The difference between success and failure in trading forex markets will most likely depend on which currency pairs you choose to trade each week and not on the exact trading methods you could use to determine market entries and exits. Each week I will analyze the fundamentals, sentiment and technical positions to determine which currency pairs are most likely to produce the easiest and most profitable trading opportunities for the week. In some cases, the trend will be negotiated. In other cases, the support and resistance levels in the markets will be negotiated in a range.
Overview 5 November 2017
Last week, I saw the best possible trades for this week in USD / CHF long, short EUR / USD and long S & P 500 index in dollars. The overall result was positive, with USD / CHF up 0.28%, EUR / USD up 0.02%, and S & P 500 up 0.17%, generating a small average gain of 0, 14%
During the week, the forex market has continued to favor the dollar a little bit again and now it seems that it has invalidated the bearish trend in the long term. Although there was important news regarding the USD, the event that dominated the Forex market was the “increase of types of pigeons” or moderate by the Bank of England, which saw the pound sterling fall by more than 1% against a basket of major currencies.
This week’s news agenda will surely be dominated by the monthly orientation and interest rate decisions of the central banks of Australia and New Zealand. The New Zealand Dollar has been in focus with high volatility and an active trade with large movements. Since the price is close to a long-term minimum, this situation is likely to persist and should be driven by any surprise movement of the RBNZ.
The US stock market is still reaching new historical highs, which is always a bullish signal, despite the relatively low volatility.
Following the current image, I see the most probable transactions for this week in the long Dollar against the Yen, and in the long run of the S & P 500 in dollars. Apart from the stock market, there are now very few clear and strong trends in the markets.
Fundamental Analysis and Market Sentiment
Currently, sentiment is a little less bullish on the dollar and on shares after the disappointing non-farm payrolls data that were published on Friday, although the unemployment rate showed a contraction that will probably help the dollar to stay strong. The geopolitical factors can come to the fore, while President Trump begins a visit to Japan and other Asian countries after the increase of Korean tensions, and while the world digests the implications of a supposed Iranian attack on the capital of Saudi Arabia by means of missiles ballistics yesterday.
The Japanese yen is at an important technical point, with the USD trying to move beyond long-term resistance just above 114.00.
US Dollar Index
This pair registered a bullish inner candle, continuing with the invalidation of the long-term bearish trend and changing the previous resistance level in 12012 in a clear support. However, there is still a signal that the price is running up to a resistance just below 12100, which may hinder an additional immediate advance. It would not be a surprise if we started a period of consolidation and uncertainty after the end of the recent downtrend, so I can not be very bullish on the dollar at this time. I have a slightly bullish bias.
USD / JPY
This pair is in an uptrend and has a bullish momentum. However, in general it seems weak. The price is struggling to break beyond a long-term resistance zone between 114.25 and 114.50 that has held firm for more than 6 months. It is not at all clear that this break is about to happen, but if it happens, it is likely to be strong, so it will probably be worth a low risk and high reward bet. The bullish case is reinforced by the fact that we have just seen the highest weekly close since mid-March.
Again we made new historical highs here and the graph below shows how bullish the trend has been. There are many reasons to remain bullish despite the innumerable press articles that predict an imminent collapse of the market. This rumor has been circulating for months, while the market continues to rise more and more, although with a very low volatility. Negotiate what you see, not what the newspapers say, and what we see here is a strongly bull market.
Dollar and S & P 500 bullish; bearish of the ye