The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics – fundamentals and technicals – determine daily biases and assist one’s trading decisions.
Let’s get started…
The indices show the performance of a particular currency vs G8 FX. A video on how to interpret these indices can be found in the Global Prime’s Research section.
In the last 24h, the deterioration in risk sentiment has taken yet another hit as the S&P 500 averages nearly 2% losses back-to-back. This deleveraging in equity bets has led to the usual suspects (USD, JPY) to outperform the rest of the G8 FX complex.
Looking at the key drivers, it was all about the speech by Fed’s Chairman Powell that gripped the market’s attention. The net effect, when all things considered, was a Fed Chairman that keeps carrying a downbeat outlook for the economy, while ruling out (for now) negative rates as part of the policy settings to stimulate the economy.
On a side note, it’s also important to emphasize another Central Bank, that unlike the Fed, is laying the ground for negative rates. I am referring to the RBNZ, which as part of yesterday’s policy decision, not only doubled down on its QE purchases commitment, but it also opened the door to enact negative interest rates later this year.
Moving into G8 FX, readers of my daily report should still keep fresh in their minds the prudence I promoted in longs EUR/USD. In my book, by accounting for intermarket analysis and technicals, I could clearly perceive danger ahead around the 1.0870-80. Fast forward 24h, and the outcome has been a topside failure of the 4h expanded range amid a negative divergence in my prop USD index (inverted).
A market that looks poised to see further follow through continuation as the focus shifts to selling on rallies after technical cracks both in the 4h and the daily includes the GBP/USD. I did underscore in yesterday’s report that all the stars were in alignment to fade strength in this market and long and behold, this is exactly what has transpired. No reason at this point to be a brave contrarian in my book.
A market that at this point in time fails to provide clear signals is the USD/JPY. It keeps edging lower as risk suppression settles in, even if as we step out to the daily, bulls took control as of late. The bottom line is one must be patient and align momentum (lost) with structures (still there). One alone is a sub-optimal trend-trading environment.
When it comes to the AUD/USD, despite equities rolling over, it continues to trade stubbornly within a confined range. However, the logical direction if the sell-side pressure in the S&P 500 picks up is going to be a resumption of the macro bear trend sooner or later. That, however, remains to be seen as we don’t have the backing of technicals.
A bunch of markets that are offering decent opportunties to engage in ongign trend at this point through 4-hour charts include the USD/CAD, NZD/USD, GBP/JPY, BTC/USD to name a few. If you want to get into the granular details, today’s video presentation touches on these attractive markets aligning structure with momentum.
If you found this fundamental summary helpful, just click here to share it!
This analysis is conducted on a multi timeframe dimension. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position, hence the video is mainly intended as a way to educate traders in upping their analytical skills.
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 I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!
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 the tutorial How To Read Market Structures In Forex.
In order to assess the market momentum of a particular asset, I’ve promoted for years the idea of using what I call the smart money tracker. The settings and the indicator can be obtained via our Discord room, where traders from all walks of life interact frequently. In this video I lay out the elements I look into to call trend directions.
Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.
It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.
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