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
In my previous piece last week, I forecast that the best trade would be long of the S&P 500 Index above the previous week’s high price, as well as short EUR/USD and GBP/USD. These trades worked out well: the S&P 500 Index did not exceed the previous week’s high price, so there was no trade there, but EUR/USD fell by 0.75% and GBP/USD fell by 0.84%, producing an average profit of 0.80%.
Last week saw a rise in the relative value of the Swiss Franc, and a fall in the relative value of the Euro.
The major developments in the Forex market last week were in the disappointing Non-Farm Payrolls data, which had the effect of halting the Dollar’s advance at the end of the week, and in the continuing prospect of a “No Deal” Brexit plus the “hawkish” rate hike of 0.25% in the British Pound. There are also continuing developments on the tariff dispute between the U.S.A. and China.
Sentiment on the British Pound is quite weak, and the Euro is also negatively impacted by the prospect of a “No Deal” Brexit. Sentiment on the U.S. Dollar is more uncertain.
Fundamental Analysis & Market Sentiment
Fundamental analysis tends to support the U.S. Dollar, as American economic fundamentals continue to look relatively strong. However, last week’ Non-Farm Payrolls came in below expectations, despite the other related metrics looking OK. The Dollar rose slightly but significantly, finally breaking above the resistance at 12085 and making its highest weekly close of the last year, which is a bullish sign.
