Market Analysis For Week Of 7 Dec., 2014

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 December 2014

    We forecast that the pair most likely to change in value significantly during the month of December will be USD/JPY, which we expect will rise in value. This pair has been the strongest mover in the market over the previous 3 month and 6 month periods.

    Weekly Forecast 7th December 2014

    Last week we forecast that the EUR/CAD currency cross was likely to fall in value. The forecast was correct, as the cross fell by 1.44% from open to close last week.

    There were no exceptionally strong counter-trend moves last week, so we make no weekly forecast for this week.

    Average volatility this week was about the same as last week. Approximately half of the major and minor pairs fluctuated in value by more than 1%.

    The big picture this week showed a continuation of JPY weakness and USD strength, with the USD resuming its upwards trend after a pause in momentum. The GBP has been showing some relative strength, with weakness continuing in the AUD and the JPY.

    Previous Monthly Forecasts

    Our forecast for November 2014 was long USD/JPY. The forecast performed extremely positively, as shown below:

    Our forecast for October 2014 was short EUR/USD and long USD/JPY. The forecast performed very positively, as shown below:

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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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