The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics – fundamentals and technicals – determine daily biases and assist one’s trading decisions.
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.
There was no definable theme in FX during Thursday, leading to choppier conditions in the charts, as depicted by the contraction nature of the currency indices performance.
The fact that in the US equity space the S&P 500 found buyers off the bottom of its range didn’t help either, as it vindicates that the extension of range-bound conditions too.
In the last couple of days, there has been a resurgence in demand towards the US Dollar, opening a gap with the weakest links such as the Kiwi or the Pound, even if it’s all happening within the confinement of familiar levels in a first gear-type of mode.
We had a half-hearted round of risk aversion early in NY in response to further evidence that COVID-19 numbers in the US may sooner or later lead to more drastic measures. However, this time, the figures ended up falling on deaf ears to the broader market.
Through the 4-hour time scale, from equities, commodities, bonds to currencies, the dominant theme technically speaking is the lack of clarity and seesawing conditions. For action, one may have to go down into the lower timeframes to catch micro trends.
While some FX pairs had shown signs of new trends, it’s all grounded to a halt and unless our interest resides in trading the edges of these ranges, it makes the conditions very trappy. In this type of environment, breakout and trend traders tend to struggle.
In the news front, aside from COVID-19 stats, we heard from White House Adviser Kudlow, who reiterated that the US economy is not going to be closed down again. It was also revealed that the Durable Goods Orders in the US rose by 15.8% on a monthly basis, US initial jobless claims w.e. increased by 1,480K vs 1,320K expected, while the
US Q1 GDP (third reading) came at -5.0% vs -5.0% expected.
The minutes of the latest monetary policy meeting of the ECB was also published and failed to act as a vol catalyst. As the WSJ notes, “officials weighed the pros and cons of their bond-buying program, and emphasised the program’s strict limits, according to a detailed account of the meeting could help to defuse a row with Germany’s top court.”
Lastly, there was a late-day mini rally in equities in response to the modification of the Volcker rule by US regulators. “Five federal regulatory agencies finalized a rule modifying the Volcker rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds—known as covered funds”, it stated.
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