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The Oceanic currencies outperform in the Forex market

We head into Tuesday with the revival of risk appetite conditions as clearly portrayed by the outperformance of the commodity-linked currencies complex. In order of strength, the Kiwi, the Aussie and the Canadian Dollar were the currencies delivering the strongest gains.

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.

 

We head into Tuesday with the revival of risk appetite conditions as clearly portrayed by the outperformance of the commodity-linked currencies complex. In order of strength, the Kiwi, the Aussie and the Canadian Dollar were the currencies delivering the strongest gains.

On the flip side, we had an almost analogous negative performance by the rest of currencies. The USD, Euro, Yen, Swissy and Pound, all fell at an index level, within 0.20% to 0.30%. This balanced decline resulted in only finding trends by matching the 3 strongest vs the 5 weakest.

This time around, the overall daily performance in Forex matched to perfection customers’ buy-side interest in risky currencies through the London session. When the EOD (End Of Day) percentage moves are roughly the same as the London-led fluctuations,  the conviction in pushing certain currency trends should be quite high.

The revelation of more encouraging news about the success of a vaccine, this time by Moderna (94.3% effective in trial III phase), was the clear inflection point re-invigorating the ‘risk-on’ dynamics. The news followed similar results last week by Pfizer/BioNTech.

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.

 

As the New York session came online, within the first 30 minutes of the golden hour, there was a short-side opportunity to be exploited via the EUR/NZD. The power of monitoring my proprietary G8 FX indices template is that one can eye-ball the strongest vs the weakest currency combinations. In this case, notice in the first chart above the perfect alignment between a bearish Euro and a very bullish Kiwi.

Once this pattern is identified via the forex indices template, attention must be immediately shifted to the currency pair chart, in this case the EUR/NZD. Here we can see that based on the rules that I will lay out for all those taking up the second iteration of my course on currency indices trading, the conditions in terms of SMT confluences and other metrics were all on point. Ever since the short was triggered, the pair has traveled a maximum distance of 60 pips.

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.

 

The environment in the last 24 hours was more favourable in terms of trend trading dynamics – good news for those looking to capitalise on trap pattern setups. This was due to the flow imbalances we’ve seen in the commodity-linked currencies against the rest of the forex pack. What this means is that the environment is now more conducive to find trap pattern trades in line with the dominant trends. In fact, there was a fantastic opportunity to gain long-side exposure in the NZD/CHF as part of the trap pattern concept. Watch my video analysis below to learn more. 

Hot trade of the day (video)

In this section, I pick a market or several ones that either presented an opportunity based on the concepts I teach or alternatively I may also use this section to provide lessons. 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, watch this 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.