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 24th July 2016
Last week I predicted that the best trade for this week was likely to be short GBP against long USD. The result of this trade was a small win of 0.49%.
The focus of the market has remained bullish on stocks and the U.S. Dollar.
Some poor British economic data was released, weakening the Pound on Friday and prompting fears that the U.K. may be on its way to a post-Brexit recession.
As the USD looks strong and 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 may be of some use this week, as it points towards a strong U.S. Dollar, which has been strengthening.
Gold and Silver continue to look relatively strong but they have suffered quite deep pullbacks (especially Gold), so the bullish run in these precious metals may be at an end already or close.
The British Pound is down sharply over the past few weeks and months, and on Friday resumed its fall.
The Japanese Yen has fallen following comments from the Governor of the Bank of Japan that while there will be stimulus if necessary, there will be no “helicopter moneyâ€. This led to the strong recent rise in the Japanese Yen being checked, with USD/JPY closing the week about 150 pips off its high.
