Knowing the current financial trends in the world is certainly necessary for traders to operate effectively in the markets, but it isn’t always enough to do so profitably. With that in mind, here are 5 current market trends in world markets and how traders might capitalize on these trends.
Since trends can change rapidly, let’s discuss some of the relationships between news events and each of the markets outlined so traders can be aware of when these trends might slow or reverse altogether.
- Gold Market
Gold has quickly become more of a fashion lately. It recently broke the $1500 USD an ounce threshold and is becoming more popular with traders looking for a stable place to keep their money while some currency volatility exists.
Since May, Gold is trading at over $200 USD more per ounce. This is fueled by the current US/China trade war that involves Chinese manipulation of the Yuan downward. Adding to the mix are worries about the U.S. economy beginning to slow and the recent U.S. Federal Reserve decision to lower interest rates helps to confirm some of those worries.
Here is a chart from an Olymp Trade account from Friday August 9th with a 4 hour interval to show some of the daily movement. The chart begins in May of this year.
One can clearly see the upward trend but the daily sell offs and shorts are providing traders with a great opportunity to buy into Gold and grab the bounces. If they don’t come immediately, they have definitely come in the next day or two.
Long position traders can hold and wait for the upward trend to slow before selling. Conversely, day traders can take advantage of daily bounces, which often take place several times a day to grab quick profits of 4-10%.
- Brent Oil
Several developments over the last month have sent the price of Brent Oil downward. Most of this is based on lackluster global demand, but it was also affected by the change in the Yuan since much of China’s oil import contracts have considerations for the value of the Yuan despite the contracts being in dollars.
The Saudis have since announced that they will be meeting with OPEC officials to work a deal to cut production in order to bring the price back up. Just the mention of production cuts have already created some solid upward movement as you can see from the chart below.
$55 USD a barrel seems to be the sweet spot for OPEC to take action and traders can take advantage of the climb back to a number that is agreeable to oil producing countries. This year, that range tends to be in the $65 – $70 USD range.
Options trading such as that on Olymp Trade will provide plenty of opportunity for traders to get some solid profits before oil finds some consolidation.
- Oil Based Currencies
One of the most dependable market correlations in Forex markets is the Russian Ruble’s tie to the price of oil. Since the Ruble became a free floating currency several years ago, the USD/RUB and EUR/RUB currency pairs have ebbed and flowed with the price of oil.
The Russian Central Bank seems to be endeared to the range of 62 to 65 Rubles to the dollar so any significant drops in oil prices that drive the number above 65 is likely to draw phone calls from Russian producers to OPEC. Although Russia isn’t an official member of the oil cartel, it does cooperate often with production quotas set by the group.
In the screenshot you can see the resistance at the 65 Ruble level and the support at the 63 level. Traders wanting to take advantage of this can utilize option trading when they see adjustments in the price of Brent Oil to make some great profits on this currency pair.
Bitcoin is clearly not dead as some people had prognosticated earlier this year. It has been trending upward for a few months now with quite a bit of tradable volatility daily. Adding to the rise is the recent Yuan decline, which drove many investors to find an asset more in line with the U.S. dollar until China and Trump come to an agreement on their trade dispute.
It is hard to believe that Bitcoin was at $4,000 in April of this year and just recently broke $12,000 again. The trend appears to see the blockchain currency rise, consolidate, drop a bit, and then rise again. The old saying, “the trend is your friend” is appropriate here.
Traders can approach positions with Bitcoin in two fashions – options and Forex. It’s highly recommended to use a trading platform that allows you to do both since there are opportunities galore for intraday options, shorts, and bounces. Many of the crypto exchanges don’t handle options so a broker like Olymp Trade, which has both Forex and options is a better choice. Longer positions can then be hedged with 15 – 60 minute option positions to take full advantage of Bitcoins volatility.
- US Dollars against Canadian Dollars (USD/CAD)
After two months of solid gains by the Canadian dollar against the USD, the trend has finally reversed and based on economic data from both the U.S. and Canadian governments, this reversal will likely be the new norm for the near future.
The USD will likely make back it’s early losses to the CAD this summer over the next several weeks and this will provide traders to buy into the rise for some decent profits. Many of the long positions for Canadian dollar investors will start hitting their stop losses sending the market further in the current direction.
More economic news from either of the two governments and a lack of quarterly earnings reports for several weeks should protect traders from losses if they go long on USD in the currency pair. Keep an eye out for economic news about Canadian/Mexican/American trade agreements as this may affect the trend.
Traders can take advantage of the market timezones with this currency pair as there are many opportunities to grab great positions early in the day and then close them once the North American trading session begins. Make sure you are using a broker with a platform that operates for all currency markets so you don’t have to wait for the opening bell in New York to take advantage of daily profits.
Armed with some market knowledge, current news, and some insight on how news affects markets is a key ingredient in successful trading. However, it can’t stress enough how a solid and consistent trading strategy can keep traders from impulsively opening some positions. A great article on the topic is here – 2 Basic Strategies for Trading Forex
Source: Olymp Trade