USD Market Structures Compromised
Featured

USD Market Structures Compromised

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.

It’s been all about wearing the ‘risk on’ hat and go with the flow as the market appears unfazed by geopolitical rhetoric picking up between the US and China to instead focus on the re-opening of economies.

Besides, as many as 10 companies around the world are now going through human trials to come up with a successful vaccine. However, the default view by reading research papers is that 12-18 month is still the most ambitious timeframe even if the more trials the higher the chances of ultimately coming up with the successful one/s.

By scanning through the news posted on Forexfactory, it immediately grabbed my attention the aggressive remarks by China’s Xi. And let me tell you, if the market can’t go down in headlines the likes of what Reuters put out quoting President Xi as saying “they will step up preparedness for military combat”, the bar for a renewed episode of deleveraging conditions in equities has been set pretty high.

Also, let me stress again the beauty of following a technically-oriented approach endorsed in my reports/videos. The benefit lies on the fact that you don’t call directions based on fundamental headlines, but rather, than acts as supplementary inputs to a view already formed via the analysis of structures, momentum, intermarket. This way we stack the odds in our favor to stay on the right side of the ebbs and flows.

So, where do we stand? We are in the midst of an environment dominated by the appreciation of growth/commodity-linked currencies (AUD, NZD, CAD) while the ones associated most intimately with risk-off flows (JPY, USD) are taken to the woodshed. Sandwiched in between we find the EUR and GBP, the latter being lifted quite aggressively too as BoE had a rethink on negative rates.

Firstly, a special mention deserves the USD, falling against G8 FX, with the only exception being its appreciation against Gold. This behavior in the metal while the S&P 500 tests 3,000.00 is the ultimate teller that the ‘risk on’ dynamics are well and truly alive.

The slump in the USD has led to significant technical developments via daily breakouts of structures in pairs such as the AUD/USD, USD/CAD, GBP/USD, NZD/USD to name a few. There is a clear case to be made to expect further follow through supply in the USD.

This negative view in the USD not only has compromised the structural formation in the markets mentioned above, but it’s also stacking the odds for an eventual breakout of 1.10 in EUR/USD judging by the incessant sell-off in the aggregated USD flows.

In the case of the GBP, the currency saw a one-way street action from the get go in Europe after some backtracking over the prospect of negative rates in the UK via BoE Chief Economist Haldane, who said “reviewing and doing are different things and currently we are in the review phase, and have not .. reached remotely yet .. the doing”.

The Aussie and Loonie look primed to make further gains against both the US Dollar and the Japanese Yen after the very damaging candle printed by the end of NY for the interest of risk-off plays. In these pairs, by calculating a 100% proj target, we can clearly observe that there is further upside room before these market may find a ceiling.

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

Insights Into Market Flows

This analysis is conducted on a multi timeframe dimension. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position, hence the video is mainly intended as a way to educate traders in upping their analytical skills.

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 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