Global Prime: Daily Market Digest

Find my latest market thoughts

USD Succumbs To Fed’s Unprecedented Measures

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
Recent Economic Indicators
Insights Into Forex Flows (Video)
Educational Material


Quick Take

We certainty had a high flurry of activity in the currency market, with weakness in the US Dollar at the epicenter of the wild moves as the Fed unleashed yet again another monster-size lending program.

The immediate reaction by market forces was to sell the US Dollar across the board, further reinforcing the bearish momentum that as the readers of the Daily Edge would know, has been promoted daily. On the flip side, the Aussie and Kiwi were the star performers, with the former hitting the bullish target of 0.63 endorsed this week.



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

In the US equities, the S&P 500 made it to its 100% projection target of 2,800.00 with bullish dynamics intact after a 40 points upside day. The renewed optimism in stocks, mainly fueled by the flattening of COVID-19 curves (take it with a huge pinch of salt as new waves may re-emerge) kept the Japanese Yen pressured throughout the week, while aiding to maintain the downward pressure in the USD too.

The Oil market was down, however, did not find sufficient comfort from the news that the OPEC and its allies agreed to historic production cuts to the tune of 10 million barrels per day near term. Overall, it was a disappointing outcome as it won’t resolve the huge magnitude of the issued at present (the the size of the oil oversupply).

In another piece of positive news, the Eurogroup reached a deal on a virus rescue plan. The package, negotiated by the finance ministers, includes a 500-billion-euro ($550-billion) fund for European countries hit hard by the coronavirus epidemic. The Euro celebrated the news through a mark-up in prices as the market learnt the news, as did the Pound cheering up for the discharge of UK PM from the ICU.

We also learned more appalling job loss figures in the US and Canada, with a speech by Fed’s Powell warning that unemployment is en-route to rise to very high levels even if just temporarily. In the US, initial jobless claims soared to over 6.5 million vs 5.5 million estimate, while in Canada, the March employment stood at -1 million, twice as bad as predicted by the consensus of economists. The Canadian Dollar traded soft throughout the day with OPEC and jobs data as the drivers.

Do remember that this Friday will be, most likely, a quiet day in the markets as many countries are closed for holidays. It’s Good Friday. During times when liquidity in the markets dry up, is best to take a pause, work on side projects, back testing, even if it’s not a given that opportunities won’t exist given the nature of the markets we are trading and the fast-moving news, but as a rule of thumb, trading during holiday periods is not the best environment to engage on.


Recent Economic Indicators & Events Ahead



Source: Forexfactory

If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!


Insights Into Forex Majors

This analysis complements one’s view by accounting for multi timeframe biases. Ultimately, it is the traders’ call, via a set of entries (watch my setups) thoroughly backtested, to decide if a market meets the prerequisites to enter a position. This analysis is mainly intended as a way to educate traders in upping their analytical skills.

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.



Important Footnotes

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

Support/Resistance
Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.

Fundamentals
It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.

Projection Targets
The usefulness of the 100% projection resides in the symmetry and harmonic relationships of market cycles. By drawing a 100% projection, you can anticipate the area in the chart where some type of pause and potential reversals in price is likely to occur, due to 1. The side in control of the cycle takes profits 2. Counter-trend positions are added by contrarian players 3. These are price points where limit orders are set by market-makers. You can find out more by reading the tutorial on The Magical 100% Fibonacci Projection
 
Find my latest market thoughts

Case To Sell USD On Rallies Warranted

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…

Scan Of The Markets
Recent Economic Indicators
Insights Into Market Flows (Video)
Educational Material


Scan Of The Markets



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

On the back of the announcement of yet another monster-size lending program last week, the new Fed Put is working like a charm for the interest of those looking to keep shorting the US Dollar.

The Central Bank also issued a statement that as part of the unfolding QE measures, it will include credit – directly or ETFs -, even sub-investment grade – high yield or sub-investment grade paper.

It’s been a one-way street for the US Dollar since the technical inflection point back on April 7th. Clients following the daily video analysis I make available every day can attest the directional calls have been accurate and it does not look like the tide will turn just yet.

The outlook for the USD, therefore, remains very fragile heading into Tuesday, with EUR/USD at a discount through 1.09, GBP/USD with a void of 200+ pips to exploit, AUD/USD setting its sights on 0.6430 if not 0.6470, while USD/JPY appears to be en-route to 107.00. All the details about the aforementioned calls can be found in today’s video.

But no market is thriving more than gold as it breaks its previous trend high beyond $1,700.00 at a time when the Fed keeps expanding its balance sheet at lighting-speed. And guess what? Mnuchin said “we think there is a likelihood we will need more money.”

When it comes to Oil, despite OPEC producers and allies agreed to a record deal that will slash global output by about 10% – largest cut in oil production ever – the technical stance by is hardly encouraging. The dominant flows suggest a retest of the $20.00 handle may be in store.

This evaporation of willing USD buyers comes on the heels of a bullish phase in equities, supported not only by the new Fed Put, but also by the ‘gamble’-type move by Trump to reopen certain parts of the economy, noting in a defying tweet that it’s “my decision when to open up the economy, not that of state governors…”

The position by Trump’s right-hand man in the fight against COVID-19, Dr. Anthony Fauci said Sunday that public health officials could consider measures to reopen the country next month, depending on the status of the outbreak in different states and cities, but warning that “a rebound in outbreaks later this year” is a risk to consider.

