2020 has been a topsy turvy year for everyone, including FOREX traders. With the COVID-19 pandemic, investors found it hard to fall back into old trading patterns.
If you want to be a successful FX trader, then you need to understand the market well and be able to read and analyze trading trends. It would be best if you built successful FX trading habits along with comprehensive FX trading trends analysis to guarantee your success in a market that’s ever-changing.
You have to know how to identify FOREX market trends to create a complete FOREX trend trading strategy. We here at ZED Network work with successful FOREX traders and provide them with a comprehensive payment orchestration platform for their business.
Because of our experience in working with FX traders, we have gathered some valuable information about FOREX trading trends for 2021. So we thought we should let you in on the market insights that we have been able to collect for the coming year.
However, before we discuss the trends, let’s talk about how you can know what the FOREX market trends are, and you do that through FOREX market analysis. So let’s talk about FX trend analysis first.
Types Of FOREX Trend Analysis
According to Zed Founder and entrepreneur Alan Safahi, as a trader in the foreign exchange market, your biggest weapon is a comprehensive FX trend analysis. Often traders try to use a FOREX trend detector, a FOREX trend focus indicator, a FOREX trend trading indicator, or other FOREX trend software, but that won’t be useful if you don’t have the necessary skills
You need to have the basic skills to minimize risk and understand price movements more accurately through a comprehensive analysis. There are two types of analysis that you have to conduct if you want to develop your FX trading strategy.
You should conduct a thorough fundamental and technical analysis if you want a successful FOREX trend trading strategy. Let’s talk about the two types of analysis now.
The purpose of the fundamental analysis is to evaluate some core factors within the market. As a trader, you need to pay close attention to gross domestic product (GDP), inflation, economic growth activity, and manufacturing from different countries to understand and find FX trends.
Fundamental analysis of the FOREX market will give you all the information you need about geopolitical and economic events that allow for wise FX trend forecasting on the currency market.
Any announcements from leaders about the economy or politics are considered ‘concrete economical announcements’ and should be part of your fundamental analysis.
If you want to create an FX trend forecasting strategy, you will need an FX economic calendar as a part of your fundamental analysis. The calendar should contain dates, time, currency, data released, actual, forecast, and previous.
Along with your calendar, you should keep up with major announcements that can completely change the markets. Here are the reports you should keep an eye out for:
- Interest rates
- Situation of employment
- Budget, trade balance, and treasury budget
Countries that are raising the interest rates are usually safe bets when it comes to predicting trends. Consequently, considerable decreases in payroll employment is a telltale sign of weak economic activity that can lead to lower interest rates, which will lead to a negative currency impact.
According to Alan, countries with high GDP will usually indicate higher interest rates. However, countries with significant trade balance deficiencies will kill your FX trading strategy. Even with your calendar and financial information, things can change instantly, so make sure you keep an eye out for new developments.
If you want to know how to predict FOREX trends, you need a technical analysis of the currency market. It includes a comprehensive analysis of past market data, particularly price data. When you analyze the past markets, you will find Forex signals that will help you forecast market trends.
The right technical analysis allows you to find current market signals that you should focus on. Technical analysis will enable you to perform better daily and make daily predictions on current trends. If you can do it right, you will quickly change your course of action if there is a trend reversal.
While trends do go on for some time, they do not guarantee success. Price fluctuations usually change trends. The right technical analysis consists of volume charts, price charts, and other mathematical representations of market data that allow you to detect ideal entry or exit points for trades.
The perfect technical analysis will increase discipline and decrease the influence of emotions on your FX trend trading strategy. So let’s talk about technical indicators that will help you in creating the perfect technical analysis.
When observing price data, you have to be aware of all the down, up, or sideways movement that can be seen without additional efforts. Another key indicator is the strength of a trend. Make sure you dive deep into understanding the market’s stance on a specific price point.
With technical analysis, you have to understand all the key indicators, and a vital indicator is volatility. Volatility is the magnitude of daily price fluctuations of a specific price point, and it helps you understand the stability of the investment.
The next indicator that’s part of a vital cog in technical analysis is cycle indicators. You have to realize that specific FX market trends come back due to recurring events like recurrent events such as elections or seasons.
Other indicators are support and resistance, which illustrate the price levels where markets frequently rise or fall and then reverse. The final key indicator that you will need to integrate into your technical analysis is momentum.
