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Oceanic FX Unloved, European Ones Thrive

The European block (EUR, CHF) were the main beneficiaries as a new weeks gets underway while the USD was initially under strong pressure for most of the day only to rebound quite decisively late on the day. The Oceanic currencies could not find any love with both the AUD and NZD imploding mid way through the European session as the losses in equities weighted towards the allure of 'risk-on' fiats.   

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Scan Of The Markets

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. 

The European block (EUR, CHF) were the main beneficiaries as a new weeks gets underway while the USD was initially under strong pressure for most of the day only to rebound quite decisively late on the day. The Oceanic currencies could not find any love with both the AUD and NZD imploding mid way through the European session as the losses in equities weighted towards the allure of ‘risk-on’ fiats.

When it comes to the GBP, it charged higher from the get go in Europe amid the lingering Brexit negotiations which had both a positive spin at first but such optimism faded away later on the day. The GBP pairs have been particularly choppy as the Brexit talks have entered the hottest stage and as such the GBP is subject to headlines.

Another major yet familiar driver that continues to influence the overall market mood and the USD in particular include the ongoing fiscal stimulus negotiations in the US. According to media reports, House Majority Leader Pelosi and US Treasury Secretary Mnuchin “continued to narrow differences”. Pelosi left hopes hanging up in the air by hinting a deal pre-election cannot be ruled out.  The next 24h to 36h will be crucial given the deadline set by Pelosi to strike a deal.

Notwithstanding the sell-side pressure in ‘risk on’ currencies, which should have benefited the Yen, today’s hot trade of the day outlines a position to exploit short exposure in the Japanese currency against the single currency. This is a trade that falls under the category of the TT or Trapped Traders pattern. It occurred around the European open after a clear purge of EUR/JPY sellers. This trade went for over 10:1 risk reward for those avid enough to have spotted it.

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Hot Trade Of The Day

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.   

Insights – Hot Trade Of The Day

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. 

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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 this video. Fractal breakouts is at the epicenter to assist us in the analysis of chart structures.

MARKET MOMENTUM 

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.

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

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.