The difference between success and failure in Forex trading is very likely to depend on the currency pairs you choose to trade each week, and not on the exact trading methods you could use to determine the inputs and outputs of operations. Each week I will analyze the fundamentals, feelings and technical positions to determine which currency pairs are most likely to produce the easiest and most profitable trading opportunities during the next week. In some cases, it will be operating with the trend. In other cases, it will be support and resistance levels during the higher-ranking markets.
Overview August 18, 2019
In my previous article last week, I predicted that the best trades would be below GBP / JPY and above XAU / USD (Gold in USD terms) after a daily close above $ 1503.
This did not work very well. The GBP / JPY pair advanced 1.68% while gold in dollars closed above $ 1503 on Monday and then advanced 0.17% for the rest of the week. These operations add an average loss for the week of 0.76%.
The Forex market last week experienced the biggest increase in the relative value of the pound sterling and the biggest drop in the relative value of the euro.
Last week’s market was dominated by the publication of more encouraging than expected British inflation data.
The Forex market continued to be very active last week, with some directional movements and some trends that persist, although mostly they weaken.
This week has a similar amount of high-impact press releases compared to last week, but there are some important news that should be published by central banks in relation to the Australian dollar and the US dollar.
Fundamental Analysis and Market Sentiment
The fundamental analysis now considers that the Federal Reserve is adopting a balanced approach following the recent cut in interest rates; however, another 0.25% cut is expected later this year, and Goldman Sachs will give this scenario an 80% chance. The US economy continues to grow strongly, but the new tariffs on Chinese products have caused stock markets to fall and the dollar has abandoned most of its previous earnings, and there has been a flight to security in general. Despite this, the security flow weakened a bit when the United States announced that the imposition of the new tariffs would be delayed.
The British economy showed surprisingly strong inflation last week and this, together with the intervention of long-term buyers, since the GBP / USD pair was only a few pips from the crucial level of $ 1,2000, made the Pound rose significantly during the week.
The dominant feeling of risk in the market has faded a little or at least it is not the main driver of the price, which seems to be taking each currency separately. The big picture is more confusing. The euro has sold hard, as has the yen, and precious metals have also fallen from their highs. For its part, the New Zealand dollar also seems to be down.
US Dollar Index
The weekly price chart shown below shows that last week the USD Index moved slightly, printing a small bullish candlestick. The price has risen in both 3 months and 6 months, indicating an upward trend. The price action of the week, which was bullish, has also been based on a new support at 12375, which is a bullish signal that suggests it is a little more likely that we will see a new rise next week than a fall .
EUR / USD
In the 4-hour and hourly chart, the slow stochastic shows bearish signals and in the daily chart the RSI supports a bearish movement. All these are bearish signals. The euro is weak, while as we have seen, the dollar is likely to rise . However, keep in mind that this downward trend, while persistent, is slow and prone to setbacks.
NZD / USD
This currency pair printed a bearish candlestick at the end of last week, reaching its lowest weekly close in almost 4 years. The candlestick closed at its lowest point, and the NZD is more bearish than the AUD. That is why it is estimated that next week bearish signals will be observed in the pair.