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 September 17
Last week, I saw the best possible trade for the coming week as long of Gold, Euro, the British Pound, and the Japanese Yen, and short of the U.S. Dollar. The result was negative overall, as the only single trade which was profitable was the British Pound: GOLD/USD fell by 1.94%, EUR/USD fell by 0.78%, GBP/USD rose by 3.00%, and USD/JPY rose by 2.78%, producing an overall average loss of 0.63%.
The Forex market over the past week has been dominated by a very strong British Pound, resulting from higher than expected inflation data which has led the Bank of England to take a more hawkish tone, making the prospect of a rate rise later this year more likely.
The news agenda this week will probably be dominated by the key monthly FOMC guidance and interest rate setting, and the Bank of Japan will also be giving their monthly guidance.
Following the current picture, I see the highest probability trade this week as long of the British Pound and the Euro, and short of the U.S. Dollar. Both the British Pound and the Euro are in long-term bullish trends against the U.S. Dollar.
Fundamental Analysis & Market Sentiment
The major sentiment dominating the market, at least at the start of this week, will be speculation on how the FOMC releases will affect the U.S. Dollar. The Bank of Japan’s releases the following day will also put the Yen, which has been volatile in recent weeks, into focus.