Momentum assures you whether a trend is strong or weak. Remember, a trend has the most significant momentum when starting and the least when ending. Now that you know how to know market trends let’s start talking about the upcoming FX market trends for 2021.
2021 FOREX Trend Trading Strategy
If you want to create an FX trading strategy that can successfully take advantage of FOREX trends, you need to make sure you do all the necessary analysis. Identifying the trends is the name of the game when it comes to foreign exchange, and we have the perfect list for you.
Because of Zed Network’s close relationships with successful FX traders in providing them with payment orchestration platforms for their business, we have gathered some valuable insights. Here is a list of FOREX trends you can expect to see in 2021.
The Pandemic Impact
The COVID-19 pandemic has had a devastating impact on worldwide trade. In 2020 FX traders had to sieve through insurmountable uncertainty. Things like economic uncertainty, trade disruptions, and increased isolationism made FOREX a very tough market to navigate.
While the 2020 FOREX market has been dismal and volatile, you as a FOREX trader can look for to 2021. With vaccines being rolled out and countries opening up trade with invigorated safety protocols, international trade looks to be in great shape, which bodes well for FOREX trade. Market stability can be expected in 2021, and you should be able to identify newer trends developing in the FOREX market.
2020 Lessons Will Come In Handy
When identifying FOREX trends, you need to keep a well-documented record of the global flow of capital. The global GDP was expected to fall by 6% by the end of 2020, with further drops expected in the coming year.
Many FOREX experts think that the fall will be around 12% and 32%. So as a FOREX trader, you have to take the right sort of precaution for 2021 if you want to minimize your losses while generating revenue.
Plenty of trends and patterns you saw this year would carry onto 2021, so ensure you keep track of the fluctuation graphs of chosen currencies. The lesson FX traders learned in 2020 was that you could not take risks.
Remember that the market is far too volatile to gamble on pairings that are too unpredictable. Sticking to stable and long-term pairings that have been reliably profitable is the right way to go.
There are a few safe-haven currencies that you can pair for great returns in the upcoming year. Here is a list of currencies that we believe will remain safe in 2021:
- USD (US Dollar)
- KYD (Cayman Islands Dollar)
- GBP (British Pound Sterling)
- EUR (European Euro)
- CHF (Swiss Franc)
- CAD (Canadian Dollar)
Old Events You Should Be Wary Of
Political events can wreak havoc on the FOREX market. Many events that happened last year will impact your FX trading strategy and influence FOREX trends. One of the most significant impacts on FOREX will be the US elections and the announcements that Mr. Joe Biden will be the next president.
Another critical factor in FOREX will be US-China trade relations. You can find out more about it here. If you are an FX trader who specializes in Europe, you cannot ignore Brexit and its implications for the EU when the UK leaves.
It would be best if you also kept up to date with the Pandemic news because even in 2021, it will play a significant role in global economies meaning your FOREX trading plan should be tweaked accordingly.
More Individual FX Traders
One of the trends that you can see happening in 2021 is the rise in individual FX traders. It’s a common trend that has been prevalent throughout 2020, and it will be the same in 2021 like all the other industries.
While you won’t see commercial companies or investment bankers go away from the FOREX markets anytime soon, you will see a flood of individual investors meaning the market will be flooded with self-reliant trading professionals. This is the perfect time for individual investors to gather up some clients and build a successful portfolio.
So if you are part of the new breed of FX traders in the post-pandemic era, then make sure you have the right sort of payment orchestration infrastructure in place to ensure maximum operation optimization.
2021 Economic Forecasting
Due to the pandemic, the world economy had a topsy turvy year. Before, you could relate the GBP with strength in the foreign exchange market. Still, according to multiple institutions, 2021 looks particularly bleak for the GBP, especially with the country recovering from the UK government’s Furlough Scheme.
It’s expected to be incredibly fragile at the start of the year, with the GBP becoming stable as 2021 rolls by. If there are further economic contractions, then you will see the EUR/USD trades suffer as a consequence.
Common factors that will impact the European FOREX market are the influence of the GBP and the overall risk of more economic disruption. So make sure you keep a keen eye out on the recent developments.
If the consensus on the Euro-zone stays positive, then the Euro will start gaining value. Along with that, you have to keep an eye out for new developments with the Federal Reserve. According to experts, the Fed will not provide significant dollar support in 2021.
