Global Prime: Daily Market Digest

[IvanGlobalPrime]

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G8 FX Taken Hostage By US-China Trade Rhetoric

The market remains fixated on the US-China trade headline, even if the base case continues to be pricing for an optimistic outcome. However, there is plenty of noise with little to no substance that can anchor the pretense of both sides so far. The lack of G8 FX fundamental drivers (exc CAD) + barrage of conflicting trade headlines led to little net changes for the week. Find out the latest in today's report.

The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics - fundamentals and technicals - determine daily biases and assist one’s trading decisions.

Let’s get started…

• Quick Take
• Narratives in Financial Markets
• Recent Economic Indicators
• Dive Into Pro FX Chart Insights
• Educational Material

Quick Take

The Canadian Dollar was hands down the top performer as BoC Governor Poloz threw cold water to the prospects of a rate cut in December. The abrupt rise in the CAD came in tandem with an appreciation in the US Dollar index, which made new highs for the week as the market still sees the US-China trade saga as a glass half-full. The Euro kept treading water, encapsulated in a tiny range on Thursday, with a very timid response to the ECB minutes, which called for unity after the recent division in policy views. The Pound was unable to sustain the solid gains printed through the European session, suffering a significant slide as the North American session came to an end. Meanwhile, the Oceanic currencies went through a mixed-bag at an index level amid the lack of fundamental drivers other than the US-China trade headlines, which helped to cap the downside in the Aussie as the Yuan found buyers on dips. The renewed optimism plays into the view that the base case remains pricing for the US-China to eventually seal a deal. Lastly, the funding currencies (JPY, CHF) were both marginally weaker as the risk appetite recovered a tad even if we are far from blaring the trumpets on the trade front.

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.

Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.

Glass half-full in the US-China trade saga: Despite the topsy-turvy state of affairs in the US-China trade negotiations, the market is still giving the two nations the benefit of the doubt. A headline overnight by China's head trade negotiator Liu saying that he remains "cautiously optimistic" about reaching a trade deal lifted the mood, even if he also said to be “confused about US demands.”

China keeps hopes alive a deal is possible: The fact that China commerce ministry denied rumours about possible disagreements in trade talks as not accurate also provided a helping hand to the overall mood as Europe came online. Officials said US, China trade teams will continue close communications to conclude phase one.

China extends invite to US trade representatives: As the North American session came online, the WSJ was out with a piece on China reportedly inviting US trade negotiators for more face-to-face talks after a phone call between the two parties last week with Liu He extending the invite to Robert Lighthizer and Steven Mnuchin. The position by the US is that unless China addressed the US demands on IP protection, forced technology transfers and agricultura purchases, they may not be ready for the trip.

Dec tariffs likely to be delayed: A report by the South China Morning Post fueled the optimism further. It notes that even if there's no trade deal, Dec 15 tariffs will be delayed. The report reads: “There is still some optimism that a watered-down deal can be reached before new US tariffs go into effect on December 15, but even if the deal proves elusive, sources say it is likely they will be at least postponed.”

Will Trump go after EU auto tariffs? Politico reports that Trump considers new trade investigation to justify tariffs on EU. The article notes how Trump is toying with that possibility “as the window closes for hitting Brussels with automobile tariffs, according to multiple people briefed on the issue.”

ECB minutes calls for unity: The latest account of the ECB October monetary policy meeting was published, highlighting how important it is from here on out for the committee to stay united. The Central Bank outlined that “economic data raised questions as to whether weakness would continue for longer than anticipated during September meeting”, and that “there was wide agreement that more information is needed to reassess the inflation outlook and impact of ECB measures.” As per further clues on the course of policy settings, “there was a plea made for patience to let the September package do its job, suggesting a "wait and see" stance in the near term.

BOC Poloz tames near-term rate cut expectations: The market walked back the rising expectation of a BOC rate cut in December after BOC's Governor Poloz threw a curveball to those in the dovish camp. The key headline read that Poloz “thinks monetary conditions are about right”, implying that the Central Bank does not perceive just yet the case to lower interest rates. The Canadian Dollar recovered its early losses, which had been exacerbated at the margin by a poor reading in the Canadian ADP October employment, which came at -22.6K vs +28.2K prior.

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Recent Economic Indicators & Events Ahead

Source: Forexfactory
Professional Insights Into FX Charts

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During yesterday’s live streaming, I talked extensively about the analysis of market structure, hence why I want to focus in this domain in today’s report. First, let’s distill the current environment in the EUR/USD hourly chart. As the chart below illustrates, the pair is currently confined in a range worth 35 pips, with market makers in control of the extremes. By drawing a 100% projection target from the recent accepted top through the prior swing low, you’d notice the area where the EUR landed at as weakness settled in coincided with the 100% measured move but also an H4 demand area that had been previously partially absorbed.

A pair that is starting to show some cracks on its constructive hourly trend is the USD/CAD, marked down after the BOC Poloz speech on Thursday. The price landed at the previous resistance turned support, also aligning with the 100% measured move. It’s worth noting that the pair is also pulling back from a daily area of supply after a 3-leg upcycle, which shows potential maturity of the bullish cycle, reinforced by the decreasing length of each extension.

Lastly, the long EUR/JPY play on the basis of a ‘trapped traders’ pattern led to an eventual take off to the next logical area in the chart, that is, an hourly fresh supply imbalance. That area highlighted in the chart below in a white box marked the highest point for the day. Stay on alert to be on the lookout for these areas as they offer a blueprint to identify expected imbalanced.

Important Footnotes

• Cycles: 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
• Trendlines: Besides the horizontal lines, trendlines are helpful as a visual representation of the trend. The trendlines are drawn respecting a series of rules that determine the validation of a new cycle being created. Therefore, these trendline drawn in the chart hinge to a certain interpretation of market structures.
• 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

 

[IvanGlobalPrime]

Find my latest market thoughts

European FX Complex Sold On Recessionary Fears

The Pound, the Euro and the Swiss Franc, were the clear under performers in the last trading day of the week as the market prices in a deeper recession in the Eurozone area as evidence reveals the manufacturing slowdown is spilling over to the services sector. Is the Euro still a buy on dips technically speaking? Find out in today's report...
The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics - fundamentals and technicals - determine daily biases and assist one’s trading decisions.
Let’s get started…

• Quick Take
• Narratives in Financial Markets
• Recent Economic Indicators
• Dive Into Pro FX Chart Insights
• Educational Material

Quick Take

As we look back at the performance of the last week, the Japanese Yen and the US Dollar dominated the proceedings, with an exceptional guest as the Kiwi. In the case of the latter, it keeps drawing further buy-side interest as a sentiment play on the back of the RBNZ shift in policy by keeping its powder dry earlier this month against all odds. The story of USD strength is one seemingly characterized by the improvement of its fundamentals, as well portrayed by the pick up we saw last Friday in both the US Market PMI and the U Michigan consumer confidence. Meanwhile, the renewed selling pressure in global yields, with the US 30-year declining every single day last week, inevitably put too much of a stride to those long JPY. The drop in US yields is really telling us that the partial unwinding of the reflationary trade, one where the market envision growth and inflation picking up in tandem. Not an easy puzzle to solve while the game of brinkmanship between the US and China on trade leads to little clarity on what’s next. The Euro, which up until last Friday, had been one of the currencies leading the G8 FX complex, failed miserably to sustain the buying interest as EZ PMIs underwhelmed as fears build up that the manufacturing recession may be spilling over into the services sector. The Swissy was also hit by heavy selling pressure in a synchronized move with the Euro. However, the Sterling was by far the worst performer after the UK manuf and services data shocked the market, rising the chances of a rate cut by the BoE down the pipe. Lastly, the Canadian and Australian Dollar managed to pare some of the ample losses from earlier in the week, the former boosted by better Canadian retail sales numbers., while the Aussie sentiment picked up as Trump made the right type of noise in the US-China trade saga even if there remains no meat in the bone but rather still plenty of ambiguity.

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.

Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.

Manufacturing recession spilling over to services: The raft of PMI releases in the Euro zone left the impression that the lay of the land in the manufacturing sector remains very weak, but even more alarming, it looks like the fragile state of the manufacturing sector is now spilling over into the services domain. which is not going to contribute in any way, shape or form for the ECB to detach itself from its clear dovish stance. In Germany, where the manufacturing print improved, it was offset by a miss in the services too.

The British recessionary reality sets in: The UK PMI’s (manuf and services) came significantly weaker than expected at 48.3 and at 48.6. respectively, which downgrades further the outlook for the UK Q4 GDP figures. The Pound saw major selling pressure after the release of the figures.

Lagarde calls for deeper fiscal integration: The new ECB President Lagarde continues to call for a mix of policies, very much in line with Draghi’s view, in which fiscal stimulus play a more important role as part of the existing monetary policy framework. What’s more, Lagarde announced a strategic policy review of the ECB’s objectives and tools, the first one in 16 years, which solidifies the idea that there are some big changes in the making.

Canadian data lowers Dec rate cut odds further: Canada’s September retail sales came negative at -0.1% but not as bad as feared (-0.3%). It was the first decline in three months (after revisions). The report will add upward pressure to the Q3 growth reading this coming Friday and solidifies the notion that the BOC will not take any hasty decision in cutting interest rates in December in line with the latest speech by Governor Poloz, in which he implied that the monetary policy setting is about right at this stage while awaiting more data.

US PMI comes upbeat: The US Nov prelim Markit services PMI came better-than-expected at 51.6 vs 51.0, while the manufacturing was 52.2 vs 51.4 expected, a seven month high. The official report by Chris Williamson, Chief Business Economist at IHS Markit, noted “The flash PMI adds to evidence that the worst of the economy's recent soft patch may be behind us. Output of the combined manufacturing and service sectors rose in Nov at the fastest rate since July, spurred by improved inflows of new business.”

US consumer sentiment the icing on the cake: Adding to the positive US fundamentals, the US U Mich November final consumer sentiment index jumped to 96.8 vs 95.7 expected, which should be seen as a good sign for the underlying economy, reinforcing the idea that the Fed will be on wait and see for the foreseeable future.

Trump talks up trade as usual, stocks like it: US President Trump managed to boost stocks by massaging the semantics around the US-China trade talks by noting that a deal with China 'potentially very close'. The comments by Trump were as follows: "We have a deal potentially, very close, he wants to make it much more than I want to make it, I'm not anxious to make it.”

