Hi, welcome back after the annual break.
This is a copy of the detailed technical & fundamental analysis I provide for forex traders inside the members area every trading week.
I also update them during the week as does my trading partner, Pierre du Plessis.
We also host a live forex trading session on a Tuesday to share ideas, tips and answer members queries and give feedback re their forex trades.
Monday is the first day back after the holidays.
As ever we saw some major areas break over the holiday period and promptly reversed.
Hopefully, you paid attention to my warnings and avoided getting burned!
I explained before and during the holidays and again in last Thursday’s live training session why I was not buying into moves higher on the Euro/$, Aud, Nzd etc. All of them rejected after initially breaking (faking) out. Nothing fundamentally has changed regarding the strength of the US economy nor the weakness of the others hence my bias remains the same, unless or until something major happens to weaken the $ or strengthen the other majors.
I explained many times why it is important to form a bias, add that to your technical and fundamental analysis to enable you to make a plan for the week (s) ahead.
Gold, Oil & possible conflict
In Thursday’s live session I showed how gold is the ultimate safe haven.
On Friday morning the assassination of General Soleimani, leader of Irans Qud forces saw gold jump for the very reason I had explained. It is seen as the ultimate safe haven. In times of war even more so- Clearly the situation in the gulf is now becoming very dangerous and the cynic in me wonders if, like many leaders before, Trump is trying to distract attention away from his problems at home, namely his impending impeachment and his re-election campaign for later in the year. There is nothing like a war to unify public opinion & politicians versus a common enemy.
Margaret Thatcher, for example, was on the verge of being rejected by her own party and the electorate when she decided to send the task force to regain control of the Falkland Islands (Malvinas to the Argentinians). As a result, she cemented her position as Prime Minister & her reputation as being the “Iron Lady.” https://www.history.com/news/margaret-thatcher-falklands-war
Equally the President of Argentina, General Galtieri was facing mounting problems at home and the invasion of the Falklands (for which he was later court-martialled) was a welcome distraction for him, albeit a short one. https://www.telegraph.co.uk/news/obituaries/1418678/General-Leopoldo-Galtieri.html
Let’s hope that common sense and diplomacy can prevent what could become a major conflict in the middle east. In the meantime, gold and oil will come into focus of the money men.
Please register for this week’s Forex Mentor Pro Live Training on
Tuesday 7th January’ at 11:00 AM GMT (London Time)
Click on the following link to register now:
If you have a topic you would like us to discuss, please let me know in the comments below or via the helpdesk.
We show in real-time what we are looking to trade and are happy to analyse any setups you may have found.
A live training session with Pierre du Plessis & myself this week. We will assess fundamentals, M2 Earth & Sky & fundamentals for potential trades. Followed by a Q & A session.
After registering, you will receive a confirmation email containing information about joining the webinar.
If you miss it, you will find a recording here on the blog, later the same day.
The Forex Week Ahead
I did my analysis and recorded the video on Saturday. If there is a dramatic escalation between the USA and Iran then I may need to revise my opinion (and you should too). If so I will update you in Tuesdays live training session.
My goal is to work a lot less in 2020 and certainly go back to just trading from weekly and daily charts.
Its the first week back after the holidays so liquidity and volume should pick up. Things should be a little more predictable, but in truth, the markets often do not fully “get going” until after Martin Luther King Day in the USA. My best advice is to wait and see after London and New York have opened, to give a clue as to the short term direction on pairs. The Iranian situation will make markets uneasy and clearly impact oil countries, including Canada, who should benefit from higher prices.
On the positive side, the pending China agreement will be seen as a positive for trade around the globe and the British election result means that Brexit will now go ahead, which should make trading the Gbp a lot more predictable in 2020. It is not guaranteed of course and there will be silly moves along the way, but a lot less than the last crazy 6 months.
Let’s see what happens on Monday.
There is not much red flag news this week, although it does culminate in NFP Friday which we never trade.
