Get the Forex forecast using the fundamental, sentiment and technical position analysis for the major pairs for the week of December 27, 2021 here.

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The difference between success and failure in Forex trading will most likely depend primarily on which currency pairs you choose to trade each week and in which direction, and not on the exact trading methods you might use to determine entries and entries. trading exits.

At the start of the trading week, it is a good idea to get an overview of what is developing in the market as a whole and how these developments are affected by macroeconomic fundamentals and market sentiment. Marlet.

There are long-term values tendencies in the market, so this can be a profitable time to trade now.

Large image 27e december 2021

The Forex market last week saw a lot of price movement, although it was the week leading up to the Christmas holidays and very little high impact data was released. The only releases were Canada’s GDP and the minutes of the Reserve Bank of Australia meeting, which contained no surprises or moved the market significantly.

The US dollar fell, against its long-term uptrend. The US dollar index ended the week sharply lower.

The feeling of risk improved during the week, with most of the higher stock markets including the US benchmark S&P 500. Most of the global stock markets rose during the week, as did the Australian, New Zealand and Canadian dollars which are currencies of commodities and key risk barometers. The improvement in risk sentiment globally is probably mainly because there is growing optimism about the impact of the omicron variant of the coronavirus which has started to spread extremely quickly in some European countries and is only just beginning in the United States. Safe-haven currencies such as the Japanese yen, Swiss franc, and US dollar are all lower.

I wrote in my previous room last week that the best trade of the week was likely to be short on the EUR / USD currency pair. Unfortunately, the EUR / USD index rose 0.68% during the week.

Fundamental analysis and market sentiment

The headlines to take away from last week were:

  1. Early UK data suggests the fast-spreading variant of the omicron coronavirus is less likely than previous strains to cause serious illness requiring hospitalization. This news helped to heighten risk sentiment, boosting equity markets and commodity currencies.

  2. The Turkish lira recovered strongly and continued to advance following the The Turkish government’s guarantee of the real value of the lira against a basket of large foreign currencies for domestic depositors.

  3. A worrying variant of the coronavirus, called the omicron variant, continued to spread around the world. The variant is heavily mutated, and the latest studies suggest that it has a strong ability to evade current vaccines. However, the latest studies suggest that a maximum vaccination will always offer strong protection against serious illness. Some European countries have announced new restrictions in an attempt to prevent the spread of the disease, including the Netherlands, which has started a full month lockdown. The UK is now announcing well over 100,000 new confirmed cases per day, a far cry from the record.

The coming week should see a lower level of volatility due to the extremely slow economic calendar and the continuation of the Christmas and New Year holiday season, the direction of the market being likely to be determined by the impact of the omicron variant.

Last week, the global number of new confirmed coronavirus cases hit an all-time high. About 57.4% of the world’s population has now received at least one vaccine. Pharmaceutical industry analysts are reconsidering the earlier belief that the pandemic will indeed end in 2022, with many likely seeing it continue until 2024 or 2025.

The strongest global increases of new confirmed cases of coronavirus are currently occurring in Argentina, Australia, Bahamas, Canada, Cyprus, Ethiopia, Finland, France, Iceland, Italy, Kenya, Luxembourg, in Malta, Nigeria, Portugal, Spain, Sweden, United Arab Emirates, United States and United Kingdom.

Technical analysis

US dollar index

The weekly price table below shows the US dollar index printed a bearish engulfing candlestick last week, after again rejecting the resistance level identified at 12257 in the previous week. Note how this key resistance level held up again – in fact, it held up just after the FOMC release last week when it was tested, which is perhaps a bearish sign. While this continued failure of resistance is not enough to invalidate the long term trend (price is well above its levels of 3 and 6 months ago), it is very noticeable that there is clearly a strong resistance here which is having an impact. This suggests that despite the long-term uptrend, we may now experience a bearish pullback. even a reversal. I wouldn’t view the USD as a key driver for trading in the coming week. For a while, and possible for the whole week to come, there will likely be some momentum against the US dollar, although the Japanese yen is considerably weaker.

Weekly chart of the US dollar index

USD / JPY

The USD / JPY currency pair hit its highest weekly close in 5 years, printing a healthy-sized bullish candlestick that closed very close to the top of its range. These are clearly bullish signs that we are likely to see a further rise in the coming days and weeks. However, it should be noted that there have been several higher daily close to the very key resistance level at 115.25 recently. While the rise in the USD / JPY is supported by the improvement in risk sentiment we see in the markets since data started showing the omicron is relatively soft, this currency pair is still prone to a sudden sell off below 115.25, so I don’t want to be long here until we see a daily close (New York) above 115.25.

USD / JPY Weekly Chart

S&P 500 Index

The S&P 500 stock index hit its highest ever weekly close, the impression of a healthy sized bullish candlestick that closed very close to the top of its range. These are clearly bullish signs that we are likely to see a further rise in the coming days and weeks. The S&P 500 Index is a buy.

Weekly chart of the S&P 500 index

But

Corn, represented by the Teucrium Corn Fund ETF, achieved its highest weekly close in over 6 months. He printed a healthy sized bullish candlestick that closed at the top of its price range. We are also seeing a very long term uptrend that has existed since the April 2020 coronavirus crash. These are bullish signs. Markets are currently benefiting from a sense of risk and with healthy demand and continued supply chain challenges, we have an environment that could see firm and continued price increases in major commodities such as corn. Be careful when trading commodity trends with retail Forex / CFD brokers as overnight swap rates can be high making long term trading potentially unprofitable.

Weekly chart of Teucrium Corn Fund ETFs

Final result

I see that the best opportunity in the financial markets this week is likely to be the long S&P 500 index, the USD / JPY currency pair after a daily close (New York) above 115.25 and the agricultural raw material Maize in USD.


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