European FX Shines, Risk-Off Yet USD Sold
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European FX Shines, Risk-Off Yet USD Sold

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

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 FX basket. A video on how to interpret these indices can be found in the Global Prime’s Research section.

In the last couple of trading days the market has deflated its groovy mood towards the tireless bid in all risk assets as equities and Oceanic currencies rollover. Note, even in this type of environment, there are still solid ongoing trends paying lofty dividends.

After going through my daily scan of the markets, I account for a total of 11 markets qualifying as actively trending off the 4h and the daily timeframes simultaneously. These are financial instruments where both the structure and the momentum remain intact.

Amid this loss of true risk-on dynamics, the currencies that appear to be drawing most of the buy-side interest ever since last week’s watershed moment where the EU inked the COVID-19 recovery fund include the European ones (EUR, GBP, CHF) + the Yen. One wonders if we are in the midst of a prolonged rotation of capital flows from the US into European assets judging by the USD and US stocks performance.

Not aiding at all the poor performance of the USD is the current disagreements in Congress over the next recovery package. That and the US-China diplomatic strains, with the market starting to be more sensitive, are likely to be market-moving drivers this week, especially the former. If the markets sniff growing risks of Congress not getting a sign-off by the end of July, the collapse in the USD may continue.

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Eagle View Momentum & Structures

To see an expanded version, right-click and select ‘open link in new tab‘. The table shows key metrics (Fractals and SMT) in different timeframes (4h and daily) to assist us in selecting the best markets to trade intraday (link to the script). A video on the power of the SMT can be found here “How To Trade Forex Trends Like A Pro“. The video “Fractals + SMT Upgrade: The Multi-timeframe Functionality” is also a Must-Watch.

Trending Markets On My Radar

In this section, from the table above, and after scanning through the charts, I short-list the markets that meet the criteria or may soon do to engage on a directional trend off higher timeframes through a 15m timeframe entry. To get a deeper dive into the markets included in this section, watch my daily video analysis below.


Hot Trade Of The Day

In this section I pick a market or several ones that presented an opportunity to buy on weakness or sell on strength based on the higher timeframes outlook. My video analysis below will further elaborate on the logic behind the trade.   

A phenomenal 3:1 risk reward trade in the EUR/USD was made available through the latest EU/US overlap session on Friday. Remember, the EUR/USD was on our list of trending markets, so when the purge of weak-handed buyers through the take out of 1.1590 was over and an abrupt reversal ensued regaining the previous fractal, that was the admission to re-engage in buy-side action well within the 13wma discounting area.

Insights Into Market Studies

In this video analysis I dissect the information above. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter and manage a position, hence the video is intended as educational in nature and not financial advice. 

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.

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. To simplify it all for readers, a transition to analyze structures via Fractal breakouts has been included in my analysis.

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