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.
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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.
We kick off the week with several narratives that have been left and center. What initially jumps out in analyzing any forex pair, without a doubt, is the sharp losses experienced by the British Pound in the last week as the markets prices in aggressively the scenario of a no deal Brexit. Negotiations, while not ruined, have taken a negative turn.
Secondly, on the other side of the spectrum, we find a Euro rejuvenated on the back of an ECB not yet ready to be on a renewed committal stance and lay the ground to beef up its QE program. Besides, the rather lax language used towards the Euro exchange rate, despite its strong appreciation, has been another major driver.
Another important dynamic not to be oblivious to as the new week unfolds is the suppressed risk sentiment in stocks after the US market once again succumbed to the growing selling pressure we’ve seen resurfacing since the beginning of September. The tech heavy Nasdaq fell by 0.6% while the S&P 500 was barely changed for the day.
Note, the move in stocks and gains in risk-off currencies since early September appears to be linked, based on the bank research notes I am reading, to a shift in focus towards the US election as the market starts hedging the risk of a Trump presidency defeat or at the very least convoluted and dramatic scenes amid the controversy over postal voting and the potential for results being contested.
Will this risk-off mood last?What’s going to set the tone for the rest of the month to answer this question is this Wednesday’s FOMC. That’s where all the attention will undoubtedly be placed. The key question the market aims to gain clarity on includes. Will the Fed renew its commitment with a new set of stimulatory tools that allows for their actions to be in line with the new new monetary policy regime they set out last month called ‘Average Inflation Targeting’ (AIT)?
The Fed wants the economy to run hot without the need to immediately hike rates. How are they going to achieve that? We’ll hopefully get new snippets of information this week. The Fed must follow up on its new tactics and show they are walking their talk to gain back credibility in the eye of the market in an area (inflation) that they’ve done very poorly since the mid 90s.
Further QE, while not the one-and-all answer, is what seems to have worked best to depreciate the USD, which in turn results in an inflationary environment. Therefore, if the Fed hints at more expansionary policies to keep expanding its balance sheet, there are real risk of a lower USD. However, if they fail to properly communicate their plan of action, the strength seen in the USD may continue. Either way, the potential vol that may unravel could quite quite high.
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To see an expanded version, right-click and select ‘open link in new tab‘. 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.
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 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 this video. Fractal breakouts is at the epicenter to assist us in the analysis of chart structures.
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.
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