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The Technical Breakdown – Forex In Rotational Hiatus

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There is an absence of sustainable trends with rotations in the valuation of currencies the norm. To find out the individual technical merits of each currency, watch the video...

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Opportunities in the Forex indices (video below)

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 Forex basket. Indicators are available to use these measures via Tradingview and MT4.

 

By distilling the performance of currencies in the last 24h, the clear winners included the Euro and the Swissy, followed at a fair distance by the USD and the Kiwi. The latter had a far better performance than the AUD as the market unwound long bets amid risk aversion. However, it was the drop in the CAD that was the most relentless. As one steps out into the weekly performance, there is an absence of sustainable trends with rotations in the valuation of currencies the norm. To find out the individual technical merits of each currency, watch the video below…

In my video analysis below I use concepts taught in the brand new Academy website such as momentum, volatility measures and market structures to come up with the daily outlook in the currency market.

EUR INDEX – MEETS TOUGH RESISTANCE

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Following a rise of such magnitude (+0.8% appreciation pre-ECB trough to peak), the Euro leaves me watching the current action from the sidelines with a rather neutral stance. From a swing-trading perspective, there is minimal value engaging in long-sided business after such vertical movement in price. The currency is now struggling to breakout the previous support from Jan 13th where I could anticipate a short-term setback to release some of its overly bullish pressure. If it transpires, a retest of the control line (13ema) is a real possibility.

GBP INDEX – BULLISH BREAKOUT IMMINENT?

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The Sterling keeps exerting upward pressure against a major area of resistance. There have been two failed attempts over the last week to break through yet the Sterling keeps at it. Should a resolution above the purple-coloured area be confirmed via an 8h candle close, there is significant risk of a more sustained gains ahead for the Pound as it would clear what’s become the stickiest area of resistance for months, ever since the first test of the high was established back in early November last year. Since then, multiple failures at this area have occurred.

USD INDEX – BOUNCES OFF RANGE SUPPORT

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The USD has re-taken its control line within the context of a defined range of about 1%. Structurally, by following the logic of range anatomies, the decisive rejection off the low may shift the focus towards the upside once again. However, the momentum indicators monitored in the bottom window prevent me from turning bullish by hinting it is too premature to engage in longs. Therefore, in the near-term, I would not be surprised in the slightest to see a retracement back down to release some of the buy-side pressure and along the way find out how committed buyers are.

CAD INDEX  – SHIFT IN STRUCTURE TO BEARISH

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On the back of a 1% drop from peak to trough, this is not a market that looks ready to be traded from a swing trading standpoint. All the momentum indicators have turned bearish, which makes me overall bearish the CAD, but at the same time, we’ve travelled on a straight line from overbought to oversold conditions in the span of just 48h ever since the outcome of the BOC last week. That said, this bearish breakout has led to the validation of a trap pattern, which makes me think any retracement between 0.3 to 0.5% from the low will be met with initial heavy selling.

JPY INDEX – TIGHT RANGE

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The Japanese Yen has entered a phase of extremely tight consolidation. This narrow passage finds price activity encapsulated between the control line to the topside and a previous area of support on the way down. There needs to be a pick up in volatility that unravels the current stagnant action in the index to shape up the next bias in the index. Until then, stand pat.

AUD INDEX – PAUSES AT BROAD RANGE LOW

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The Aussie has found bids to temporarily pause the sell-side pressure at the bottom-side of its daily range. The risk of buyers outweighing sellers around this vicinity for a return back to the control line is a very realistic outcome to expect solely based on the technical merits. Besides, from a risk reward standpoint, it is at these levels where one can reap the most benefits. Following my default template of range anatomies and how price tends to behave within these environments, the next expected movement, until technicals negate it, is a recovery to the topside of the range.

NZD INDEX – SETTING UP FOR LONGS?

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The New Zealand Dollar may my attention in the next few candles for possible long opportunities. I like the fact that most momentum indicators in the 8h chart have turned bullish as price finds its footing above the control line after going through a much-needed correction of its recent highs. I’d be stalking for longs but I need to first see a re-grouping by buyers via a renewed upward momentum that results in the trigger line (bottom-window) to change its slope to bullish again. Until that happens, I am watching but not engaging.

CHF INDEX – BULLISH BUT AWFUL PRICE TO PAY

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The Swissy is at a high risk of being snapped back down towards its control line. The type of bullish momentum that has built up over the last 48h (+0.8% appreciation) tends to be unsustainable, which is why even if the majority of momentum indicators point to bullish tendencies, that’s just one piece of the puzzle. Structurally wise, this market is in need of a healthy pullback.

Education -The Global Prime Academy

Announcing The Global Prime Academy. Check out our brand new Academy website. Are you ready to learn a set of strategies to take your game to the very next level?

Let me give you a brief background on why we’ve created the Global Prime Academy. The universal praise I received about my trading and content I produce has been incredible. However, clients were frustrated unable to find a structures frame to absorb all this knowledge. Part of these golden nuggets are now going to be encapsulated in easy to follow and digestible lessons.

About the author

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.