In Europe, attention has been on the rescue fund, finally approved, in spite of the resistance by the Northern block. According to the Team at NAB, “it triggered a political storm as a result of Italian FinMin Gualtieri willingness to sign up to the EUR500bn albeit without the tough macro conditions demanded by the Netherlands.”

If you found this fundamental summary helpful, just click here to share it!

Recent Economic Indicators & Events Ahead



Source: Forexfactory

If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!


Insights Into Market Flows
This analysis complements one’s view by accounting for multi timeframe biases. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position. This analysis is mainly intended as a way to educate traders in upping their analytical skills.

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.



Important Footnotes

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

SMART MONEY TRACKER
In order to assess the market momentum of a particular asset, I’ve promoted for years the idea of using what I call the smart money tracker. The settings and the indicator can be obtained via our Discord room, where traders from all walks of life interact frequently. In this video I lay out the elements I look into to call trend directions.

SUPPORT & RESISTANCE
Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.

FUNDAMENTALS
It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.

PROJECTION TARGETS
The usefulness of the 100% projection resides in the symmetry and harmonic relationships of market cycles. By drawing a 100% projection, you can anticipate the area in the chart where some type of pause and potential reversals in price is likely to occur, due to 1. The side in control of the cycle takes profits 2. Counter-trend positions are added by contrarian players 3. These are price points where limit orders are set by market-makers. You can find out more by reading the tutorial on The Magical 100% Fibonacci Projection
 
Find my latest market thoughts

USD Weakness: Steady As She Goes…

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…

Scan Of The Markets
Recent Economic Indicators
Insights Into Market Flows (Video)
Educational Material

Scan Of The Markets



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

Equities keep roaring ahead, with the calls made to keep buying the S&P 500 on weakness coming to fruition. However, the tech-centric Nasdaq has been the superstar with an impressive 4%+ run.

The USD vulnerabilities keep flaring up left and right as the Goldilocks scenario for sellers stays the course, that is, improved risk sentiment combined with an insane amount of USD in circulation courtesy of the unprecedented Fed policies to stem the economic fallout.

To understand how rich we’ve come to trade in such a short period of time as the S&P 500 recovers past its 50% covid19-led retracement, one must be in tune with the current dynamics at play. The Fed has gone above and beyond to become the ultimate buyer of credit, ETFs, you name it… while talk of easing containment measures in the US and Europe gain momentum.

President Trump is prepping an announcement to the nation in coming days that would lay the ground for his grand plan to gradually re-open the economy. In parallel, as the team at NAB notes, “10-states that account for nearly 38% of the economy have also began working on their own separate resumption plans.” In Europe, signs of relaxation in the lockdown were also seen…

Trump’s May 1 target for restarting the economy is “overly optimistic,” his top infectious disease adviser (Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases) said on Tuesday, according to Reuters. “We have to have something in place that is efficient and that we can rely on, and we’re not there yet,” Fauci added.

As I explain in today’s video analysis, the bullish run in equities, taking the S&P 500 as our reference, looks overextended, hence I wouldn’t be surprised that we go through a temporary reprieve. Oil looks quite tricky as well since the latest meltdown has taken us all the way down to the bearish target of 20.00. Gold remains on fire with a new macro target of $1,950.00.

As per the Forex space, the EUR/USD bull run continues to be justified by the aggregated sell-side flows in the USD and 1.10 looks like is just a matter of hours. GBP/USD looks like it has further upside potential until 1.27+ is reached after a major structure breakout earlier this week. USD/JPY is teetering with a breakout of 107.00 after sellers kept re-emerging. AUD/USD remains a buy on dips with the caveat of being mindful where we are at (weekly resistance).

Recent Economic Indicators & Events Ahead



Source: Forexfactory

If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!

Insights Into Market Flows

This analysis complements one’s view by accounting for multi timeframe biases. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position. This analysis is mainly intended as a way to educate traders in upping their analytical skills.

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.



Important Footnotes

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

SMART MONEY TRACKER
In order to assess the market momentum of a particular asset, I’ve promoted for years the idea of using what I call the smart money tracker. The settings and the indicator can be obtained via our Discord room, where traders from all walks of life interact frequently. In this video I lay out the elements I look into to call trend directions.

SUPPORT & RESISTANCE
Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.

FUNDAMENTALS
It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.

PROJECTION TARGETS
The usefulness of the 100% projection resides in the symmetry and harmonic relationships of market cycles. By drawing a 100% projection, you can anticipate the area in the chart where some type of pause and potential reversals in price is likely to occur, due to 1. The side in control of the cycle takes profits 2. Counter-trend positions are added by contrarian players 3. These are price points where limit orders are set by market-makers. You can find out more by reading the tutorial on The Magical 100% Fibonacci Projection
 
Find my latest market thoughts

The USD & Risk-Off Come Back To Life

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…
Scan Of The Markets



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

What have we learned in the last 24h? Firstly, while some are busy looking for all types of narratives to justify the turnaround in the equity market, be it via poor earning guidance or US retail sales, those following my daily updates would know how crucial it was the level of resistance reached in the S&P 500 circa 2,850.00 (100% proj target).

Equity sellers are not out of the woods just yet despite the smart money tracker is rolling over in the 4-hour chart. Remember, we need this momentum to also be accompanied by a breakout of structure, which is not going to happen until we can burst through and find price acceptance below the 2,700.00 mark in the S&P 500.

