Risk Sentiment Keeps USD & JPY Pressured
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Risk Sentiment Keeps USD & JPY Pressured

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

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 price action in the last 24h had striking similarities and in a way is an analogous script to the one that played out on Monday. That is, risk-off associated currencies (USD and JPY) kept giving back gains with the Loonie also following the same path south.

The AUD and Gold remain the standout performers this week with the European currencies either hanging onto recent gains or finding further follow through demand. The NZD, even if rising, has been an underperformer judging by the bullish equities.

The above takes me to the next point to get across. We are finally getting objective evidence via order flow (derived off fractal structures) that equities in the US may have turned an important corner to start exhibiting a more protracted bullish phase.

That’s what the price action in the 4h timeframe communicates in both the S&P 500 and the Nasdaq 100. All eyes will now be on the US Presidential debate at 01:00 GMT. If Trump is perceived as the winner, watch for the risk-on sentiment to expand further.

Also, be reminded that besides the US Presidential debate, today we will be subject to most likely a spike on volatility due to the month/quarter-end rebalancing flows.

Usually portfolio managers will either leave or give orders to dealing desks to be transacted at the fixing time and price. These flows can be very heavy at the end of the month and particularly heavy at the end of a quarter.

This results, more often than not, in movements that cannot necessarily be explained neither through technical nor fundamental logic but rather is all about tweaks in currency risk exposure by global portfolio managers.

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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.  A short position in CAD/CHF was the idea promoted in the last 24h based off OFA. 

Insights Into Market Studies

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