China makes a good-will gesture: In what looks like an attempt by the Chinese government to relax the tensions with the US by addressing one of the main sticking points in the trade talks, it announced that it will increase the penalties for those that violate intellectual property rights, while also looking to lower the thresholds for criminal punishments related to IP thefts.

German IFO eyed: The German IFO will be released today, with the market deeply fixated in the outcome of it following the miss in Friday’s PMIs. The more evidence that the manufacturing recession is spilling over into the services sector, the more sell-side pressure the EUR should suffer.

Powell takes the stage: Fed’s Chairman Powell is due to speak on “Building on the Gains from the Long Expansion” at the annual dinner for the chamber of commerce. It will be interesting to see the remarks by Powell and whether or not he can reveal some new inputs following the meeting with Trump, in which the President kept his criticism about the elevated interest rates in the US vs other developed nations.

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Recent Economic Indicators & Events Ahead

Source: Forexfactory
Insights Into FX Charts

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As a new week gets underway, my current exposure is nill following my latest trades on the EUR/JPY and CHF/JPY, both ending in break-even outcomes. I want to point out that in hindsight, I miscalculated the placing of my take profit target in the EUR/JPY, I was too aggressive above a level of strong supply. If I had adjusted the take profit a few pips lower, I would have collected a solid 2:1 risk reward trade. See below the trade I refer to.

After the Sunday prep, I include below the trade ideas I am pondering, which as usual, get to be re-assessed based on technicals and fundamentals on a daily basis.

The are 3 positions in particular that should volatility return early in the week, have a higher chance of being filled given the proximity of the current market pricing. I am referring to the EUR/USD, about 45 pips away from a long entry, and then CHF/JPY long and NZD/USD short, both at roughly 70 pips away from where market is exchanging hands now.

Detailing my thinking process one by one in these markets is what follows. Firstly, in the EUR/USD, I aim to be filled at 1.0975 as that’s an area where huge confluence exist. Not only comes at the juncture of a fresh demand off the daily, but the 100% measured move comes at the exact same level, further solidifying the levels as an area rich in liquidity. This is also a position that would be playing into the view of my long outlook in higher timeframes, based on a break of structure in the weekly and a bullish outside candle in October still to play out.

What caught my attention during this Sunday’s prep in the CHFJPY market is twofold. Firstly, in a context of a bullish market structure in the weekly, I’ve identified where the convergence of fresh demand off the H4 coupled with a 100% measured move after the breakout of the range should increase the likelihood of a response in the 108.25-30 vicinity.

Lastly, a short limit order in NZD/USD. What led me to look for short exposure in this market is the following rationale: The weekly remains in a clear downtrend as per the market structure with lower lows and lower highs with resistance at 0.6480-85. If I then go down to the H4 timeframe and I draw the 100% measured move from the last 2 bracketed areas, notice the projection target for longs is somewhere between 0.6475-80. Plus, right above this level at 0.6485 we find a fresh level of supply on the H4 dating back from August 8th, with the major 0.65 psychological number adding further technical protection to place the stop.

Important Footnotes

• Cycles: 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
• Trendlines: Besides the horizontal lines, trendlines are helpful as a visual representation of the trend. The trendlines are drawn respecting a series of rules that determine the validation of a new cycle being created. Therefore, these trendline drawn in the chart hinge to a certain interpretation of market structures.
• 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

 

[IvanGlobalPrime]

Find my latest market thoughts

NZD Remains The Darling Of FX In November

The New Zealand Dollar, and most recently the British Pound, are the two currencies outperforming the rest of the G8 FX, with the USD following closely behind. Can these trends be sustained? The fundamental data in New Zealand keeps backing the NZD trend for now, while it's all about the UK general election for the GBP. Find out the latest headlines and G8 FX ebbs and flows in today's report.

The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtubeweekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics - fundamentals and technicals - determine daily biases and assist one’s trading decisions.
Let’s get started…

• Quick Take
• Narratives in Financial Markets
• Recent Economic Indicators
• Dive Into Pro FX Chart Insights
• Educational Material

Quick Take

Monday’s limited ebbs and flows keep proving that the GBP, emboldened by UK polls, and the NZD, catapulted by the local data and lingering RBNZ outcomes effects, remain the darlings of FX. On the other side of the spectrum we have the Aussie, depressed near its monthly lows at an index level as the market has rolled back expectations of a neutral RBA. If you are trading the Aussie, today’s speech by RBA Lowe on ‘Unconventional Monetary Policy” should definitely be on your radar as a must follow event since it has the potential to inject decent vol. The USD keeps grinding higher but at a rate of change that is far from encouraging, even if that’s been sufficient to make good progress against the Euro, which remains on a weak path for the last 2 days as the 1.10 round number gets retested once again. The Canadian Dollar, the Japanese Yen and the Swissy saw modest flows, primarily sell-side dominant, with the exception of the latter, which found better buying conviction as the North American session came online. If one understand where the Swissy index trades at, you would not be surprised (more on the charts section).

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.

Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.

Optimism in the US-China trade deal returns: The market is back to pricing in a near-term resolution in the US-China Phase One trade deal after the Global Timesnotes “China and US are very close to sealing the Phase One deal. The tweet read: “Contrary to negative media reports, China and the US are very close to the phase one trade deal, and China remains committed to continuing talks for a phase two or even a phase three deal with the US, on equal footing, experts close to the Chinese govt told GT."

US-China Phase One around the corner? China’s Global Times reports that both countries have basically reached a broad consensus on phase one deal, citing experts close to the talks. "The two sides have basically reached broad consensus for the phase one agreement," Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing who is close to the trade talks, told the Global Times on Monday, noting that the two sides are still moving closer to reaching a phase one deal soon, unlike the "contradictory information" in the media reports.

China makes the right noises: As a reminder, over the weekend, China made a positive move in the negotiations by extending a good-will gesture by which the government attempts to address one of the main sticking points in the trade talks, that is, IP rights/thefts. China announced that it will increase the penalties for those that violate intellectual property rights, while also looking to lower the thresholds for criminal punishments related to IP thefts.

US stocks keep thriving: The US equity market continues to thrive with the S&P 500 up 23 points to a new record close of 3133, with the Nasdaq and Dow Jones following suit. Meanwhile, the appetite towards fixed-income doesn’t recede, sending conflicting signals. The expanding divergence between the S&P 500 (rising) and the US 30-year bond yield (falling) communicates a market not convinced that the reflationary environment (higher growth, higher inflation) can materialize. When that’s the premise the market telegraphs through yields, the carry trade won’t thrive unless the rising of stocks is accompanied by a sell-off in bonds that leads to an adjustment higher in yields.

German IFO stabilizes at very low levels: The much-awaited Germany November Ifo business climate index came flat-lined at 95.0, which was bang on expectations, even if the readings remain very low in line with the recessionary environment. It’s difficult to have a relevant takeaway when there is no divergence in the data. If anything, it reinforces the notion that while the German economy remains stuck, there is tentative evidence of some stability in sentiment.

GBP demand after the weekend polls: The latest weekend opinion polls show the Conservatives gaining further ground vs Labour ahead of the Dec 12 General Election, which would translate into an 80-seat overall majority for the Tories. The Pound saw major gains for the day on the back of the news. However, there is reason not to be overly excited as the latest UK election poll by ICM/Reuters released on Monday led to a quick intraday setback off the highs in the Pound as the Labour lead narrowed down to just 7 points. Conservatives at 41% and Labour at 34%.

ECB’s Lane hints CB can still be creative: ECB's Chief Economist Lane spoke in London, noting that all the Central Bank instruments can be adjusted if outlook worsens. The policy maker said that the ECB is going to be in the bond market for a long time. When asked what the ECB would do if inflation outlook worsens, said “the best guide might be what they did is September, a little bit of everything.” Lane admitted that the Asset Purchase Programme (APP), broadly known as QE, has constituted an effective tool worth roughly 100bp through the lowering of the sovereign ten-year yield.

RBA Lowe speech major focus for AUD traders: RBA Governor Lowe is due to speak on ‘Unconventional Monetary Policy: Some Lessons from Overseas” at the annual ABE Dinner. The speech by Lowe will follow an early one by Deputy Governor Guy Debelle, who is speaking on “Employment and Wages”. As the NAB Strategy Team notes: “Dr Lowe’s speech will provide an opportunity to outline the RBA’s view on various unconventional policy options and, perhaps, at what point the RBA thinks such a programme would be warranted. The Governor's comments to date suggests his preference is for QE in the form of buying government bonds, and not – unlike what the RBNZ has said to date on the topic – negative rates, described as being ‘very unlikely’.”

NZ retail sales for Q3 overwhelmed expectations: New Zealand retail sales ex inflation for Q3 came much better than expected at 1.6% vs 0.5%, which only reaffirms the outperformance of the Kiwi as the lingering positive sentiment on the back of the RBNZ holding rates extends further. For those trading the Kiwi, RBNZ Governor Orr will hold a press conference about the financial stability report on Wed morning.
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Recent Economic Indicators & Events Ahead

Source: Forexfactory
Professional Insights Into FX Charts

If you found the content in this section valuable, give us a share by just clicking here!

Amid the relatively slow movements in G8 FX, today’s analysis will be centered around the G8 FX indices as to understand where we stand in the overall ebbs and flows.

The EUR index has recently been under the cosh, rejected away from the 50% retracement or midpoint of its broad range with potential to move lower from here for a retest of support.

The GBP index keeps pressing higher towards the top end of its range. The breakout into marginal new highs mid Nov has been followed by dip buying activity yesterday, reinforcing the notion that the last bullish leg formed has drawn enough buy-side interest to keep extending.

The USD index has stalled at a previous horizontal level of support turned resistance, with a second retest of the level currently underway. A decision for a fresh directional bias at this point is expected, either is sellers regaining the upper hand or an extension into weekly supply.

The CAD index continues to be technically challenged by the successful rotation to the downside see earlier last week, which implies that any rebound into the resistance line as seen, or as the pricing goes deeper, will see the threat of trend traders looking to jump in for a resumption of the bearish tendencies. There are two clear areas of supply on the daily to take note.

The NZD index keeps heading higher but a warning must be given. The currency is now entering what back in Sept constituted a strong supply area based on the departure we saw. Caution is warranted as the impulsive sell-off back then is no met with the same type of strong flows. If the NZD were to suffer from a setback in its momentum, this is an ideal area to sell into.

The AUD index has stalled its descend at the origin of a demand area in the daily, resulting in a week-long distribution of prices ahead of the next fundamental catalyst. Today’s RBA Lowe speech on unconventional policies could be the mover we’ve been waiting for.

