Welcome to The Daily Edge report, a technically-oriented newsletter aimed to help traders better navigate the FX markets with the assistance of unique research and unbiased market analysis.
Top Level Summary
The Forex market is back to life with volatility picking up. As a round up of my current exposure, the GBP long I was running got taken out for a scratch after a sudden sell-side rotation. With regards to a fresh CAD short initiated on the back of the Asian session flows, the trade is now up about 2:1 RR and I truly hope that this one meets the 3:1 target to put an end to what’s been a poor run of wins as of late. Besides, I also like what I am seeing in the AUD market, so I am going to take a stab for longs in what qualifies as a valid BO with sufficient room till BE distance.
In the video below, I provide a distillation of the technical outlook in the main Forex indices. These views tend to be relevant and actionable for the members of my mentor room the following 24h of price action. Humbly speaking, I am yet to find other traders that conduct the technical study of currency indices on an equally-weighted basis as taught in the Academy courses.
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Forex Indices Break Down
If you are interested in a deeper dive into my prop equally-weighted indices as a true teller of the performance of each G8 FX currency, then keep reading…
EUR Index – Flies Higher Post Range Breakout
We’ve seen back-to-back strength in the last 2 sessions to make it 4 sessions of appreciation in a row. This rally constitutes the most aggressive buy-side campaign since late February. This movement leaves behind the previous range formed and sets the stage for a retest of a structural high from late in March. EUR looks like a nice momentum play until that target is reached.
CHF INDEX – Emerges From The Ashes
The revived Swissy performance comes after what’s commonly known as a SR flip play. The currency has followed to the tee the technical script you’d expect after a successful range breakout. That is, an initial solid close beyond the delimitation of its previous range top, a retest of that top-turned-support before the mark up as the level acted like a springboard.
USD INDEX – Further Downside On Tap
The follow through supply allows us to get more clarity near-term as the metrics are finally fully aligning to the bearish side. Besides, the bottom-side close in the US session candle below the previous low is further vindication that buyers have dissipated for the time being. There is over 0.4% of projected gains potential for sellers here until the next relevant support.
JPY INDEX – Commendable Breakout
The congested sideways action has concluded with a bullish breakout. One that I won’t be playing to the upside as it lacks the technical backing of sufficient metrics that hep me define a market’s bias. That said, I must confess that buyers have achieved a commendable break here that may see the extension of gains. So, despite not longing the market, I can envision the case for a short-term reprieve in this market that leads to follow through demand in the Japanese Yen.
GBP INDEX – Heavy Selling Off 2021 High
A violent move from its 2021 high has led the Pound to eliminate 1 week worth of gains in a matter of 1 single day. This impulsive reversal off the top is one that may set us out for a meaningful trend reversal. However, that’s going to take some time to find out. Short term though, the sell-off hit the 100% proj target, which makes it very unattractive to short GBP at these levels.
CAD INDEX – Losing Its Mojo Rapidly
The currency has been met with a consistent wave of selling pressure. In fact, the last 2 selling candle neatly exemplify the complete obliteration of buyers here. Not only the last 2 session candles have produced outsized movements, but the closes have been at the very low. This implies a very negative sentiment around the currency. I eye follow through supply.
AUD INDEX – Longing This Bullish Breakout
A topside resolution of the range has come to fruition. This could now set the Aussie into traction to explore higher levels towards the late March peak. As such, and with all our proprietary metrics pointing north, I’ve entered a long position in what we classify in the mentor room as a breakout trade. It’s also encouraging to have put on a double bottom prior to the breakout.
NZD INDEX – A Signal To Buy Around The Corner
The technical landscape remains constructive in the Kiwi. What had previously acted as an area of resistance has now proven to be resilient enough to reject the European-induced sell-side pressure on the Kiwi. We might just be one candle away from the currency signalling a long entry in line with the near-term bullish trend currently at play.
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