The USD & Risk-Off Come Back To Life
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The USD & Risk-Off Come Back To Life

Authored by 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.

Let’s get started…

Scan Of The Markets

The indices show the performance of a particular currency vs G8 FX. A video on how to interpret these indices can be found in the Global Prime’s Research section.

What have we learned in the last 24h? Firstly, while some are busy looking for all types of narratives to justify the turnaround in the equity market, be it via poor earning guidance or US retail sales, those following my daily updates would know how crucial it was the level of resistance reached in the S&P 500 circa 2,850.00 (100% proj target).

Equity sellers are not out of the woods just yet despite the smart money tracker is rolling over in the 4-hour chart. Remember, we need this momentum to also be accompanied by a breakout of structure, which is not going to happen until we can burst through and find price acceptance below the 2,700.00 mark in the S&P 500.

If this bearish scenario transpires, this is a key pre-condition to keep calling for a higher USD index. Failure to do so gives Dollar sellers a reason to rejoin the offer, especially against the strongest contenders such as the Pound or Gold. The new paradigm on the heels of the USD liquidity crisis has anchored the USD and equities very intimately together (invert correlation very high).

Revisiting the action seen, right from the get go in Europe, we saw equities go into a sea of red and never look back, instilling renewed upside momentum in the US Dollar. This strength was ample across the board, and as I elaborate in today’s clip, it has sufficient merit to call for a potential protracted shift in trend in the Euro and Aussie.

A special mention deserves the Aussie. The sell-side flows that have emanated on the back of the aggressive turnaround in equities originated, you guessed it, from a huge level of confluence as depicted via the 100% daily bullish target and a weekly resistance area.

There are other markets such as the Pound or the Yen where more work needs to be done before validating, as per the congruence of momentum and structures, that we are in new bearish or bullish territory respectively. The pretext to attack these markets with conviction in line with the USD buying flows is shared in today’s video.

Besides, whenever you see my daily calls negated by the eruption of fresh flows, that’s something that one has no control over. Trading the markets is a probability game. In our thriving Discord community, a member pointed out that the USD headed north with quite the fury, just to defy some of my daily views, which by the way, will always be conditional to a certain intraday criteria being met.

Here is my response:

“No crystal balls here, I’d be eternally grateful to have evolved into the type of trader that adapts in a dime to incoming flows… it’s challenging when you want to help a community yet you are perceived to hold a view as true for the entire day as report don’t come hourly. If I were to make commentary hourly, mid Europe was clear we were breaking structures all over.”

Bottom line? Adapting to market flows, always with an open mind, knowing when certain scenario would be negated, and resorting to lower timeframes as the entry trigger to get an extra confirmation that the potential entry resonates with higher timeframes is all essential too.

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Insights Into Market Flows

This analysis complements one’s view by accounting for multi timeframe biases. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position. This analysis is mainly intended as a way to educate traders in upping their analytical skills.

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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 the tutorial How To Read Market Structures In Forex.

SMART MONEY TRACKER 

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.

SUPPORT & RESISTANCE

Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.

FUNDAMENTALS

It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.

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