The JPY index failed for a second time in a row at the same equal high, an event that could unleash further sell-side pressure for a retest of the previous low, which as a reminder, should keep seeing buy-side pressure as it intersects with a weekly demand.

The CHF index sold quite aggressively from its fresh month highs, currently retesting its previous swing low, an area that is likely to attract buying interest as it gets tested for the first time after the very successful rotation we saw in price 2 weeks ago. The level also coincides with an area of weekly demand, further reinforces the potential buy-side opportunity.
Important Footnotes

• Cycles: 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
• Trendlines: Besides the horizontal lines, trendlines are helpful as a visual representation of the trend. The trendlines are drawn respecting a series of rules that determine the validation of a new cycle being created. Therefore, these trendline drawn in the chart hinge to a certain interpretation of market structures.
• 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

 

[IvanGlobalPrime]

Find my latest market thoughts

Low Vol FX Detaches From Trade Noise

The state of affairs in the FX as Nov comes to an end remains relatively quiet with volatility rather suppressed while equities in the US keep making record highs. The Kiwi remains the main contender to end the month in top position, while the CAD keeps fighting back. The USD and the EUR are compressed in limited ranges.

The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics - fundamentals and technicals - determine daily biases and assist one’s trading decisions.

Let’s get started…

• Quick Take
• Narratives in Financial Markets
• Recent Economic Indicators
• Dive Into Pro FX Chart Insights
• Educational Material

Quick Take

The volatility in Forex remains quite compressed, with the positive soundbites in the US-China trade talks, not really providing the stimulus necessary to see a stronger commitment of capital into the currency market. It appears as though equities are still the main destination to express an opinion, which continues to be, the market sees a glass ¾ to almost full as an analogy of the chances that the US and China will ultimately sign the phase one deal, which is most likely going to include a generous roll back of the existing tariffs. So, while vol remain low in the USD, EUR, CHF amid the lack of fresh fundamentals to re-examine valuations, there are a few currencies that continue to show interesting price action. These currencies are, unsurprisingly, the ones where Central Bank have recently made some noise. Firstly, on the back of the RBNZ shocker earlier this month (kept rates steady), a healthy dose of vol remains in the NZD as traders exploit the bullish sentiment as the short-side exposure keeps unwinding. The CAD keeps regaining ground with solid vol intraday after last week’s BOC Poloz threw cold water into the prospects of a rate cut in December. Another currency that saw a brief spell of vol intraday in the last 24h was the Aussie as the RBA Boss Lowe updated the market on the chances of QE. The net effect, I must say, was quite neutral as the market realizes that we are still a long shot away from any QE-related scenario to become a hot topic yet. Meanwhile, the GBP slid from its weekly high on a setback in UK polls for the interest of the Conservatives. it's been all about sentiment trading in the GBP . Lastly, the JPY remains on the back-foot as equities keeps soaring.

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.

Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.

RBA Lowe not to consider QE until 0.25% interest rate: RBA Governor Philip Lowe, in a much-awaited speech, which has been made available via the RBA website, said it is unlikely that Australia gets to the point where it needs QE, but if it were to happen, it wouldn’t be considered until interest rates got down to 0.25%. Lowe recognized that may come a point when QE would help but I "don't expect us to get there."

RBA remains a long way from resorting to QE: Note, the market is pricing in another 25bp rate cut for the next year while the 0.25% threshold Lowe mentions is still 50bp away, hence why the prospects of QE in Australia do not represent a short-term focus for the market until at least mid to late next year. Lowe said, should the RBA need to resort to QE, it could include the purchase of state government bonds. Bottom line, “we are still a long way from QE happening in Australia”, citing Lowe here.

GBP under pressure as Tories lead narrows: The pattern we began to see emerging earlier this week, that is, Labour starting to improve in the polls, continues to play out. In the latest UK election polls, conservatives stand at 43% (-2), Labour 32% (+5), according to Kantar poll. A tighter race implies a lower GBP. Analysts appear to be justifying the step back by the Tories in response to the general population feeling slightly disheartened by the release of a more reserved than expected election manifesto by Tories.

US-China deal getting closer: According to a report by Politico, a China deal is getting closer following a call yesterday between top deputies. The report details that China is expected to give concessions on IP and that the sides aren't too far apart on which tariffs will be removed and when. Politico adds: “There was a call between the main players Monday night (USTR Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He) so at least talks are continuing toward some type of announcement. Still no word on when it would take place.”

Trade ball in US’ court: Another report by the Global Times also carries a positive tone. The article cites experts saying that “the phone call sends positive signal, but the ball is in US’ court to make reasonable compromises on tariffs, including a proportional removal of tariffs.

China feeds into the positive trade rhetoric: A statement released from the Ministry of Commerce notes that “both sides achieved consensus on properly addressing relevant issues and agreed to maintain contact over the remaining issues…” The topics thought to have been discussed, according to an expert close to the trade talks included “tariff removals, agricultural purchases, a review mechanism for the implementation of a potential agreement as well as arrangements for a face-to-face meeting.”

US data a mixed-bag: In terms of US data, we saw a busy calendar. Overall, the data came quite mixed. The US consumer confidence came weaker than expected, printing a fourth consecutive month of declines even if it originates from very elevated levels. New home sales were very solid, with the back-to-back increases the best we’ve seen in more than a decade as low interest rates continues to support this category, even if the role it plays in the GDP is limited. Meanwhile, US October advance goods trade balance narrowed to -$66.5B vs -$71.0B economists called for. It is expected that Tuesday’s data will contribute positively to the Q4 growth numbers.

US equities unstoppable: The lay of the land in the equities space remains supportive for beta-currencies (AUD, NZD, CAD), as long as these are not influenced by fundamental factors as was the case in the AUD where the ebbs and flows were subject to RBA’s Lowe speech on Tuesday. The rise in equities in the US, with the S&P 500 making fresh record highs is driven by the injection of fresh liquidity into the system and a market that keeps pricing in a positive resolution of the phase one deal.

US yields send conflicting signals: On the contrary, the US long-term yields are telling us the market is not buying into the reflationary trade environment, which puts a cap on how much deterioration we can see in funding currencies as lower bond yields (US 30y as benchmark) indicates that the bond vigilantes are not expecting inflation nor growth to materialize in a meaningful way.
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Recent Economic Indicators & Events Ahead

Source: Forexfactory
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The EUR index portrays limited flows hitting the currency is the last 24h. Within this context of slow movements, it’s been predominantly dominated by buyers. The push away from 1.10 in the EUR/USD comes a long way to explain why the EUR is finding renewed buying interest. However, at an index level, it really remain unclear which way we go from here as the index is far from testing any relevant confluent area on the daily via supply/demand or support/resistance.

The GBP index saw sellers step in, which makes the conditions in the currency return to a range-bound state as opposed to the now fading possibility that the Pound can develop a fresh uptrend at an index level. This scenario is hard to see materializing ahead of the general election unless the UK polls see the Conservatives extending the lead significantly in the coming days. If anything, the pattern we are seeing is Labour gaining back a bit of ground. This should put the odds for the GBP to continue being encapsulated in familiar ranges.

The USD index continues to struggle at a key level of resistance in the daily. The price action we are seeing in the world’s reserve currency embodies perfectly the low volatility in Forex amid the lack of fresh top-tier economic events and lack of breakthrough in the US-China trade talks. The sticky resistance the index is facing at this juncture, a point where one could anticipate the sell-side orders in the USD to have picked up, may also contribute to the low key affair so far.

The CAD index found enough buying interest to end as the top performing currency on Tuesday, even if one must be aware that the index is now heading straight into the origin of a supply imbalance area where I’d expect sellers to potentially regain the upper hand. It is unlikely that the currency guns through this area without a major fight by sell-side actors. Looking to pair the CAD, soon expected to face sell-side pressure, against a currency that may find strong bids, such as the CHF based on the level it trades at, could be a sensible strategy to consider.

The NZD index remains the currency attracting the steadiest demand flows, with the campaigns to be a buyer of the Kiwi coming to life after the RBNZ held rates unchanged and led to a major re-assessment of an overly committed market to short-side exposure. All the technical evidence visible in the index chart tells us the way to go is higher, hence why the NZD should continue to be a market one can look to exploit to the long side vs the weakest peers.

The AUD index is yet to find a resolution from its existing distribution phase. That said, it’s important to understand that the current range occurs after the price stalled at a key demand area in the daily as per the strong departure back on Oct 16th. This is a pristine area to initiate a fresh buy-side campaign by large accounts and see a potential rotation back up. This scenario will be negated should the market managed to consume this demand. Note, the bottom-side tails every time there has been an attempt to enter the zone suggests strong buy interest.

The JPY index found a double top after the print of equal highs and it has now rolled back down, in a move that threatens to revisit the most recent lows. If you are a buyer of JPY, be aware that it is not a positive sign when you see the index failing at the same level for two times in a row, as that communicates a debilitating technical picture. There is no technical support in the index until the market retests the recent lows, about 0.5% away from the current pricing.

The CHF index is at a crossroads as it comes into contact with a key support level after a successful rotation to the upside. Whenever that happens, this is a potentially premium area from where to initiate buy-side campaigns at the most attractive level to accomplish the best risk reward scenario. One just needs to find what currency may face the most supply based on the ebbs and flows anticipated, with technicals helping us to decipher that. As I mentioned, the CAD could soon be a candidate. Watch out CAD/CHF shorts opportunities.
Important Footnotes

• Cycles: 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
• Trendlines: Besides the horizontal lines, trendlines are helpful as a visual representation of the trend. The trendlines are drawn respecting a series of rules that determine the validation of a new cycle being created. Therefore, these trendline drawn in the chart hinge to a certain interpretation of market structures.
• 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

 

[IvanGlobalPrime]

Find my latest market thoughts

Spell Of Risk-Off As Trump Signs HK Bill


There has been a sudden change in behaviour following the news that Trump signed a controversial HK bill that supports protesters in what represents a gross offense in the eyes of China. As a result, risk-sensitive assets the likes of Gold, the Yen or the Swissy caught a strong bid as the ramification could be a setback in the trade talks. Find out what's the state of affairs in FX by reading today's report.

The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics - fundamentals and technicals - determine daily biases and assist one’s trading decisions.

