Welcome to the Daily Edge FX 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 activity around Forex dialed down due to the Easter long-weekend. Some markets, the likes of the EUR, JPY or AUD exemplify this lackluster action through the tight ranges established. It tells us low interest to engage in speculative bets has been present. Hence market makers (liquidity providers) took over the price discovery dynamics. On the flip side, we have a couple of markets, namely the GBP and NZD, characterised by bullish momentum. It is the former though that looks like it holds the brightest prospects. As such, I continue to be long the British currency.
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 – TRAPPED WITHIN SIDEWAYS ACTION
The Euro index is going through a period of stagnation. Through the 8h session flows, we can clearly see the loss of volatility via the contraction of the bollinger bands. Besides, both the upper and lower edge of the existing range have been clearly rejected in multiple occasions. This is a clear tell-tale sign of a market dominated by liquidity providers aka market makers.
CHF INDEX – RETRIEVES KEY RESISTANCE
The Swiss Franc index has come back up with a vengeance after printing over 0.3% gains in the US session. The move up has re-taken the most critical area of resistance in recent weeks. This type of breakout with the candle close at the very high of the session opens up the prospects for follow up continuation to the tune of +0.4% until the 7.04/05 resistance.
USD INDEX – KEY BREAKOUT OF SUPPORT
The USD index has extended the sell-off initiated off the highest point in 2021. The market has so far found enough sell-side pressure to break a key area of support. That said, there is a tough structural high to break just ahead in the form of March 8-9 previous resistance. I wouldn’t be surprised in the slightest if the USD starts to find renewed buying interest around these levels.
JPY INDEX – THE TINIEST OF RANGES STILL PREVAILS
The only short-term play in the JPY is to see a downside resolution of the current narrow range. Should this scenario eventuate, it’d make us re-align with the long-term bearish trend. Until the confirmation of such potential breakout trade occurs though, I am watching this market from the fences. The re-opening of Tokyo should bring life back to the Yen.
GBP INDEX – EN-ROUTE TO ITS TARGET
I remain long this market off a signal fired on March 30th. This is what in our mentor room we classify as a CLPB (Control Line Pullback). The market has so far run for about 2:1 RR. Through this leg up, the market is yet to touch back the 13ema (our go-to moving average aka control line). This is a testament of the strong bullish trend in the currency.
CAD INDEX – DOWNSIDE LIMITED BY SR FLIP
The Canadian Dollar index has landed and so far been rejected in multiple occasions at a key reference area. This area had acted as resistance several times on the way up, so once broken late last month, and with the underlying trend unambiguously bullish, it is no surprise that the market finds technical value at this vicinity. We might be on the cusp of a new long signal.
AUD INDEX – TIGHT RANGE VALIDATES LOW INTEREST
It shouldn’t come as too much of a surprise that the Aussie has been acting rather lethargic as the market activity dialled down though the Easter long-weekend. In the chart above I’ve spotted the current tight range established. Should a breakout occur, the downside looks the most appealing outcome given the void it exists to see follow through towards the previous double bottom.
NZD INDEX – BULLISH AFTER BREACH OF RESISTANCE
Despite no immediate long signal in the horizon, the market action as of late is undeniably bullish. This outlook has been vindicated by the resolution of price through a double top followed by a clear period of acceptance above this horizontal area. As such, and with all the 8h/D1 metrics bullish, I am of the view that any shallow dip may now provide long opportunities.
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