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One Of The Busiest Weeks Of The Year

One of the busiest weeks of the year is upon us with the celebration of the US general election, alongside the RBA, the FOMC and the BoE. If that wasn't enough, the market has the added complexity of how to factor all in within a context of a worsening COVID-19 trend globally.

Let’s get started…

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. 

I find it very fitting to call this unfolding week one of the busiest weeks of the year as now being upon us with the celebration of the US general election, alongside the RBA, the FOMC and the BoE policy meetings. If that wasn’t enough, the market has the added complexity of how to factor all in within a context of a worsening COVID-19 trend globally that has been many countries toughening up their positions in lockdown policies.

In terms of G8 FX performance, with incessant risk-off dynamics for most of last week, the likes of the US Dollar and the Japanese Yen were hands down the main beneficiaries while the Australian Dollar, the Canadian Dollar and the Euro, the latter driven by a more dovish ECB, were the underperformers. The Pound, the Kiwi and the Swissy continue to navigate this risk aversion storm in better fashion.

Over the weekend, there were a couple of important developments out of the UK. Firstly, PM Johnson announced tougher lockdown measures. Meanwhile, there appears to have been progress in the UK-EU trade talks. According to Bloomberg, “officials are zeroing in on a solution to break the eight-month long deadlock over one of the biggest obstacles (fisheries) to their planned trade deal.”

On the US election front, the latest updates when aggregating the biggest betting sites point at the chances of a Biden win around 65% vs Trump’s 35%. These stats, however, tend to be quite biased based on what’s been happening in reality vs leading the future reality. Regardless of the outcome, what’s almost a given is that the levels of volatility will remain very elevated with the VIX already giving us a sense of it by shooting to 40.00 last week as US stocks sold off in earnest amid the huge uncertain landscape.

When it comes to the hot trade of the day, I wanted to emphasize the GBP/AUD support area I underscored last week as a very sensitive area where buy-side commitment may re-emerge following the formation of a trap pattern in the 4-hour timeframe. In the video below, I go through an explanation of what made this area an excellent location to expect a rebound the way we did see in this pair.

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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.