Market Analysis For Week Of 22 February, 2015

This week we’ll begin with our monthly and weekly forecasts of the currency pairs worth watching. The first part of our forecast is based upon our research of the past 11 years of Forex prices, which show that the following methodologies have all produced profitable results:

  • Trading the two currencies that are trending the most strongly over the past 3 months.
  • Assuming that trends are usually ready to reverse after 12 months.
  • Trading against very strong counter-trend movements by currency pairs made during the previous week.
  • Buying currencies with high interest rates and selling currencies with low interest rates.
  • Let’s take a look at the relevant data of currency price changes and interest rates to date, which we compiled using a trade-weighted index of the major global currencies:

    Monthly Forecast February 2014

    We forecasted that the pair most likely to change in value significantly during the month of February would be USD/CAD. This pair had been the strongest mover over the previous 6 months and, with the exception of the CHF, over the previous 3 months as well. The strong move in CHF looked abnormal and suspicious. The performance of the monthly forecast to date has been as follows:

    Weekly Forecast 22nd February 2015 

    There was no weekly forecast last week. There is also no forecast this week, as there were no strong counter-trend moves.

    This week saw a continuation of the mostly counter-trend moves of the previous two weeks, until the end of the week when some of the longer-term trends began to reassert themselves, but not very strongly. The strong USD seems to be losing its momentum, with strength now being mostly exhibited in the GBP. The weakest currencies look to be CAD, then EUR, followed by the AUD. However none of these are falling by much. Overall, the market looks mostly uncertain and choppy.

    There was a meaningful decrease in volatility this week, with about two-thirds of the major and minor currency pairs fluctuating in value by less than 1%.

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    Author: Travis Esquivel

    Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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