Forex Remains A Trend Traders’ Dream
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Forex Remains A Trend Traders’ Dream

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

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 way the week starts with the USD and JPY on the backfoot lays the ground to see follow through continuation of the ‘risk on’ dynamics prevalent for a number of weeks. It’s not rocket science that these conditions are a dream come true for trend traders.

On the back of a shocking upbeat in both the US and Canada’s employment reports last Friday, equities not only maintained the bid tone but gains were turbo-charged as the S&P 500 broke through the 3,200.00 pattern with a huge resistance now overhead.

But it’s not just the hammering of the Yen or US Dollar, it’s the action seen in the broader spectrum, where the Swiss Franc underperformaces against the EUR, Oi stretches its gains after the OPEC+ outcome this weekend or Gold loses the $1,700.00 area.

The ‘true risk on’ proceedings in the marketplace continues to vindicate the buying of commodity-linked currencies against the weakest links (USD, JPY, CHF) even if there is a clear sense that we’ve already traveled so far in what looks like very mature rallies.

It is clear that systematic-type trading programs are unfazed by discretionary value-led elements that may argue stocks or FX are over-valued based on fundamentals. In any daily time scale where one matches a commodity-linked currency (AUD, NZD, CAD) vs a risk-off one (USD, JPY, CHF), the picture is the same. The structural breakouts in the JPY or USD indices show an identical technical bearish verdict.

Also, with all due respects, the market has not given a rat’s arse to the protests in what’s become a global movement under ‘black lives matter’ label following the killing of George Floyd in the US. It didn’t slow down the market from pushing the risk envelope last week and it is not having an effect today either. A trend-trading dream this market is.

Besides, be reminded, the Fed decision is Wednesday and with the pump in stocks after inundating the economy with fiat US Dollars successfully executed, watch out as the focus is quickly shifting to some unwinding of the emergency measures introduced to avoid a further fracture between reality in the ground and valuations.

It’s definitely shaping up to become a monetary policy event far more important than anyone could have envisioned just a few weeks ago. The equity market strength alongside the surprising beat on expectation in last Friday’s NFP hints a potential rethink in the aggressive policies sooner rather than later…

If one wishes to get my daily insights into both the S&P 500 as my Go-To bellwether indicator to assess risk conditions, alongside what the lay of the land looks like in FX, the video below gives you a full technical round up, including the study of structures, momentum, vol, targets, you name it. You’ll get as much value as attention you put in.

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Insights Into Market Flows

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.

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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.

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