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 29th November 2015

Last week I highlighted long USD/CHF and short EUR/USD and GBP/USD as good trades. All three of these pairs moved last week in my predicted direction: EUR/USD by 0.50%, USD/CHF by 1.09%, and GBP/USD by 1.03%.

This week I have no hesitation in saying again that the best opportunities are likely to be following momentum, as we now have one currency that is clearly strong and two or three others that are clearly weak. Looking to long the strong currency against the weaker currencies is probably going to be a good strategy.

Fundamental Analysis & Market Sentiment

The strong currency is the USD. The fundamental data could be stronger, however there have been no bad surprises. The position technically for the USD also looks strong. The currency is now trading higher than it was 3 months ago against every major global currency, with the exception of the JPY, NZD and AUD.

Weaker currencies are a little less clear but there are three that stand out: the CHF, GBP, EUR. Let’s take each currency in turn.

Swiss fundamentals are neutral. However there is a feeling that the “real” Swiss economy has been in trouble for a while, and the SNB wants to see the CHF fall in value to make Swiss exports more competitive. One tool to achieve this was setting a negative interest rate of 0.75%. This negative rate combines with the gloomy economic sentiment to produce a currency that feels weak.