Let’s get started…

• Quick Take
• Narratives in Financial Markets
• Recent Economic Indicators
• Dive Into Pro FX Chart Insights
• Educational Material

Quick Take

The rare dynamics of trading the forex market based on hard data as market reacted positively to upbeat US core durable goods and US growth figures, while the US-China trade headlines were put on the back-burner, ended the moment news broke out that US President Trump signed the HK bill. Remember, this bill supports protesters in HK and the immediate reaction of the market has been to price the risk of retaliation by China as it’s plausible to expect that this act of formalizing the HK bill may potentially derail some of the progress made in trade between the US and China, which the stock market has priced to perfection. The Yen, Swissy and Gold were bought off the lows, even if the net effect when accounting for Wednesday’s groovy vibes is still negative. The Pound remains trading at the tune of its own drums, emboldened by the latest YouGov survey, which predicts a big majority for Tories in the upcoming UK general election. The Australian Dollar and New Zealand Dollar, as the market discerns the implications of Trump signing the HK bill, were taken to the woodshed, which clearly portrays the risk of China retaliating in some way. Lastly, the USD and CAD, are both unfazed so far by the worsening of the risk profile in the market. Remember, it’s going to be a long weekend in the US markets in celebration of Thanksgiving and Black Friday.

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.

Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.

GBP boosted by UK poll of polls: The Sterling keeps finding further bullish momentum after the latest YouGov MRP model, which has been drawn from a 50,000 strong survey panel, predicts a big majority for Boris Johnson in the upcoming UK general election. Even before the news broke out, Cable had been on a steady rise after a Tweet from Labour activist and Guardian Journalist Owen Jones speculated, citing a reliable source, that the YouGov survey would show a significant Tory majority.

Trump signs HK bill: In breaking news that just crossed the screens, US President Trump has signed the bill in support of Hong Kong protestors, leading to an immediate shift in market sentiment, with the usual suspects (Gold, Yen, Swissy) all bought while the Aussie and Kiwi suffer the most.

US data set the tone on Wednesday: Before Trump signed the HK bill, there had been a rare shift in dynamics whereby the market, for once, moved away from trading based on US-China trade headlines and instead behaved positively in response to encouraging US fundamentals. The US data includedOctober preliminary durable goods orders at +0.6% vs -0.9% exp with Capital goods orders non-defense ex air +1.2% vs -0.2% exp. Besides, the US Q3 GDP second reading was also revised higher at +2.1% vs +1.9% exp.
Seldom tranquility, it didn’t last long: As said, prior to the HK bill signing, there hadn’t really been any major headlines crossing the screens and making unnecessary noise in the US-China trade talks. However, it didn’t make a difference to the US stock market, which remains incredibly steady making fresh all time highs as it taps into any excuse to justify the hefty levels. This time, the S&P 500 kept the momentum as US data came much firmer-than-expected.

Beige book outlines solid economic outlook: According to the latest B
eige Book in the US, activity expanded modestly from October, outlining that the outlook going forward remains generally positive. Employment continued to rise slightly overall even as labor markets remained tight across the country. Vast majority of 12 districts continued to note difficulty in hiring workers. In terms of inflation in wages, it noted that wage pressures rose at a modest pace, while stable to moderately growing consumer spending and increases in Auto sales and tourism were seen across several districts.

BOJ keeps market in-check: BOJ member Sakurai warned that if the Japanese economy keeps weakening, there will be a need to prepare for further easing. Remember, the toolbox by the BOJ is pretty much empty after deploying very aggressive easing programs over the years, including a radical approach to control the yield curve in order to re-calibrate banks’ profitability. By simply jawboning the possibility, they are keeping the markets in-check.

Westpac calls for QE in Australia by H2 2020: The Economics team at Westpac updated its outlook on the RBA, now expecting the bank to cut the cash rate to 0.25 by June 2020, with QE to follow in H2 2020. The news led some selling pressure in the Australian Dollar even if it remained rather moderate in the big picture, as the topic of QE won’t fully take center stage until the market starts pricing in 2 new cuts in the next 12 months, which implies further deterioration in the Australian data. For now, the market is only assuming that another 0.25bp rate cut will be necessary by the RBA. If QE were to come, it would largely be centred around the purchase of Australian government securities.

Pressure to make a trade deal with the US mounting: China's industrial profits data showed a 9.9% fall y/y in October, adding to the previous two months of declines. The reading is a dramatic fall and the worst printing seen since 2011. China's NBS senior statistician Zhu Hong said: “The fall in profits was mainly attributable to an expanding decrease in producer prices for manufactured goods, slower production and sales growth.” The line of thinking is that the worse the Chinese data comes, the more pressured the government is going to be to formalize the Phase One trade deal, still being negotiated.

US markets closed due to Thanksgiving: Remember, trading for the rest of the week will be much more choppy, in theory, as the market heads into a much thinner liquidity period due to the closure of US markets in celebration of Thursday’s Thanksgiving, with the stock market also closed early for Black Friday.

Aus Capex up next: Today’s calendar only sees two events of relevance. Firstly, there is likely to be a response by way of increased vol in the NZD based on the ANZ Nov Activity Outlook, while in Australia the Q3 Capex is due, expected to show a slowdown.
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Recent Economic Indicators & Events Ahead

Source: Forexfactory

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The EUR index remains incredibly quiet with absolutely nothing new to report. The dullness in trading the currency is well portrayed by the level the index trades at, in what I consider to be no man’s land, between the midpoint of a broad range and the bottom of it. It is very unlikely that the equable trading conditions in the EUR will change in the short-term as there is a lack of stimulus, especially in the next few days as we head into a long weekend in the US.

The GBP index is definitely much more alive, to the point that a new milestone has been achieved in the currency by breaking into fresh highs at an index level. The latest YouGov MRP model, one of the most reliable to abide by given the size of its sample, calls for a big majority for Boris Johnson in the upcoming UK general election, and since we are trading opinion polls in the Pound for quite some time, this has given the Sterling a major boost. The trend is your friend in the GBP, in other words, core longs is the safest bet as technicals stand.

The USD index, despite going through a positive path of domestic data, remains unable to break a sticky resistance right overhead. Until the area is cleared, one should remain cautious on the outlook for the world’s reserve currency. Remember, you want to align fundamentals, which are currently improving in the US, with a concurrence of technicals.

The CAD index finally made it all the way to poke into the origin of a huge supply imbalance area in the daily chart, from where the clustering of offers has blocked further progress. The easy gains in the currency have been made with the risk of a setback a clear risk now that the daily area of supply has taken control of the proceedings. The next key event to inject volatility into the Canadian Dollar will be Friday’s Canadian GDP.

The NZD index has been on a tear and while Wednesday’s price action reflects the early stages of a potential exhaustion, we are far from this signal being validated. All the bearish pin bar communicates, based on where it has occurred in the index chart, is that some profit-taking may have kicked in as the market took profits by closing juicy profits ahead of the holidays. In the grand scheme of things, as in the case of the GBP, this market is a buy on dips.

The AUD index continues to be pressured as the change of heart by Westpac is an opinion the market cares to hear, leading to an extension of the decline, even if it’s going to represent a challenge to break the current area of demand (origin of a strong departure Oct 16). To make matters worse, the signing of the HK bill by Trump has exacerbated the pain for the AUD, which finds itself caught in a bearish storm as China may soon retaliate this action.

The JPY index has been emboldened in early Asian trading after Trump signed the HK bill. This event can potentially have major ramifications for the prospects of the US-China trade deal as it will without a doubt anger the government of China. The market’s immediate reaction to buy the Yen is a foretelling sign that the risk of a setback in the US-China trade has increased. So, despite the weakness seen in the Yen, one cannot forget that the overarching theme for the market is the US-China trade sage, hence as a sentiment trade, looking to buy Yens off these lows makes an awful lot of sense if the risk-off settles in heading into this Friday.

The CHF index is another market that faces relatively solid prospects of appreciating from here on out should the risk profile continue to worsen. The Swissy has landed into a major level of horizontal support after achieving a successful rotation in its latest upcycle, which makes it a very interesting proposition looking to engage in buy-side campaigns. The risk to reward is quite attractive from a technical standpoint, with the backing of the risk profile also in favor now.

Important Footnotes

• Cycles: 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
• Trendlines: Besides the horizontal lines, trendlines are helpful as a visual representation of the trend. The trendlines are drawn respecting a series of rules that determine the validation of a new cycle being created. Therefore, these trendline drawn in the chart hinge to a certain interpretation of market structures.
• 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

 

[IvanGlobalPrime]

Find my latest market thoughts

Bearish Reversal In the US Dollar, More Weakness To Come?


The EUR index shows the potential to be targeting higher pools of liquidity after the abrupt reversal on Friday, while the USD index is at risk of an extension back down as the price poked unsuccessfully into an area rich in liquidity at an index level. Find out the most relevant thematic in Forex and the outlook in G8 FX by reading today's report.

The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics - fundamentals and technicals - determine daily biases and assist one’s trading decisions.

Let’s get started…

• Quick Take
• Narratives in Financial Markets
• Recent Economic Indicators
• Dive Into Pro FX Chart Insights
• Educational Material

Quick Take

The month of November can now be stared from the rare mirror. It was a month that saw the New Zealand, the Pound and the US Dollar as the indisputable outperformers, with the latter displaying a steady bid tone since half way through the month, while the former saw more volatile moves, especially the Pound as poll sentiment ruled. The clear underperformer by the end of a rather lethargic month in the overall G8 FX volatility picture was the Aussie as disappointing domestic data combined with a more dovish stance by the RBA in its minutes + RBA Lowe speech did the rest to keep the sell-side pressure unabated. The risk-off associated currencies (Yen, Swissy) did poorly in a month that saw fresh record highs printed in the three benchmark indices in the US (Nasdaq, Dow, S&P 500) as the market sees the US-China trade sage as a glass half full. Lastly, sandwiched in the middle of the performance chart for Nov we find the Euro and the Canadian Dollar, even if my technical analysis suggests the fortune of the EUR might look brighter as we head int December. Find out more about my outlook by checking the chart insights section.

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.

Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.

Chinese data upbeat: China’s weekend official PMIs for Nov were a pleasant surprise, lifting the AUD and NZD at the open of trading in Asia. The manufacturing PMI showed a reading of 50.2, which represents the first expansion since April this year, while the services (non-manufacturing) stood at 54.5 vs 53.1 expected, marking the highest since March this year. The important private survey (Caixin / Markit) PMI on Monday also came upbeat at 51.8 vs 51.5 expected, marking the fouth consecutive reading above 50

Oil under the cosh: Oil suffered a major fall of over 5% on the back of Russia's Novak reluctance to make a decision regarding the OPEC+ supply cuts extension until April, which means expectations to announce an extension when they meet this week have been upset now. Media is also reporting that Saudi Arabia would not be in a position to commit either to reduce its own production in an effort to offset the breach of agreed thresholds above-quota production levels from others in the group.

