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Global Prime: Daily Market Digest

Discussion in 'Market Predictions and Reports' started by IvanGlobalPrime, Aug 8, 2018.

  1. IvanGlobalPrime

    IvanGlobalPrime Private

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    Find my latest market thoughts

    The Aussie Steals The Limelight


    While it's fair to say that the EUR and the USD experienced its fair share of intraday volatility, the net change by the end of business in NY sees the Aussie as the absolute dominator.


    The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.

    Quick Take

    While it's fair to say that the EUR and the USD experienced its fair share of intraday volatility, the net change by the end of business in NY sees the Aussie as the absolute dominator. It is being followed by the Sterling and the Kiwi, two currencies that have recently suffered, as the chart below illustrates, from its own hardships as it is the stuckness in the Brexit saga and the clear dovish tilt by the RBNZ earlier this month and subsequent re-pricing of the market. Meanwhile, the Euro and the US Dollar, both were hit by supply imbalances as the countries' respective Central Bank left little doubt that more accommodative policies are coming. In the case of the ECB, in the form of a new round of TLTROs while the Fed is on its way to relax its policy by terminating QT even if we still need to clarify the future composition of the balance sheet. One thing is obvious, equity markets keep loving the prolonged patience the Fed has embarked upon. Somehow mixed in the middle we find the Yen, unable to hold onto its gains as one would expect when you have such a rampant S&P 500, retesting its year highs. Lastly, the Loonie keeps retracing its strong gains from 24h ago.

    [​IMG]
    Narrative In Financial Markets
    • The AUD is the main triumphant of an action-packed Wednesday, with the credit to be given to RBA Deputy Governor Debelle, who made some rather hawkish statement on the economy by noting that the jobs market is surprisingly strong while leading indicators are solid. Due to the tight similarities in G10 Central Bank policies, any potential communications out of the expected script (dovish for the RBA), is an event sensitive to market participants and as seen, to the AUD.
    • The expected volatility around the ECB, US CPI and FOMC minutes occurred, especially as ECB President Draghi began his policy statement, but the net effect at the end of the day was pretty disappointing, with a Draghi reiterating the negative outlook for the EU economy, while keeping the forward guidance on rates unchanged, on standby, at least until the end of 2019. As per the details of the new TLTRO, it won’t be until May/June that we’ll know more about it.
    • The marginal miss in the core US CPI reading, coming at +0.1% vs +0.2%, was easily counterbalanced by the weakness in the Euro, hence strength in the USD. It was on the fixed income market that the lack of any inflation in the US was reflected via lower Treasury yields.
    • The FOMC minutes didn’t bring much life to currency markets. It was an opportunity for the market to further dig into the recent change of rhetoric by the Fed, as the minutes referred to the March meeting where the ‘dots’ (rate projections) by board members had been lowered to reflect a largely neutral stance with no change in the policy rates for the remainder of the year. The bottom line is that the Fed is trying to massage its communication to make it look as though they are currently in a prolonged patient stance, so far helping to appease vol spikes.
    • As part of the EU Summit, leaders have agreed to kick the can down the road by extending the Article 50 (Brexit deadline) to Oer 31. UK PM May made her official statement to the press, saying that the extension could be terminated if the withdrawal agreement is ratified.
    Recent Economic Indicators & Events Ahead
    [​IMG]
    [​IMG]
    Source: Forexfactory

    RORO (Risk On, Risk Off Conditions)

    Notwithstanding the weakness in the Euro, which by default strengthens the US Dollar given the 60% weight as part of the DXY index, the dominant dynamics by the end of business in NY involve an environment characterized by broad-based USD weakness in a context of ‘risk on’. It is the rampant rise in US equities, with the S&P 500 forming a V-shaped reversal to test its recent highs, that acts as the main source of support to prevent the Yen from finding an excess of demand. The drop in the treasury yields is more a reflection of the tepid inflation read in the US, coupled with a neutral Fed, further strengthening the notion that an indefinite period of patience is needed. Surprisingly, our Yen index exhibits a bullish structure on the hourly, even if the present price action is more a function of dual weakness in the EUR and the USD than a reflection of ‘risk off’ flows. This prognosis is further anchored by the strong reversal in the VIX (vol index), down towards the 13.00 handle, but even more evidence originates by looking at credit markets, where junk bonds are flying vs investment-grade paper, a strong testament that the market is on a risk-seeing mode. The only two ratios not quite showing us the perfect picture for risk are Oil vs Gold and Copper vs Gold, both on a downward trend short-term, mainly due to the USD-induced Gold strength. Overall, we should consider the environment tentatively positive to keep supporting the likes of commodity currencies, while any further strength in the Japanese Yen should be relatively contained as per the current RORO analysis.

    [​IMG]

    Latest Key Technical Developments In G8 FX

    [​IMG]

    EUR/USD: Bullish Price Action Post ECB & FOMC


    The quick round trip towards the touch of a 3rd trendline was met with a vigorous rebound, which strengthens the idea that this is a market with ongoing bullish traits. Playing shorts around the resistance 1.1275-80 in light of the V-shaped bullish reversal becomes riskier in my view. Ever since the bottom found on April 2nd, the episodes of acceptance seen are occuring on the topside, with the latest action on the aftermath of the ECB and the FOMC anchoring this view, as the market failed to find any acceptance on the auction lower on Wednesday. If looking to play longs, 1.1250-55 remains the best level to lean against while sellers will look to exploit plays off 1.1275-80 ahead of 1.13.

    [​IMG]

    AUD/USD: 100% Proj Target Hit To The Pip


    The ongoing buy-side campaign in the Aussie came to an abrupt halt once the 100% proj target of 0.7175 got hit late in the NY session. From there, a pullback into the 0.7150-55 is to be expected before a cluster of bids looks to re-engage in the bullish momentum. Personally, the caveat is that we’ve completed a 3-legs push up, which tends to be followed by a period of distribution/consolidation in prices, but we should first wait and see if the current bullish structure has concluded or the market aims for an incomplete newly found 100% proj target at 0.7184. As long as the Aussie remains above its ascending trendline, and with intermarket flows strong positive, the path of least resistance should continue to be to the upside in the near term.

    [​IMG]

    AUD/JPY: Pressure Builds On Major Daily Resistance


    The strong demand towards the Aussie has led to a revisit of a daily level of resistance circa 79.60-65, where judging by the price action, an enormous number of offers are sitting. The current environment of broad--based USD weakness in a context of rising equities should still incentivize enough demand in the pair to think that the prospects of an eventual breakout would be justified. Until the resolution to the upside happens, if at all, this is a market that should be treated as what it is, that is, a range bound pattern, with selling tops and buying bottoms the best way to play it. However, as intermarket flows stand, the current top play faces poor prospects of major rotations back down. If a breakout were to eventuate, 79.88, 80.00 and 80.15-80.20 are the sequence of targets to reach.

    [​IMG]

    EUR/AUD: Breaks Long-Standing Range


    The breakout of the range, conditioned to gather further momentum, opens up the doors to a new downside target of 1.5673, even if the round number 1.57 will represent a hindrance on the way. As technicals stand, the acceptance below the key support at 1.5750-55 makes a backside retest of the level an ideal area to reinstate shorts ahead of the round number 1.58 (alignment with today’s ADR topside limit). If this latter level is reached, it would really throw cold water into the hopes of a potentially downtrend extension to instead anticipate a mere widening of the range, with the new bottom found just ahead of 1.57, with coincides with the low registered on April 2nd.

    [​IMG]

    EUR/JPY: Bearish Structure In Conflict W/ Intermarket Flows


    I personally wouldn’t be placing too high hopes for the bearish trend to resume judging by the micro trends identified in our RORO model, where equities recovered in style as the USD sold across the board. These are not the dynamics that are going to favor a rish back to buying Yens, while the Euro should keep its demand fairly ample across the board as a function of USD weakness. Should the exchange rate break through the recently formed descending trendline, it would negate the short-term downtrend to instead bring the focus back into 125.55-60. On the contrary, a resumption of the sell-side action sees 125.00 as the next transition, with an eventual target in the area of 124.50-61.

