USD Strength Is The Story Of The Week
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USD Strength Is The Story Of The Week

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.

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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 story of the week is the strength in the US Dollar. This move is definitely very meaningful and carries behind the type of real-money commitment that has finally allowed some huge technical milestones.

The equally-weighted USD index has transitioned into bullish reads in the daily chart both structurally and momentum wise. What this means is that the currency should now be seen through the lenses of an overall bullish trend until this outlook negates.

The Japanese Yen, while unable to level up the performance by the US Dollar in the last 48h, is nonetheless the other currency that definitely stands out as the implosion in equities continues amid the admissions by Fed’s Chairman that the Fed has done all it can think of so far. This seems to have resulted in renewed selling interest in risk assets.

On the other side of the equation, with money flowing out of commodities and stocks, the Oceanic currencies, not long ago the darlings of FX, have hit particularly hard. The combination of back to back losses in equities, the fall in Silver/Gold and the appreciation of the US Dollar set out an awful contextual setting to deal with.

When looking at the EUR and GBP indices, both remain chopping around. The former found little volatility around the European ‘flash’ PMIs where manufacturing reads came quite solid, especially in the engine of the continent as is Germany, even if in stark contrast with poor flash services PMIs. The GBP saw a better tone on the back of its own PMI readings where manufacturing came slightly improved.

In terms of trending markets, it continues to be a very conducive environment to trade in congruence with multi-timeframe trends since the imbalance of flows in risk-off currencies (especially in the USD) against the rest of peers have been particularly one-sided as of late. In today’s video I will touch on this current environment, on the hot trade of the day and to top it off will look at the indices outlook.

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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. Today’s is a long in USD/CHF.    

Insights Into Market Studies

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. 

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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 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