Scan Of The Markets

The USD had a bad day as the FOMC-induced gains were erased to the point that the currency ends the day as the worst performer across the FX board even if the net daily gains/losses for in most currencies were all compressed in a paltry +/- 0.2% range.

That’s how tight these markets have turned out to be in recent weeks with ranges still predominant in the vast majority of pairs. Even the British Pound, one of the only exceptions displaying volatility above the depressed levels elsewhere also ended up with little net changes for the day after being jigsawed in both directions.

We had two main catalysts in the unfolding of vol in the Pound. Firstly, it plummeted on news that the BOE is mulling to go down the route of negative interest rates at some point in the near future. Secondly, what sent the Pound back up, were comments from Ursula Von Der Leyen (The President of the European Commission), who stated that she remains “convinced” that a EU-UK trade deal is still possible.

We also learned in the early hours of the Asian session that the Australian jobs report for August came spectacularly hot at +111k vs -35k expected with the unemployment rate at 6.8% vs. 7.7%. Even the full time/part-time employment split was a solid one. In New Zealand, the Q2 GDP reading wasn’t as bad as feared, while in Japan the BOJ monetary policy meeting came with no surprises.

Technically speaking, these markets remain in a topsy-turvy state with no clear directional biases in the higher timeframes. This is true in pairs where European and North American currencies are involved. There are some exceptions such as the out-performance of the Asian FX complex (AUD, NZD, JPY). It is especially head-scratching to see the Oceanic currencies doing so well after the falls in equities as of late, which speaks volumes of the underlying strength in these two.

Insights Into Market Studies

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: 00:16:45

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 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.