    [​IMG]

    USD/JPY: Critical Support Reached On 3 Legs Down


    An important level of support on the 4-hour chart circa 110.85 has acted as the temporary bottom found by the pair, even if under the current dynamics of lower US yields and DXY, the demands towards this particular exchange rate should be limited. No doubt rising equities support the selling of Yens as portfolios seek riskier bets, but you will be hard-pressed to find time in which the pair can put on a solid recovery unless US yields start to move in congruence with equities. For now, the key technical level to the upside one must pay attention as the first real test of conviction to keep the bearish trend going is the intersection of a descending trendline. A break and hold above would increase the risk of a range developing, considering the current intermarket flows, where rising equities are negative the Yen while lower US yields/DXY add pressure to the DXY. Should the downtrend resume in case ‘risk off’ makes a comeback, a 100% proj target at 110.71 may be eyed.

    [​IMG]


    Important Footnotes

    • Risk model: The fact that financial markets have become so intertwined and dynamic makes it essential to stay constantly in tune with market conditions and adapt to new environments. This prop model will assist you to gauge the context that you are trading so that you can significantly reduce the downside risks. To understand the principles applied in the assessment of this model, refer to the tutorial How to Unpack Risk Sentiment Profiles
    • Cycles: Markets evolve in cycles followed by a period of distribution and/or accumulation. The weekly cycles are highlighted in red, blue refers to the daily, while the black lines represent the hourly cycles. To understand the principles applied in the assessment of cycles, refer to the tutorial How To Read Market Structures In Forex
    • POC: It refers to the point of control. It represents the areas of most interest by trading volume and should act as walls of bids/offers that may result in price reversals. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals the constant evolution of the market auction process. If you wish to find out more about the importance of the POC, refer to the tutorial How to Read Volume Profile Structures
    • Tick Volume: Price updates activity provides great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement. Studies validate that price updates (tick volume) are highly correlated to actual traded volume, with the correlation being very high, when looking at hourly data. If you wish to find out more about the importance tick volume, refer to the tutorial on Why Is Tick Volume Important To Monitor?
    • 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.
    • Correlations: Each forex pair has a series of highly correlated assets to assess valuations. This type of study is called inter-market analysis and it involves scoping out anomalies in the ever-evolving global interconnectivity between equities, bonds, currencies, and commodities. If you would like to understand more about this concept, refer to the tutorial How Divergence In Correlated Assets Can Help You Add An Edge.
    • 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
     
  2. IvanGlobalPrime

    IvanGlobalPrime Private

    Joined:
    Aug 1, 2018
    Messages:
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    Find my latest market thoughts

    EUR Leads The FX Pack In April


    In terms of relevant news to account for, the last 24h should be defined as a low key affair, which is why I will afford to take a step back and look at the big picture for April


    The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.

    Quick Take

    In terms of relevant news to account for, the last 24h should be defined as a low key affair, which is why I will afford to take a step back and look at the big picture for April. After all the chat about the Euro being fundamentally weak, which is a reality I agree on, the market is not yet convinced that the currency deserves to be overly supplied even if the ECB remains firmly dovish and ready to go through another round of TLTRO mid this year. The net effect, however, considering the rest of Central Banks are headed in the same dovish direction, is a market that lacks the incentives to develop macro trends and its volatility is a reflection of it, with carry trade back in vogue.

    The performance of G8 FX through the first 2 weeks of April is the proof in the pudding if you were wondering the true rotational nature of these markets. It makes the interpretation of intermarket flows, especially episodes of 'risk on & risk off' to gauge the direction of the AUD, CAD, NZD, JPY, USD all more important, while the GBP keeps trading to the tune of its own drummers (Brexit-related news) & the EUR accurately respecting technicals. The depreciation by the NZD and the trends that have developed as a result of the dovish surprise by the RBNZ earlier this month encourages us to think that once Central Bank policy divergences become a bigger theme in the future, trends will return, even if we shouldn't hold our breath but instead adapt to the present circumstances.

    One really needs to contend with the diminutive moves witnessed day-to-day by being much more nimble to take profits, be aware of the relevances that proj targethas in such a multi-year low environment and get better at deconstructing the granular directional biases still developing intraday. As the chart below shows, long EURs or USDs against the likes of the Japanese Yen have paid off handsomely in the last 24h, which judging by the RORO conditionsI analyze every day, you were definitely warned.

    [​IMG]

    Recent Economic Indicators & Events Ahead

    [​IMG]
    [​IMG]
    Source: Forexfactory

    RORO (Risk On, Risk Off Conditions)

    Remember that the table below is dynamic. I take as reference the micro slopes at the end of business in New York (5pm), but you must be constantly adapting to the ebbs and flows as there is a constant permutation of dynamics depending on the ever-evolving flow of fundamental information, technicals influencing price, etc. The official micro context we found ourselves in at the cutoff time on Thursday reflected an environment of USD strength in a context of neutral to bearish stocks, even if this last assessment must be taken with a big bucket of salt as the S&P 500 continues to be in a strong macro trend. If the USD can sustain its recent gains, it should act as a negative vs commodity currencies such as the AUD, CAD, NZD, especially if the established bearish micro trends in Oil and the S&P 500 by the NY close can be maintained, which in the case of the latter is a tall order as I mentioned, given the macro bullish outlook, so be extremely caution. Remember, it's only when we can combine a weaker USD and rising equities that currencies such as the AUD and the CAD will ripe the most benefits, the latter with an influence on Oil too, as said.

    [​IMG]
    [​IMG]
    Latest Key Technical Developments In G8 FX
    [​IMG]
    Interested about downloading today's key levels? Find the MT4 templates, updated daily, by clicking the following link.

    EUR/USD: Multiple Attempts To Break Higher

    The fact that the EUR is back retesting its recent trend highs even as we just went through a spell of strong USD demand in the last American session, speaks volumes of the micro bullish sentiment in the currency. This is far from being the best exchange rate to exploit the fortitude of the Euro though, as there are other currencies such as the commodity-linked block where gains have been much more evident as intermarket flows turn less friendly these currencies (AUD, CAD, NZD). Should we see acceptance above 1.1285-90, another key resistance lies overhead at 1.13 (lots of offers eyed due to its confluence with the ADR limit, hourly resistance, round number). Should the momentum higher extent heading into next week, the area 1.1325 (100% proj) is the target of the potential leg up.

    [​IMG]
    AUD/USD: The Squeeze Continues, Bottom-Side Liquidity Eyed

    With equities struggling to extend gains as depicted by the downward slope of the 25-HMA and the dynamics around the DXY improving markedly, the Aussie has been hit by consistent supply. The latest round trip in the Aussie through 0.7170 only to be snapped back down en-route towards 0.7108-0.71 liquidity-rich area, comes to show the true rotational nature of these markets. The move down has effectively violated the bullish cycle as the ascending trendline is taken out, while the impulsivity of the selloff suggests there is definitely merit for this leg to represent a meaningful top.

    [​IMG]
    USD/JPY: Retesting Liquidity-Rich Resistance Area

    There is no denying that the bullish momentum on this exchange rate is very strong, and testament of it is what buyers were able to achieve, that is, breaking through the 100% proj target of 111.69 and retest the 111.80. I am now expecting pockets of demand to support the pair on shallow pullbacks as the 111.55-69 gets revisited, with a key intersection to take control now at play circa 111.80. Judging by the bullish micro slopes in the DXY and US 30-year bond yields, the intermarket flows should stay supportive of this pair, even if the downturn in the S&P 500 micro slope acts as a counterbalance.

