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: June 4

Last week, I predicted that the best trade for this week was likely to be long the Euro and Gold, and short of the U.S. Dollar. This worked out very well, with both pairs rising. This combination trade was nicely profitable, with EUR/USD rising by 0.91%, and Gold also rising, by 0.98%. This produced an average profit of 0.95%.

The Forex market is in a more settled mood, with trends in force against the U.S. Dollar and in favor of the Euro, Gold, and the Swiss Franc, and these trends have resumed their long-term direction this week. I correctly forecasted that Friday would be crucial to last week’s final direction. The market will now be focusing on the U.S. Dollar and safe havens following last Friday’s disappointing Non-Farm Payrolls headline number, and there will almost certainly be volatility in the British Pound following a further terrorist attack in the U.K. over the weekend and the British General election on Thursday. I therefore suggest that the best trades of the coming week will again be long the Euro and Gold, as well as the S&P 500 Index, and short of the U.S. Dollar.

Fundamental Analysis & Market Sentiment

The major elements affecting market sentiment at present are increasingly positive economic data within the Eurozone concerning growth and unemployment, and renewed concerns over the Federal Reserve’s ability to continue to tighten monetary policy any time soon, as well as fears over terrorism in the western world. There is nothing scheduled which looks likely to change this picture in the next few days, so currency conditions will probably continue into the new week.