Spotting reversals in forex as Trump demands lower rates at Davos [Video]

Nathan Bray ACY Securities

In the fast-paced world of forex trading, catching trend reversals or pauses is a game-changer. To stay ahead, focus on two critical pillars:

1. Change of technical price structure

Watch for higher tops and bottoms forming on your charts—this signals a potential break in the trend. Patterns like the reverse head-and-shoulders are especially telling, showing that sellers have lost their grip while buyers regain control. These changes, often seen on four-hour or daily charts, could mean a deeper correction or even a complete reversal.

2. Changes to key trend drivers or fundamental policy

Beyond the charts, the narrative matters. Take Donald Trump’s bold demand for lower interest rates—this stark departure from his previous "higher for longer" stance is shaking up the market. Such a fundamental shift in rhetoric can spur profit-taking on the strong US dollar, creating opportunities for reversals in major currency pairs like NZD/USD, AUD/USD, and EUR/USD.

Author

Nathan Bray

ACY Securities

Experienced Key Strategic Partnership Manager with a demonstrated history of working in the financial services industry. Skilled in FX Hedging, Microsoft Word, Sales, Public Speaking, and Management.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.