High inflation worldwide is causing strong trends in the forex market, and this article will present you with the most interesting trading opportunities at the moment. Let’s have a look at EUR/USD, AUD/JPY and EUR/CHF.
EUR/USD has been in a strong downtrend for several months, and it fell from 1.2 below parity (1.000) in July. The descending channel shows another opportunity how to jump into a trend, but is the downtrend really going to continue? A potential double bottom pattern is forming in the chart, which could lead to a breakout of the bearish channel.
Related article: USD/CAD defends 1.30 after terrible CAD jobs market data
Before entering a long position, ensure you understand what is going on. Both Fed and ECB are raising interest rates, which makes it hard to determine the next move on EUR/USD. That is why a little breakout from the channel by 200-300 pips is possible, but consolidation in the next few weeks is the most probable as the currency pair is holding above parity. If a strong reversal signal develops in the chart, the downtrend may continue to new lows without a problem.
While EUR/USD is falling, AUD/JPY is the total opposite. Since the US Dollar is strong, the Japanese Yen is decreasing in value to 24-year unseen levels. It is still in an uptrend and it is recommended to stay bullish, but a reversal is slowly but surely forming.
AUD/JPY is approaching the critical psychological level of 100, where there is also a daily gap. If the market fills this gap and reaches 100, this currency pair will likely go down to the trend line by a few hundred pips after this event. Divergence also confirms the upcoming move downward.
For long-term forex traders, it must be interesting to consider a long position on EUR/CHF as it approached 7-years unseen low. False breakout on the support already happened, and as the European Central Bank started to raise interest rates regularly, Euro will likely gain some power in the upcoming months. EUR/CHF could easily reach parity in a few weeks or even higher as a result.
Do not forget this is only an informational article, and you should be aware of the possible risks of trading. That is why it is recommended to use stop-loss and prepare risk management before entering a trade.