If this bearish scenario transpires, this is a key pre-condition to keep calling for a higher USD index. Failure to do so gives Dollar sellers a reason to rejoin the offer, especially against the strongest contenders such as the Pound or Gold. The new paradigm on the heels of the USD liquidity crisis has anchored the USD and equities very intimately together (invert correlation very high).

Revisiting the action seen, right from the get go in Europe, we saw equities go into a sea of red and never look back, instilling renewed upside momentum in the US Dollar. This strength was ample across the board, and as I elaborate in today’s clip, it has sufficient merit to call for a potential protracted shift in trend in the Euro and Aussie.

A special mention deserves the Aussie. The sell-side flows that have emanated on the back of the aggressive turnaround in equities originated, you guessed it, from a huge level of confluence as depicted via the 100% daily bullish target and a weekly resistance area.

There are other markets such as the Pound or the Yen where more work needs to be done before validating, as per the congruence of momentum and structures, that we are in new bearish or bullish territory respectively. The pretext to attack these markets with conviction in line with the USD buying flows is shared in today’s video.

Besides, whenever you see my daily calls negated by the eruption of fresh flows, that’s something that one has no control over. Trading the markets is a probability game. In our thriving Discord community, a member pointed out that the USD headed north with quite the fury, just to defy some of my daily views, which by the way, will always be conditional to a certain intraday criteria being met.

Here is my response:

“No crystal balls here, I’d be eternally grateful to have evolved into the type of trader that adapts in a dime to incoming flows… it’s challenging when you want to help a community yet you are perceived to hold a view as true for the entire day as report don’t come hourly. If I were to make commentary hourly, mid Europe was clear we were breaking structures all over.”

Bottom line? Adapting to market flows, always with an open mind, knowing when certain scenario would be negated, and resorting to lower timeframes as the entry trigger to get an extra confirmation that the potential entry resonates with higher timeframes is all essential too.

If you found this summary helpful, just click here to share it!

Insights Into Market Flows

This analysis complements one’s view by accounting for multi timeframe biases. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position. This analysis is mainly intended as a way to educate traders in upping their analytical skills.

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.

Recent Economic Indicators & Events Ahead



Source: Forexfactory

If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!



Important Footnotes

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

SMART MONEY TRACKER
In order to assess the market momentum of a particular asset, I’ve promoted for years the idea of using what I call the smart money tracker. The settings and the indicator can be obtained via our Discord room, where traders from all walks of life interact frequently. In this video I lay out the elements I look into to call trend directions.

SUPPORT & RESISTANCE
Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.

FUNDAMENTALS
It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.

PROJECTION TARGETS
The usefulness of the 100% projection resides in the symmetry and harmonic relationships of market cycles. By drawing a 100% projection, you can anticipate the area in the chart where some type of pause and potential reversals in price is likely to occur, due to 1. The side in control of the cycle takes profits 2. Counter-trend positions are added by contrarian players 3. These are price points where limit orders are set by market-makers. You can find out more by reading the tutorial on The Magical 100% Fibonacci Projection
 
Find my latest market thoughts

Spike In Equities Sends USD Down Again

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…
Scan Of The Markets



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

As Trump continues to make a case for a gradual re-opening of the US economy, noting that “we have to do that” in a press conference, equities in the US, after a range-bound Thursday, had an explosion as represented by the ES futures, taking out the previous trend high.

Trump suggested some states could re-open this month. As the BBC reports, “the guidelines for ‘Opening up America Again’ outline three phases in which states can gradually ease their lockdowns”, adding that “Mr Trump promised governors they would be handling the process themselves, with help from the federal government.”

What looks clear is that the market still sees the narrative playing out as a ‘glass half full’ where hopes of the containment measures lifted at the forefront as opposed to the dire economic data that keeps coming in. The last US jobless claims in the US being a clear example of that, as notwithstanding another appalling print above 5 million, taking the 4 week total of US jobless claims to 13.5% of the labor force, equities were unfazed by it, communicating that’s discounted old news.

Furthermore, a report noting that a Gilead Sciences drug showed effectiveness in treating the coronavirus helped to propel the the stock market higher in the after hours trading on Friday. It’s going to come down to whether these breakthroughs are going to have a meaningful impact in helping the economy to ‘re-open’ quicker than anticipated based on current projections.

I will open up some brackets here because outlining the explosion in the price of Oil is also worth touching on. The black gold instrument was catapulted in after hours from sub $20.00 levels to above $26.00 (that is a 30% spike!), in a market still dominated by fundamentals. The latest driver includes a report by Bloomberg that Saudi Arabia and Russia had a phone call, which was followed by the issuance of a joint statement stating they are ready to take “further measures” if needed.

So, what did this push up in equities mean for the USD? After a promising run to the upside since mid-week, there is real danger that the flows in the Dollar start to revert in a more meaningful way the higher equities go following the newly found strong negative correlation that currently exist between the SP500 & USD index.

I’d be very careful to be chasing equities higher, however, as the mark up in the ES1! through the twin-light Asian session is yet to see the VIX inverted (fear index) portray the same bullish structure. If one throws into the technical mix the weekly resistance faced, it should add weight to expect an initial fading of this move back to forms of ‘mean’.

As I shift the attention to Gold, the round of USD buying we are going through has left us with price still hanging onto gains above the previous trend high from the March 9 week. As I argue in today’s video analysis, with up to 4 days of acceptance beyond this technical level that converted into support, and with all the USD buying absorbed by committed gold longs, this market looks bright.

