In this week’s blog I want to take you back almost 12 months to a video I posted on the 27th December 2014. Here I gave my directional predictions on several currency pairs based on nothing other than the fundamental outlook. No technicals, no crystal balls, just plain and simple fundamentals.
By watching this video and then seeing how each currency prediction fared throughout 2015 I think you will be pleasantly surprised, perhaps even a little shocked, but I hope this empowers you to take action and to learn more about the fundamentals (if you haven’t done so already) which drive the FX markets.
It’s very easy to discuss currency movements after the event, as many often do, but as traders we don’t get paid this way. We have to make bold speculations on direction BEFORE the moves take place and only then, if we are proved correct, do we profit. The video will fill you in on the detail but as a summary you can see how the trade predictions fared below:
|Currency Pair||Direction Predicted?||DEC 2014 PRICE||2015 OUTCOME||MOVEMENT IN PIPS/POINTS||REASON FOR FALL or RISE|
|EURUSD||SELL||1.2179||1.0495 (lowest)||1684||ECB QE, rate cuts, bearish central bank|
|USDJPY||BUY||120.29||125.58 (highest)||529||BoJ QE, low rates, bearish central bank|
|EURGBP||SELL||0.7828||0.6945 (lowest)||883||ECB QE, rate cuts, bearish central bank|
|GBPJPY||BUY||187.11||195.82 (highest)||871||Opposite central bank policies|
|USDCAD||BUY||1.1625||1.3456 (highest)||1831||BoC rate cuts, oil prices falling|
|AUDUSD||SELL||0.8123||0.6907 (lowest)||1216||RBA rate cuts, China slowdown|
|NZDUSD||BUY||0.7768||0.6121 (lowest)||1647||RBNZ rate cuts, China slowdown|
|OIL||SELL||54.70||38.01 (lowest)||1669||Massive oversupply issues|
I have bolded out the NZDUSD prediction as this proved to be incorrect. However one thing I want to point out here is that although the NZD fell against the USD when I felt, at the time, it would rise, it didn’t take long before I changed my outlook. When the NZ central bank started to move from raising rates to talking about cutting them (which is massively bearish for the respective currency) I quickly changed my view on the currency and began to actively sell it, as you will see from a number of trade videos posted on my YouTube channel. This is another wonderful thing about tuning into the fundamentals, you can tell pretty quickly when you need to change your directional bias on a currency. On my course, I update a ‘currency watchlist’ whenever our view on a currency changes to enable students to trade it in the highest probability way.
Now I don’t want you to think that just because of a strong directional bias on a currency pair that we would just simply take a trade and hold it for 12 months (even though this would have proved to be highly profitable!) as this simply isn’t practical, but we can certainly attack the trading year with more confidence and clarity on those pairs likely to yield the best returns.
As you will have seen in the last blog, planning in advance of a trade and being as pro-active as possible is something I never fail to do and something I drum into my clients due to how powerful an approach it is. In that particular instance I talked specifically about planning on a weekly and daily basis but planning can start well before that as last year’s video illustrates. Looking at the year ahead can give a long term outlook/bias on certain currencies, then your monthly/weekly planning can offer a medium term view and finally we have a short term perspective by planning on a daily basis. It all goes to build a strong view on a trade so you can execute your prediction/speculation with absolute conviction. I have traded the likes of EURUSD, USDCAD, NZDUSD etc..so much more confidently knowing the underlying longer term fundamentals support a trades direction.
Although I am very pleased with my foresight on a number of pairs, this blog is not to pat myself on the back (although every now and again we should do so). Instead I want this video to once again demonstrate the power of the fundamentals. I have posted many live trade videos of how we can use them on a short to medium timeframe but this video clearly shows how you can also utilise them from a long term perspective too. In fact taking trades on a short to medium term horizon ALONGSIDE the longer term/bigger picture fundamentals is a highly probable approach and can do wonders for your confidence.
So this video, produced 12 months ago, has highlighted innumerable trading opportunities and if you are one of those who have been able to take advantage then wonderful. If not, then my advice is to not wait any longer…get your head around the fundamentals (with my support or not) and see your understanding of the markets, and your ability to trade them successfully, skyrocket. CHECK OUT THE VIDEO NOW!
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Until we speak next,
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