Let’s get started…
- Scan Of The Markets
- Insights Into Market Flows (Video)
- Recent Economic Indicators
- Educational Material
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.
As the dust settles and I take a technical snapshot of the latest market flows to re-formulate directional biases, there were a number of market moving headlines that certainly played an important role in sentiment.
These fundamental drivers included:
- The somber outlook by Federal Reserve Chairman Jerome Powell on a testimony to the Senate, warning that the U.S. economy faces a severe downturn with “significant uncertainty” over both the timing and fortitude of a recovery. He stressed that the longer this goes on for, the worse for employment and businesses.
- Powell also highlighted that the Fed didn’t necessarily have to buy the full allotment in the corporate bond program, noting that “if market function continues to improve, we will taper corporate bond program”. This was definitely a headline that led to an immediate suppression of the mood in markets.
- The headlines of a spike in COVID-19 cases in Texax, Arizona and Florida also shook off weak-hand buyers in risk trades. In Texas, hospitalizations reached 2,518 confirmed patients, a new record. In Florida, COVID-19 cases jumped +3.6%, while in Arizona, it got even worse with a surge in cases by 6.5%, more than doubling.
- As a double whammy not helping sentiment, especially in the currency space, and more specifically the AUD, we learned that Beijing raised the COVID-19 response to level 2 as fears of an outbreak mount. Beijing officials advised people not to leave the city unless necessary. While companies won’t stop working, authorities are encouraging work from home. What’s worrying is that Beijing shut all schools again.
- On the bright side, the overall positive sentiment in US equities found an important anchor point via a surprise bounce in US retail sales numbers (+17.7%, highest ever on a MoM basis), coupled with chatter that a $1 trillion infrastructure program from the Trump administration is in the works.
- I wouldn’t add too much weight on the following, but there have been plenty of headlines coverage as the news was intended to be sensationalized although in reality is just a minor advancement. I am talking about about an effective treatment found for severe COVID-19 cases called Dexamethasone, which has been proven to cut mortality from those in a ventilator by 1/3rd.
- In the geopolitical space, the India-China border clashes are testing investors’ nerves with CNN reporting that twenty Indian soldiers died after clashes with China along a disputed border. Besides, news that North Korea blew up an intra-Korean liaison office used for talks with South Korea is a worrying development too.
After all said and done, we still end with the validation of a fresh bullish phase in the S&P 500 through the 4h time scale, but interestingly, this must be reconciled with the 3 risk-off associated currencies (JPY, CHF, USD) higher for the day.
On the other side of the spectrum, the AUD, the EUR and the GBP were the underperformers, in what I reiterate to have been a day with rather strange dynamics in the forex space. In this new COVID-19 era, it represents a huge annomaly to see equities going one way (higher) yet a pair s risk sensitive like AUD/USD losing ground.
Let’s now dive deep into the technical merits of the movements seen during Tuesday. In order to dissect it all with proper details and make it as actionable and relevant to readers as possible, I’d like to ask you to watch the video posted below as it allows me to better articulate my messages and go much deeper into the factors that count.
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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.
Recent Economic Indicators & Events Ahead
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!
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.
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.
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