In the EUR/USD front, the structure and momentum point lower, which typically results in selling on strength to eventually ensue. But as we know, market are not ‘black and white’, and with the USD index showing potential cracks again (to the bear-side) and 1.0815-30 a key support area hit a sticky wall to break, I can also picture an environment where the bear trend terminates here.

The outlook for GBP/USD looks even more encouraging if we see the market re-taking the 1.25-2510 prior swing high. Until that occurs, the market might soon transition into a range even if this is unlikely to last given the pick up in volatility this week and the fairly narrow range that would ensue, delimitated by barely 100 pips from top to bottom.

In the AUD/USD, I’d be wary, as in the case of equities, to be chasing up this market as the current pricing shows a very substantial negative divergence with the USD index as 0.6370-80 resistance is retested. My above expression of markets are not always ‘black or white’ could not be truer in this market, as a case to be a buyer on weakness and seller on strength finds technical backings.

Lastly, the USD/JPY is trending up as it reverts from the 107.00 support in line with rising equities. This market looks like it be be settling into a 80-100 pips range until a resolution beyond 107.00/108.00. Trading the USD/JPY in a risk appetite environment will provide the most volatile, one-sided moves when equities and the USD index move in the same direction, which as we know, it has not been the case since the liquidity crunch episode from last month.

If you found this fundamental summary helpful, just click here to share it!

Insights Into Market Flows

This analysis complements one’s view by accounting for multi timeframe biases. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position. This analysis is mainly intended as a way to educate traders in upping their analytical skills.

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.



Recent Economic Indicators & Events Ahead



Source: Forexfactory

If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!



Important Footnotes

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

SMART MONEY TRACKER
In order to assess the market momentum of a particular asset, I’ve promoted for years the idea of using what I call the smart money tracker. The settings and the indicator can be obtained via our Discord room, where traders from all walks of life interact frequently. In this video I lay out the elements I look into to call trend directions.

SUPPORT & RESISTANCE
Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.

FUNDAMENTALS
It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.

PROJECTION TARGETS
The usefulness of the 100% projection resides in the symmetry and harmonic relationships of market cycles. By drawing a 100% projection, you can anticipate the area in the chart where some type of pause and potential reversals in price is likely to occur, due to 1. The side in control of the cycle takes profits 2. Counter-trend positions are added by contrarian players 3. These are price points where limit orders are set by market-makers. You can find out more by reading the tutorial on The Magical 100% Fibonacci Projection

 
Find my latest market thoughts

Transient Spell Of Low Vol In Forex & Equities

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…


Scan Of The Markets



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

The equity market in the US, as expressed through its bellwether instrument (S&P 500) continues to display bullish dynamics. The constructive price action happens at a time when developed countries, including the US, are laying out plans to relax lockdown measures in coming weeks amid positive stories about treatment/testing trials.

However, be on high alert, as the way the run-up in the S&P 500 is playing out, in vol terms, makes me think the bullish days might be numbered before sellers step in and re-take control. Why would I make such a claim? Because I am in the business of building up scenarios and make hypothesis that I envision could transpire, and while it’s anyone’s guess, I don’t like how this bull run is evolving.

It could be a fundamental-driven event or a technically-inspired move that tilts the balance. If the former, reading through the weekend news, Reuters carries a story that plays into my own view of a world where the hostility between the US and China go up a few notches.

Tensions between the two superpowers may arise on the basis of evidence that was always out there about China intentionally covered-up the magnitude of the crisis in what’s seen as a hugely irresponsible mismanagement of this pandemic crisis that could have been minimized if the had acted as a key global player they aim to be.

Back to the S&P 500. Why gives for the bullish days to be soon over? In my video today I explain why the vol dynamics in the S&P 500 tend to be followed by a mark-down in prices. The descending trendline drawn in the vol chart tells us we are in a compression phase with buyers far from expressing conviction, and it gets worse, as this action heads straight into a huge weekly resistance.

The picture I get in the Oil market is far less encouraging for the interest of buyers, which have been absolutely annihilated as the price breaks and accepts in its last weekly auction levels sub $20.00. This has some serious technical implications because as ‘logic-defying’ as it may sound, it tells us Oil might be headed next to the $10.00 target. Excess supply conditions is one of the main culprits.

As part of today’s technical break down, you will notice that the predominant theme in the Forex domain is the establishment of ranges in the 4h charts. What this equates to is an environment of tighter and more balanced flows that are so far causing a suppression of volatility until we can get a resolution beyond the upper/lower bound of these.

If you found this fundamental summary helpful, just click here to share it!


Insights Into Market Flows

This analysis complements one’s view by accounting for multi timeframe biases. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position. This analysis is mainly intended as a way to educate traders in upping their analytical skills.

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.



Recent Economic Indicators & Events Ahead



Source: Forexfactory

If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!

Important Footnotes

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

SMART MONEY TRACKER
In order to assess the market momentum of a particular asset, I’ve promoted for years the idea of using what I call the smart money tracker. The settings and the indicator can be obtained via our Discord room, where traders from all walks of life interact frequently. In this video I lay out the elements I look into to call trend directions.

SUPPORT & RESISTANCE
Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.

FUNDAMENTALS
It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.

