Global Prime: Daily Market Digest

[IvanGlobalPrime]

FX Weekly Edge: Key Levels Hit Across The Board

The majority of FX indices have simultaneously landed at key inflection points. By that, I mean that the price is sitting at areas that often represent either a pivotal area for an eventual price reversal or alternatively, an acceleration of the moves.

 

[IvanGlobalPrime]

FX Weekly Edge: USD Vol About To Spike?

Top Level Summary​

For the most part, the Forex market remains in a holding pattern. What I mean is that the majority of currencies continue to exhibit choppy volatility around the edges of what may be the most significant levels we’ve tested this year. That’s certainly the case in the likes of the EUR or the USD, which alone make up most of the trading volume in the currency space. The Sterling is the currency that appears to show the most attractive technicals. Others like the AUD or the NZD, while price action last week felt like two worlds apart, which is not typically the case, nearby supports or resistance don’t clear up the picture near-term.

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Video Analysis​

In the video below, I distil the technical outlook in the main Forex indices. These views are relevant and actionable for the members of my mentor room the following week of price action. Humbly speaking, I am yet to find other traders that conduct the technical study of currency indices on an equally-weighted basis the way is put together in this report.

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Forex Indices Break Down​

If you are interested in a deeper dive into my prop equally-weighted indices as a true teller of the performance of each G8 FX currency, then keep reading…

EUR INDEX – Flurry of buying clashes w/ huge resistance…​

Back-t0-back attempts to poke through a sticky resistance have yielded limited gains. This action tends to typically result in an eventual exhaustion of buyers. More so at the location tested, a perfectly confluent horizontal resistance level that matches the 50% retracement from the 2021 dominant bearish trend. This area has a proven record of acting as a role reversal level, so I’d be surprised if this time it doesn’t. Be wary to be long EUR nearby this vicinity as gains harder to come by. So, my main take away continues to be that longing the EUR this week remains a dangerous business until/if the resistance above is broken.

CHF INDEX – Buying slows down where you’d expect…​

An analogous context to the Euro can be found in the Swissy market. As warned in the last report, the currency has so far struggled to record further gains at this key intersection outlined in a red line, where I’ve speculated that a potential topping formation may be in store. This region where price has stalled to the tick refers to a structural previous low and just like in the case of the EUR, also aligns perfectly with a 50% retracement. A break of last week’s low is the next evidence needed by sellers that the 2-month long correction might be over and sellers about to re-take control of this market.

USD INDEX – Calm before the storm…​

We’ve had the tightest range period since the beginning of the year. Back to back doji candles sends a clear message on how undecisive this market remains. The stalling of price at its yearly low with so low price amplitude tends to be a precursor of an expansion in volatility. Whenever a market enters a range, I always tend to assign higher probabilities that it will break in the direction of the dominant trend as that’s proven to be the path of least resistance. I will reiterate where I stand on this market. Either this is the location of maximum opportunity to long the currency or the pain the currency may undergo might be quite substantial.

JPY INDEX – Sellers arrive to the 100% proj destination…​

The Yen extended further down to hit almost to the tick the 100% measured move target that I had projected. Shorting the Yen has been paying off consistently, with a few brief but most insignificant bumps along the way. The last one that buyers had to go through was a 2-month consolidation; but once that broke, over a month ago, it unleashed the next wave of selling pressure in what now appears to be a potential pause in the trend based on the projected area reached. Structure and momentum certainly don’t suggest this trend is over, but the location makes is rather expensive to short the Yen.

GBP INDEX – Buyers get away with a key breakout…​

Out of all the indices scanned, the Pound certainly looks like the most promising to build up on its recent gains. This view is backed by buyers culminating an important technical feat through the acceptance above a key resistance level, continuously outlined in this report for weeks. Now that this resistance can be stared from the rear mirror, there is likely going to be a re-assessment of the new unfolding range, with the potential for this resistance to flip its role into support. Should further evidence of this dynamics unfold, we are looking at a potential appreciation of the Pound in coming weeks to the tune of around 1.5%.