Canada's Q3 GDP solidifies BOC rate on hold: Last Friday’s Canada Q3 GDP came bang-on expectations at +1.3%, which should reinforce the notion that this week’s BOC policy meeting will not offer any major surprises in the way of an unexpected rate cut. The market has been walking back a rate cut odd this Dec.

A bullish story line in the Sterling: GBP has opened gaping down a new week as weekend polls point at a narrowing lead by the Conservative. In four out of the five publicly available polls, the Labour has gained marginal ground, even if the price action in the Sterling is clearly telling us, alongside last week’s UK Gov poll, that the core view remains this is an election with a clear risk of Labour obtaining a majority. By following the trend in GBP, the market is telling us the real verdict so far.

The Kiwi remains on fire on positive local news: NZD, on the contrary, has gaped up after interbank bids overwhelmed temporarily following news that NZ Finance Minister Robertson signals “significant” fiscal package. The Finance Minister flagged extra spending in infrastructure in the short to medium term as part of his speech to the Labour Party's annual conference in Whanganui. "We are currently finalising the specific projects that the package will fund but I can tell you this - it will be significant."

Forex back to business as usual post Thanksgiving: The liquidity machinery is set to return to normal ‘Monday’ levels following the rather subdued activity seen over the last 48h due to a long weekend in the US markets due to Thanksgiving. Volatility was nonetheless overserved in the Greenback and Euro market to end the month, with the former hitting a six-week high at an index level before sellers stepped in. Overall, November was a solid performance month for the interest of those long the USD.

Merkel's coalition government in shaky ground: In Germany, Merkel’s Coalition party is under threat as the newly elected SPD leaders are pondering to no longer support the coalition. Both, Norbert Walter-Borjans and lawmaker Saskia Esken, the new party leaders, are known to be critics of the government’s policies. A position that was once again reflected in the victory speech, after Walter-Borjans asked Merkel that it was time to review the government’s balanced-budget policy stance. A vote will be cast next weekend to decide if the SDP remains in government as part of their annual convention.

Key events up next: There are a few events to highlight early in the week, including the Caixin manufacturing PMI in Asian this Monday (released), followed by final EZ PMI readings, a testimony by the new ECB President Lagarge in the European Parliament, and to top it off, we have the US ISM Manuf PMI, expected to still come at a recessionary reading sub 50.00. On Tuesday, the RBA monetary policy decision will be the event set to inject the most volatility, in the case to the Aussie.

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Recent Economic Indicators & Events Ahead

Source: Forexfactory
Professional Insights Into FX Charts

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.
If you found the content in this section valuable, give us a share by just clicking here!
The EUR index shows the potential to be targeting higher pools of liquidity after the abrupt reversal on Friday. There are a few bullish components allowing to sustain this view. Firstly, the price action itself (bullish outside day) engulfing the last weekly range. Next, the aggregated tick volume on the latest swing low portrays a display of poor commitment by sellers. Also note, the liquidity available at the bottom side was grabbed through the second week of Nov - no longer there - combined with a 100% measured move, an area where a trend reversal may play out.

The GBP index remains in bullish price delivery dynamics with the daily structure backing up this premise, as is the fact that the latest swing low found equilibrium at the 50% retracement, which validates the notion of a market symmetries for an eventual follow up continuation. The two small body candles in the last two days also hints a pick up in vol come Mon/Tues. If the bullish scenario plays out, I am looking at a leg in the tune of 1.3-1.4%.

The USD index is at risk of a reversal back down as the price poked unsuccessfully into an area rich in liquidity where buy stops in USD pairs would have been placed before institutional activity at an order block in a yellow rectangle was tested and sell pressure kicked in. Notice the rejection occurs at the 50% equilibrium area from the last swing low extension, which makes this an ideal area to get a fresh sell-side campaign in the USD underway. Also note, the grinding upward trajectory over the last week was on tapering buying volume (bearish sign).

The CAD index is faced with bearish prospects from an order flow standpoint as the origin of a supply area is now being worked out. I am expecting this bracketed imbalance area to eventually result in the price taken back down to breach the double bottom, which will provide the liquidity pool necessary for the smart money to find enough counterparties to close shorts. Besides, the transition from lows into the supply zone has come on a tapering of volume too (bearish). Remember, we will have the BOC policy decision acting as a price shaker on Wed.

The NZD index shows that its path of least resistance is clearly to the upside with room for another 0.5% appreciation until a level of confluence will act as an impending technical roadblock to most likely deprive buyers from further upside extensions. Until this topside point of interest comes into contact, the rhythmic traction of this market screams buy on dips.

The AUD index is lacking the technical credence to turn bullish even if the sentiment has turned more constructive following the positive news out of China. The index is on the lower end of its broad daily range with liquidity made available to the downside as per the double bottom in Oct. The next directional bias will be set by the RBA, which could act as an excuse to grab the downside liquidity before shorts start a distribution period by closing shorts.

The JPY index is on the brink of breaking through the bottom of its range where plenty of stops in JPY-related crosses are likely to be resting. If enough momentum is found, my projection is for the new leg down to mature once it reaches an extension of about -1% from the breaking point, a level that would align perfectly with the double bottom from May this year.

The CHF index keeps marching lower with speculators most likely to target the liquidity that resides beyond the area of horizontal support outlined in yellow. The index has been selling for more than 2 weeks in a row with little to no signs of life, hence why at this stage I wouldn’t be surprised that sellers keep engaging until the area of support where a re-assessment will occur.

Important Footnotes

• Cycles: 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
• Trendlines: Besides the horizontal lines, trendlines are helpful as a visual representation of the trend. The trendlines are drawn respecting a series of rules that determine the validation of a new cycle being created. Therefore, these trendline drawn in the chart hinge to a certain interpretation of market structures.
• 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

 

[IvanGlobalPrime]

Find my latest market thoughts

Trump Upsets The Market, Risk-Off Back In Vogue

The Yen, Swissy and the Pound to a lesser extend, dominated the proceedings, in a day characterized by the shocking headlines that Trump is rethinking the trade strategy with China. The risk-off profile is definitely back even if the technicals suggests some currencies are poised to do better than others. Fancy to find out more? Today's report distills it for you...
The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics - fundamentals and technicals - determine daily biases and assist one’s trading decisions.

Let’s get started…

• Quick Take
• Narratives in Financial Markets
• Recent Economic Indicators
• Dive Into Pro FX Chart Insights
• Educational Material

Quick Take

There has been a shift in G8 FX flows as Trump triggered a major sell-off in both stocks and bond yields, with the impact of these fluctuations this time reverberating into the currency market, as the Yen and Swissy were bought up as the market flocks back into the protective and safe-haven nature of these assets at times of uncertainty. The remarks by Trump, stating that "it might be better for the trade deal with China to be done after the US election", which is a year away, if true, should radically change what the market had been pricing up to this point, which was some type of positive resolution around the turn of the year. Are we moving from a glass half full-type of approach to now experience a paradigm shift by which the market starts to rollback the built optimism? The risks are certainly on the rise. As the chart below illustrates, despite the return of the risk-off profile, the NZ Dollar keeps its status as the top performer this week, followed by the Swissy, while the Aussie comes third, benefited by China PMIs and a less dovish RBA, even if the reconciliation with the negative headlines on China trade have taken the shine away from the currency. The Euro and the Sterling have shown a decent performance so far, in line with the synopsis shared with the readership that both currencies look set to experience upward pressure in early December. At the bottom, we can find the North American currencies, both moving into softer territory in tandem, even if it will be the Canadian Dollar the one to stimulate a contrast in flows today as the BOC is due to releases its latest monetary policy decision, with unanimity, according to a survey by Bloomberg, that the Bank will keep its powder dry.

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.

Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.

Trump triggers a market sell-off: A flurry of headlines by US President Trump led to a sudden change of heart in the market as market makers pulled liquidity away from the market and algorithm activity was quick to discount what appears to be a backpedaling of the US in its interest to get a quick resolution as part of Phase One of the trade deal with China. President Trump soared the mood by stating that it might be better for the trade deal with China to be done after the US election, a year away.

True risk-off profile returns: Understandably, we’ve seen what’s typically described in my own repertoire of personal jargon as ‘true risk off’ dynamics in which a reshuffling of portfolio back into safe-havens has ensued. The stock market and the US long-dated bond yields experienced sharp moves down in accordance with the relevance of such a statement by Trump. The usual suspects, that is, the Yen, Swissy, Gold traded with renewed fortitude as a consequence of the risk aversion present.

China's mouthpiece sees US backpedaling: The Global Times, a sounding board for the Chinese government, has been quick to chime in its opinion that the US appears to indeed be backpedaling in trade talks. The tweet read: “The US appears to be backpedaling in #tradetalks as officials threaten tariff hikes, but that will have zero effect on China's stance because Chinese officials have long prepared for even the worst scenario: Mei Xinyu, an expert close the Chinese Commerce Ministry.”

A FOX report depresses the mood further: A report by Fox News states that the US still going ahead with December 15 China tariffs, which resulted in depressing the mood in the market even further as the report is tentative evidence that the US is shifting its strategy. The Correspondent for FOX, Edward Lawrence, tweeted: “Trade Sources tell me the Dec 15th tariffs on basically the rest of what China imports into the US are still going forward as of today. I was told the caveat is if Phase One trade deal gets on paper or something else positive happens President could choose not to impose tariffs.”

China calls out on Pompeo's toxic remarks: To make matters worse, China, via the foreign ministry, said that US Secretary of State Pompeo is repeating 'toxic lies' about Huawei, which came as a warning after Pompeo cautioned European countries against allowing Chinese companies to build 5G networks. "With so much on the line, it's urgent that trustworthy companies build these 21st-century information arteries. Specifically, it's critical that European countries not give control of their critical infrastructure to Chinese tech giants like Huawei, or ZTE.” The cold war is here to stay for many years folks.

BOC to inject volatility into the CAD today: The Bank of Canada monetary policy decision is the major fundamental event on Wednesday, with the outcome expected to be a call to keep rates unchanged. In a survey conducted by Bloomberg, the view is unanimous that the Bank will keep its powder dry. Out of 27 economists, all without exception share the view of no change of the 1.75% rate. As a reminder, the market has not fully ruled out rates cut down the road, with 26.2% odds of a cut in January. Later this week, the Canada employment report will be released alongside the US NFP numbers.

