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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.
On the back of the FOMC, and as the dust settles in financial markets, the Japanese Yen and the Swiss Franc continue to outperform for a third day in a row amid the lingering bearish outlook for the US Dollar as Powell sticks to the status quo in policies.
The FOMC outcome, despite the admission that it will maintain the same direction in terms of QE and rates for the foreseeable future, failed to inspire further buy-side momentum in the equity space. Coincidentally or not, this happens as the S&P 500 continues its struggles to take out the 3,225.00 resistance level.
Fed’s Chairman Powell admitted, with no much beating about the bush and with a rather succinct language that leaves little doubt, that the Fed will continue to be the force stabilizing markets and the buyer of first resort in the US. Powell reiterated the Fed’s commitment to ultra-loose monetary policies through 2020 and 2021 for now.
Powell said that inflation is expected to remain below 2 percent through to 2022 and that the humongous QE quantities committed will remain in place “at least at the current pace” for the time being. On the economy, Powell’s view was quite shady.
The meandering of the commodity-linked currencies complex at such elevated levels without making further strides can be understood through the effect of a deterioration in the equity valuation and the stage of maturity of a rally that has gone too far too soon?
The technical reality as I see it is characterized by a USD still struggling to get out of 2nd gear at depressed levels. Besides, the suite of factors I monitor (structure, momentum, levels) still show that further losses may be ahead, especially against the Euro.
Should risk-off accelerate, the JPY and CHF are set to maintain an advantageous stance against the USD after technicals turned decisively bearish. For the Aussie, Kiwi and the Loonie to regain the upper hand vs the USD, a re-invigoration of equities is a must.
It’s going to be an interesting 24h ahead as the market digests the FOMC decision and the real-money and leveraged type accounts re-formulate their outlook towards the USD. By looking at the behavior of gold, equities, the Swissy and the Yen, it really feels the USD should be way higher, but it isn’t, so I will be keen to watch this annomaly.
If you are looking to get much more surgical in the general views projected above, I invite you to watch today’s video analysis. This is your opportunity to stay in tune with my thinking process and learn a few new lessons or reinforce existing ones along the way.
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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