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Short Yens is the market to be in

The currency exhibiting the most stable trend on Monday was the British Pound, attracting buyers amid the positive soundbites that a Brexit trade deal with the EU looms near. On the opposing end of the performance board we find the Japanese Yen, sold off ahead of the London fix with no respite of the offered tone afterwards. 

Let’s get started…

Scan of the forex market

The currency exhibiting the most stable trend on Monday was the British Pound. It attracted buyers amid the positive soundbites that a Brexit trade deal with the EU looms near. On the opposing end of the performance board we find the Japanese Yen, sold off ahead of the London fix with no respite in the offered tone afterwards.

Impressive turnaround in the US DOLLAR

The positive performance by the British currency was challenged by the re-resurgence in the US Dollar. The latter went through an impressive turnaround, as it transitioned from being the worst performing currency half way through the London session to drawing the most buying interest by the end of it. The service, manufacturing and composite PMI readings in the US all beat expectations and dollar buying became the trend to jump on.

RISK Dynamics from mix to improving

When we see the Oceanic and the Japanese currencies perform equally poor for most of the London session, as was the case on Monday, it implies that the market was not driven by risk flows. Instead, it suggested that idiosyncratic drivers based on the fundamental merits of each market were at the epicentre of the value adjustments seen. The heavy economic calendar, as I pointed out in my update on Monday this week, was the main force determining the ebbs and flows.

However, by the time the London session came to an end, we saw a notable acceleration in the Yen selling flows, as risk appetite improved. This led to the JPY becoming the standout underperformer for the day. The main driver behind the resumption of the bearish trend in the Japanese Yen, one could argue, was further optimism that vaccines to fight off the global pandemic are coming…

MORE POSITIVE VACCINE NEWS aids stocks

AstraZeneca became the last company to announce that its experimental vaccine, produced alongside Oxford University, had an average success rate of 70%. This success rate, however, goes up to 90% when administered following certain protocols (such as half a dose initially followed by a full dose the next month). Stocks in the US appear to have celebrated the news by rising modestly, with the Dow up 1.4%, the S&P 0.65% and NASDAQ 0.60%.

Besides, the companies’ claim that mass production and distribution can be achieved easier, and that it would come at a cheaper price, were certainty additional positive aspects to take into account. If that’s not enough, the company said that unlike previous experimental vaccines, the drug only needs be stored at standard refrigeration temperatures. AstraZeneca becomes the latest pharma company to apply to the WHO for an Emergency Use Authorisation.

Hot trade of the day

In this section, I pick a market or several ones that presented an opportunity based on the concepts I teach. My video analysis below elaborates on the logic behind the trade.

Economic indicators & events

Important footnotes

Market structure 

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 the idea of using what I call the smart money tracker. The settings and the indicator can be accessed via our Discord room, where traders from all walks of life interact frequently. In this video, I go through the layout and all elements of the Discord room in great detail.

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.