‘Risk On’ Prevails At Month/Quarter-End
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‘Risk On’ Prevails At Month/Quarter-End

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.

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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.

The quarter that was ended on a bang for equities with the S&P 500 gaining 1.54% for the day and 19.95% for the quarter. Gold, the Pound and commodity-linked currencies, in this order, had a stellar performance, while the USD, Yen and Euro succumbed.

The NASDAQ, which has recently been making record highs, closed the day up 1.85% and for the quarter the gains stand at a mind-boggling 30.6%, which is the best quarter in the last 19 years. Investors have expressed their bullishness in the full digitization of the post COVID-19 era by bidding up the FAANG complex with earnest.

It didn’t matter if the director of the National Institute of Allergy and Infectious Diseases in the US Dr Fauci clearly implied that COVID-19 is out of control by warning that it could reach 100k cases per day, noting “clearly we are not in control right now.”

The spike in new COVID-19 infections – more pronounced in the Southern and Western areas – has led to at least a dozen of US states to either put on hold or reverse all together the plans to reopen. If the data I am reading is anything to go by, it is expected that the new containment measures will hit over half the US population.

Even with such somber prospects, at the end of the day, it all got brushed under the rug, and the balance tilted towards equity bulls as the overwhelming force that represents the vast liquidity provisions by the Fed ever since the end of Q1 keep encouraging risk-taking. The disconnect, some call it ‘bubble’, in equities stays the course.

Once again, I will reiterate how paramount it is that as a trader, you don’t get caught up in the utterly epic decoupling between the reality in the ground with the US reporting 40k new virus cases per day and valuations. Don’t let it be the compass that influences your bias. Stick to technicals (structures, momentum, volatility) to do the heavy-lifting.

Shifting gears to technicals, what have we learned? Firstly, we have the S&P 500 on the brink of a major structure shift in the 4h timescale that may see us en-route to 3,150.00. Gold has torpedoed into a fresh 7-year high and has its sight on $1,800.00.

We also have some decent trend still in play across JPY crosses, with the commanding breakouts in pairs such as the AUD/JPY a testament of the renewed risk-on sentiment. The groovy vibes are also being supported by the range resolution in the AUD/USD.

The forex market behavior infuses the confidence to conclude that the overall picture is turning constructive in risk assets. If you are interested to find out what instruments looks prime to keep capitalizing in the current state of affairs, the video below is for you.

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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