GBP/$: This could be tricky for the next few weeks. I expect the Gbp to be a lot more data-driven going forwards, however it might take a few weeks or even months for a pattern to establish. My gut feeling is that the Gbp will go up, but a run of negative data will have the opposite effect, so as ever plan for all eventualities. In the meantime, I suspect that price will be range-bound, below 1.3500 and above 1.2900. Those and 1.300 are the areas to watch, but there are better opportunities elsewhere for the next few days at least.
If it breaks and closes above 1.3500 on a daily then I will consider a long on a pullback BUT I don’t believe that fundamentals support the idea unless the news is very positive. As ever make a plan for every “what if” scenario.
Euro/$: Tried to break 1.1200 last week but rejected and ended up at the daily trendline once more, of 1.1170. I will place a forward order to short at 1.1300 although I doubt it will get there this week. To long I would feel more comfortable at 1.1000 but obviously 1.1070 to 101170 was a strong range pre-Christmas, so those are areas to watch intraday. Technically I prefer the Chf at the moment
Chf: I usually use it for confirmation with Euro/$ trades, but this has been fairly predictable of late bouncing off the whole numbers. I will watch intraday 0.9800 for a short and place a forward order at 0.9900, both have multiple reasons why price will probably bounce there. (if you are new these pairs are correlated – if the Euro is going up the Chf is going down most of the time and vice versa, explained here: https://www.mataf.net/en/forex/tools/correlation
Euro/Gbp: 0.8600 is huge on this pair and a break above would be a significant move. My bias is to short for multiple reasons as explained in the video. If that trade loses and price moves higher I will still be looking to sell.
Aud: My bias is short. I said last week ”…… If it shoots up on news I will definitely short at 0.7000 for multiple reasons.” This might now be range-bound for at least the next few days. Red flag news starts on Wednesday but prior to that 0.7000 to 0.6900 could well be the limit.
Nzd: My bias is still short. Like the Aud this could be stuck in a range for now between 0.6700 and 0.6570 (which is a 9-year-old trend line, ie a HUGE area). If it moves higher I will still only short it. This pair tends to stop at whole number so 0.6800 I will look for price to slow down. If it keeps going I will place a forward order to short at 0.6900
If it falls from the current position I need it to break and close on a daily below 0.6500 then do an M2 pullback to short.
If it drops like a stone after news then 0.6200 is where it will “probably stop” ergo a counter-trend long.
$/Yen: Did break out of its weekly 600+ pip triangle last week, so the dilemma now was that a Xmas fake-out or a real move? If it pulls back up to 109.00 I will short.
To long it (and change my bias on all the Yens) I need it to break and close above 110.00 on a daily candle close. Until then my bias is to short.
Cad/Yen: I have been saying for weeks that 83.00 is HUGE on this pair….” and it still is. I am “neutral” on this pair right now- expert speak for I don’t know”!
83.00 is the place to focus. If it breaks higher then the more conservative option is to look for a short at 85.00 for multiple reasons. If it drops then I need a break and close below the trend line and recent support at 81.30
Aud/Nzd: Same as last week although the average range is small on this pair. I only want to short and 1.0500 is the first place but the stop concerns me. 1.0600 is a better option but seems unlikely now, although it could spike there after news. If it keeps dropping then Pierre will be looking for a counter-trend long at 1.0300.
Aud/Cad: Still interested to short at 0.9100 its a big area again.
Aud/yen: Not sure, leaving alone.
Euro/Yen: It is holding above 120.00 which is major support and resistance. I am tempted to long there. To short it I need a clear break and close below 120.00 on at least a daily candle close.
New members, please note: If I am looking to take a trade long, for example, 1.5000, I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.
We are NOT a “tipping service” our aim is to teach you how to trade for yourself.
For more up to the minute, updates do not forget to drop by the forum in Pierre’s corner.
Watch the video for more detailed explanations of this week’s detailed analysis and trade plan.
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