    [​IMG]
    AUD/JPY: Takes A Crack At Resistance, Caution Warranted

    The saturated price action right underneath the critical level of resistance reflects a market feeling more comfortable to accept higher prices as the bidding pressure goes on. In the early hours of Asia, we’ve finally seen the breakout transpire, which has allowed testing the next key level of resistance around the 79.75 ahead of the 80.00. With no stimulus to come out of the economic calendar and no much expected in the way of relevant news, I foresee the market struggling to fill out the heavy tier of offers resting ahead, which should be broadly spread out across the 79.75-80.00 price intervals. Also notice, from an intermarket flows perspective, we are starting to see value selling high prices as the S&P 500 micro slopes turns lower in an environment (by the NY close) of USD strength, even if this has been somewhat reversed in the early hours of the Friday session in Asia.

    [​IMG]
    EUR/JPY: Spike Towards 100% Proj Target

    Most of the gains for the day appear to have been made just 1h into the Tokyo open. If one judges at the area where the spike has landed to, you’d have to be very courageous to envision much further gains from here for the remainder of the year. The area of 126.15-25 intersects with the 100% proj target, a horizontal level of resistance derived off the H4 chart, and the ADR limit. Shallow pullbacks towards the 126.00 to play a tight range game is what I’d be expecting, with the risk of a deeper pullback should risk off conditions pick up steam in the session to come. By the close of business in NY, the bearish micro slope in the S&P 500 and the bullish ones in the DXY/US30Y, makes me think that the move seen in this exchange rate looks rather overstretched.

    [​IMG]

    Important Footnotes
    • Risk model: The fact that financial markets have become so intertwined and dynamic makes it essential to stay constantly in tune with market conditions and adapt to new environments. This prop model will assist you to gauge the context that you are trading so that you can significantly reduce the downside risks. To understand the principles applied in the assessment of this model, refer to the tutorial How to Unpack Risk Sentiment Profiles
    • Cycles: Markets evolve in cycles followed by a period of distribution and/or accumulation. The weekly cycles are highlighted in red, blue refers to the daily, while the black lines represent the hourly cycles. To understand the principles applied in the assessment of cycles, refer to the tutorial How To Read Market Structures In Forex
    • POC: It refers to the point of control. It represents the areas of most interest by trading volume and should act as walls of bids/offers that may result in price reversals. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals the constant evolution of the market auction process. If you wish to find out more about the importance of the POC, refer to the tutorial How to Read Volume Profile Structures
    • Tick Volume: Price updates activity provides great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement. Studies validate that price updates (tick volume) are highly correlated to actual traded volume, with the correlation being very high, when looking at hourly data. If you wish to find out more about the importance tick volume, refer to the tutorial on Why Is Tick Volume Important To Monitor?
    • 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.
    • Correlations: Each forex pair has a series of highly correlated assets to assess valuations. This type of study is called inter-market analysis and it involves scoping out anomalies in the ever-evolving global interconnectivity between equities, bonds, currencies, and commodities. If you would like to understand more about this concept, refer to the tutorial How Divergence In Correlated Assets Can Help You Add An Edge.
    • 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
     
  3. IvanGlobalPrime

    IvanGlobalPrime Private

    Joined:
    Aug 1, 2018
    Messages:
    25
    Likes Received:
    0
    Find my latest market thoughts

    Markets Bet On The Chinese Growth Story


    Market participants are certainly blaring the trumpets as a whole legion of newly found buyers go full throttle buying risk-related assets in response to the upbeat Chinese economic figures in trade (mainly exports) and credit growth, which implies better reads should lie ahead.


    The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.

    Quick Take

    Market participants are certainly blaring the trumpets as a whole legion of newly found buyers go full throttle buying risk-related assets in response to the upbeat Chinese economic figures in trade (mainly exports) and credit growth, which implies better reads should lie ahead. The massive rally in the AUD/JPY portrays like no other pair the ebullient mood in financial markets, as both global equities and bond yields move up in tandem in what should be understood as a reflection of renewed optimism towards a global recovery. The fuel engineering this rebound is thrown by China alone, but let's not forget, it accounted for half the global growth since the GFC. The Euro, as highlighted in my last report, is another currency defying gravity by putting on its best performing month YTD, capitalizing on the rather neutral outlook by the USD this month. The outlook for EM should definitely improve from here on out, which retro-feeds in a bullish AUD as a proxy to play CNY longs, while at the same time, it suggests the recent pattern of foreign-invested USD repatriation may see a turnaround with negative USD implications as more capital gets interested in the EM growth story if China keeps it up. The Kiwi has also been spurred by its correlation dynamics with the AUD, while CAD, GBP were the two most uneventful pairs in terms of daily movements.

    [​IMG]

    Narrative In Financial Markets

    • The resurgence of positive data out of China is at the forefront of the latest rampage movements in risk assets as trade (mainly boost in exports while concerns on import figures remain) and credit figures (massive jump in aggregate financing) in China are celebrated.
    • Even if the US consumer confidence came downbeat on Friday, by the time the release came out, ‘true risk on’ dynamics were in full swing, hence it was largely ignored.
    • In the US, the S&P 500 closed above the 2,900.00 for the first time in over half a year with US financials the top performer sector spurred by JPM results.
    • The Japanese Yen was absolutely annihilated on Friday, as the news out of China’s economic figures came combined with US Treasury Secretary Mnuchin signaling further progress in the trade talks by highlighting that a commitment of enforcement could work both ways.
    • US President Trump kept attacking the Fed via Twitter, noting that “if the Fed had done its job properly, which it has not, the Stock Market would have been up 5 to 10k additional points”, adding that “QT was a killer, should have done the exact opposite.”
    • As part of the G20 Finance Ministers and Central Bankers, it was a non-event for financial markets, with the group acknowledging that the global economy faces evident risks despite the usual ‘overinflated’ optimism was emphasized by talking up hopes of a bounce in 2020.
    • ECB President Draghi showed signs of concern about the Fed’s independence, arguing that “if the Central Bank is not independent then people may thin monetary policy is determined by political advice rather than objective assessment of the economic outlook.”
    Recent Economic Indicators & Events Ahead
    [​IMG]
    [​IMG]
    Source: Forexfactory

    RORO (Risk On, Risk Off Conditions)

    As the charts below illustrate, we’ve entered a period of absolute dominance by micro ‘true risk on’ flows, with all charts without exceptions flashing risk appetite is well and truly alive. Note, the moves from Friday, as portrayed by the major selloff in the Japanese Yen, should be a reminder that unless you are a momentum trader looking to trap weak-handed players for quick intraday trades, the overstretched nature of the movements suggest it becomes riskier to play the upside without some type of pullback, even if it occurs in a shallow fashion. The S&P 500 has hit its 100% proj target as has the US 30-year bond yield spread, therefore outlines the risks of a technical correction.

    [​IMG]
    Latest Key Technical Developments In G8 FX
    [​IMG]
    Interested about downloading today's key levels? Find the MT4 templates, updated daily, by clicking the following link.

    EUR/USD: Pullback After 100% Proj Target Hit

    With USD repatriation flows likely in reversal mode as China’s data strengthens the outlook towards EM economies, alongside risk appetite adding additional downside pressure to the USD, the Euro continues to find a better bidding tone. In this type of environment, and with technicals unambiguously positive as the 25HMA bullish slope reflects even as a pullback sub 1.13 took effect, the main bias remains to play longs for an extension of the recent gains. A break below the 1.1285-90 H4 horizontal line would be a first warning of the flows in the exchange rate shifting for potential damage of the uptrend, even if it won’t be until a breach of the ascending trendline off April 10th that buyers should really start questioning the underlying bias. The current bullish structure is one anchored by renewed impetus in its cycle dynamics, with the latest ramp up in the rate achieving a greater appreciation than any of the previous leg ups since the April bottom. This is not the type of market communicating that the bullish cycle is running out of steam anytime soon.

