Let’s get started…
Scan of the forex market
The first thing that comes to mind when analysing the currency space is how focused the market has become to the immediate future. In other words, short-term economic jitters due to stricter lockdowns in many parts of the world appear to be overriding any hopes for the longer-term vaccine-fuelled positivism and Trump’s presidential departure.
The underperformance of the Aussie, despite positive economic news in the form of an upbeat Australian jobs report, is a telling sign of precisely the narrative I am referring to. The market remains very cautious to commit capital into risky assets at a time when the surge in COVID-19 cases globally may see economies take another hard hit.
Very narrow ranges dominate
Another observation that reflects the convoluted state of affairs in the forex market includes the narrow ranges. Even if the Aussie was the weakest on Thursday, the net gains in the rest of forex indices were so minuscule, that the extension of the AUD bear trends became largely limited when compared to normal dynamics. In fact, by matching the EUR (strongest) vs the AUD (weakest), the EUR/AUD only rose 60 pips for the day, which is way below the daily ATR.
This week has been unusually quiet in the forex market. It’s a major rarity to see the overall performance of currencies being encapsulated within excruciatingly narrow ranges of -/+ 0.10% through the London session. Remember, this session in the UK is characterised by being the most volatile for currencies given the amount of customers’ volumes. As traders we must remain patient and let the market come to us. This is one of those times when patience pays off.
Hot trade of the day
In this section, I pick a market or several ones that presented an opportunity based on the concepts I teach. My video analysis below elaborates on the logic behind the trade.
Economic indicators & events
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 epicenter to assist us in the analysis of chart structures.
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.
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.