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: 7th February 2016

Last week I highlighted short GBP/USD and long USD/CHF as the probable best trades of the week. This did not work out well at all as the GBP/USD pair actually rose by 1.79% and the USD/CHF pair fell by 3.13%.

I was trying to remain with long-term trends but over the past week we have seen really strong shifts and turbulence in the markets in general and in the Forex market in particular. There have been very large and wild swings and there have been major shifts in which currencies are looking strong and weak. This creates a difficult and dangerous market and there are many traders right now who will prefer to remain on the sidelines for a while longer until things become clearer.

Fundamental Analysis & Market Sentiment

At the moment, fundamental analysis is not going to be very useful, as we look to be at the end of major trends. Markets are currently being driven very strongly by sentiment which can shift from day to day and not by the macro environment as expressed through fundamental analysis. The only point worth making here is that over the past couple of weeks several central banks have begun making more dovish noises, which have sent many currencies plummeting from day to day. The outstanding example is the USD which weakened a lot before recovering somewhat at the end of the week on better than expected unemployment numbers. However there is a lot of doubt surrounding the strength of the U.S. economy now and we may start to get a real trend of a weakening USD as a result, which would be a major change from the situation we have seen for the past couple of years with a strong USD.