CAD INDEX – Stubborn buyers keep at it…​

We saw the first signs of weakness in the CAD in 6 weeks yet buyers returned in earnest to bid the currency back up. This strong buy-side interest signals that a break beyond last week’s high may endanger the outlook for any contrarians and set us out on a path to the next 100% projection target. Note, however, that if history is any indication, ever since 2015, around these highs is where a macro rotation back down in the CAD tends to occur over and over. There are few signs of the trend reverting just yet, so treat this as speculation from my side, but something I am definitely prepping for in coming weeks.

AUD INDEX – En-route to hit the 100% proj…​

The index saw acceptance outside of its range on a weekly basis. A depreciation of the AUD to the tune of about 1% was my default view ever since that event occurred. That view is near completion now. This calculation, as usual, is predicated on the use of symmetrical patterns to come up with the 100% proj. Note, this level where the Aussie may find a bottom aligns with a previous structural low, which makes it even more compelling to see buying returning.

NZD INDEX – RBNZ-led mark up meets resistance…​

The NZD portrayed a complete different dynamics compared to its neighboring peer the Aussie. The mark up in the Kiwi was fueled by the unexpectedly hawkish turnaround by the RBNZ, which caught the market by utter surprise. At present, the Kiwi has landed at a key resistance level, which contextualize wise, constitutes the top of its 3-month long range. Longing the Kiwi into this resistance warrants prudence as the upside is limited until more technical evidence. Just as I warned to be cautious shorting the Kiwi last week purely on the basis of the support revisited, the same applies on the opposite side now. It’s always safer to allow the price to show its hand via an acceptance beyond a particular level before committing to a certain direction, or else you are asking for trouble.

 

[IvanGlobalPrime]

Find my latest market thoughts

Why Is So Difficult To Take Losses & How To Fix It?​

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If you get frustrated experiencing a trading loss, you are not alone. In fact, it is human nature wanting to procrastinate booking a loss. Cutting your losses in the market can easily carry negative emotions unless you learn to become a great loser.

Be A Great Loser?​

What the heck does it mean to become a great loser you may be asking? Recognizing at all times when it’s time to throw in the towel as the edge no longer is present. Taking a loss is one of those things that sounds simple in theory but it can be extremely difficult to implement. That’s why the right position sizing and risk management is paramount. It helps us to protect our account and not run into far bigger problems.

The more you gain conviction that the trades we take do carry an edge that plays out overtime, the more you’ll see losses as just part of our day to day operational cost of running a business to find out if an outcome is converted into revenue or becomes the necessary expense that must be incurred in order to achieve the expected edge over a long series of trades.

The unpredictability of one single outcome, if combined with low confidence, tends to be a Molotov cocktail that can result on the progressive removal of your commitment to a particular style of trading. Luckily, in my mentor room, through my own trades and constant feedback, I’ll help u doge that risk thru the consistency that the setups provide when applying the right rules in not only the entry trigger, but most importantly, trade/risk management.

Psychological Barriers​

First, I want to remind you of the #1 principle to keep in mind ahead of any given trade. As developing traders, you do enter a trade that looks to exploit an asymmetrical reward to risk opportunity. That’s gets us off to the right start, doesn’t it?

If I were to tell you that for every flip of a coin you get paid minimum $100 if heads and taken away $50 if tails, you’d be playing the game all day long! So, if you accept that as true, the only reason traders struggle to take losses and impacts their psyche is because of psychological reasons and our social environment that ingrains within us certain ideas about right and wrong. You need to progressively flip these ideas on its head.

If you seek constant security and do the right thing, you will inevitably find it tremendously hard get past the negative emotions of taking a loss. This is very rooted within the human brain. From an early age, we have been taught to do the right thing, and avoid doing the wrong thing. So no wonder we associate a loss with a negative outcome that triggers within us do whatever it takes to avoid being proved wrong in the market.

Now, if your position size is far too big, that feeling of false hope for the market to turn around gets only amplified. Why? Cause you can’t accept taking such a big loss. It’s far better to remain positive and optimistic and hope that a losing position turns around, isn’t it? Again, is completely counterproductive to our chances of success. It’s simply statistics that if you lose too big on your losers and win proportionally smaller the equity curve won’t look pretty.

