The Daily Edge

GBP Weakness Main Theme

The main mover last Friday was once again the suspect swinging the wildest as of late, that is, the British Pound. A couple of negative headlines around Brexit led to another strong round of selling pressure as the market comes to terms about the ongoing stalemate between the EU and the UK in order to reach a Brexit trade deal.

Let’s get started…

Scan of the Forex market

forex trends
To see an expanded version, right-click and select ‘open link in new tab’. The indices show the performance of a currency vs a G8 Forex basket. Indicators are available to use these measures via Tradingview and MT4.

 

The main mover last Friday was once again the British Pound. A couple of negative headlines around Brexit led to another strong round of selling pressure as the market comes to terms about the ongoing stalemate between the EU and the UK in order to reach a Brexit trade deal.

While the EU chief Brexit negotiator confirmed that he will be headed to London for further talks, what remains clear is that there is still a major impasse. Dominic Raab told the BBC over the weekend this week is most likely when the talks enter the “last real major week”, noting that an agreement remains possible if the EU shows “pragmatism”.

As traders, what this means, is that the British Pound is still the market offering the best volatility prospects to trade. On the contrary, the volatility spikes that are to come remain quite a risky business for those traders utilising tight stops amid the risk of slippage in order fillings due to the evaporation of liquidity and poorer competitive and riskier conditions for market makers.

Aside from the weakness in the Pound, the other currencies worth highlighting include the Euro, the Aussie and the New Zealand Dollar. They became the outperformers in a slow trading environment last Friday amid the post Turkey-hangover in what for many involved in financial markets traditionally represents a long weekend in observance of Thanksgiving.

Analysis of the Forex trends

In my video analysis below I use concepts such as momentum, market structures or order flow to come up with the daily outlook in the currency market. 

Economic indicators & events

Source: Forexfactory. If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video. The indicator allows you to save time and avoid mistakes.

 

Important footnotes

Market structure 

Markets evolve in cycles followed by a period of distribution and/or accumulation. To understand the principles applied in the assessment of market structures, refer to this video. Fractal breakouts is at the epicentre to assist us in the analysis of chart structures.

Market momentum

In order to assess the market momentum of a particular asset, I’ve promoted the idea of using what I call the smart money tracker. The settings and the indicator can be accessed via our Discord room, where traders from all walks of life interact frequently. In this video, I go through the layout and all elements of the Discord room in great detail.

Projection targets 

The usefulness of the 100% projection resides in the symmetry and harmonic relationships of market cycles. By drawing a 100% projection, you can anticipate the area in the chart where some type of pause and potential reversals in price is likely to occur, due to 1. The side in control of the cycle takes profits 2. Counter-trend positions are added by contrarian players 3. These are price points where limit orders are set by market-makers. You can find out more by reading the tutorial on The Magical 100% Fibonacci Projection.

 

About the author

Ivan Delgado

Ivan Delgado is a decade-long Forex Trader. Feel free to follow Ivan on Youtube. Join thousands of traders who follow Ivan's insights to increase their profitability rate by learning the ins and outs of how to read and trade financial markets. Ivan has you covered with in-depth technical market analysis to help you turn the corner.