The difference between success and failure in Forex trading is very likely to depend mostly upon which currency pairs you choose to trade each week and in which direction, and not on the exact trading methods you might use to determine trade entries and exits.
When starting the trading week, it is worthwhile looking at the big picture of what is developing in the market as a whole and how such developments and affected by macro fundamentals and market sentiment.
Big Picture 29th November 2020
In my previous piece last week, I saw the most attractive trade opportunities as likely to be in a long trade in the NZD/USD currency pair, and cautious short-term long trades in Bitcoin against the U.S. dollar. While the price of Bitcoin basically went sideways or fell slightly over the past week, the NZD/USD currency pair closed on Friday up by 1.30%, so this was a profitable call overall.
Last week’s Forex market saw the strongest rise in the relative value of the New Zealand dollar and the strongest fall in the relative value of the U.S. dollar. There is a strong trend against the U.S. dollar; meaning, it is an attractive time to be trading Forex.
Fundamental Analysis & Market Sentiment
Last week saw somewhat higher volatility in the Forex market, although there was very little news and no surprising economic data releases. We are seeing the U.S. dollar continue to weaken while the commodity currencies (AUD, NZD, and CAD) are strong and continue to advance. The EUR/USD currency pair made its highest New York close on Friday in more than 2 years, moving upwards in a firm bullish trend. President Trump is still refusing to concede the Presidential election but there seems to be no real chance that any of his legal challenges will succeed in changing any of the results so the electoral college seems set to confirm Joe Biden as President on 14th December. It is no longer possible to bet on Biden becoming the next U.S. President.
Another notable feature of the election result was that the Democrats seem to have made either no gains or only very limited gains in congressional elections, and it seems quite likely that Republicans will retain control of the Senate, although this will be determined by run-off elections in Georgia in January. If the Democrats win these, then there may be a stronger economic stimulus package, which could boost the U.S. stock market and weaken the U.S. collar.
Global stock markets remain generally bullish, with both the S&P 500 and the Nikkei 225 indices closing Friday at all-time weekly highs despite last week’s still worsening coronavirus infection rates in the U.S.A. and globally.
Last week’s major story in the U.S. has been a tailing-off in new daily confirmed coronavirus cases, although hospitalizations and deaths continue to rise strongly. Several states have announced new lockdowns and other restrictions…
Read More: Forex Forecast: Pairs in Focus