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Acute Flow Imbalances In European vs Risk-Off Currencies

The Euro and its correlated twin the Swiss Franc saw steady demand on Tuesday. The strength was initiated at the London open only to accelerate into and post the London fix. The breach of 1.20 in the EUR/USD snowballed into further broad-based USD weakness, with the Kiwi and the Pound also capitalising in the miseries of the USD...

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Scan of the Forex market

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 Euro and its correlated twin the Swiss Franc saw steady demand on Tuesday. The strength was initiated at the London open only to accelerate into and post the London fix. The breach of 1.20 in the EUR/USD snowballed into further broad-based USD weakness, with the Kiwi and the Pound also capitalising in the miseries of the USD and the JPY as stocks stay buoyant.

The Forex market is moving and trending nicely once again. The flow imbalances in the European currencies (EUR, GBP CHF) against risk-off associated fiat the likes of the USD and JPY are notable and easily visible via the strong trends when matching the first group of currencies vs the second one. Check my video analysis for a list of markets to be fixated on today.

When it comes to the identification of the trapped traders pattern, which is the entry mechanism at the core of my recently released trading course, there were no trades meeting the TT criteria to enter. A good does of patience is required to trade this strategy by always letting the market to show its hand and come to us. However, in such a one-way directional markets in European currencies vs the weakest links, I ended up with a nice long entry opportunity in the EUR/AUD early in the London session.

In terms of news events for the following 24h, there are no fundamental adjustments scheduled to take place. The only event worth noting is the week-long testimony by Fed Chairman Powell and Secretary Mnuchin on the CARES act before the House Financial Services Committee, but as demonstrated through Monday and Tuesday, it is unlikely that we could anticipate at what time in particular they may make comments that move the needle and cause volatility. As such, it shouldn’t affect the way I trade or management any positions that I have open.

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

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.

 

Source: Forexfactory

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.

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