Forex Forecast: Pairs In Focus - Sunday, Jan. 19

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 January 19

In my previous piece last week, I forecast that the best trades were likely to be long of gold in USD terms following a daily close above $1575 and long of the S&P 500 Index in USD terms following a daily close above 3275. Gold never made a daily close above $1575 during the week, while the S&P 500 Index rose by 1.26% after closing at 3288.13 on Monday. These were good calls overall as these trades produced an averaged win of 0.63%.

Last week’s Forex market saw the strongest rise in the relative value of the Swiss Franc, and the strongest fall in the relative value of the Japanese Yen.

Fundamental Analysis & Market Sentiment

Fundamental analysts are leaning in favor of a weaker USD as the Federal Reserve is set on a course of inflating its balance sheet, and as there is little prospect of a rate increase in the foreseeable future.

The U.S. economy is still growing, and fears of a pending recession have receded. Sentiment has been aided by the completion of a “Phase One” U.S. / China trade deal. Last week showed strong U.S. consumer sentiment. There are solid reasons to be bullish on stock markets generally, especially the U.S. stock market.

We are seeing valid long-term trends in the S&P 500 Index, the DAX and the FTSE 100 (all bullish) and the USD/JPY currency pair which seems to be making a long-term bullish breakout above 110.00.

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