Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade update of the Free Profitable Forex Newsletter!
The weeks ahead will be decisive for the corona crisis, the economy, and markets
Markets are relatively much calmer this week compared to recent times, possibly due to the upcoming Easter holidays that are taking place this weekend in the western world. Many traders have taken extended holidays, so trading may stay quiet well into the next week.
At the same time, uncertainty remains high regarding the near-term direction of currencies and other markets due to the unpredictable medical crisis caused by COVID-19. It is evident that the coming days and several weeks will be crucial for the outcome of both the coronavirus pandemic and, subsequently the outlook for how quickly the economy can rebound back to normal levels.
It’s imperative now for the economy and everyone’s well-being that the corona medical crisis gets contained soon. Once that happens, investors will be more confident to look at potential opportunities in the markets. For the moment, despite the solid recovery in risk appetite, the overall risk-off tone remains dominant, and another wave of disruptive moves in the markets, where safe-havens outperform, can’t be excluded. Thus, an attitude of heightened
vigilance and careful trade picking remains appropriate.
Risk appetite is making a recovery; But will it last?
High-beta risky currencies such as AUD are making a notable recovery as are other risky assets like equities. The S&P 500 and AUDUSD, for example, have retraced 50% of the losses since their bottoms on March 19 and March 23, respectively.
But, as noted above, with the dismal outlook for the global economies and the worst yet to come, it’s hard to imagine the risk-on rallies can continue for much longer, especially since a large part of this move has already run its course. It’s doubtful how much markets can respond positively now even to good news on the COVID-19 crisis, but with this rally already taking place, negative news may be much more impactful.
With that said, it’s still preferable to look for going long on the safe-haven currencies such as JPY, CHF, and USD at key technical levels. For example, AUDUSD is likely to meet stronger resistance from here to the upside and as it runs into the 0.65 area (see chart).
Gold regains the lost ground in the meantime
The situation on the God weekly chart is also interesting. Obviously, the safe-haven yellow metal is receiving a lot of support in a crisis like this, although its sharp 2-week decline in March certainly surprised many at the time. The price is now making another run at the March highs near $1700. Slightly higher, the resistance trendline of the bullish channel stands at the $1725 area.
The Fed’s actions of providing USD liquidity have killed the Dollar rally, and Gold has benefited from this too as a direct inverse reaction. Particularly, the enormous, previously unseen amounts of QE that the Fed is conducting right now should also be a long-term support for commodities in general, not just Gold as a precious metal. However, the lack of demand due to the upcoming recession should keep a lid on inflation for now. In this regard, it will be
of interest to see how Gold interacts with the $1725 resistance zone.
Our trade signals from the past week
- March 12 - Short EURJPY from 117.30, stop taken out at 116.95 = -35 pips (The trade didn’t work exactly as planned last week. Although the pair did find a bottom in the end, it was below the area that we identified as the harmonic support.)
TOTAL: -35 pips in the past week
TOTAL: +2790 pips profit since October 1, 2018
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Thank you!
High Risk Warning: Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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