Foreign Exchange Online - Masakazu Sato's Practical Trading Techniques | Technical and Fundamental Analysis Predicting the Future of the 3 Major Currencies [This Month's Theme | After the U.S. Presidential Election, the Forex Market. Focus on the Key Tech
The U.S. presidential election has ended. As of this writing, I do not yet know the results. I’m curious what the outcome will be, but the trends that emerge after a major event often began well before it. I’d like to try predicting the forex market after the U.S. election using my favorite moving average, the Ichimoku Kinko Hyō cloud, and MACD for pure technical analysis, along with the interest rate differentials of each country.
※This article is a reproduction and re-editing of FX攻略.com’s January 2021 issue. Please note that the market information described in the text differs from the current market.
Profile of Masakazu Sato
Sato, Masakazu. After working at a domestic bank, he joined the French Paribas Bank (now BNP Paribas). He has served as an interbank chief dealer, head of funds, senior manager, and other roles. He later became a Senior Analyst at Foreign Exchange Online, which boasts the industry’s highest annual trading volume. He has been involved in the forex world for over 20 years. He also appears on Radio Nikkei’s “Stock Complete Live Commentary! Stock Channel,” and Stock Voice’s “Market Wide – Foreign Exchange Information,” and regularly provides market information on Yahoo Finance.
From technical indicators & interest rate differentials, will USD/JPY return to a “gentle downtrend”?
By the time this issue went on sale, I expect the results of the U.S. presidential election to be known. Regarding the U.S. presidential election, even if Biden wins, the likelihood of implementing the large-scale economic measures proposed by the Democrats increases, and the pre-forecast was for a “strong dollar and weak yen” due to rises in stocks and rates. On the other hand, if Trump wins, amid a stock-price–driven trend so far, there is a strong possibility of a somewhat stronger dollar reacting. However, if Trump is re-elected, sanctions against China would intensify, and Japan’s yen might strengthen amid worsening U.S.-China relations, fueling risk-off sentiment, which has also been discussed.
However, at the time of writing this manuscript, the U.S. presidential election results have not been decided, so this time I will purely use technical analysis and interest rate differentials to look ahead at the FX market from year-end through early 2021. The technical indicators I favor are the 200-day and 120-day moving averages (hereafter SMA), MACD, and the Ichimoku cloud. The MACD parameters are typically the default 12, 26, 9, but I find a longer MACD that emphasizes the gap between mid- and long-term lines—such as 25, 75, 9—more suitable for long-term market outlooks. I, Masakazu Sato, will publish in detail the essence of chart analysis in the book “This Is All You Need! FX Chart Analysis: The Three Sacred Tools,” which will be released on November 30, and I hope you’ll check that out as well.