PROJECTION TARGETS
The usefulness of the 100% projection resides in the symmetry and harmonic relationships of market cycles. By drawing a 100% projection, you can anticipate the area in the chart where some type of pause and potential reversals in price is likely to occur, due to 1. The side in control of the cycle takes profits 2. Counter-trend positions are added by contrarian players 3. These are price points where limit orders are set by market-makers. You can find out more by reading the tutorial on The Magical 100% Fibonacci Projection
 
Find my latest market thoughts

WTI Negative: COVID Era Defies Old Beliefs

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.

Scan Of The Oil Market

What just happened to Oil? The unthinkable became a reality in the front-month May contract as the price of WTI got slaughtered as low as -$40.00. Producers are at a point where they no longer have sufficient capacity to store all the surplus of Oil, so they’ll pay to get rid off it.

Let me show you first, via price bulletins and posted prices, where we stand in the American physical oil market by the close of New York. What once could not be fathomed (read replies), this pandemic keeps both schooling the uneducated and defying old beliefs and paradigms.



A picture speaks a thousand words, right? You probably want to print this image off, stick it on the wall and frame it nicely, especially if you were able to milk this trend to the downside.



THE PERFECT STORM IN OIL PRICES

By following trends, you get exposed to the maximum reward by following the flow. At times, when the proverbial hits the fan and things go haywire with technicals, fundamentals and overly speculative moves aligning, one could be in for a big pay day. That’s what happened to those short the front-month contract as some buyers will be leaking their wounds for years.

So, let’s touch briefly on the complexity of factors precipitating Oil front-month contract (May) to collapse in such a spectacular fashion.

Firstly, technicals were screaming sell on strength, with all the signals flashing red right after the failure by OPEC to desperately address the whole conundrum with the cuts announced not moving the needle, even if we must remember that these are applicable from May.

However, I am just reading news crossing the newswires that Saudi Arabia and other OPEC members are considering cutting their oil output as soon as possible, refusing to wait until next month, the WSJ reports. “Something has to be done about this bloodbath,” said a Saudi official familiar with the matter. “But it might be a little bit too late.”



By disseminating the fundametals, here is where we understand the ‘why’ this happened, as opposed to technicals, which gives us a response for the ‘how’ we got to where we are.

In a nutshell, there has been an utter extermination of the Oil demand as the world went into lockdown mode at a time when supply kept pumping at steady levels amid a harsh price war. This resulted in unseen reserve excesses, to the point that producers run out of space to store the output.

Here is the explanation offered by one of our Discord members:



@bbatrading makes a great point when he states that turning off Oil is not like ‘the tap in our kitchens’. Why? Because for sellers of oil, its damn expensive to shut down wells, oil pipelines, hence the problem at the storage facilities mounts as these are filling up towards capacity. Besides, one must think of the added costs and logistics involved if considering the transportation of oil from inland hubs to ships on the coast which have seen a steady cost increase for floating storage.

What about the speculative element? Well, as Forexlive and Forbes report, it looks as though every average Joe out there, alongside their dogs, have been busy piling into Oil (refers to front-month contract) through ETFs that would mick the price of it heavily to the long side. Besides, thrown into the mix some massive margin calls ongoing right now by some funds truly imploding.

WHAT’S NEXT FOR OIL?

First, a quick crash course on how the Oil market really works. The most popular contract out there is the CL, which is traded in the NYMEX market. This instrument, unlike spot forex, is a physical contract and it is deliverable. What this means is that if you are holding a long position in the CL by the end of the contract, which expires every month, you must take delivery, hence those who own the contract need to have a place to store the Oil.

The way it works is that each month, towards the end of the expiration date, most volume switches over to the next contract, which tends to be a seamless process with little variation in prices as the market is functioning properly and its price discovery is efficient. For days, the real action has been on the June contract, as reflected by the open interest which has been five times higher compared to May’s with staggering amount of volumes, even through the rollover period.

Back to the May contract, this time things were different, and as we roll over from the May contract, which expires this Tuesday, to the June, traders holding CL May contracts long are caught under a lot of pain. They had no options left as expiry is upon us to take delivery of physical crude oil at Cushing, Oklahoma, but’s it’s all filled up/booked. Therefore, panic ensued to run to the exits.

Think about it. With the current constraints in storage capacity by physical oil traders, there was little escape, which wouldn’t be the case and selling at $0 or canceling the contract would make more sense if they had space, as they could buy May crude oil, take delivery, store it and then sell it back into the market in June for a juicy profit.

The tricky situation now is that if the same storage issues arise in the June contract as this moves into expiration, we are risking a replay over the coming weeks to prices towards where the May contract ended. What could avoid that? A recovery in demand (unlikely at this stage), or a radical twist in the fundamental outlook through more aggressive production cuts, combined with more producers out of business, which would led to accommodate more space to store Oil in the US.

Anyone who holds the view that today’s plunge into negative territory in the front-month oil futures contract is a one-off and can’t happen again would be solely misleading himself. The backdrop, unless the fundamentals revert, is looking extremely dire folks. The hope? Further OPEC cuts, the existing ones coming into effect, a successful transitions towards lifting social distancing that improves demand, and new measures in place by government to counter a similar move as more episodes like this won’t send the right signals for risk appetite.

These intricacies part of the CL contract are partly the reason why brokerage firms, including Global Prime, resort to the offering of a continuous Oil contract vs an expiration contract. This explains why in our ticker XTIUSD, the price remains stable circa $21.00, as it reflects the future contract pricing.