Ross says US must get 'the right deal' with China: In an interview with Reuters, U.S. Commerce Secretary Wilbur Ross said on Tuesday that was more important to get a proper trade agreement with China than to get the deal done by this December or next December - after the 2020 presidential election. Ross said more details need to be worked out about China’s purchases of farm products, some structural issues and an enforcement mechanism to complete an interim trade agreement.

Australia's growth figures fuel further AUD selling: The Australian Q3 GDP came at +0.4% vs +0.5% q/q expected, seen by economists as a disappointment, even if on the bright side, the upward revision to Q2 tames down the bitter taste after the report. The Australian Dollar extended its losses as the negatives keep building up after Trump implied a deal with China may not happen until after the next election, which is one year away. This headline led to the Aussie to pare most of the RBA-led gains from Tuesday after it hinted the bar to cut rates is higher now.

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Recent Economic Indicators & Events Ahead

Source: Forexfactory
Professional Insights Into FX Charts

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.
If you found the content in this section valuable, give us a share by just clicking here!
The EUR index failed at the 50% equilibrium area of its broad monthly range as Trump upset the normal business flows with his hint of a walkback in the US-China trade deal. The currency appears to be indecisive which direction to take at this point, which makes picking a particular side a very tricky exercise at this point. A rather neutral approach is how to best define the EUR.

The GBP index, through the higher high printed, has strengthened my core view that this market was seeking out lower levels of liquidity only to build GBP long inventory before the bullish price delivery, which appears to now be underway for a retest of the previous trend high. The low on Monday could very well be the point that represents the low for the week.

The USD index remains in a clear mark-down phase with the bearish price delivery not expected to abate until the price travels a further 0.3% down from Tuesday’s close into a 100% measure move, a juncture that will align with a horizontal support where a pause may ensue.

The CAD index broke into new trend lows, not seen since mid June this year. The next directional bias will be a function of the BOC outcome later today. Liquidity will be removed ahead of the event, with the market re-setting for an assessment of the CAD valuation. Unless the BOC ditches any chances of a rate cut in early 2020, I’d expect this market to remain a sell on rallies.

The NZD index has stalled its bullish momentum at a key confluence area. As noted in yesterday’s report, playing longs in the Kiwi at this stage of maturity in the bullish price delivery carries significant risks as the market is likely to enter a period of distribution. The sizeable topside wick on Tuesday reaffirms my view that the trend in this market may have terminated with the risk of either a slow grind lower or a consolidation at the bare minimum.

The AUD index came to retest the point of resistance outlined in yesterday’s report, only to see a reversal back down as the AUD sell-side flows kicked in aggressively in response to Trump’s remarks on China trade. The overall bias for this market is lower, with the poking of the recent high on Tuesday representing the right shoulder of a potential H&S pattern.

The JPY index has printed back to back bullish pin bars off a critical support area (bottom of the daily range), shifting the focus towards the upside for an eventual comeback to the top side of this existing consolidation phase. If the momentum to the upside picks up, I can envision the JPY complex to put on a rally to the tune of 0.8% from Tuesday’s close.

The CHF index, following a bullish signal via the printing of a sizeable bullish outside bar off the daily, found enough follow through to revisit a previous resistance level. This slow grinding move lower over a number of weeks hints at a potential long accumulation storyline as every single time lows have been taken out since October, the market bounced back up.

Important Footnotes

• Cycles: 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
• Trendlines: Besides the horizontal lines, trendlines are helpful as a visual representation of the trend. The trendlines are drawn respecting a series of rules that determine the validation of a new cycle being created. Therefore, these trendline drawn in the chart hinge to a certain interpretation of market structures.
• 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

 

[IvanGlobalPrime]

Find my latest market thoughts

Funding Currencies Suffer As 'Risk On' Back With A Vengeance


Retail traders may perceive the market as a randomness in motion For the untrained mind, that's certainly true. To a certain extend, there are outcomes we cannot predict, such as when Trump gets out of bed on the wrong side. However, by becoming a student of the charts and knowing what to look for, you can find order and direction within the chaos. Today's report deconstructs how you could have been preparing for certain outcomes such as the recent CAD weakness ahead of the mark up, the GBP institutional buy flows, etc.

The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics - fundamentals and technicals - determine daily biases and assist one’s trading decisions.

Let’s get started…

• Quick Take
• Narratives in Financial Markets
• Recent Economic Indicators
• Dive Into Pro FX Chart Insights
• Educational Material

Quick Take

Funding currencies, most notoriously the Swissy and Yen, fell out of bed, accompanied by overall weakness in the US Dollar and Euro. The risk landscape experienced, once again, a 180 degree turnaround after a Bloomberg report hinted at the Phase One trade deal between the US and China moving closer. The renewed optimism around a positive resolution in the current impasse to ink a deal turbo-charged the Kiwi and the Aussie too. The New Zealand Dollar keeps outperforming its neighboring peer driven by a more sanguine domestic landscape, reinforced by the RBNZ announcing plans to force banks to raise capital ratios, while the Aussie lags behind as mounting evidence (Aus GDP, retail sales, trade balance) shows the economy is still limping unable to get out of second gear, which will definitely keep the RBA on the watch to adjust policy if needed. The Sterling finally saw the smart money sponsorship campaign by targeting much higher levels, it left and never looked back. Lastly, the CAD was marked up aggressively after the Bank of Canada kept rates unchanged at 1.75% while sounding less dovish than previously thought.

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.

Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.

US-China closer than thought in trade deal? A report by Bloomberg that the US and China are moving closer to a trade deal despite heated rhetoric, citing people familiar with the talks, represented an inflection point for ‘risk on’ dynamics to comeback with a vengeance. The report argues that despite the increase in tensions about the HK and Xinjiang bills, seen as separated issues all together, that significant progress was made in the amount of tariffs that would be rolled back in a "Phase One" deal

Trade deal before Dec 15 tariffs deadline? In terms of a timeline, the Bloomberg report notes that U.S. negotiators expect a phase-one deal with China to be completed before American tariffs are set to rise on Dec. 15, the people said. Outstanding issues in the talks include how to guarantee China’s purchases of U.S. agricultural goods and exactly which duties to roll back, they added.

Trump’s lack of urgency in deal to be downplayed? The Bloomberg report, which is worth deconstructing as it single-handedly acted as the driving force behind the price action reversal in FX, it notes that the people familiar with the talks, who asked not to be identified, said that U.S. President Donald Trump’s comments Tuesday downplaying the urgency of a deal by pondering the idea of no deal until after the 2020 election “shouldn’t be understood to mean the talks were stalling, as he was speaking off the cuff.”

Funding currencies fall out of bed: As a result of the rampant bounces in stock valuations since the Bloomberg report above, the likes of the Japanese Yen and the Swiss Franc suffered the most as the necessity to seek out protection in one’s portfolio via safe havens is re-evaluated. The close of the Japanese Yen belows its month-long consolidation is especially concerning if one holds JPY longs.

CAD boosted by the BOC outcome: The CAD was marked up aggressively after the Bank of Canada kept rates unchanged at 1.75% while sounding less dovish than previously thought. Some of the most revealing headlines included that the Central Bank “sees nascent evidence that the global economy is stabilizing,'' which reinforces the notion of what was nonetheless stated in the statement, which read it is “appropriate to maintain interest rate at current level.”

Saudi Arabia had enough dealing with cheaters? The WSJ reported that Saudi Arabia is toying the possibility to increase production due to other OPEC countries dishonestly increasing oil production unilaterally, which violates the group’s output curbs. The Wall Street Journal reports that: “If the noncompliance continues, the Saudi official signaled that the kingdom would begin merely complying with its commitment-rather than overcutting to make up for laggards in the group.” Oil saw a dip before bouncing back.

GBP mark up phase underway: The Pound found the institutional money sponsorship to finally unravel the next bullish price delivery phase in line with the view I promoted daily since Monday’s open. Don’t be tricked by thinking the latest UK election poll has suddenly caused this rise. This was a very well premeditated move that the smart money has been working out for days now, first allowing the market to come lower to grab liquidity before the mark up phase. The market is pricing in a landslide win by the Conservatives ahead of the election.

RBNZ to force banks to increase capital ratios in 7 years: The NZD was given a boost early Thursday after the RBNZ announced plans to force banks to raise capital ratios. The statement notes that large banks will have to hold 18% in total capital (and 16% in tier one capital) vs current 10.5% minim. Meanwhile, smaller banks will have to hold 14% in tier one capital. The new requirements must be met in 7 years from 5 initially.

Australian data keeps disappointing: The Australian retail sales and trade balance outcomes were another slap in the face for AUD longs, even if the currency remains underpinned by the latest US-China trade headlines. The Australia October retail sales saw no growth by coming at 0.0% m/m vs +0.3% expected, while the October trade balance came at $4502m vs +6500m expected, with imports coming flat and exports falling by 5% as Chinese trade activity slowed down.

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Recent Economic Indicators & Events Ahead

Source: Forexfactory
Professional Insights Into FX Charts

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.
If you found the content in this section valuable, give us a share by just clicking here!
The EUR index has shown the most pronounced bearish tendencies in the last 48h of trading, ever since it found a rejection off the 50% equilibrium area or midpoint of its broad range. The likelihood that the previous low is now taken out is quite high, with a reversal potential a real possibility as this level represents a technically strong support. If a long setup in a preferred EUR-pair occurs around this support, the area validates the considerations to dip one’s toes in a position given how cheap the EUR would be in a still ranging context.

The GBP index finally found the smart money sponsorship to see a sharp markup in price as the market piles into long positions ahead of the UK election day on Dec 12. We are right in the midst of a GBP long-side campaign, which makes it much riskier to support contrarian views against the Pound. The market, in my opinion, will now be fixated in the next 100% proj target, which does not come until the price extends its upside run for another 0.9% approximately.

The USD index remain en-route to meet its downside target, at this point just a stone’s throw away. Once the confluent level is reached, there is an increasing likelihood that the institutional sell-side campaign will come to a temporary hold ahead of the US NFP report on Friday. Remember, the swing low in the USD index about represents a symmetrical 100% target move, which would be an ideal place for shorts to start distributing its profitable run this week.

The CAD index was marked up violently after the BOC appeased the prospects of an immediate rate cut, which led to a quick re-assessment of what at the time of the statement was a misplaced cheap valuation in the CAD. Note, while the structure in the index remains bearish, the market has now been able to grab lower liquidity, likely closing a fair share of shorts, only to see a major impulsive move, one that may have well represented the termination of the sell side campaign. Besides, it looks like this is a meaningful cyclical low as each leg down has carried lesser commitment - magnitude of the downside extension - than the previous.

