Featured The Daily Edge

The USD Is Taken To The Woodshed

The US Dollar had the worst performance in over 6 months on the aftermath of the US election as 'risk on' grips the market. The Australian Dollar, the price of metals and the equity market expressed a completely different picture as the ongoing appreciation doesn't abate.

Let’s get started…

Scan Of The Markets

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 FX basket. 

The US Dollar had the worst performance in over 6 months on the aftermath of the US election as ‘risk on’ grips the market. The Australian Dollar, the price of metals and the equity market expressed a completely different picture as the ongoing appreciation doesn’t abate.

I must emphasize that the huge movement we’ve seen in the US Dollar occurred very much in isolation with other currencies linked to ‘risk off’ flows such as the Japanese Yen or the Swiss Franc holding their ground in a much firmer fashion despite the risk-seeking dynamics.

As a reminder for readers, the outcome of the US election has not yet been called, even if Joe Biden, the Democratic candidate, is nearing the much needed 270 electoral votes amid the unsubstantiated and contradictory allegations by Trump of stopping and re-counting votes in some key swing states in a clear move out of desperation.

As Politico reports, “Joe Biden is ready to give a victory speech. But he needs just one more victory in one of three too-close-to-call states where they’re still counting ballots: Nevada, Pennsylvania or Georgia.”

Sandwiched in between, this last Thursday, we saw the Federal Reserve updating the markets with its latest monetary policy measures and guess what? To no one’s surprise, certainly not to me, the statement as part of the FOMC was literally a carbon copy of the previous one as the Central Bank wants to first see clarity out of the US election.

The fragility of the US Dollar was exploitable since the early stages of the European session. To prove this point, as part of the selection of the hot trade of the day, my attention goes to the New Zealand vs the US Dollar market, where once again the formation of a trap pattern became the precursor to jump on board of a trade that has so far travelled almost 5:1 risk rewards. The video below breaks it down.

If you found this fundamental summary helpful, just click here to share it!

Hot Trade Of The Day

To see an expanded version, right-click and select ‘open link in new tab‘. In this section I pick a market or several ones that presented an opportunity to buy on weakness or sell on strength based on the higher timeframes outlook. My video analysis below will further elaborate on the logic behind the trade.   

 

Insights – Hot Trade Of The Day

In this video analysis I dissect the information above. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter and manage a position, hence the video is intended as educational in nature and not financial advice. 

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.

Recent Economic Indicators & Events Ahead

 

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 I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!

Important Footnotes

MARKET STRUCTURES

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 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.

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.