The rollover is the switching from the front month contract close to expire to the next front month contract. Some instruments we offer are based on futures contracts which we periodically roll. The rollover allows the account holder to maintain the current open position into the next month.

WHY BRENT DID NOT COLLAPSE AS WTI DID?

Another very noticeable anomaly going on in the markets is the outrageously high spread between the price of WTI (American pricing benchmark) and that of Brent (The European pricing benchmark), and also now considered as the global benchmark. The latter barely dipped a mere 4% hovering at US$27 per barrel, which reflects once again, the point made about storage constraints in the US as the European version of the CL contract doesn’t face the same storage issues.

Because of the nature of the contract, Brent can be delivered offshore to a variety of locations. What this means is that if no or little storage is left in one place, the mechanisms guarantee that it can be delivered elsewhere. This also helps to explain why the collapse in WTI saw Oil-sensitive currencies (CAD, NOK) unfazed by the hammering of CL1!

BOTTOM LINE: THIS IS A REALITY CHECK FOR THE WORLD

At this point in time, things aren’t as bad as if this is an Armageddon-type situation, which is what headline-grabbing tactics make it look like. The price for Brent tells us the real picture, even if things could keep getting ugly again, especially for WTI due to storage constraints.

The price action in the latter is a watershed moment and a reflection of the reality in the ground, comprised of a toxic cocktail that results in no one wanting physical oil amid the evaporation of storage room, demand and purpose to hold it.

If you found this fundamental summary helpful, just click here to share it!
 
Find my latest market thoughts

Oil Rout Spills Over To Broader Risk Aversion

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…


Scan Of The Markets



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

At the epicenter of the dial back in risk sentiment as a major influence to push the S&P 500 over the cliff and roll over (~-3%) we find the ongoing high vol rout in the Oil market. The June CL futures has effectively become the front-month contract, with more dramatic falls sub $10.00 seen following the unprecedented slaughter on Tuesday.

Allow me to remind the readership of a citation from yesterday’s report: “Anyone who holds the view that today’s plunge into negative territory in the front-month oil futures contract is a one-off and can’t happen again would be solely misleading himself. The backdrop, unless the fundamentals revert, is looking extremely dire…”

The desperation in the Oil industry is palpable as Oil implied volatility has gone absolutely parabolic as this chart shows. Besides, Bloomberg notes, “Oil ministers from the OPEC+ coalition held an unscheduled conference call on Tuesday to discuss the collapse in Oil, though a closing statement signaled they didn’t settle on new policy measures.”

Even news that the US Congress has agreed to a fresh spending bill to stem the economic fallout from the shock of the pandemic, this has barely had an impact on markets. A tweet that Trump is bailing out the Oil & Gas Industry didn’t move the needle either.



The renewed sell-side pressure in equities as Oil keeps imploding has had immediate spillover effects in the outperformance of the USD, JPY, but also a stubborn EUR and CHF (all risk-off friendly), while on the flip side, currencies most sensitive to risk-off dynamics (AUD, NZD, CAD, GBP) have gone through a rough patch, especially GPB.

We now find ourselves in an environment primed for equities to potentially resume the downward tendencies in line with the macro COVID19-inspired bearish trend, which would have major ramifications for the interest of currency flows.

Why is that? Because that is most likely to be accompanied by a period of USD fortitude. Be reminded that the USD analog long endorsed weeks ago (macro call ) is still very much a valid case.



Not only that, but by checking the above updated chart, it looks as though the structural breakout through the breach of a sticky resistance area is now being retested. For those buying into this view, this is a formidable level to be looking to turn more constructive in the USD.

If you want to find out the main difference of this proprietary USD index vs the mainstream DXY, I invite you to check my recent video, where I shared with viewers a look under the hood in my USD index. You will notice the merit it has to build a relationship between the aggregated USD flows and your USD-denominated markets.

So, where do we stand in the grand scheme of the Forex domain? Well, first let’s get out of the way the yawning fest markets, which include the EUR/USD and USD/JPY, both still trapped in well defined ranges. Until there is a resolution outside the upper/lower boundaries, it’s a game of patience. In the EUR/USD front, however, the USD index is screaming that topside discounts exist.

We then have a number of markets where we are finally starting to see the light at the end of the tunnel as fresh flow imbalances ensue. That’s been the case in the GBP/USD, with selling on weakness my default view now based on technicals/intermarket. The same can be said in the AUD/USD, although there is a caveat, as the daily still suggests we might be morphing into a range.

The USD/CAD market, with Oil under severe pressure and the USD strong as equities fall, the way bias is up. One must be mindful, however, that a very relevant resistance area between 1.4250-1.43 is preventing a more aggressive mark up in prices for now. Nonetheless, it really is the perfect bullish storm for the pair to keep showing upward tendencies as the lay of the land stands.

If you found this fundamental summary helpful, just click here to share it!

Insights Into Market Flows

This analysis complements one’s view by accounting for multi timeframe biases. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position. This analysis is mainly intended as a way to educate traders in upping their analytical skills.

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.



Recent Economic Indicators & Events Ahead



Source: Forexfactory

If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!

Important Footnotes

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

SMART MONEY TRACKER
In order to assess the market momentum of a particular asset, I’ve promoted for years the idea of using what I call the smart money tracker. The settings and the indicator can be obtained via our Discord room, where traders from all walks of life interact frequently. In this video I lay out the elements I look into to call trend directions.

