Featured The Daily Edge

Supply of Euros dominates proceedings

The behavior of G8 forex indices is never free of ambiguity and uncertainty as the short-term moves always tend to be random in nature. It's only when we step back to analyze the contextual setting that we can make more sense of the overall flows.

Let’s get started…

Performance of forex indices

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 forex basket. Indicators are available to use these measures via Tradingview and MT4.

 

The behavior of G8 forex indices is never free of ambiguity and uncertainty. If caught up in short-term moves alone, it tends to be random in nature. Analysis of the contextual setting and information advantage allows us to make more sense of the flows.

Even as I dissect the dynamics from an overall performance standpoint this week, it’s really hard to find well-defined trends. The currency market continues to be torn between the optimism of a vaccine and further lockdowns amid the resurgence of COVID-19 cases, hospitalisations and deaths.

The fact that we ended up with both the Kiwi and the Japanese Yen as the top performing currencies on Wednesday this week, reflected how entangled currencies performance can be. These movements somehow defy the logic by which markets favour one currency over another. 

I want to highlight  the last London session, where we did have a solid trend that picked up a steady momentum in the Euro. The currency saw the bulk of its losses ahead of the London fix only to peter out afterwards as volumes collapsed (this is usually the case). 

Pay attention to today’s hot trade, where the Euro was an exception. It was cross checked against the Kiwi as a strong trend developed.

Trading via Forex indices

To see an expanded version, right-click and select ‘open link in new tab’. In this section, I provide insights into intraday currency trades via the G8 forex indices. The aim is to match the weakest vs the strongest. I apply the SMT indicator to measure multi-timeframe momentum alongside additional metrics. Due to popular demand, I am working on an extension of my course to add this strategy.

 

I recognised that this entry was too aggressive. I didn’t take it. However, I did identify it via my proprietary forex indices template. I am referring to a short in the EUR/NZD right off the gates in the London session that has gone for over 100 pips. When an entry occurs without having tested the 13ema previously I am much more reserved on pulling the trigger. That’s exactly what happened in this short trade. It showed the type of trend one can catch when matching the weakest (EUR) vs the strongest (NZD).

Trading via trap patterns

To see an expanded version, right-click and select ‘open link in new tab’. The table above shows key metrics (momentum + structures) in different timeframes (4 hours and daily) to assist students of my TT course in selecting the best trending markets (link to the script). A video on the power of the SMT can be found here “How To Trade Forex Trends Like A Pro”. The video “Fractals + SMT Upgrade: The Multi-timeframe Functionality” is also a Must-Watch to fully grasp this style. A fully-fledged trading course about the TT (Trapped Traders) pattern will soon be available via Global Prime Trading Academy website.

 

Even if the market fails to make up its mind in the near term, it doesn’t mean we don’t have congruence of momentum and structures to step back all the way to the 4h and the daily timeframes. In fact, we have more than 10 markets flashing either bullish or bearish concordance as per the directional bias most dominant. These are the markets where I tend to place most of my focus to find TT setups.

 

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

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. The indicator allows you to save time and avoid mistakes.

 

 

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.