Resilience In Risk, Mores Losses In The USD
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Resilience In Risk, Mores Losses In The USD

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.

What stood out through a Wednesday session vacant of market-moving fundamental news was the continuous fragility of the US Dollar, by far the worst performer, while on the other side of the spectrum, Gold added over 0.8% and convincingly broke $1,800.00.

In equities, the US tech rally shows no signs of abating with the Nasdaq rallying +1.4% courtesy of the FAANG complex. The S&P 500, as it’s been the case through the post COVID-19 era, lagged behind the Nasdaq but also printed gains to the tune of +0.8%.

Amid the sustainability of solid bets in risky assets, the Canadian Dollar was the stand out out performer in the currency arena, while a bunch of other currencies (AUD, EUR, GBP, CHF, NZD) delivered similar daily percentage changes at the expense of big losses in the Japanese Yen but most notoriously, against a battered US Dollar.

It is important to convey the message that from what’s transpired in the last 24h, the resilience in risk sentiment is very much in line with the recently promoted premise of a re-alignment between the big picture ‘risk on’ and short-term dynamics. It also vindicates the presumption that the recent setback in risk on Tuesday was a mere bleep and corrective in nature as part of the grand ‘risk on’ trend.

Technically, I like what I read across key instruments to solidify my positive stance for an expansion of the risk appetite. Equities are on a firm footing with the latest setback in the S&P 500 very corrective in nature vs the recent impulsivity of the buy flows. Not to mention that the Nasdaq remains on absolute fire making new all-time highs.

On top of that, the US Dollar is showing cracks across the board, while Yen crosses catch a renewed wave of buy-side pressure. The gold market keeps portraying like no other the fragility in the USD with the latest bullish leg making it to the 100% projection target of $1,816.00, a major profit target I mentioned in yesterday’s analysis (from 2′ 30”).

If you are interested to find out the markets best positioned to keep milking the vulnerability in certain currencies the likes of the US Dollar or the Japanese Yen, the video I put together below is a must-watch. In it, I deconstruct the analysis of structures, momentum, volatility, support/resistances and projection targets. You get served in a matter of 15-20m a great deal of valuable info, a real treat to your education.

As a final note. Make sure you do not let the disconnect between fundametals in real economies and valuations derail you from trading based on your technical edge. I know it’s must be hard for the untrained mind to reconcile buying risky assets at a time when the number of COVID-19 cases is spiking again and Melbourne goes on a 2nd 6 week lockdown, but this is what you get when Central Banks (Fed most notably) go out of their way to manipulate markets via insane liquidity injections.

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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