The NZD index keeps extending its upside momentum after further positive local news. This time, the RBNZ announced it plans to force banks to raise capital ratios. Remember, unless you fit into the category of being a momentum short-term trader, you don’t want to be paying up these expensive prices to own NZD inventory. If you look at the chart below, the price has surpassed the 100% proj target and is now testing an area previously sponsored by the smart money to originate a long lasting very successful bearish campaign.

The AUD index is the chart I am having the most issues getting a read from, a view that when applied to my own trading, automatically cancels my interest to endorse a bias, hence it tends to be a currency I don’t want to put on my radar to trade. That said, the index keeps respecting key levels, with the test of a right hand shoulder resistance finding grateful sellers. Fundamentally, there has been way too many conflicting factors, both positive and negatives, which has resulted in a rather messy affair trading the Aussie.

The JPY index has printed what I refer as a bearish outside continuation candle, shifting the focus, once again, toward the downside. This time, reinforcing the bearish bias, one must factor in the fact that the index has finally closed beyond its lengthy daily range. This translates into a market finally finding the necessary acceptance to agree on potential lower prices. The next projected target does not come until 0.9% lower, so we could be in for a few weeks of JPY weakness heading into year-end, subject to the China trade deal outcome.

The CHF index, akin to the mixed outlook I hold in the Aussie, has been unable to provide sufficient clarity to reinforce one particular bias. This is mainly due to the crossfire of alternating risk off and risk on headlines pertaining to the US China trade deal status. I personally don’t hold a strong opinion, hence why I’d be careful to overcommit. If forced, I’d say that the bearish outside candle on Wed cancels the bullish bias short term and makes the previous low the next area where sellers might be fixated to find the liquidity necessary to mitigate shorts.

Important Footnotes

• Cycles: 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
• Trendlines: Besides the horizontal lines, trendlines are helpful as a visual representation of the trend. The trendlines are drawn respecting a series of rules that determine the validation of a new cycle being created. Therefore, these trendline drawn in the chart hinge to a certain interpretation of market structures.
• 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

 

[IvanGlobalPrime]

Find my latest market thoughts

Will US NFP Revert USD Bear Trend In Dec?


Will the market defy the negative seasonal pattern in the US Dollar by propping up the demand flows on the back of a blockbuster US NFP report? What to look out for this week? Are you prepared for the main drivers affecting the currency market this week? China tariffs deadline, UK general election, ECB and Fed policy meetings... Today's report helps you to contextualize where we are at.

The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics - fundamentals and technicals - determine daily biases and assist one’s trading decisions.

Let’s get started…

• Quick Take
• Narratives in Financial Markets
• Recent Economic Indicators
• Dive Into Pro FX Chart Insights
• Educational Material

Quick Take

Have we seen a meaningful bottom in the US Dollar? As the chart below reflects, the currency was by far the biggest loser during the course of last week even if the US NFP blew it out of the park by showing a huge positive divergence against the expected print. This contrast in technicals vs fundamentals could easily lead to think holding a USD bullish stance this week offers value, and I wouldn’t disagree, but as it’s usually the case in trading, one must be mindful to pick the right combination of currencies and at what particular level to bank on this premise. I offer a tease of my view in today’s chart section to get an idea of the outlook I hold in USD-related pairs. Remember, in terms of currency seasonals, the USD tends to suffer from aggressive bearish tendencies in December, which judging by the performance so far, is proving to be a decent predictor of the overall interest in the Greenback. Besides, this week’s ebbs and flows will see a handful of currencies the likes of the GBP (UK general election), EUR (ECB meeting), AUD & NZD (Chinese tariffs deadline) face idiosyncratic-type gyrations. The USD will also be injected extra volatility as it responds to the outcome of the FOMC on Wed. Therefore, it’s a week charged with plenty of fundamental events, which is why, as a trader, you want to be timely and manage your positions adequately as the success or lack thereof in your plays this week will heavily hinge on your ability to execute a plan that accounts for these risks coming up.

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.

Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.

The US NFP headline number blows it out of the water: The US Non-farm payroll for November came at a blockbuster headline of 266K vs 180K estimate, with the unemployment rate at 3.5% vs 3.6% estimate. The average hourly earnings saw a modest 0.2% m/m vs 0.3% estimate, while the average hourly earnings y/y edged up to 3.1% vs 3.0% estimate. The labor force participation rate stood at 63.2% vs 63.3% last. As a response to the jibs data, the USD saw immediate demand inflows, while the US yields were too marked higher with the 10 year up more than 3 basis points. Also in the US, the U of Michigan sentiment for Dec came upbeat at 99.2 vs 97.0 estimate, which adds to the positive sentiment.

The Canadian job figures a reckoning moment for the BOC? The Canadian net change in employment for November came in stark contrast to the US NFP, as the reading showed a loss of 71.2K jobs vs +10K estimate, representing the biggest monthly fall in a decade. When looking at the break down, the full-time employment change came at-32.8K vs 15K estimate, while the part-time employment change was -38.4K vs +10K estimate. The unemployment rate soared to 5.9% vs 5.5% estimate. In terms of hourly wage rate, it came modestly lower at 4.4% vs 4.5% estimates. As per the participation rate, it fell to 65.6% vs 65.7% estimate, which makes the fall in the jobless rate even worse. The CAD was hammered as the market backtracks the premise that the BOC will be comfortable holding rates steady.

BOC Boss headed for the exit door by mid next year: Bank of Canada Poloz announced his decision to step down as Governor of the Central Bank in June 2020 when his mandate expires. Remember, in the last meeting, the Bank of Canada kept rates unchanged at 1.75% with Poloz & Co. sounding more sanguine. However, the employment data today at of Canada may have represented a water-shed moment for the policy-maker to potentially re-consider the rate setting as the fall was too dramatic to ignore. The bank will be monitoring very closely if this becomes a one off or develops into a trend.

Brace for high vol in GBP this week: The Pound will gather most of the attention this week as the market awaits to reshuffle portfolios based on the result of the general election on Dec 12. According to the election polls, Tories maintain a comfortable lead over Labour as the campaign enters the final days. If the reader wishes to find out who’s ahead, the Guardian offers some handy visuals via an opinion poll tracker. The Guardian notes that “the Labour have tightened the gap but the Tories still have a significant lead, while the Lib Dems and Brexit party have seen their support slump.” The results of Thursday’s UK General Election will be known in the Asian time zone on Friday.

Stories of green shoots in China continue: Over the weekend, there was further evidence of green shoots in the Chinese economy, this time in the form of a pick up in imports activity. It is the first time since April that Chinese imports rise, coming at +0.3% y/y vs -1.4% expected, while the exports came at -1.1% y/y vs +0.8% expected. The total trade balance stood at $38.73B vs $44.50B expected. While too early to speculate on how big of a deal this is to conclude that China’s economy has turned an important corner, it starts to paint a tentatively rosier picture as it follows a recovery back into expansion in last week’s Chinese PMIs (both the government and Caixin-sponsored).

The ‘risk on’ feel returns after the US NFP: US equities and bond yields both came back up in tandem to re-calibrate the environment firmly into ‘risk appetite’ conditions again. The US NFP report saw the S&P500 come a hair away from the November 28 record closing high after a rise of +0.9% on the day. As the current context stands, it should be quite negative for the appeal towards funding currencies (JPY, CHF, EUR).

China tariffs deadline by next Sunday, eyes on binary outcome: The more evidence that exist of green shoots in the US and Chinese economies, the more both US and Chinese Presidents can afford to take a ‘hands off’ approach and leverage that by not rushing into a trade deal, which as of today, still remains the overarching theme. This week will be crucial to read the semantics ahead of Sunday’s current deadline for imposing new tariffs on China. As the situation stands, the US is due to enact further tariffs worth $160bn on Chinese imports if the ‘Phase 1’ trade deal fails to be agreed upon. Watch this space closely.

Oil prices catapulted as OPEC exceeds market expectations: Oil saw a spike in prices on Friday after the leaks from the previous day turned out to be true and OPEC+ confirmed it had agreed not only to maintain existing production cuts, but on top of that, Saudi Arabia showed a commitment to cut an additional 500,000 barrels, alongside a pledge by other OPEC+ members to reduce production by 400,00 barrels on aggregate.

FOMC, ECB policy meetings eyed: Besides the UK general election (vol injector isolated to GBP), the Chinese tariffs (to reverberate across all asset classes), the market will be treated with an additional two high-stakes events, even if this time, the expectations for a change in stance are low. In the US, the FOMC meets Wednesday, while in Europe, the ECB meets the next day, in what will be Christine Lagarde’s first event at the new President, which will make the press conference a very interesting one in order to frame further her thinking process in policy terms.

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Recent Economic Indicators & Events Ahead

Source: Forexfactory

Professional Insights Into FX Charts

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EURUSD: Still interested to play longs early in the week (mon, tues, wed) as the daily and weekly structures remain constructive. I will be watching a retest of the 100% proj as the potential termination point of the current correction lower. I want to see a deep retracement before commiting longs as the combination of upbeat US NFP numbers + the break lower in the EUR index warrants extra caution to pay deep discounted prices. See the yellow box as the ideal area I’d like to see retested before pondering the idea of longs if price action agrees. If looking to gain exposure in the pair this week, be mindful that the FOMC and ECB will cause all type of vol, so you want to manage your position and risk accordingly once these events take place.

GBPUSD: The pair has reached its 100% proj target on the daily, which can be seen by graphically by drawing a fib extension from the bottom to the top of the range that was broken last week. The level of 1.3166 is approximately where I’d have expected the rally to terminate and a period of distribution to follow ahead of the UK general election outcome. I am personally not interested to engage in positions as the ‘easy gains’ have now been made. A retest back down into the backside of the broken range top will have my attention but that view will have to be carefully managed and well time not to overlap with the UK election-inspired vol on Friday.

USDJPY: It has my attention this week as long as I can first see the market collecting long-side USD inventory at the point of liquidy sub 108.25-30. If that initial down target can initially be met, I am expecting smart money to potentially step in as counterparties buying cheap off late Joe sellers on the breakout of the support as it would trigger sell stop orders, which is the fuel large institutional order flow requires to enter the market. So to recap, looking for longs BUT only off the lows once the market managed to trip sell-side stops. Note, the market structure of higher highs and higher lows in the daily and bullish remains in place, with the added positive development of a strong US NFP, which has boosted the US yield levels. The 100% proj target reached in the USD index (equally-distributed) is another hint of a possible USD bottom.

