Good bye 2018.
Looking back in hindsight, it was a year for the bears. Had you been bearish right from the beginning, you would be swimming in pips!
Having said so, thus is the reality that we can only look back and comment while being no more wiser about the future. After all, you cannot predict the market with an accuracy of 100%.
Not An Excuse 😛
However this is not an excuse for messy trading. With proper understanding of the market and situation, we can find ourselves useful insights every now and then. This makes the forex trading journey less treacherous. Now let us look at the charts for 2018.
The Australian dollar was sliding down for most part of the year. Attempts to regain lost ground towards the end of the year was admirable but futile. A forex spike happened in the last candle. Attributed by many as a flash crash due to the lowering of Apple’s earnings forecast. This highlights the vulnerability of forex positions during low volume market conditions where movements may be amplified due to a lack of liquidity.
Looking Ahead for AUD/USD
0.7 will be a key support to look out for. Having already failed once, bearish momentum will need to break this region decisively in order to continue it’s descent.
While similar to the AUD/USD, the descend of the EUR/USD was sharper at the start. It gradually settled into a consolidation of sorts for the rest of the year.
Looking Ahead for the EUR/USD
The situation of the currency pair is not straight forward. Being one of the most traded currency pair, liquidity is ample and often results in consolidations. Think many buyers and sellers all pulling a rope! A key region to look out for is likely 1.12 to 1.16, with 1.14 being a pivot. The EUR/USD will need to shift out of this zone before a momentum can develop.
Possible Major Influences
The slowing of China’s economy will likely continue to shape trends. As the markets get used to it, we will likely then see less spikes.
The US – China trade war is mostly priced into the markets now. Having said so, any significant improvement or deterioration to the situation may introduce momentum into the markets.
Brexit and the Euro Zone will likely remain in focus for 2019. A hard exit may send ripples across the financial world as countries and economies try to navigate uncharted waters. Unique challenges in the various economies of the Euro Zone will continue to exert a toil on the Euro currency. The protests in France and Italy budget crisis are examples. As a generalisation, the US and Euro Zone is still playing out the theme of the less weaker of both being favoured.
The US Federal Reserve interest rate hikes are forecasted to slow down in 2019. The question now is if other central banks will adopt similar conservative stances or differentiate themselves. We know that a high interest rate or low interest rate will affect a currency differently. The same goes when it is used to compare across currencies.
With the Democrats turning up the pressure on President Trump. Many are expecting a bumpy road ahead for the US. We know that short term price action is often influenced by sentiments hence keep a lookout on developments.
Understanding the Markets is Key
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