We can also touch on the biological reasons as to why it’s difficult for us to to take a loss. We are by nature loss averse. This has been studied and validated by behavioral psychologists. Prospect theory has shown that people generally make decisions based on their potential perception of losses and gains rather than rational probabilities. The tendency to avoid losses compared to realizing gains is a very well researched and proven truth on how human behave. The pain of a loss is many times more impactful than the joy of a gain. I could go on and on with further shortcomings traders face such as close-minded, attachment to trades…

Let’s Focus On Solutions​

Now, how to break through? It’s a process that takes awareness, developing a neutral mind, remain unbiased and objective based on market information. One of the best weapons I have come to learn over the years is the power of meditation as a vehicle that has helped me to rewire my brain to address limitations, aim for success, build emotional IQ, enhance a present mind, develop pattern recognition skills, retention of memory, and other elements all essentials for trading success.

A major challenge of mine before meditation (back in 2014) used to be the activation of my fight or flight response to certain tense situations. I knew as an aspiring professional trader my attitude should be to stay calm, relaxed but it was easier said than done. The more I’ve meditated by just spending 10m/day, the more I’ve contributed for my brain to also stay in a state of internal peace and happiness, while I feel more in charge of my emotions and dialogue.

I also felt that has translated in my determination to make tough decisions in life in general. The practice I’ve performed over many years is called Shamatha, I tend to do it right before trading for 10m, as a practice aimed to strengthen the mind’s stability and to counterbalance the symptoms of an agitated mind. Shamatha meditation—mindfulness or concentration—is the foundation of Buddhist practice. My mentor on this field has been Chris Capre of 2ndSkies.

You can find out more about what Shamatha is about via this video below:

 

[IvanGlobalPrime]

Find my latest market thoughts

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Owning Your Trading Approach

A topic I'd like to address today is that while I am wholeheartedly endorsing mentorships to turbo-charge one's skills, it's not the 'panacea' for all trading ills!

The moment I came to terms in adopting a set of styles that not only resonates with my personality but that I could single-handedly determine what is it that constitutes the edge, based on my thousands of hours observing the market and its patterns, that’s when a huge ‘aha’ moment ensued.

While I provide an incredible frame of reference thru the course and the constant feedback to take your skills to the next level, you should be the ultimate responsible, through your own experience/journey of self-discovery, to make certain decisions that I simply cannot make for you.

Case in point, timeframe combinations, set of entry techniques that resonate most with how you have fun trading, risk management, and the list goes on. Let me take things deeper. On the strategy front, as your experience grows, you may stop following each and every aspect I teach religiously.

You may decide this or that is not for you. Maybe you notice something I’ve taught is redundant. Whatever it is, ironically, that often tends to be a sign of growth as you are finally able to develop the skills to such an extend that such religious following may not be needed.

And guess what? That’s perfectly fine!

Becoming more selective on how you’d like to mold things to your own style, provided that you can gather sufficient evidence that the approach carries and/or improves the edge to exploit under specific market conditions (situation awareness), let me repeat, is often a hint of ‘progress’ (you take ownership!).

I’ve been taught all types of indicators and styles, with the peculiarity that most were not initially designed by myself. I needed educators providing me an early guidance. Tones were filtered out and eventually I stuck with what resonated with me and served best the purpose of deciphering relevant market information.

The course and my mentor room is that collection of wisdom that ultimately worked for me and I am openly teaching it to anyone willing to put in the time. Take it for what it is, the answers I was looking for to read markets were found through the material that is presented to you.

That could have never happened unless I first FOUND MYSELF through taking ownership of my approach.

My methodology in trading ultimately originated from my own discretion in combining different tools I learned along the way. I am thankful to each and every educator as they contributed to my growth, but it wasn’t until I started to look from the inside out that things started to click.

What made the difference was the fact that I was finally taking responsibility to piece it all together through the constant collection of experiences to shape up my trader profile. At some point, you will realize that there are certain areas where you and only you must make a decision to keep moving forward.

This can either be a sign of growth or drifting away. How can you tell? Accountability and being the owner of your destiny. It all starts by making your own decisions, hence, why you must take ownership of how you are going to be trading the markets with purpose and authenticity.

Can’t think of anyone reaching the echelons of any competitive field by not having done that. Trading is no different. In fact, trading amplifies it given its solitary nature. I am aware of it and through the mentor room, I want to open your eyes to all the realities that come or will come in your constant development as a trader!