SUPPORT & RESISTANCE
Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.

FUNDAMENTALS
It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.

PROJECTION TARGETS
The usefulness of the 100% projection resides in the symmetry and harmonic relationships of market cycles. By drawing a 100% projection, you can anticipate the area in the chart where some type of pause and potential reversals in price is likely to occur, due to 1. The side in control of the cycle takes profits 2. Counter-trend positions are added by contrarian players 3. These are price points where limit orders are set by market-makers. You can find out more by reading the tutorial on The Magical 100% Fibonacci Projection
 
Find my latest market thoughts

It’s All About The USD And It Looks Strong…

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…


Scan Of The Markets



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

We had a better session for Oil prices (June contract), ending just above the $14.00 mark after a 20%+ move up. With implied volatility stratospherically high, it doesn’t take much to cause such springy movements in the instrument. The latest recovery can be hardly rationalized to a single catalyst given the dicey environment.

Amid this backdrop of higher Oil, the S&P 500, which is at the epicenter to gauge risk sentiment, printed a +2.3% rise, even if at best, this positive day simply represents the reinforcement that we are entering a potential range-bound period in the 4h chart. I have my reservations in all honesty, given the recent spike in the VIX.

Be reminded that this is the year of volatility, not only in Oil, but also in equities, and hopefully it returns to Forex soon again. This quote courtesy of @DataTrekMB via Twitter says it all: “There have been 42 days in which the S&P 500 has posted a +1% one-day move this year, closing in on the annual average of 53 days over the last +6 decades, and we’re not even a full 4 months into 2020.”

Helping to stabilize European bond yields (Italy has been a key focus) even if the jury still out as to whether or not it can help to address the worsening equity sentiment, as Bloomberg reports, the ECB announced it will accept sub-investment grade debt as collateral as long as they were rated above BBB- as of April 17. The news has barely budged the Euro, which has traded overall weaker.

Today’s Flash’ Markit PMIs out of Europe and the US will be an anecdote to fill in newspapers, even if the market is probably going to sit it out given how much negativity has already been priced in. Everyone should ‘guess’ that the data, which now begins to caputre the effects of COVID-19, is going to be simply appealing. The latest weekly US jobless claims and UK Retail Sales are also due.

Note, if you are trading the Pound heading into May, the dullness that is to watch the Brexit conundrum unfold will make a comeback with Brexit-related headlines set to steadily pick up. As Reuters explains, “Brexit is set to work its way into the headlines again as a June deadline for extending Britain’s 11-month transition period turns currency traders’ focus back to the Pound.”

With the assessment of the fundamental backdrop and the of relatively stable risk dynamics out of the way, let’s now look at the Forex majors. Here, the story is one of positioning for USD long-sided bias at discounts. In the case of the EUR/USD, a topside auction at the high-end of its established range was gratefully sold amid the highlighted divergence it presented with our prop USD index.

The GBP/USD provided another firm declaration of intent by sell-side forces as they re-grouped at the 50% retracement for what looks like a market that may give it another shot at the trend lows. The AUD/USD and USD/JPY, in line with the USD strength thematic, also provided very interesting locations as of late to engage in shorts and longs respectively, as I elaborate in today’s video.

Even if it’s not covered in today’s video, the outlook for Gold has improved as buyers re-take control at a time when ‘real’ US Treasury yields are falling again. It’s a noticeable development to account for when the 5-yr ‘breakevens’ (average inflation expectations) go up, as when that occurs at a faster rate than nominal Treasury yields, then that’s detrimental for those seeking ‘real’ yields, which makes gold and stocks a more attractive investment proposition and move in tandem.

Lastly, an anomaly as part of this new regime where stocks and the US Dollar move in tandem, is the evolving divergence that I am observing between the behavior in equities (lower this week) yet the USD is putting up a real fight with a very solid performance. If you were to ask me, I’d say that’s an admission by Mr. Market that the 2nd wave of USD buying is soon if not already upon us as I argue in this USD long analog update where I draw parallels on how it played out in 2008/09.

If you found this fundamental summary helpful, just click here to share it!

Insights Into Market Flows

This analysis complements one’s view by accounting for multi timeframe biases. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position. This analysis is mainly intended as a way to educate traders in upping their analytical skills.

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.



Recent Economic Indicators & Events Ahead



Source: Forexfactory

If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!

Important Footnotes

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

SMART MONEY TRACKER
In order to assess the market momentum of a particular asset, I’ve promoted for years the idea of using what I call the smart money tracker. The settings and the indicator can be obtained via our Discord room, where traders from all walks of life interact frequently. In this video I lay out the elements I look into to call trend directions.

SUPPORT & RESISTANCE
Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.

FUNDAMENTALS
It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.

PROJECTION TARGETS
The usefulness of the 100% projection resides in the symmetry and harmonic relationships of market cycles. By drawing a 100% projection, you can anticipate the area in the chart where some type of pause and potential reversals in price is likely to occur, due to 1. The side in control of the cycle takes profits 2. Counter-trend positions are added by contrarian players 3. These are price points where limit orders are set by market-makers. You can find out more by reading the tutorial on The Magical 100% Fibonacci Projection
 
Find my latest market thoughts

Focus Shifts To Outright Euro Weakness

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…


Scan Of The Markets



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

Traders had to digest a plethora of negative news such as absolutely catastrophic global flash PMIs across Europe and the US, another spike in the US jobless claims above the 4 million mark which tells us the US unemployment is running near 20%, or the fact that Europe is yet to agree on how it will fund its covid-19 long-term recovery plan.

