Bullish Equities Or US Dollar? Something’s Got To Give
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Bullish Equities Or US Dollar? Something’s Got To Give

Authored by 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.

Let’s get started…

Scan Of The Markets

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.

We had an interesting shift in dynamics in the last 24h, where low vol in the S&P 500 has not been an impediment for the Aussieto see consistent follow through supply.

In the equity space, the S&P 500 is my ultimate bellwether indicator of risk sentiment, and it suggests the path of least resistance remains up. The VIX has been decreasing at a time that both the 4h and daily structures are still in bullish congruence.

Back to the Aussie action overnight, it felt as if the market was all of a sudden decoupling from the well-anchored dynamics of a stronger Aussie when equities stay buoyed. Fast forward to Asian trading this Tuesday, and long and behold, we have the following news breaking out -> China hit Australia with import bans… hmmm…

I must say, warnings had been making the rounds, and probably the market felt like the Aussie was no longer justifying such hefty levels.

The ripple effects of an escalation in the trade war between China and Australia were felt across G8 FX, such as the Yen, which had a rough day on Monday, yet recovering some of its out sized losses as the risk dynamics took a hit (Asian equities lower).

A currency that is definitely recovering some of its lost mojo as of late is the US Dollar. And things could just be getting started. Why am I saying that? Not only because we’ve seen a commanding bullish breakout in USD/JPY, but both EUR/USD and GBP/USD are walking a fine line nearby daily support areas. We might be close to an inflection point…

However, if we were to see the unraveling of a new long-lasting buying phase in the USD, the 2020 dynamics suggest that this can really only come if equities implode again. Not only that, but the rally in commodity-linked currencies would come to an end.

The scenario where equities look ripe to sell, I am afraid, is still too premature for me to call it and simply cannot be technically justified. Something has got to give and I will be on top of the charts to keep updating you all with the latest developments.

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Insights Into Market Flows

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.

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Recent Economic Indicators & Events Ahead

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 I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!

Important Footnotes

MARKET STRUCTURES

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.

SMART MONEY TRACKER 

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.

SUPPORT & RESISTANCE

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.

FUNDAMENTALS

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.

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