Scan Of The Markets

The main take away from Wednesday was the revival of risk sentiment as hopes keep building up around vaccines, allowing European and US equities to push higher and with it commodity-linked currencies.

It was ITV’s Robert Peston who via a tweet said that a University of Oxford’s vaccine trial will report “positive news,” imminently, adding that “the vaccine is generating the kind of antibody and T-cell (killer cell) response that the researchers would hope to see.”

While good vibes are reigning again, at any time, the positive tone could be eclipsed as heightened geopolitical tensions between the US and China and the re-imposition of lockdown measures in certain hot spots due to Covid-19 cast a long shadow.

In FX, the CAD was the best performer in response to the monetary policy meeting by the BOC, stating that the cash rate will remain in the lowest bound for about 2 years “until economic slack is absorbed so that the 2% inflation target is sustainably achieved.”

With regards to the QE commitment, the new BOC Governor Macklem said it will remain the course at a rate of not less than $5b per week, until the recovery is “well underway”.

We also saw the Bank of Japan keep its policy settings unchanged. Another snooze fest by Governor Kuroda really, reiterating the known message that the Bank is prepared to take further action if required.

The US Dollar continues to be broadly weaker although the currency most punished in the last 24h was the Swiss Franc, victim like no other of the resurgence in risk appetite from the early doors in Europe.

I’ve selected a short-list of currencies with the most promising outlooks for swing type traders to engage in existing trends should we be offered the opportunities to buy/sell at technical discounted prices.

Remember, the watch list below comes accompanied by a daily video analysis where I break down all my views in a way that is both actionable and relevant for those looking to get further bias confirmation but also with the intent to be educational in nature.

Trending Markets On My Radar

In this section, I short-list the markets where a case can be made to engage on a directional trend off higher timeframes, including the 4h and daily time scales. These are the markets included in my video analysis in the insights section below. 

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.  

Those following my market coverage should be aware that I’ve been running long exposure in Silver for an eventual 3:1 risk-reward trade. In the last 24h, after some toing and froing around the 2:1 risk-reward, it eventually took off to hit the target.

A long trade I documented through our Discord in the last US session includes longing the NZD against the JPY on the basis, as I explained in Discord, “the 4h trend re-established and now blending in with the daily plus penetration of backside 13wma 4h followed by a resurgence of buyers taking back control of the structure. 3:1 target as usual.”

Insights Into Market Flows

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. 

Video Length: 00:20:50

Recent Economic Indicators & Events Ahead

(Click on image to enlarge)

(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.