Scan Of The Markets
In my latest report, I made the case that the market kept behaving in a manner that continues to give the benefit of the doubt (glass half full) to ultimately see further fiscal stimulus in the US being agreed.
Evidence that Trump had made a U-turn by suddenly endorsing a $1.8 trillion proposal as part of a fiscal stimulus buoyed markets on Friday even if such groovy vibes and levels of hope may require a revision judging by the weekend news where House Leader Pelosi and Republicans opposed to the fiscal package.
Politico notes: “Senate Republicans lashed out at a potential framework for a new coronavirus deal between the Trump administration and Speaker Nancy Pelosi on a conference call Saturday, warning that there was little support for a big spending bill right before the election.”
But so far what the charts are telling us is that the US Dollar and the Japanese Yen, as the usual suspects to be sold on risk appetite, are still not finding bids and remain in a protracted selling campaign. The Euro is also suffering from sell-side flows on aggregated terms. The commodity-link currencies (AUD, NZD, CAD) are thriving.
In particular, the CAD was briefly boosted by a tremendous employment report that far exceeded expectations. Meanwhile, the GBP had an impressive bullish run stripping out a disappointing GDP at 2.1%m/m vs 4.6% expected. UK Prime Minister Johnson will announce new COVID-19 related restrictions to MPs on Monday with the BBC saying it is “very likely” some areas will face further restrictions as seen in other European cities where tighter restrictions were implemented such as Berlin, Madrid and Paris.
It’s also worth noting the volatility around the Chinese Yuan following the PBoC announcement on Saturday to reduce risk reserves for FX forwards sales from 20% to 0% as part of a macro-prudential tool in order to limit the strong appreciation of the yuan.
Heading into this week, the calendar is full of top-tier events. In Australia, the RBA Governor Lowe is set to speak on Thursday, an event that will be closely scrutinized as the RBA has hinted at further easing at the upcoming November meeting. This appearance by the RBA boss happens to be the same say the jobs report is published. Elsewhere, earnings season in stocks, US election polls and the resolution of the EU-UK trade talks will take the spotlight. Besides, the publication of US Retail Sales on Friday will also be monitored closely.
As per today’s hot trade of the day, I’d like to highlight a long setup up in the GBP/USD with a 3:1 RR target that was absolutely smashed. This trade was once again a combo of the TT or trap pattern with the soon to be released order flow script. A compression pattern, followed by the confirmation of a trap pattern, all well portrayed thru the OFA indicator gave the go ahead to capitalize on this position.
Hot Trade Of The Day
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.
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Insights – Hot Trade Of The Day
Video Length: 00:01:32
Recent Economic Indicators & Events Ahead
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Source: Forexfactory
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.
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