2017 is a landmark year for a number of reasons. A businessman is now the leader of the United States, the United Kingdom is fully committed to implementing the Brexit and once again, gold may be on the rise in the coming months. With so many disparate events taking place simultaneously, is it possible to develop a sound and solvent Forex strategy? This question has been asked by countless traders and in order to appreciate which methodologies should be employed, we will need to break it down into several sections. Let’s take a closer look.
Forex Trading: Is a Market Crash Imminent?
One of the rumours which has been spreading amongst some circles is that the markets in set for a major crash during the latter half of 2017. While much of this arises from speculation, it is still a fact that the levels of the VIX are the lowest that they have been since 1993. The reason that this observation is important arises from the fact that some believe such a lack of momentum could represent the proverbial calm before the storm. Should Forex traders believe this perspective, they may be wise to curtail their open-market trading until more clarity is found (most likely in September).
A Falling Dollar: How to Cope
There has been a fair amount of news touting the economic policies put in place by Donald Trump since he became president. Indeed, major indices such as the Dow Jones and the S&P 500 seem to reflect this sentiment. However, there may be more than meets the eye in terms of the medium-term value of the dollar. Disappointing economic and consumer data released in May confirms that the domestic economy is still rather weak. This may also signal that the average citizen is not entirely confident of Trump’s ability to lead. Be sure to check out some of the latest Forex news on CMC Markets.
One school of thought believes that these symptoms could indicate a declining dollar towards the final quarter of 2017. Should this occur, Forex traders should be ready to diversify their holdings into other currencies such as the euro, the pound or even the Australian dollar. It is still a fact that a great deal of downward momentum will need to be witnessed in order to confirm this trend.
The Criticality of Online News
We live in a world dominated by the exchange of information at the speed of light. If poor economic data is released from Asia, it will impact the western markets within minutes. This is why it is so very important for Forex traders to keep abreast of the latest news stories as they take place. As opposed to resorting to generic sources such as Reuters or BBC, it is much better to choose financially oriented portals including CMC Markets. These websites are solely concerned with providing the latest fiscal data to their clients. Thus, investors will be able to make the most appropriate decisions and “strike while the iron is hot”.
The Inverse Relationship with Gold
It is a well-known fact that gold is a dollar-backed asset. Therefore, the value of this yellow metal will rise when the price of the dollar falls. We have seen this very same trend during recent months. Some believe that gold may indeed break through the important resistance level of $1,800 dollars. Should it find support at this new foundation, it is not inconceivable that prices could reach $2,000 dollars by the end of the fiscal year. However, this is also assuming that the value of the dollar continues to weaken and that the bulls make a run towards gold. Should this be the case, Forex investors should be looking to capitalise upon any short-term currency fluctuations. It may also be prudent to scale back dollar-based assets for the time being.
The fact that 2017 has been associated with so much volatility makes it difficult to know exactly where we may be headed. However, these are all educated observations that have at least some backing by financial analysts. The most pivotal suggestion to remember is that keeping abreast of the latest news will provide clarity and insight when they are required.