Yen Outperforms All Its Peers
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Yen Outperforms All Its Peers

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.

The Japanese Yen has been the star performer in a move that surprisingly didn’t get fueled by that much weakness in the S&P 500 (-0.7%). Even the US long-dated Treasury yields soared, which tends to be associated with Yen weakness rather than strength.

These dynamics where the Yen decouples from its usual drivers makes tapping into the aggregated flows in G8 FX so powerful. It keeps traders in constant tune with what’s going on. The FX index chart clearly shows how JPY has taken off and not looking back.

In the fundamental domain, even if it has the potential to be a source of distress, so far investors are undeterred about the growing tensions between the US and China over the origin of the coronavirus. US Secretary of State Pompeo said there is “significant evidence” the virus was engineered via a Wuhan laboratory.

Steps to curb supply chains and investment flows in China by the US made it to the front page of the Financial Times. This would be another critical stabilizing factor that may see risk deteriorate, even if at this point, equity tradrs are sweeping it under the carpet.

In the containment rollbacks, Germany announced plans to further reopen its economies even if social distancing will remain in place. Meanwhile, in the UK, the market awaits the plan to ease lockdowns by PM Johnson to be outlined this coming Sunday.

In the US, it looks as though the trend has been for the virus to travel from East to West, with California badly hit with a spike in new cases. President Trump’s rhetoric to encourage people going back to business as usual and reopening the economy has gone up a notch, saying Americans should begin returning to their everyday lives.

Back to forex, one of the currencies most fragile in the last 24h, includes the GBP, battered for seemingly no particular catalyst. It may be because attention is now placed on today’s BOE policy meeting where the risk of a QE expansion near term is real.

The US Dollar, after the balanced flows thematic from earlier this week, finally found a technical resolution by breaking higher. This strength sends the EUR/USD into a critical daily support or puts AUD/USD in a complicated position to retain the daily bullishness.

In today’s video, where I dive into the daily assessment of the currency flows, I conclude that where the EUR/USD stands makes short trades especially tricky. The GBP/USD appears to have further downside room as dos the USD/JPY. Think what that means for the GBP/JPY near term…. Lastly, the AUD/USD, a market I tend to focus on, is rolling over dangerously but the SMT is not quite there.

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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.

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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