Be aware that the market is so far treating these dismal fundamentals as ‘old news’ and I see no reason why it would be any different on Friday, when we get the UK retail sales, the German IFO and US goods orders. As I mentioned in yesterday’s report, these fundamental reads “will probably be sit out given how much negativity has already been priced in. Everyone should ‘guess’ that the data, now capturing the effects of COVID-19, is going to be simply appalling.”

Despite the above, we saw suppressed volatility in US equities, with the S&P 500 (-0.05%) still trading within its 4-hour range. The continuation of the oil rebound was one of the few silver linings that one could argue contributed to the stabilization of risk sentiment. One that commodity-linked currencies (AUD, NZD, CAD), this time, managed to capitalize on in style by outperforming its peers.

By the way, do you wonder what caused the sudden intraday spike in the Yen or Euro crosses? In the former, it had to do with a Nikkei report that the BoJ may allow unlimited government bond purchases, while maintaining the yield curve target. The report also notes that the BoJ will double the purchase targets for commercial paper and corporate bonds, suppressing those yields. A similar flash spike was seen in the Euro as result of a Bloomberg headline attributed to Merkel where she endorsed that leaders’ virus response “must be huge.”‘

Something else worth pointing out is the latest data published by the Swiss National Bank, where it confirmed record losses of CHF38.2b as a results of its active intervention on its stock portfolio. Remember the SNB has been manipulating its CHF exchange rate to try to prevent further appreciation of the CHF against the EUR. This is all you need to know to understand why EUR/CHF has been a yawnfest and therefore the EUR and CHF are moving in lockstep as of late.

Another piece of news that got some air time is the failure of the first Chinese trial, as reported by the Financial Times, of the drug remdesivir, developed by Gilead Sciences, which showed not marked improvements in the patient’s condition. This developments contradicts previously released information that opened up a venue of hope about the effectiveness of the anti-viral drug.

Shifting gears now, let’s look at the currency market, where the EUR was the weakest link, manifesting lower levels across the G8 FX complex, in what may reflect some disappointment over the deep disagreements of the EU as they pertain to the long-term rescue fund.

It may have also had something to do with the bold statement by France President Macro, who said via Reuters “Europe has no future if we cannot find a response to this exceptional shock”, or even ECB Lagarde warning of the -15% contraction in GDP overnight.

EUR/USD looks technically very weak, even if this weakness is solely an expression of EUR weakness and not fueled by USD strength, which makes me wary and hence I call this trend not the healthiest. The EUR/USD, unfortunately for those seeking out well defined 4h/daily biases, is the only major that has cleared up the technical picture, even if that must be reconciled with the troubling fact that is being pushed down not as a result of USD strength.

The rest of majors analyzed in today’s video (GBPUSD, AUDUSD, USDJPY) are all, without exception, stuck in ranges, with the Aussie the one that may soon see a resolution of its topside edge amid a startling recovery. Granted, if we expand the focus outside these majors, there are definetely some juicy trends developing in markets involving the Euro, Swissy or even Pound against the strongest in FX. A market that I also touch on as part of today’s technical analysis which has made a strong bullish declaration of intent is Gold.

If you found this fundamental summary helpful, just click here to share it!

Insights Into Market Flows

This analysis complements one’s view by accounting for multi timeframe biases. Ultimately, it is the traders’ call, via a set of entries thoroughly backtested, to enter a position. This analysis is mainly intended as a way to educate traders in upping their analytical skills.

If you found the content valuable, give us a share by just clicking here! Besides, if you have a suggestion on extra instruments for me to cover, reach out to me via Twitter.



Recent Economic Indicators & Events Ahead



Source: Forexfactory

If interested in the best ‘free of charge’ News Indicator that displays data on past and future news in the Forex market via MT4, check this YouTube video I produced. The indicator allows you to save time, avoid mistakes. It’s spot on!

Important Footnotes

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

SMART MONEY TRACKER
In order to assess the market momentum of a particular asset, I’ve promoted for years the idea of using what I call the smart money tracker. The settings and the indicator can be obtained via our Discord room, where traders from all walks of life interact frequently. In this video I lay out the elements I look into to call trend directions.

SUPPORT & RESISTANCE
Unlike levels of dynamic support or resistance or more subjective measurements such as fibonacci retracements, pivot points, trendlines, or other forms of reactive areas, horizontal areas of support and resistance are universal concepts used by the majority of market participants. It, therefore, makes the areas the most widely followed. The Ultimate Guide To Identify Areas Of High Interest.

FUNDAMENTALS
It’s important to highlight that the daily market outlook provided in this report is subject to the impact of the fundamental news. Any unexpected news may cause the price to behave erratically in the short term. Monitor the event risks via Forexfactory.com & refer to Fundamentals vs Technicals In Forex.

PROJECTION TARGETS
The usefulness of the 100% projection resides in the symmetry and harmonic relationships of market cycles. By drawing a 100% projection, you can anticipate the area in the chart where some type of pause and potential reversals in price is likely to occur, due to 1. The side in control of the cycle takes profits 2. Counter-trend positions are added by contrarian players 3. These are price points where limit orders are set by market-makers. You can find out more by reading the tutorial on The Magical 100% Fibonacci Projection
 
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