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…
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.
The groovy mood dominating the equity space failed to extend on Tuesday as the S&P 500 continues to struggle taking out a key decision point in the form of the upper bound of its daily range just short of 3,000.00. The jury is therefore still out there.
This topside failure in equities led to a hiccup in ‘risk on’ flows late on the day, yet there are a number of currency charts off a 4-hour angle still supporting the idea that buyers will have more goes. It is also suspiciously intriguing that AUD/JPY is breaking higher.
The culprit behind the latest change of hearts in the equity market, as Statnews reports, is the revelation that Moderna withheld some key information about its vaccine trials, alongside the fact that the National Institute of Allergy and Infectious Diseases (NIAID) did not publish a press release, hence it leaves big questions on the table.
Also note, a key propeller of the buy-side action in equities as of late came courtesy of Fed’s Chairman Powell, who in a recent 60-minutes interview, endorsed the idea of deploying more policy ammunition to reduce the risk of companies’ liquidity and solvency issues when and if needed. That undeterred commitment to be the ultimate circuit breaker has proven to be music to the ears of systematic equity buyers.
Amid this uncertainty over the timeline for a vaccine and promises that the Fed remains willing to keep flooding the market with more liquidity, gold continues to amass buy-side interest with the 4-hur and daily technical picture in agreement. In the last 24h, buyers returned to join the bid at a critical SR flip around the $1,725-30.00 area.
Shifting gears to the EUR/USD, the pair traveled further north landing at a critical resistance between the 1.0980 & 1.10 round number. Note, the bullish momentum and structure off the 4-hour still implies another go into higher level could very much be in store. The eruption of buy-side flows this week came fast and furious, so it is likely that it will take more than 24h to see a potential reversal of the trend if at all.
The GBP/USD shows a notable contradiction between a newly found bullish structure in the 4-hour chart and the outright bearish bias that the daily timeframe displays. Gaining long-side exposure in lower timeframes must be done exercising prudence and discretion as a role reversal area (support-turned-resistance) gets tested on the daily. The amount of bearish confluence off this last chart cannot be ignored.
A market running hot in line with the congruent analysis of structure, momentum and intermarket, all flashing buying signals includes the USD/JPY. Not only the shift in market structures was evident off the 4-hour and daily, alongside an upward slope in the SMT, but the ultimate ‘leading indicator’ to back up this bias (JPY index) was also showing us the way as it kept weakening across the board. This is a market where buyers, unquestionably, keep the upper hand.
The AUD/USD, much like what we’ve seen in the S&P 500, is a market that will behave heavily dependable on equities.We are at a key decision point and by looking at the 4-hour, it doesn’t not appear as though buyers had the last say with the structure and momentum still resonance for a market that offers credence to keep pushing higher. A break and hold above 0.6555-60 is critically important here.
The USD/CAD, meanwhile, has printed a commanding bullish engulfing candle off the 4h chart away from a daily support area. However, this price action alone does not suffice to conclude that buyers have done much damage at this point. Remember, awaiting for a change of structure and momentum via the SMT turning higher would allow more evidence that the tide is turning, even if this is one of the ugliest markets to trade given the range-bound nature of its price.
Last but not least, a market that currently shows a disparity with equities is the AUD/JPY. Sooner or later, the trifecta of instruments comprised of the S&P 500, my USD prop index and AUD/JPY must realign. At this point, neither the S&P 500 nor the USD index broke market structures yet the AUD/JPY did. Did buyers jump the gun in the latter? Because if so, the selling opportunity that may come about is rather enticing. Or is AUD/JPY acting as the leading gauge? What’s clear is that this divergence is a big anomaly.
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