As I’d mentioned previously – Sunday’s are sacred.
With no lights flashing on my screen, no announcements scheduled, no scandals hitting the wires, no “fed speak” etc – Sundays are truly a blessing, for the hard-working and ever diligent currency trader. Unfortunately the spaceships didn’t show up last night (here on the Mayan Riviera) so the world is saved. Back to business for me.
Don’t think for a minute that markets are going to just sit idle – while you stuff your face full of turkey.
This week could just as likely” rip your face off” in either direction – should you decide to turn a blind eye. I suggest sneaking away (if ony for a minute or two) check a couple of charts, levels, prices etc…and take advantage of this small window of “down time” to check yourself, your trades and your overall market position and exposure.
Never take anything for granted when trading currency – or any other asset for that matter!
Sure its the holidays…..and I do wish you (and all of your families and friends) the best – and all the best in the coming new year BUT! I encourage you to stay diligent, stay focused and never EVER take your eye off the ball – even when those presents under the tree appear far more interesting.
Happy holidays everyone – and best of luck to you in the new year!
I do expect relatively light trading in coming days – and imagine the dollar will flounder here on its bounce, then continue in its downward direction. This being said – keep your eyes on equities ( and in particular gold/ silver related stocks) as well tech for buying opportunities as we still look poised to move higher.
Trading Through the Holiday Calm: Strategic Positioning for January’s Storm
Dollar Weakness: More Than Just Seasonal Noise
While holiday liquidity creates the perfect smokescreen, smart money is already positioning for what’s coming in January. The dollar’s current bounce? It’s textbook dead cat territory. We’re seeing classic distribution patterns across DXY, and when you combine that with the Fed’s increasingly dovish pivot, this rally has all the sustainability of a house of cards in a hurricane. EUR/USD is coiling above 1.0800 support, and any break higher through 1.0950 resistance will likely trigger algorithmic buying that could push us toward 1.1100 faster than most retail traders can blink. The key here is understanding that institutional players are using these thin holiday sessions to accumulate positions without moving the market against themselves. Don’t get caught sleeping while the big boys build their war chests.
GBP/USD presents an even more compelling setup. The pound’s been beaten down mercilessly, but technical divergences are screaming oversold conditions. Watch for any move above 1.2150 – that’s your signal that Cable is ready to rip higher. The Bank of England’s hawkish stance compared to the Fed’s dovish lean creates a perfect storm for sterling strength. Risk management is crucial here though – use tight stops below 1.2050 and scale into positions rather than going all-in on the first sign of strength.
The Precious Metals Play: Follow the Smart Money
Gold and silver aren’t just shiny rocks sitting in vaults – they’re economic barometers screaming warnings that most traders ignore. When you see gold holding above $2000 while the dollar supposedly strengthens, that’s institutional money hedging against something bigger. Silver’s industrial demand combined with its monetary properties makes it the sleeper play everyone’s missing. But here’s where it gets interesting for currency traders: watch AUD/USD and NZD/USD closely. These commodity currencies move in tandem with precious metals, and both Aussie and Kiwi are setting up for major breakouts.
The Australian dollar specifically is building a base above 0.6750, and any sustained move through 0.6850 opens the door to 0.7000+ territory. Mining stocks in Australia are already telegraphing this move, but currency traders who understand the correlation can position ahead of the crowd. New Zealand’s dollar follows a similar pattern but with even more explosive potential given its smaller float and lower liquidity during Asian sessions.
Technology Sector Signals Currency Flows
Tech stocks aren’t just about Silicon Valley dreams – they’re massive drivers of currency flows that smart forex traders monitor religiously. When NASDAQ futures show strength during these holiday sessions, it signals risk-on sentiment that typically weakens the dollar and strengthens risk currencies. USD/JPY becomes particularly interesting here because Japanese institutional money floods into U.S. tech when momentum builds. Any sustained break above 148.50 in USD/JPY could trigger the next major leg higher, especially if tech continues its stealth rally during these quiet sessions.
The correlation isn’t coincidental. Technology companies drive massive capital flows between currencies through their global operations, hedging activities, and investor positioning. When you see semiconductor stocks quietly grinding higher while everyone’s focused on holiday shopping, that’s your cue to start thinking about long EUR/JPY or GBP/JPY positions. These crosses offer the perfect blend of risk-on exposure with technical setups that could explode once normal trading volumes return.
January Positioning: The Calm Before the Storm
Here’s what separates profitable traders from the weekend warriors: understanding that real moves happen when nobody’s watching. January brings fresh institutional money, new trading mandates, and algorithmic rebalancing that creates the kind of volatility that makes or breaks trading accounts. The positions you establish during these sleepy December days will determine whether you’re riding the wave or getting crushed by it.
Focus on building core positions in USD weakness themes – EUR/USD longs above 1.0850, GBP/USD accumulation below 1.2100, and commodity currency strength plays in AUD and NZD. But manage risk like your trading life depends on it, because it does. Use position sizing that lets you sleep at night, but stay alert enough to add to winners when the technical breakouts confirm the fundamental thesis.
Remember: markets don’t care about your holiday plans, family dinners, or New Year’s resolutions. They care about one thing – separating unprepared traders from their money. Stay sharp, stay positioned, and stay ready for what’s coming.