    [​IMG]
    AUD/USD: Demand Found On Shallow Pullbacks

    On the back of one of the most aggressive intraday demand imbalances in 2019 in a context of low vol in this exchange rate, you would expect buyers to continue pilling up, at least aiming for a potential level where a change of behavior may take effect above 0.72. That’s an area where existing longs would find plenty of liquidity to potentially close long-help positions. Should the 0.72 area be broken, it will most likely be driven by persisting USD weakness with a possible absence of stocks-derived flows as the S&P 500 looks overstretched at these levels. At this stage, I refuse to envision a spontaneous reversal of the dominant bullish trend after seeing the overwhelming demand imbalance that took place last Friday, one that should lead at least the filling out of offers thru 72c.

    [​IMG]
    AUD/JPY: On A Tear As True Proxy Of Ebullient Sentiment

    Without a doubt, long AUD/JPY on Friday was the best play. One that unraveled away of a congestive range-bound area that had lasted for most of April in a 60-pip range give or take. As positive news out of China’s economic activity hit the screens and the range broke out, it was off to the races. The consolidation above the 100% proj target signals a further squeeze of shorts is a possibility that has the technicals as the main backing, with 80.25-20 (proj target violated) now expected to act as a pocket of intraday demand. As a caveat, I don’t see much further upside potential on the 2 intermarket assets that fuel this pair as both the US30y and the SP500 reached key technical projection targets. If 80.20-25 is taken out, expect buyers’ next stronghold circa 80.00 ahead of 79.75, the latter being the origin source of the strong demand seen last Friday at the London open.

    [​IMG]
    EUR/JPY: Stampede Of Buyers, Daily Resistance Reached

    The bull run in the exchange rate, similar to what we’ve seen in the AUD/JPY, is nothing short of spectacular. Proof of that is that the exchange rate cut through the 100% proj target of 126.45 like a hot knife through butter and never looking back up until this point. Which leads me to think that opportunities to keep trapping sellers on the wrong side of the market will continue to be available, perhaps not so much pushed by a continuous ebullient move in the S&P 500 or US30y but more about the demand derived off the EUR/USD, which looks quite bullish to extend its gains. Any push above the daily resistance area currently tested may see 127.00 as the next logical target, even if one should be aware that any levels above 126.75 will represent an excellent opportunity for sellers to take further chips off the table, which may create added supply. It remains to be seen if enough to counterbalance the ongoing demand imbalance as China’s growth prospects brighten up near term.

    [​IMG]
    Important Footnotes
    • Risk model: The fact that financial markets have become so intertwined and dynamic makes it essential to stay constantly in tune with market conditions and adapt to new environments. This prop model will assist you to gauge the context that you are trading so that you can significantly reduce the downside risks. To understand the principles applied in the assessment of this model, refer to the tutorial How to Unpack Risk Sentiment Profiles
    • Cycles: Markets evolve in cycles followed by a period of distribution and/or accumulation. The weekly cycles are highlighted in red, blue refers to the daily, while the black lines represent the hourly cycles. To understand the principles applied in the assessment of cycles, refer to the tutorial How To Read Market Structures In Forex
    • POC: It refers to the point of control. It represents the areas of most interest by trading volume and should act as walls of bids/offers that may result in price reversals. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals the constant evolution of the market auction process. If you wish to find out more about the importance of the POC, refer to the tutorial How to Read Volume Profile Structures
    • Tick Volume: Price updates activity provides great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement. Studies validate that price updates (tick volume) are highly correlated to actual traded volume, with the correlation being very high, when looking at hourly data. If you wish to find out more about the importance tick volume, refer to the tutorial on Why Is Tick Volume Important To Monitor?
    • 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.
    • Correlations: Each forex pair has a series of highly correlated assets to assess valuations. This type of study is called inter-market analysis and it involves scoping out anomalies in the ever-evolving global interconnectivity between equities, bonds, currencies, and commodities. If you would like to understand more about this concept, refer to the tutorial How Divergence In Correlated Assets Can Help You Add An Edge.
    • 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
     
  4. IvanGlobalPrime

    IvanGlobalPrime Private

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    Find my latest market thoughts

    CAD Main Mover In Low Vol FX


    The 20ish pips ranges in the EUR/USD or AUD/USD should speak volumes of the absolute vegetable state of the forex market on Monday, with a flash news-led selloff in the Canadian Dollar on the back of a disappointing BoC business survey the only real move to take note of.


    The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.

    Quick Take
    The 20ish pips ranges in the EUR/USD or AUD/USD should speak volumes of the absolute vegetable state of the forex market on Monday, with a flash news-led selloff in the Canadian Dollar on the back of a disappointing BoC business survey the only real move to take note of. As I elaborate in today's report, whenever a strong movement in any asset class, the likes of what we saw in the Japanese Yen or other risk-sensitive assets such as the Aussie or stocks is followed by a day of consolidation, this is what we understand in institutional terms as an auction with acceptance of value. In other words, the 'true risk on' movements from Friday as optimism around China's growth picks up is not being responded with rejections from what one could consider overdone levels. Instead, the market is finding equilibrium, which is encouraging for the build-up of further momentum or else you wouldn't see 24h of buyers and sellers agreeing to exchange bids and offers at these lofty levels by 2019 standards (mainly on JPY terms).

    [​IMG]

    Narrative In Financial Markets

    • Extremely tight ranges in the currency market, with the exception of the CAD, knocked down by a poor BoC business survey, which has led to an increase on the pricing of a rate cut by the Canadian Central Bank by the end of 2019 (6bp of easing based on the OIS curve Dec 2019).
    • The controversial Mueller report that looks into the meddling of Russia and its links to the Trump campaign will most likely be released on Thursday, according to Bloomberg.
    • According to the US Treasury Secretary Mnuchin, there is more work to do with China, especially concerning the enforcement mechanisms that must be in place. Mnuchin added that the US-China negotiations are making a lot of progress.
    • EU’s Malstrom notes that the potential retaliatory tariffs list against the US as to counteract the plans of the latter to impose $11bn worth or tariffs will be published on April 17th.
    • In words of UK PM spokesman, there is no fixed end date on the ongoing talks with Labour in order to find a possible compromise that may unlock the current stalemate.
    Recent Economic Indicators & Events Ahead
    [​IMG]
    Source: Forexfactory

    RORO (Risk On, Risk Off Conditions)

    After the rampant movements in risk last Friday, the market has gone through a consolidation pattern this Monday, which if you ask me, it’s a positive sign for risk as it communicates acceptance of the newly found lofty levels in the S&P 500 and to a lesser hefty-status but equally impressive is the near term bull run in yields, taking the US 30-year bond maturity yield as our reference. This prognosis of dominating risk appetite obtains further evidence via the suppressed levels on the Yen index, while the DXY continues to trade quite messy within a generally weaker macro trend as per the black slope, which looks at the 125HMA, hence accounting for 1--week worth of price data. The rest of supporting risk-sensitive asset classes such as Oil vs Gold or Copper vs Gold ratios continue to show benign conditions for the interest of risk-seeking strategies, and the same applies when analyzing the state of affairs in both the VIX (vol index in the S&P 500) and in credit markets via the ratio between junk bonds vs investment-grade bonds (HYG/IG). Overall, last Friday’s upthrust in risk followed by an acceptance near the recent highs, is a sign of persisting ‘true risk on’ in the markets, which should translate in further selling interest vs the USD and JPY, with the caveat of vulnerabilities arising in currencies hit by fundamentals such as the CAD on Monday.

    [​IMG]
    Latest Key Technical Developments In G8 FX
    [​IMG]

    Interested about downloading today's key levels? Find the MT4 templates, updated daily, by clicking the following link.

    In today’s analysis, I am taking a step back from the most granular analysis and diving into the macro technicals, anticipating potential targets and the established directional biases and/or inflection points where a potential change of behavior by market participants may be seen.