AUDUSD: The structure off the weekly and daily on the pair is in congruence with my view that playing longs is still favored, but not at any price. It requires first a deep retracement for the daily to first enter what I’d consider to be an equilibrium point or 50% retracement. The weekly pattern shows the potential for a squeeze into higher prices in coming weeks as long as the previous low circa 6750 is not taken out. FOMC and tariffs deadline will be the next catalyst for the pair, so it’s safe to assume that once the time the market finds out about the Chinese tariffs, a reset in the AUD valuation will ensue, leading to a spike in vol subject to the outcome. If a deep retracement cane be seen earlier on the week, Mon, tues, Wed best time to trade the pair. Once the FOMC and the Chinese tariffs decision approaches, erratic moves more present.

USDCAD: I am unable to pair confluent signals when cross checking the weekly and the daily. The two timeframes are not painting the same picture, with this view exacerbated by the contrast in jobs data out of the US and Canada, which makes me be bullish fundamentally, a position that interferes with the rather bearish outlook off the daily as per market structure, and the neutral to bullish outlook I hold of the weekly timeframe. When no clear view, I stay out.

Final note, in some of the pairs where I am looking to engage in short USD inventory at a deep discount, I am accounting for the poor performance of the currency during the month of December. As the chart below illustrates, this month tends to see sellside flows
dominate.

Important Footnotes

• Cycles: 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
• Trendlines: Besides the horizontal lines, trendlines are helpful as a visual representation of the trend. The trendlines are drawn respecting a series of rules that determine the validation of a new cycle being created. Therefore, these trendline drawn in the chart hinge to a certain interpretation of market structures.
• 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

 

[IvanGlobalPrime]

Find my latest market thoughts

FX Vol Flat-Lined Ahead Of Risk Events

It’s been a snooze fest in the FX market, indicative of the high-stakes events around the corner. This degree of tranquility is typically the precursor of a looming storm, which as a reminder, will come courtesy of the FOMC on Wednesday, the ECB policy meeting and UK general election on Thursday, and ahead of the decision on Chinese tariffs by Sunday Dec 15.

The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics - fundamentals and technicals - determine daily biases and assist one’s trading decisions.

Let’s get started…

• Quick Take
• Narratives in Financial Markets
• Recent Economic Indicators
• Dive Into Pro FX Chart Insights
• Educational Material

Quick Take

The currency market is in a holding pattern ahead of the abounding barrage of risk events late this week, which will start with the FOMC on Wednesday, the ECB policy meeting and UK general election on Thursday, ahead of the decision on Chinese tariffs by Sunday Dec 15. The ebbs and flows into trading currency has, therefore, understanbly receded significantly. If one is to play positions this week, be quite strategic as this tranquility is leading up to an injection in vol. As I’ve detailed in the last report, the Central Bank events are likely to act as an idiosyncratic factor mainly influencing flows into individual currencies, even the UK general election may see volatility largely contained within the walls of GBP-related pairs. It’s going to be the decision by Trump to either enact or suspend tariffs on China, with the deadline this coming Sunday, that may see the most impact in financial markets as a whole, as this has been, without a doubt, the overarching theme that the market has been most sensible to, and crunch time is looming fast. As the chart below shows, the movements in FX have been rather tepid, with the GBP and NZD still maintain its advantage when accounting for last week’s performance, while the USD, CAD and EUR, in this order, remain the least favored this Dec. Sandwiched in between we find the JPY, CHF and AUD, as we await more conclusive price action.

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.
Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.

Where do we stand in the Chinese tariffs? In the US-China trade saga, the headlines that have been dripping in have been inconclusive, even if the US Agriculture Secretary said the next tranche of tariffs to China may be suspended, noting that “we have a deadline coming up on Dec. 15 for another tranche of tariffs, I do not believe those will be implemented and I think we may see some backing away.” Secretary Purdue added that “there’s got to be some movement on their part to encourage him not to do that and hopefully the signal that they sent over soy and pork reduction might be that signal in that way”. There was a recognition that such decision is on President Trump’s courtyard.

Vol in markets has been on the rise: Despite the low volatile and soggy movements experienced in FX this Monday, be reminded, as Morgan Stanley notes, that in the grand scheme of things, vol in financial markets is starting to creep back up quite noticeably. As the Strategy team at the bank details, “realized rate volatility has returned to the elevated levels of early November, while realized equity volatility in both the US and Europe has risen to two-month highs. Even FX volatility, which has notably lagged other assets, has ticked up – though to a less substantive degree.”

Data trends divergence = higher vol: Morgan Stanley argues that to sustain this volatility we need data trends continuing to diverge. As the team notes: “Divergence is a recipe for volatility, and we are starting to see signs of the data trends diverging. Global data continue to show signs of stabilization. More than half of global manufacturing PMIs ticked up in November, including in China where both manufacturing PMIs have rebounded. Trade activity is also showing signs of bottoming while global credit growth is rising at the fastest pace in three years.”

Recent data supports global growth stabilization: Even if the data was sparse and low-tier on Monday, the economic releases play into the view of global growth starting to stabilise. First off, the Japanese Q3 GDP edged up to 0.4% q/q after a considerable revision from an initially reported 0.1% q/q, with stronger business investment the key factor in this rise. In the Eurozone, the Sentix investor sentiment surprised with a move up to +0.7 in December, which may hint at a more robust German ZEW survey on Tuesday. The German Trade Balance also printed a better reading at €20.6bn after a 1.2% m/m increase in exports, while in New Zealand, following the positive trend in fundamentals, manufacturing production came upbeats. All this data, as NAB notes, shows “signs that stabilisation is starting to emerge in corners of the global economy.”

Tories well ahead in the polls: The latest UK election surveys have reinforced the idea that Boris Johnson's Conservative party is likely to obtain a majority in this week’s parliamentary election. This poll charts, courtesy of 'Britain Elects' and shared by the Wall Street Journal, paints a clear picture. When accounting for all surveys and averaging the results, PM Johnson's lead is extending as of late. Should the election produces no conclusive outcome though, the collapse in the value of the GBP could be quite dramatic as the market has been busy pricing in a Tories’s landslide victory. Besides, the BOC’s policy path may have to be repriced lower as uncertainty will return.

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Recent Economic Indicators & Events Ahead

Source: Forexfactory
Professional Insights Into FX Charts

The indices show the performance of a particular currency vs G8 FX. An educational video on how to interpret these indices can be found in the Global Prime's Research section.
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The EUR index broke below the bottom side of its range last Friday, a development that has technically worsened the overall outlook in the currency ahead of the ECB. The currency looks far too weak to expect a sudden turnaround and gains to come by, but one must be aware that Lagarde’s first presser as ECB President on Thursday may represent a major vol injector and act as a trigger for a resetting of the EUR valuation. Therefore, when it comes to the EUR, a much greater deal of clarity will not be obtained until Lagarde’s stance on policy is formally defined.

The GBP index has maintained an upward bias ahead of the UK election outcome. Trading the GBP earlier this week does not offer the same attractive rewards as the ebbs and flows have now receded significantly ahead of the huge risk events that lies ahead. Technically, bullish is the clear trend to stick with, but the fundamental risk is most likely going to cause the market to tread water in the next few days as positions and trading activity are dialed down.

The USD index has reached a location where one would think a period of distribution that allows the price to at least stall and potentially reverse back up towards last week’s breaking point. The performance in the index this week will hinge on the outcome of the FOMC, so again, technicals won’t act as a primary driver to gauge the next direction but rather the stance on policy by the Fed will. It is safe to assume though, that with forex seasonas against the USD in Dec, and technicals looking poor, any Fed-led bounce should still be met with grateful sellers.

The CAD index may have found a meaningful bottom, or at least, that’s what the maturity of its downcycle seem to suggest. Each leg down has carried lesser commitment - magnitude of the downside extension - than the previous (-1.65%, -1.45%, -1.10%). This premise is supported by the latest BOC decision, which appeased the prospects of a rate cut, although it is at odds with the horrible Canadian jobs report printed last Friday. I held the view that the CAD is starting to be perceived as a currency with a misplaced cheap valuation that should keep order flows skewed to the upside. However, the Canadian jobs shocker, which was the worst in 10 years, has understandable lower my conviction on this view, as I want to pair up technicals with fundamentals. Note, while the structure in the index remains bearish, the market grabbed lower liquidity where shorts were mitigated in what I see as the termination of the sell side campaign.

The JPY index fails to manifest, via its aggregated flows, a clear picture in the last week of trading, and I must say, understandably so, as the market dials down its commitment to take any aggressive bets against the Yen ahead of the risk events on schedule. While the macro trend is clearly to the downside, it is the day to day flows that I am most interested to decode based on what type of ebbs and flows went through the books, but in the case of the Yen, it really is in a holding pattern going nowhere fast until the market can digest the risks to come.

The AUD index continues to look fragile in its outlook, which still suggest the double bottom to be raided as the next logical target. Once the Aussie comes into contact with this critical pocket of liquidity available, it will be time to watch like a hawk what pans out. Will the market see follow through supply towards the double bottom in Aug-Sept, or will Aussie buyers show up for a reversal back to the midpoint of the broad daily range. In the grand scheme of things, this is the binary outcome to pay attention as that’s where the index is headed next.

The NZD index managed to sustain its upward momentum into Friday last week, which made the bull run being even more impressive in nature as it blew up what I’d have expected to be a potential top given the level of confluence. The break above this important resistance point definitely depicts graphically that the NZD flows remain largely one-sided to the upside, hence there is no reason to be a hero by looking to engage in shorts unless you have a well calculated and premeditated strategy that looks to hold positions for longer time horizons.

The CHF index keeps its outlook unclear with rotational price action the norm, so we are none the wiser by analyzing the fluctuations in the last 24h of trading. This messy outlook is perfectly manifested via the recent bullish outside candle off the lows met with a bearish outside candle 2 days later, again, the perfect graphical example of this inconclusive outlook for the currency. I am personally staying away from forming any strong opinion on the Swissy as the overall flows stand. Trade with extra cautiousness if you are going to engage in this currency, making sure you crosscheck it against the weakest peers out there if you aim is to bank of CHF strength.

Important Footnotes

• Cycles: 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
• Trendlines: Besides the horizontal lines, trendlines are helpful as a visual representation of the trend. The trendlines are drawn respecting a series of rules that determine the validation of a new cycle being created. Therefore, these trendline drawn in the chart hinge to a certain interpretation of market structures.
• 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