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 20th December 2015
Last week I highlighted long USD/CAD as the probable best trade of the week. This was a good call as the pair continued its explosive move upward, closing the week up by 1.77%. I had forecast that if the Fed raise rates it should continue to rise strongly and this is exactly what happened.
This week I again see the best opportunity as long USD/CAD. It is in a very strong bullish trend and has continued to make new 11 year highs. I also see short GBP/USD as having some good potential but the move down may be quite choppy and also may be limited at about 1.4500.
Keep in mind that this week sees the last few days before the Christmas holiday starts, and that many market professionals particularly in Europe may be on holiday now until the New Year or at least until early next week. There is little key news due and as such it may be a quiet week. However we seem to having a trending December so I sense it is likely the positive USD trend will continue.
Fundamental Analysis & Market Sentiment
The strong currency is the USD. The fundamental data could be stronger, however there have been no bad surprises and we now seem to be set on a course of gradual rate rises. The position technically for the USD also looks strong. The currency is now trading higher than it was 6 months ago against every major global currency except the JPY.
Weaker currencies are a little less clear but there are two that stand out: the CAD and the GBP. European currencies in general are fairly weak.
