Turnaround In Risk But GBP Still Shining

Scan Of The Markets

We’ve gone through a setback in risk sentiment as depicted by the out performance of the Yen and the US Dollar across the board, closely followed by the mighty Pound (judging by this week’s results), while the Aussie, the Euro and the Canadian Dollar were the main laggards as a wave of selling hit the S&P 500 early doors in the US.

By going through the news overnight, some appear to attribute the declines to renewed concerns over the coronavirus in the US, where the CDC reported a 29% increase in the number of cases as the death toll continues to rise steadily. But we know by now how decoupled the COVID-19 saga has been to call the tone in risk sentiment.

What I noticed is that the buying of Yens and US Dollars happened to be timed to perfection to a piece of news where the Supreme Court ruled that a NY Grand Jury can have Trump’s tax records, after Manhattan prosecutor Cy Vance subpoenaed eight years of returns in connection with an investigation into hush-money payments.

Trump tweeted: “This is all a political prosecution. I won the Mueller Witch Hunt and others, and now I have to keep fighting in a politically corrupt New York. Not fair to this Presidency or Administration! Courts in the past have given “broad deference”. NOT ME!” Deutsche Bank says it will comply with the Supreme Court’s decision and will provide Trump’s records to NY prosecutors, according to Bloomberg. Axios carries the story.

Shifting into the technicals, the setback in risk has led to the majority of instruments that used to show constructive trends in either the 4h chart, the daily chart or both combined (ideal scenario) being compromised now. There are still a few exceptions where healthy trends are still present, mainly in GBP pairs given the impressive weekly gains printed.

It’s now important to be pragmatic and selective, arming yourself with enough patience to know what markets are best to sit out awaiting for further definition of the directional bias and what instrument still argue for tradable opportunities to potentially be found this Friday. Let’s find out via the video analysis that I put together for you all below.

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.

Video Length: 00:16:30

Recent Economic Indicators & Events Ahead

(Click on image to enlarge)

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 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.