‘Risk On’ Flows Make A Comeback
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‘Risk On’ Flows Make A Comeback

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

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. 

‘Risk on’ flows was the name of the game with the Nasdaq 100 soaring by 2.32%, followed by the S&P 500 up 1.8% and the Dow Jones up 1.7%. The GBP was the main winner on Monday while risk-off associated currencies like the USD and JPY suffered.

With Trump well behind in the polls just one month ahead of the US election, hopes for a fiscal stimulus package returned as both Treasury Secretary Mnuchin and Pelosi talked and shared new proposals. Besides, the US ISM services also gave a boost to risk sentiment as it did the fact that Trump left the hospital, which by itself, judging by the sell-off it induced the news of his admission to hospital, may have fueled further the relief rally as short risk bets unwind.

Fundamentally, the Pound remains a lively currency to be trading (it made it to the trade of the day) as the UK-EU trade talks come to its final stage. Judging by the behavior of the Pound, there appears to be renewed optimism that the UK may get away striking a deal even if the weekend talks didn’t yield any significant break throughs yet. UK PM Johnson said that the UK can “more than live with” a no-deal Brexit.

As part of today’s hot trade of the day, I include an entry with long exposure in the British Pound against the Australian Dollar off what I marked as a key role reversal level following the formation of what I describe as a Trapped Traders pattern, which is at the very core of what my upcoming trading course will orbit around. Besides, GBP long inventory was in line with both the 4h and daily bullish trends.

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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