    The first chart that catches my attention is the resolution above 80.00 in the AUD/JPY. Based on market symmetries, it now allows us to draw a 100% proj target, which may play out over the next few weeks or months, with an ultimate target of 82.00-05. In terms of intermarket correlations, it is the upside pressure in the S&P 500 (orange line) that has been the main driving force in the exchange rate, coupled with positive news out of China. The key leading indicator that still contradicts such macro bullish move is the relatively suppressed levels of global yields (US30Y in green).

    [​IMG]

    Another yen pair that is edging closer to a massive daily resistance level is USD/JPY. I am referring to 112.25-30, which represents the double bottom through last Nov-Dec of 2018. The rise in the S&P 500 (orange line), accompanied by a relatively well bid DXY(blue line) are the two positives arguing for a breakout, however, it is of major concern to see the pair heading into such a critical intersection without the backing of what’s arguably the number 1 leading indicator for the pair, that is, the 30-year US yields (green line). That said, the short-term inertia in the US30-year bond yield is there, even if it needs to be taken with a bucket of salt given the downtrend in global yields.

    [​IMG]
    Another pair that is flirting with a major daily resistance level is the AUD/USD as buy-side pressure builds up against the 0.72 round number. This is an area where plenty of liquidity is likely to be found and because of it, a level that will most likely act as a magnet attracting buyers, who very well know they will enjoy a level very rich in orders to flip and close their buy-side campaigns if they so wish. The inertia, as per the slope of the 5-DMA on the S&P 500 (orange) and the Yuan+DXY (red) argue for a continuation of the bullish trend, for now, counteracting the negative outlook in the AU-US yield spread (blue). Any upside break could see the exchange rate target the next big level at 0.7270-75.

    [​IMG]

    Important Footnotes
    • Risk model: The fact that financial markets have become so intertwined and dynamic makes it essential to stay constantly in tune with market conditions and adapt to new environments. This prop model will assist you to gauge the context that you are trading so that you can significantly reduce the downside risks. To understand the principles applied in the assessment of this model, refer to the tutorial How to Unpack Risk Sentiment Profiles
    • Cycles: Markets evolve in cycles followed by a period of distribution and/or accumulation. The weekly cycles are highlighted in red, blue refers to the daily, while the black lines represent the hourly cycles. To understand the principles applied in the assessment of cycles, refer to the tutorial How To Read Market Structures In Forex
    • POC: It refers to the point of control. It represents the areas of most interest by trading volume and should act as walls of bids/offers that may result in price reversals. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals the constant evolution of the market auction process. If you wish to find out more about the importance of the POC, refer to the tutorial How to Read Volume Profile Structures
    • Tick Volume: Price updates activity provides great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement. Studies validate that price updates (tick volume) are highly correlated to actual traded volume, with the correlation being very high, when looking at hourly data. If you wish to find out more about the importance tick volume, refer to the tutorial on Why Is Tick Volume Important To Monitor?
    • 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.
    • Correlations: Each forex pair has a series of highly correlated assets to assess valuations. This type of study is called inter-market analysis and it involves scoping out anomalies in the ever-evolving global interconnectivity between equities, bonds, currencies, and commodities. If you would like to understand more about this concept, refer to the tutorial How Divergence In Correlated Assets Can Help You Add An Edge.
    • 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
     
  5. IvanGlobalPrime

    IvanGlobalPrime Private

    Joined:
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    Messages:
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    Find my latest market thoughts

    Green Shoots In China Lift The Aussie


    The Aussie seems to have no rival this April, as further evidence of green shoots in China, led to a new wave of buy-side pressure on the Oceanic currency. Each setback it had in the last 24h, be it via Tuesday's dovish RBA minutes or a quick round trip on lower NZ CPI, has been met with incessant buying interest...

    The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.

    Quick Take

    The Aussie seems to have no rival this April, as further evidence of green shoots in China, led to a new wave of buy-side pressure on the Oceanic currency. Each setback it had in the last 24h, be it via Tuesday's dovish RBA minutes or a quick round trip on lower NZ CPI, has been met with incessant buying interest, which speaks loud and clear of the current bullish outlook, mainly anchored by the growth rebound story currently underway in China. It's neighboring currency, the Kiwi, didn't enjoy the same fortunes, as the miss in the NZ CPI adds further strains to the Kiwi as the NZ Central Bank finds yet another argument to eventually cut rates. In a similar misery, in terms of drawing short-term buying interest, is the Sterling, under sellers' siege as UK Labour Leader Corbyn finds no compromise with UK PM May on a Customs Union as part of amending May's Brexit deal. Looks like the extension of 6 months will give us now a time to trade the Sterling under much more contained vol. The one currency that still follows, to a certain distance, the Aussie's stellar performance this April, is the Euro even if it's starting to struggle above the USD 1.13 mark. Lastly, the USD and the JPY, have enjoyed a bit of a respite as stocks failed to sustain gains in the US (positive JPY) and US yields kept rising (positive USD). However, with China's optimism governing price action, the JPY and to a lesser extend the USD, may continue to struggle finding enough interest to avoid further depreciation short term.

    [​IMG]
    Narrative In Financial Markets
    • Notwithstanding a positive lead from Asia, mainly led by the strongest rebound in Chinese house prices since April 2017, which spurred a flurry of buying activity in European stocks, the bullish action failed to sustain in US equities after mixed earnings reports.
    • US yields, with the 10y in mind, managed to retake its pre-FOMC level at 2.59% in a move that portrays market participants having decisively shifted their focus towards a pick up in growth in China as the main driver of yields as opposed to a sidelined Fed (bullish bonds).
    • The rebound in the Aussie can be, in large part, attributed to RBA watcher McCrann, who writing for the Australian Herald-Sun, said the RBA is not planning to cut rates soon.
    • The RBA minutes clearly shifted its bias to an easing stance. The board is now openly discussing under what scenario it would be forced to ease policy by cutting rates. The contrarian signals between growth and the labour market still warrant patience though.
    • According to the Guardian, talks between UK PM May and Labour’s Corbyn are seemingly going nowhere, which has increased the downside pressure on the Sterling. The main sticking points reside in the differences about a customs union, which is the wish from the Labour.
    • Interestingly, despite it has become a sideshow until Brexit is resolved, the UK employment sector continues to roar ahead, with the unemployment rate at the lowest since 1975 at 3.9%, while the upward pressure in wages prevails. The BoE would be hawkish if it wasn’t for Brexit.
    • Reuters reported on a story that caused an initial selloff in the EUR as a ‘significant minority’ of ECB policymakers are now expressing a stronger pessimistic opinion towards the prospects of the EU returning to a sustainable growth path due to change of consumption habits, trade wars and the reduction of Chinese demand.
    • Germany’s and EU April ZEW economic sentiment left a bitter/sweet taste as the encouraging rebound in the outlook series was overshadowed by a retreat in current conditions.
    • The NZ CPI reading fails to meet expectations by coming at +0.1% vs 0.3% exp, with the yearly reading at 1.5% vs 1.7% expected. The Kiwi was immediately sold on the economic release.
    • The Chinese data dump was the major event in Asia, and it lived up to the positive expectations that had been placed ever since the rebound in PMIs from last week. China’s Q1 GDP came at 1.4% (in-line) while the yearly reading stood at 6.4% vs 6.3% exp. The retail sales overshot estimates at 8.7% vs 8.4%, while Industrial production came at 8.5% vs 5.9% y/y.
    Recent Economic Indicators & Events Ahead
    [​IMG]
    [​IMG]
    Source: Forexfactory

    RORO (Risk On, Risk Off Conditions)

    The rapid descent from a new year high on the S&P 500, led by a number of earning report misses as in the case of Bank of America, has caused pockets of renewed demand in ‘risk-off’ currencies the likes of the US Dollar and the Japanese Yen to re-emerge. Be wary that the rise in the latter may not find much sustainability, as it happens under a context of rising global yields, with the US 30y our gauge, now testing a massive psychological level at the 3% mark. Additionally, further signs of improving Chinese data has led to equities in the far east taking a positive lead, with China at the forefront, that may extend into European and US markets.

