Get the forex forecast with fundamental, sentiment and technical position analysis for key pairs for the week of February 1st, 2021 here.
The difference between success and failure in Forex trading very likely depends primarily on which currency pairs you trade each week and in which direction, rather than the exact trading methods you might use to determine trade entries and exits.
At the beginning of the trading week, it is a good idea to look at the big picture of what is happening across the market and how these developments affect macroeconomic fundamentals and market sentiment.
Now is a good time to start trading the trading markets as there are many strong long-term trends in favor of stocks and riskier assets, although we are currently seeing some significant counter-trend moves.
Overall picture January 31, 2021
In my previous article last week, I saw the most attractive trading opportunity as long as the NASDAQ 100 index and looked for short-term long trades in the GBP / USD currency pair after a down day immediately after a new 50-day high, it became a daily close (New York).
This wasn’t a good call as the NASDAQ 100 index fell 3.60% over the week. However, the long position of the GBP / USD currency pair at the end of Wednesday after the first day of decline after a new 50-day high resulted in some profit.
In last week’s forex market, the relative value of the New Zealand dollar rose the most and the relative value of the Japanese yen rose the most. There is still a valid, long-term and strong trend against the US dollar which means that it is an attractive time to trade forex as the greenback is the main driver of the forex market. However, we are currently seeing a strong backlash in favor of the greenback so it may not be the time to start trading in line with the long-term trend.
Fundamental Analysis & amp; Basic sentiment of the market
The headline reads that late last week we saw a surge in risk sentiment and inflows into safe havens like the US dollar and out of global equity markets. This is mainly because the FOMC is now a little more aggressively warning of the fragility of the US economic recovery, suggesting that the speed of the coronavirus vaccination campaign will be crucial, but the US is not slowing down its ability to exceed a million shots per day the markets will consider too slow to deliver. The US advance GDP data was also lower than expected, growing 4.0% on an annualized basis versus an analyst forecast of 4.2%.
Last week the E.U. in the fight against AstraZeneca after the company shipped its coronavirus vaccines to the E.U. The EU. publicly alleges that the treaty has not been respected, and there has even been a slanting threat to seize vaccines made in Europe or at least a percentage of them from exports from the euro zone, particularly to the UK. The EU’s vaccination campaign against coronavirus is now running relatively slowly.
Global equity markets have sold off quite sharply from their recent highs last week.
This week is likely to be dominated by US non-farm payroll data and the Bank of England’s monthly policy statement due Friday and Thursday, respectively.
Last week, the global number of confirmed coronavirus cases fell and the total number of deaths stabilized. The numbers remain relatively high, however, and there are concerns that new mutations of the virus could spread that are more deadly and potentially more resistant to the first generation of vaccines that are introduced. Many countries have just introduced additional travel restrictions. The U.S. just made it federally illegal not to wear a face mask on public transportation.
The strongest growth in newly confirmed cases is in Albania, Andorra, Argentina, Bahrain, Bolivia, Brazil, Chile, Costa Rica, the Czech Republic, Estonia, Finland, France, Germany, Guatemala, Honduras, Indonesia, Jamaica, Kazakhstan, Kosovo, to be recorded. Kuwait, Latvia, Lithuania, Malaysia, Mexico, Nigeria, Paraguay, Peru, Portugal, Senegal, Slovakia, Slovenia, Spain, Sri Lanka, Sweden, Switzerland, Tunisia, United Arab Emirates, Uruguay and Venezuela.
Several countries have started vaccination programs. Israel vaccinated over 32% of its population (including 80% of those over 60) with a first dose of Pfizer vaccine and over 18% with a second and final dose. The U.A.E. comes next with over 30 doses per 100 people.
US dollar index
The following weekly price chart shows that the US dollar index printed a small, weakly bullish candlestick last week. The consolidation of the past few weeks suggests that despite the long-term bearish trend, the dollar may not continue to fall – the pace of this trend has slowed in recent weeks. Overall, the price movement for the next week in US dollars seems unpredictable. Because of this, it is probably advisable not to trade the USD directly in the coming week.
S & amp; P 500 index
After hitting a new all-time high on Tuesday, the US stock index fell sharply, recording its largest daily decline since October. The price chart below shows that this bearish retracement has only just begun to break below the 50-day moving average. This area below the moving average can be a good buy zone for this index when the price is on a firm upward day closing below this moving average. Stocks could be a buy this week, but it makes sense to wait for another decline followed by a solid move higher before buying.
