed best against the JPY which is the weakest of all the major currencies right now.
The Forex market seems to be moving into a less predictable mode now, with some signs that the strong rally in the USD since 8th November is beginning to run out of steam.
I therefore suggest that the best trades this week are likely to be long USD, GBP and AUD against the Japanese Yen.
Fundamental Analysis & Market Sentiment
Fundamental factors are playing a role right now but are difficult to explain fully. What is becoming increasingly clear is that Trump will need to try to deliver on his promise of generating jobs for lower-skilled Americans, and the logically easiest way to achieve that will be federal spending on infrastructure projects. This is boosting the American stock market overall, led by companies that will logically stand to gain from the range of Trump’s known policy positions. As money flows into America to buy American stocks, so the U.S. Dollar is bought and rises in value.
Overall, sentiment is still bullish on the USD, but it may be that other currencies start to lead the pack.
