Forex Trading Opportunities in December
While November was certainly an interesting month, the last month of the year is now coming up and perhaps we can expect the market to give us a few more clues as to what is to come next year.
In this month’s market overview, we will go over what has happened in the forex and stock market over the past month, as well as look at some potential opportunities to take advantage of as we go into December – so stay tuned!
US Stocks
When it comes to the US stock market, things are now in fact looking very bullish. Since reaching a bottom in early October, the S&P 500 – the broadest measure of the US stock market – has been in a continuous uptrend on the daily chart, with only very minor price dips along the way.
As we can see from the chart above, the black trendline has really acted as a firm support line for the price during the corrections we have had this year.
From the way the chart looks now, it appears as if the market reacted with a form of relief when it realized that the support would hold during the latest correction in October. The result, of course, was another surge to new all-time highs.
Gold
Another market that a lot of traders follow closely to get an idea of what’s going on in the broader markets is gold. Gold serves many roles in the financial market, but is in some ways a barometer of fear. The more worried people become about the stock market, the higher the gold price tends to move. Similarly, higher stock prices tend to send gold prices lower.
Now, however, we have seen sharply higher stock prices at the same time as the gold price has only seen a slight decline. This may give us a hint that appetite for gold is still high, perhaps because confidence in a continued rise in the stock market is not very strong.
Regardless of the reason for this price move, gold is still largely in an uptrend when judging from the daily chart, as seen above. We are now most likely in a consolidation phase similar to the one we saw between March and May this year, which means that nobody should be surprised if prices turn higher again in the near future.
USD/AUD
The US dollar/Aussie dollar is one of the currency pairs we know many of our students and readers follow closely. And there are good reasons for that, as the USD/AUD can be a good pair to trade, perhaps particularly for those of you who are based in Australia and trade during Australian trading hours.
As we pointed out in November as well, the USD/AUD has been trading within a relatively narrow channel for the entire year. And depending on which timeframe you use, we can even say that this channel has persisted since mid-2018.
The USD/AUD has, in other words, been remarkably predictable, giving traders who know how to take advantage of this lots of opportunities to do so. And until the price actually breaks out of this pattern, our best bet can only be that it will continue. Buying low and selling high within the pattern therefore still seems to be the way to go about this pair, until the time comes when price tells us otherwise
Fundamental outlook
On the fundamental side, there is one issue in particular that stands out as important as we move into December; the geopolitical situation between the US and China.
As far as we can tell, the situation between the US and China will continue to make headlines. The big question right now is whether a “Phase 1” trade deal will be signed before the end of this year, or if negotiations will fall apart again like so many times before.
The other thing to look out for, which is in many ways related to the ongoing trade negotiations between the two superpowers is what happens in Hong Kong. Some commentators seem to believe that the anti-government protests there will calm down and eventually fade away now that the pro-democracy movement has won a big victory in district elections in the end of November.
In any case, the Hong Kong situation is still highly uncertain and remains volatile. And although this may seem like a small and isolated event, these types of events have historically had a tendency to spill over and cause reactions in other parts of the market and the world in general.
Join our free event
Are you interested in learning more about how news events, geopolitics, or even just chart patterns can be interpreted to make profits from the forex market? If so, you may consider joining one of our free events in 2020. We regularly host free forex trading seminars around Australia and would be thrilled to see you at an event near you!
