COVID-19 Int'l Spread Only Game In Town

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USD/CAD is a textbook example of the outcome one can aspire to get by spotting what side is suffering the most pain (trapped), and from that read, add your exposure. The compression at the lows last week ahead of the bullish breakout was clearly the building of long positions, with the retake of a strong resistance (break of structure) the ultimate signal that this market was poised for higher levels this week. Every touch of the resistance-turned-support has yielded a predictive series of bounces eventually taking prices into new daily trend highs. This behavioral pattern led me to promote buying dips this week, a directional bias that has paid off.

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USD/CHF has extended its downward correction in the 4-hour chart but is starting to show more two-way price action as I would have expected given the sticky daily support encountered. I personally find this market to now be in a period of transient distribution until the next wave of buying or selling reveals what type of market structure keeps playing out. It looks like the market may be transitioning into a range for the time being, as the two bounces off this daily support have met strong selling for a revisit back down. It would be a hasty decision to call for a particular directional bias in this market until more data inputs around this vicinity come in.

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Important Footnotes

Market structure: Markets evolve in cycles followed by a period of distribution and/or accumulation. To understand the principles applied in the assessment of cycles, refer to the tutorial How To Read Market Structures In Forex

Horizontal 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, the horizontal lines of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed and relevant to monitor. The Ultimate Guide To Identify Areas Of High Interest In Any Market

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.

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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The Daily Edge is authored by Ivan Delgado, Head of Market Research at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth ...

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