    By looking at other crosscurrents in industrial assets such as the ratio of Oil vs Gold or Copper vs Gold, both saw spikes due to the aggressive selloff in gold, which is a reflection of a market diversifying further away from the perceived safety of the precious metal at a time when US yields are on the rise in a clear bet towards additional positive news out of China, and as a ripple effect, into other global economies. Even if we look at the VIX (vol index), it hovers around the 12.00 handle, which means the implied volatility expected in stocks is very low by the no so distant standards. Credit markets in the US are perhaps the one asset class telegraphing like no other that the level of optimism to keep a bid on risk should remain fairly elevated as the HYG/IG (junk bonds vs investment grade bonds) stands.

    Latest Key Technical Developments In FX Majors
    [​IMG]

    Interested about downloading today's key levels in the major pairs? Find the MT4 templates, updated daily, by clicking the following link.

    The USD was sold across the board, alongside the Japanese Yen, in the Asian session. This has led to the EUR/USD exchange rate retaking the 1.13 handle after a strong rebound of a highlighted H4 horizontal support area (in orange). An area rich in liquidity around 1.1315 (Tuesday’s high) is now under siege, ahead of further liquidity pockets just a few pips ahead. It won’t be, however, until the 1.1325 area is potentially tested again, that’s where the real battle to take control of the next H4 level will take place. The inertia for today should be a USD under pressure as risk on flows resume.

    [​IMG]

    However, no currency has been re-invigorated to the extent that the Aussie has, fully recovering the NZ CPI-induced selloff in early Asia, only to rebound by its ADR full extension of 55 pips. What this means is that the rise in the AUD/USD has now landed the exchange rate at the macro level of 0.72c, an area where one would expect a major cluster of offers as the level also coincides with a daily resistance level where price failed in the last two interactions, coupled with today’s ADR limit. That said, the Chinese positive growth story should continue to keep the bid tone in the Aussie intraday, even if one must apply its own rationale to realize that the expected extension today has already been reached at the 0.72c. Note, the latest spike allows us to draw a new bullish trendline.

    [​IMG]

    After 2 days of consolidation, the rate has filled out sellers’ offers above the 112.10 resistance, even if at the first pass the breakout has failed, taking the price back into its range midpoint. The environment remains supportive of further upward pressure as the risk appetite stands. The weakness in the DXY, judging by the renewed strength in the EUR/USD, should be compensated by rising US yields, especially if combined with a resumption of the rally in equities. It’s important to note that any setback sees two important areas of horizontal support at 111.80-90. The real macro battle in the exchange rate comes on a test of the daily resistance at 112.25-30.

    [​IMG]

    A pair attracting a lot of attention today, even if the vast of the potential extension has already occurred, is the NZD/USD. It got knocked down to grab plenty of liquidity below a level of support off the daily chart as highlighted in a red line. From there, assisted by China’s data, buyers have stepped in to initiate an intraday bullish move that may very well take us to revisit the 0.6740-50 vicinity, which is an area of resistance both on the H4 and the hourly as depicted by the blue/orange lines.

    [​IMG]

    The Sterling has been under pressure as negative Brexit headlines weighed on the currency, in what ended up being a one-way street slide towards an area of important liquidity at 1.3030-35. Even if the ‘risk on’ mood is constructive for the interest of the pair, it hasn’t seen much of a rebound in Asia, which speaks loud and clear of the negative sentiment after Corbyn’s headlines. Granted, the level where the Pound is currently finding demand from starts to be very attractive if you believe on the rotational nature of the pair until a new Brexit breakthrough occurs, which may be weeks away given the 6 month extension conceded by the EU. The range 1.3120-1.30 should cover the short-term eventualities, hence trading away from these levels makes technical and fundamental sense.

    [​IMG]
    Important Footnotes

    • Risk model: The fact that financial markets have become so intertwined and dynamic makes it essential to stay constantly in tune with market conditions and adapt to new environments. This prop model will assist you to gauge the context that you are trading so that you can significantly reduce the downside risks. To understand the principles applied in the assessment of this model, refer to the tutorial How to Unpack Risk Sentiment Profiles
    • Cycles: Markets evolve in cycles followed by a period of distribution and/or accumulation. The weekly cycles are highlighted in red, blue refers to the daily, while the black lines represent the hourly cycles. To understand the principles applied in the assessment of cycles, refer to the tutorial How To Read Market Structures In Forex
    • POC: It refers to the point of control. It represents the areas of most interest by trading volume and should act as walls of bids/offers that may result in price reversals. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals the constant evolution of the market auction process. If you wish to find out more about the importance of the POC, refer to the tutorial How to Read Volume Profile Structures
    • Tick Volume: Price updates activity provides great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement. Studies validate that price updates (tick volume) are highly correlated to actual traded volume, with the correlation being very high, when looking at hourly data. If you wish to find out more about the importance tick volume, refer to the tutorial on Why Is Tick Volume Important To Monitor?
    • 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.
    • Correlations: Each forex pair has a series of highly correlated assets to assess valuations. This type of study is called inter-market analysis and it involves scoping out anomalies in the ever-evolving global interconnectivity between equities, bonds, currencies, and commodities. If you would like to understand more about this concept, refer to the tutorial How Divergence In Correlated Assets Can Help You Add An Edge.
    • 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
     
  6. IvanGlobalPrime

    IvanGlobalPrime Private

    Joined:
    Aug 1, 2018
    Messages:
    25
    Likes Received:
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    Find my latest market thoughts

    AUD Positive News Keep Piling In


    Demand towards the Aussie keeps on going, even if the struggle to break through a macro level at USD 0.72c is real. The fact that the market failed to fill out resting offers just pips ahead of the round number in spite of a very strong Australian employment report not only reveals the macro relevance of the level but it also demonstrates how important it is to gauge Intermarket flows...


    The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.

    Join our discord room if you'd like to interact with Ivan and other like-minded traders. The invitation link can be found here: https://discord.gg/Nc42HjE

    Quick Take

    Demand towards the Aussie keeps on going, even if the struggle to break through USD 0.72c is real. The fact that the market failed to fill out resting offers just pips ahead of the round number in spite of a very strong Australian employment report not only reveals the macro relevance of the level but it also demonstrates how important it is to gauge Intermarket flows, as, by the time of the test, both the DXY and Yuan were moving in the opposite directions. When it comes to the New Zealand Dollar, as I elaborate in today's report, it looks set to struggle vs G10 FX as negative news keep mounting (dovish RBNZ, poor NZ CPI). The bull flattening of its yield curve is a reflection of it. The Japanese Yen is a currency that faces a more benign outlook heading into Thursday, not based on technicals, but on the deterioration of risk flows. Meanwhile, the Euro has been able to maintain its fortitude, even if within the context of a compressed range against the Greenback. The Canadian Dollar was initially bolstered by a decent Canadian core CPI print, but null conviction to hold onto the gains followed in what has become a very erratic market to trade the USD/CAD. What to say of the Sterling? A paltry 35 pip range it's all we could manage to contend with on UK CPI day. That's the ultimate reflection of how Brexit and the low vol regime means for a historically volatile currency.