If the economy keeps suffering throughout the year, then there’s a real chance of seeing the bond yields being capped. So you have to understand the entire Federal Reserve Outlook for 2021 if you want to be a successful FX trader in 2021.
The minority bank community advises that it will be a medium-term growth term for the dollar because there may be a lack of support on the Euro.
This means that a euro/dollar pairing seems like a lucrative option for FX traders, and the best traders are keeping an eye out for the developing trends for 2021. Even with economic turmoil in 2020, the dollar still seems like the market standard and is the safest bet in 2021.
Best Currency Pairs For 2021
Even with the world in disarray, the common pairing trends for FOREX brokers have stayed more or less the same. The USD is still the best currency to pair, and as an FX trader, you should also know how the Japanese Yen fared in 2020. Here is a list of FX currency pairing trends for 2021:
- EUR/USD (Euro/US Dollar)
- USD/JPY (US Dollar/Japanese Yen)
- GBP/USD (British Pound/US Dollar)
- USD/CAD (US Dollar/Canadian Dollar)
- AUD/USD (Australian Dollar/US Dollar)
- USD/CHF (US Dollar/Swiss Franc)
- NZD/USD (New Zealand Dollar/US Dollar)
- EUR/GBP (Euro/British Pound Sterling)
- USD/HKD (US Dollar/Hong Kong Dollar)
- USD/KRW (US Dollar/South Korean Won)
Even though we listed GBP/EUR as a valuable pair trend for 2021, there’s a catch. The new developments regarding BREXIT and the pandemic’s impact will play a significant part in defining whether or not it will be a valuable pairing or not. Catching the FX trends for this pairing will help you operate a tricky year after a pandemic.
Monitoring FX Trends For Emerging Markets
Remember, the FOREX market was primarily a gloomy place this year, and you have to know the losers when looking for FX trends for 2021. Most currencies that faltered in 2020 were from emerging market economies that rely on oil prices.
With oil prices expected to suffer in 2021, monitoring these currencies as a risky investment trend is a safe bet for an FX trader. Here is a list of currencies we think will have a bad year:
- RUB (Russian Rouble)
- BRL (Brazilian Real)
- TRY (Turkish lira)
- ZAR (South African Rand)
- IDR (Indonesian Rupiah)
There are exceptions to common FX trends where oil-dependent economies remain stable, like the Bahrain dollar with the US dollar. Other currencies have remained steady even with industry upheavals being rampant.
Currencies like the KWD (Kuwaiti Dinar) and OMR (Oman Rial) are just two examples. Along with these companies, France is expected to have a good year with them boosting their country’s economy and of all nations that use the EUR. There are wrong choices with stable currencies as well.
Traditionally, the JOD (Jordan Dinar) is a stable currency, but it is lackluster as a FOREX trading option. The country isn’t economically developed enough to warrant FX traders’ investments and financially developed as 2021 looks to be another weak year for the JOD.
If you are conducting an FX trend analysis, you will see that pairing the GBP with JPY is a good option. However, based on the current unresolved development due to Brexit ensures it won’t be the right choice. You will see the FX trend for this is moving downwards in 2021.
Other volatile currencies for 2021 include the CAD (Canadian dollar) and AUD (Australian dollar. While these currencies are wild cards, some currencies will reap you rewards in the long term. The CAD (Canadian dollar) will be a safer bet down the line in 2021 because the Canadian economy is relatively stable compared to other countries.
Detecting FX Trends For Sound Investments
There you go; these are the ZED Network’s insights on detecting FOREX trends for 2021. Make sure you go through it all when creating your new FOREX trend trading strategy.
2021 is touted to be the year of recovery, and you have to be extremely vigilant about the economic and political landscape to establish yourself as a successful FX trader. You will need a payment orchestration platform for a seamless FOREX trading operation based on new, developing FX trends.
We here at ZED Network can help you with that. Our primary goal is to provide a comprehensive solution for all your payment needs. So if you want to talk more about finding the perfect payment orchestration solution, then feel free to get in touch with our developers.
We will be more than happy to discuss every detail about a complete POP. So that’s about it for now. Let us know in the comments below about any new FX trading trends that we have missed, or hit us up on our socials if you find any new development in the FOREX market. We will come back with something new for you soon. Until then, see ya!