GBP / USD
Although the US dollar has regained some strength, the British pound is also relatively strong as a currency. The price hit a new weekly closing high of 2.5 years. This long-term uptrend is probably best traded by waiting for a new 50-day high and then waiting for a downtrend the next day. At this point, a long trade entry could be made profitable again from the slump. An alternative method would be to identify key support levels and trade bullish reversals at such levels within a day.
USD / JPY
The US dollar gained strength again over the past week, and this resulted in the USD / JPY currency pair hitting its first new 50-day high in a long time. This would normally indicate a long trade entry, but it is noteworthy that the volatility is very low and that the price has not yet passed the technically significant level of 105.00. If we hit a daily close above 105.00 this week, this pair could be a buy, especially if it pulls back the next day but still closes above 105.00.
I see the most likely opportunities in the financial markets this week to look for selective long positions in the S&P 500 index as well as the GBP / USD and USD / JPY currency pairs. However, as stated above, it is important to wait for the right technical developments in each of them before making any new long trades.
What are the 28 forex pairs?
These names are easy to use for research and useful for communicating with other forex traders.
- USD (US dollar) greenback or buck. …
- GBP (pound sterling) sterling. …
- EUR (Euro) u2013 Single currency or fiber. …
- CHF (Swiss Francs) Swissy. …
- CAD (Canadian dollar) u2013 Loonie. …
- AUD (Australian dollar) Aussie or Ozzie.
How to Choose a Forex Pair?
The Criteria for Selecting Currency Pairs Each currency pair has the time when it is most active. This is the time when the volume of trading is greatest and the price could move significantly. For example, USD / JPY, AUD / USD and NZD / USD are active early this morning during the Asian session.
What are the 8 main currencies?
In general, the eight most traded currencies (in no particular order) are the US dollar (USD), Canadian dollar (CAD), euro (EUR), British pound (GBP), Swiss franc (CHF), the New Zealand dollar (NZD), Australian dollar (AUD) and Japanese yen (JPY).
What is the most unstable currency?
The most volatile currencies
- North Korea won
- Indonesian rupee,
- Venezuelan bolivar,
- Iranian rial.
- and other.
Can the Forex Market be Predicted?
Predicting the direction of the forex market is not easy, but traders have more tools and resources than ever before. We look at the tools that traders can use to try to predict forex movements and exchange rates.
Is Forex Just Guessing?
Forex trading is not a guessing game because it is not poker. Forex trading is an analytical game that runs based on sentiment statistics. The market movement would be different every day, so that we cannot guess, but can predict by analyzing the market situation.
Can I trade Forex with $ 100?
Most forex brokers allow you to open an account with as little as $ 100. … While it is possible to build a $ 100 account, you should learn everything from other forex traders first and practice on a demo account before depositing any real money.
What is the Best Forex Trend Indicator?
One of the most popular and useful tools for trend confirmation is the moving average convergence divergence (MACD). This indicator first measures the difference between two exponentially smoothed moving averages.
Which Forex Pairs Are Most Correlated?
|EUR USD||USD / CAD|
|GBP / USD||0.81||– 0.56|
|USD / CHF||– 0.54||0.37|
|USD / JPY||0.51||– 0.52|
|EUR / JPY||0.87||– 0.71|
How Many Forex Pairs Should I Trade?
A good rule of thumb for traders new to the market is to focus on one or two currency pairs. Generally, traders choose to trade EUR / USD or USD / JPY because of the availability of so much information and resources about the underlying economies. Unsurprisingly, these two pairs make up a large chunk of global daily volume.
What is the easiest currency to trade?
What is the easiest currency pair to trade? EUR / USD is not only the easiest to trade, but also the most stable currency pair. It is the best choice not only for beginners but also for professional traders. This is one of the most widely traded currency pairs due to tight spreads and liquidity.
How Do I Trade Forex Using Fundamental Analysis?
When performing fundamental research in the Forex market: Have an economic calendar ready, detailing the indicators and when they should be released. Also, keep an eye on the future. Often times the markets move in anticipation of a specific indicator or report to be released at a later date.
What is moving the forex market?
The central banks move the currency markets dramatically through monetary policy, setting the exchange rate regime and, in rare cases, through currency interventions. Companies trade currencies for global business operations and to hedge against risks. Overall, investors can benefit from knowing who is trading forex and why they are doing it.
How do you trade forex for beginners?
Beginners can get started with a micro account for as little as $ 50. Before you get started, you should familiarize yourself with the market and forex market terminology. If you’ve already traded stocks online, getting started should be easy.
What are the basics of forex?
Fundamental analysis evaluates the economic well-being of a country and thus also the currency. Exchange rate movements are not taken into account. Basic forex traders use data points to determine the strength of a particular currency.