    [​IMG]
    Narrative In Financial Markets
    • As US stocks keep charging higher this year, the Nasdaq 100 makes a fresh record high but fails to sustain its gains. An analogous picture in other US benchmark indexes, including the S&P 500, unable to keep up the positive tone from earlier on the day, finishing slightly on the negative as the healthcare sector acts as the main dragger.
    • In the last 24h, we’ve learned that the phenomenon of global low inflation continues. The first evidence came out of a miss in the NZ CPI for Q1, which was followed by the UK inflation reading undershooting and a flat final EU CPI too. The only encouraging sign originated out of Canada, where core inflation saw a moderate uptick.
    • The Chinese data dump invigorated the Aussie even if 0.72 remains a tough nut to crack, as expectations were slightly surpassed, as in the case of China’s Q1 GDP, which came at 1.4% (in-line) while the yearly reading stood at 6.4% vs 6.3% exp. The retail sales overshot estimates at 8.7% vs 8.4%, while Industrial production far exceeded expectations at 8.5% vs 5.9% y/y.
    • According to the WSJ, there are tentative signs of preparations for a potential signing ceremony between US and Chinese Presides by late May or early June. Before that, a new round of trade talks is due on April 29, when US trade representative Lighthizer travels to Beijing, while China’s Vice Premier Liu He travels to Washington one week later. The absence of any market reaction to the headlines implies a deal has already been fully priced in.
    • The Fed Beige Book report offered no significant new insights, with the language of ‘slight to moderate’ growth a replica of the same narrative used in previous reports.
    • The US trade balance continues to move in the direction the Trump administration aims for after it printed a reduction in the deficit to -49.4bn vs -53.4b expected. This is the smallest trade deficit in almost 1 year due to an increase in aircraft exports and slower import growth.
    • The German government revised considerably down its economic growth forecast for 2019, even if the news had been well telegraphed by media outlets over previous weeks. The new estimate for growth in 2019 stands at just 0.5% vs 2.1% a year ago.
    • The Australian jobs report showed a very solid reading, with the headline number beating expectations at 27.5k vs 15k exp, while the unemployment rate stood at 5%. The break down of the full time vs part time employment numbers carried even better news, as the former jumped by 48.3k, which is a very hefty level. Even the participation rate ticked up to 65.7% vs 65.6%.
    Recent Economic Indicators & Events Ahead
    [​IMG]
    [​IMG]

    Source: Forexfactory

    RORO (Risk On, Risk Off Conditions)

    From a microflows perspective, the bearish reversal day in the S&P 500, followed by a wave of buyers in US bonds, which has pushed the 30-year bond yield marginally below 3% again, implies the risk profile has turned ‘risk off’ in the very near term. In terms of the risk flows derived off currencies, our best barometer is our prop Japanese Yen index, which is start to apply further upward pressure against a level of daily resistance. The US Dollar index, and to a lesser extent the Yen index, has been extremely choppy as of late, with no particular bias developing off the H1 chart. Another red flag which communicates risk-seeking conditions are far from ideal is the spike towards 13.00 in the VIX (vol index for the S&P 500) or the aggressive sell-off in junk bonds as reflected by the HYG/IG ratio. The only encouraging signs can be found from the Copper/Gold ratio, in a firm uptrend, as is the case of Oil/Gold, both indicating the growth outlook has definitely improved. Further evidence that the reflation trade is back on as we gather mounting evidence that China’s economy is on the mend, is the fact that DM (developed markets) yield curves are exhibiting bear steepeners across the board, with the only exception being New Zealand, where the market is still not pricing growth but rate cuts there. In the rest of the economies outlined in the chart below, bear steepeners dominate, indicative of economies where inflation expectations start picking up due to higher growth prospects.

    [​IMG]
    [​IMG]
    Latest Key Technical Developments In G8 FX
    [​IMG]

    Interested about downloading today's key levels in the major pairs? Find the MT4 templates, updated daily, by clicking the following link.

    EUR/USD: Chopfest Still In Context Of Bullish Structure

    The successful rotation on the EUR/USD exchange through the early stages of Wednesday offers opportunities to play longs off 1.1290-95, even if one must be mindful that right overhead the 1.13 is an area where supply will most likely abound as we are starting to see on multiple rejections. This is a market that still exhibits sufficient merit to be treated as a range between 1.1325-11280/90 within the broader context of a bullish narrative in terms of market structure. Unless the area of support at 1.1280 gets violated with equilibrium found below, the outlook remains constructive even if the chopfest that we are seeing in recent days above 1.1290 should reinforce selectiveness on trades.

    [​IMG]
    USD/JPY: Well Defined Tight Range Around 112.00


    The area of 112.00 should act as the midpoint of the current tight range from which the pair will pivot around. Watch for intraday control of the mentioned round number from where to initiate buy/sell-side campaigns aiming for the extremes of the range. In the context of a bullish trend, the building of value circa 112.00 is a positive development as it communicates acceptance. However, with the risk conditions turning uglier on Wednesday, don’t be surprised if upside breakouts fail.

    [​IMG]
    AUD/USD: Retesting Offers at 0.72c On Strong Aus Jobs

    The Australian Dollar keeps receiving further positive news, this time in the form of very solid Australian job numbers. A strong headline print, full-time employment showing another blockbuster read, unemployment rate at 5%, a very solid report indeed that should assist the bulls have more goes towards the 72c. If the Aussie is unable to break the level by the end of business in NY today, that should be quite worrisome. If we look at intermarket flows through the DXY and Yuan, they remain restrictive of a 72c breakout as it stands. Yellow line below is one of the most critical value lines on the Aussie -> 1/(FX:USDCNH/6.7+TVC:DXY/96.9). Correl is very consistent and it suggest caution.

    [​IMG]
    Important Footnotes

    • Risk model: The fact that financial markets have become so intertwined and dynamic makes it essential to stay constantly in tune with market conditions and adapt to new environments. This prop model will assist you to gauge the context that you are trading so that you can significantly reduce the downside risks. To understand the principles applied in the assessment of this model, refer to the tutorial How to Unpack Risk Sentiment Profiles
    • Cycles: Markets evolve in cycles followed by a period of distribution and/or accumulation. The weekly cycles are highlighted in red, blue refers to the daily, while the black lines represent the hourly cycles. To understand the principles applied in the assessment of cycles, refer to the tutorial How To Read Market Structures In Forex
    • POC: It refers to the point of control. It represents the areas of most interest by trading volume and should act as walls of bids/offers that may result in price reversals. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals the constant evolution of the market auction process. If you wish to find out more about the importance of the POC, refer to the tutorial How to Read Volume Profile Structures
    • Tick Volume: Price updates activity provides great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement. Studies validate that price updates (tick volume) are highly correlated to actual traded volume, with the correlation being very high, when looking at hourly data. If you wish to find out more about the importance tick volume, refer to the tutorial on Why Is Tick Volume Important To Monitor?
    • 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.
    • Correlations: Each forex pair has a series of highly correlated assets to assess valuations. This type of study is called inter-market analysis and it involves scoping out anomalies in the ever-evolving global interconnectivity between equities, bonds, currencies, and commodities. If you would like to understand more about this concept, refer to the tutorial How Divergence In Correlated Assets Can Help You Add An Edge.
    • 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
     
  7. IvanGlobalPrime

    IvanGlobalPrime Private

    Joined:
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    Messages:
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    April 9-16: Significant Increase In JPY Shorts

    The most noticeable changes as part of the latest changes in the commitment of traders report can be found in the Euro, the Pound, and the Yen. In terms of the Euro, the poor German PMI reading from last Thursday has caused renewed committed sell-side interest as the volume and open interest readings indicate.


    Authored by Ivan Delgado, Head of Market Research at Global Prime. This report intends to unveil the directional bias the smart money is supporting based on the latest changes in market positioning. If one wishes to gain further insights into how to read the CoT data I publish every week, read the following report (primer).

    Forex Markets: How To Read The Commitment Of Traders Report?

    QUICK TAKE

    The most noticeable changes as part of the latest changes in the commitment of traders report can be found in the Euro, the Pound, and the Yen. In terms of the Euro, the poor German PMI reading from last Thursday has caused renewed committed sell-side interest as the volume and open interest readings indicate. On the British Pound, despite the latest slide through an area of support, large specs are just a few contracts away from crossing above the 0 line, as commercials are also about to turn negative. This should translate into a positive event in terms of positioning, something that had not occurred since June 2018. However, the clearest shift in positioning is found in the Yen, where large specs piled into new short positions on an increase of both volumes and open interest, communicating that the JPY bear trend may find further legs down.

