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 14th August 2016
Last week I predicted that the best trades for this week were likely to be short GBP against long USD and also long JPY. The results of these trades was an average win of 1.38% thanks to the weak performance by the British Pound.
The market may now become somewhat more bearish on the U.S. Dollar due to the poorer than expected consumer data released last Friday.
The British Pound continues to be seen as weakening.
As the GBP has the greatest long-term weakness of all the major currencies, I forecast that the best trade for this week will again be short GBP/USD and also probably short GBP/JPY.
Fundamental Analysis & Market Sentiment
Fundamental analysis is likely to be of little use this week with the exception of any poor data boosting the bearish trend in the British Pound.
Gold and Silver seem to have run out of momentum, at least for the time being.
The British Pound continues to weaken following downwards economic forecasts following the Brexit vote last June.
Technical Analysis
USDX
The U.S. Dollar was little changed last week, printing a small but slightly bullish candle which may be rejecting support at 11900. The price is still barely above its level of 13 weeks ago, suggesting that the downwards trend is over. There is a short-term upwards trend, but the price is still within an area of relative congestion, leading to choppy action.
