Picking the year-end trends in the FX market
Generally speaking we get a fair amount of volatility in December and patient traders can certainly take advantage of these conditions. Now all we need to figure out is what’s going where?
- Is the current Yen weakening an ‘across the board’ move or primarily a strengthening in USD/JPY?
- Has the market sold enough Yen already or is there more firepower to come?
- Will the weekly down trend-line in AUD/USD hold firm, providing another pro-USD indicator?
- Can EUR/USD break out of range-trading mode?
- Will the EUR crosses see more short-covering in the lead up to Christmas or will the bears get more aggressive?
- Can cable remain below a double-top at 1.6300, yet another pro-USD indicator?
As always plenty of questions in my head as I wake up. My thoughts at this stage are that the most straightforward risk-reward trade is to be long of the USD whilst pairs like AUD/USD and cable remain below their resistance levels. Being short the EUR might be a dangerous play whilst the market is short and the bad news from the EZ dries up. In other words, I think it’s buy-dips in EUR/USD and USD/JPY, and sell-rallies in cable and AUD/USD until proven wrong.