    EUR CONTRACT

    Prior to the renewed selling wave that hit the Euro on the back of a disappointing German PMI last Thursday, the correction higher in the exchange rate over the previous 2 weeks saw leveraged accounts barely budge, keeping the net short position just under -100k. Further anchoring the macro bearish view on the rate, such retracement attracted the interest of commercials by increasing the short positions ever so slightly, which is what you’d expect in a bearish trend. In terms of open interest, the changes have been extremely muted even if we can finally observe that the last commanding bearish candle on April 18th does carry an increase in both volumes and open interest, communicating that there is a new committed sell-side campaign underway

    [​IMG]

    GBP CONTRACT


    Large speculators are about to turn net positive in the Sterling, while the opposite is true for commercials, effectively leading to an inflection point not seen since June 2018. In the last few weeks, it’s been commercials that have been pushing the exchange rate lower by increasing the net short positions, while large speculators are for now caught wrong-sided after the bear breakout. The changes in open interest have been very marginal for weeks now and the same applies to the volume, where the activity has decreased below the 100,000 contracts/day. Overall, this is not a market that has the backup of the large specs for now as the gradual net increase in positions indicates. However, with fast money and commercials pushing the rate down through a key technical level, the cascade of sell-side orders on those caught wrong-sided could continue feeding the bearish momentum.

    [​IMG]

    JPY CONTRACT


    There has definitely been a sea change in the Japanese Yen market, clearly noticeable via the futures and options markets, where the short-side exposure towards the Yen has increased significantly to nearly -100,000, while commercials saw one of the largest jumps in buying interest in months. What’s most important, the renewed selling pressure on the Yen comes amid a leg of increasing volumes and open interest, which is the perfect scenario for an eventual continuation of the trend.

    [​IMG]

    AUD CONTRACT


    Despite the modest and extremely lackluster recovery in the Aussie since early March, there has been very little net changes in large speculators. It reflects the dominance by fast money for quick intraday moves that lack enough substance to find directional resolution at a more macro level. The minor upticks in commercials from the last 2 months suggested these account types have been growing more optimistic on joining the bid above the 70c. In terms of vol and open interest, the tendency has been to decrease positions over the last week or so with volume activity weakening too.

    [​IMG]

    USEFUL COT RESOURCES


    There are 4 types of reports published by the CFTC. However, there are only two we want to pay attention to, which include 1. The legacy and 2. The traders in financial futures (TIFF), with the proper version including futures and options activity. Find below these resources:

    View a table of the latest legacy report:

    These reports are broken down by the exchange, with a futures-only report and a combined futures and options report, the latter being the one we want to stick with. It is then unpacked into reportable open interest positions for non-commercial (speculators) and commercial traders (hedgers).

    View a table of the latest TIFF report.:

    These reports include financial contracts, such as currencies, U.S. Treasury securities, Eurodollars, stocks, VIX and Bloomberg commodity index. These reports have a futures-only report and a combined futures and options report, the latter the one we want to use. The TFF report breaks down the reportable open interest positions into Dealer/Intermediary, Asset Manager/Institutional, Leveraged Funds, and Other Reportables.

    Access the historical data:

    In this section of the CFTC website, any entity or individual is free to download the historical data accumulated over the years of the different classified CoT reports. This site is very handy in case you want to crunch the numbers and conduct your own backtesting.
     
  8. IvanGlobalPrime

    IvanGlobalPrime Private

    Joined:
    Aug 1, 2018
    Messages:
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    Find my latest market thoughts

    CAD & JPY Bought Post Easter


    As the long-weekend Easter holidays come to an end, we find the CAD as one of the top performers alongside the Japanese Yen. The former benefited from a spike in the price of Crude Oil after a surprise announcement by US President Trump, flexing his muscle against Iran by ending the waivers for all those nations buying Iranian oil.

    The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.

    Quick Take

    As the long-weekend Easter holidays come to an end, we find the CAD as one of the top performers alongside the Japanese Yen. The former benefited from a spike in the price of Crude Oil after a surprise announcement by US President Trump, flexing his muscle against Iran by ending the waivers for all those nations buying Iranian oil. The Japanese Yen has seen an intraday tsunami of buy orders come through the books in the early hours of Tokyo, taking the currency index to its best level in weeks. The Euro also found steady bids through the stagnant holidays period, even if occurs on the back of an aggressive sell-off last week after yet another raft of EU PMI misses. The Aussie, ahead of Wednesday's critical Australian CPI release for Q1, is trading on the backfoot, not finding enough buying interest despite higher equities and a stable DXY. The Pound and the Kiwi, meanwhile, have treaded water without any impetus whatsoever ahead of a return of flows to minimal levels in today's European session.

    [​IMG]
    Narrative In Financial Markets
    • Markets are slowly returning back to normality after a long weekend Easter holidays that saw liquidity evaporate from usual standards.
    • The US President Trump has announced an end to waivers for all those nations buying Iranian oil. Effectively, the US will not renew exemptions granted in Nov last year to buyers (China, India, Japan, … ) of Iranian Oil, which is a rather surprise and bullish move for the interest of Oil.
    • A key development weighing on the price action of the Euro late last week was the depressing state of affairs in the series of EU PMIs, just when optimism was starting to build a tad as signs of green shoots in China were starting to become more obvious.
    • The poor PMIs in Europe, especially in Europe, came in contrast with a stellar US retail sales print last week, which when combined with a lower US trade deficit in Q1, analysts have been upgrading the prospects of a higher advance GDP print due this coming Friday.
    • The Australian jobs report was one of the other highlights just ahead of Easter, showing not only a robust headline print of 25.7k, but the break down of part-time vs full-time was a very positive one in favor of the latter. The participation rate also ticked up by 0.1%, which led to the only negative as the jobless rate came at 5% vs 4.9% prior.
    • The UK Parliament returns from holiday on Tuesday, which much to our demise, means Brexit is likely to return as a focus as reports emerge, via the Telegraph, that the National Conservative Convention, which represents grassroots Conservative Party volunteers, has managed to gather enough support for a vote of no confidence in PM May to be held.
    • The calendar today lacks any major event, with traders having to content with low tier releases. US existing home sales for March will be watched today as the only event with minor interest.
    Recent Economic Indicators & Events Ahead
    [​IMG]

    Source: Forexfactory

    RORO (Risk On, Risk Off Conditions)

    As a cautionary note, one should let intermarket flows in the most heavily traded instruments in equities, fixed-income, currencies, and credit shape up post-Easter before gauging the risk flows. Buyers did regain the upper hand on the S&P 500 pre-Easter as buy-side accounts managed to produce a decent performance to turn the 25-HMA micro slope into positive territory. In terms of flows emanating off US fixed income, the rise on the US 30y bond yield (capped below 3%) is yet another sign that investors were fairly sanguine in their perception of a constructive growth outlook, both in the US, and globally, spearheaded by the green shoots seen in China as of late (not in the EU).

    The risk-friendly uplegs in both equities and yields, surprisingly, has not been translated into a lower Yen, which still remains at fairly rich levels if one considers the positive risk dynamics we come from. On the industrial assets space, the spike in Oil/Gold is a fundamentally-driven event, so we won’t read much into it. However, the Copper/Gold ratio has found renewed selling interest, which comes in stark contrast with the rise in US yields as any major selloff in the ratio is suggestive of a poorer global outlook. It makes me think that the upleg in the US 30y bond yield is more of a US-centric play. When it comes to the dynamics in the VIX, it trades just under 12.5, which is a relatively low level that should promote further upside attempts on the S&P 500, while junk bonds have been underperforming relative to investment-grade bonds in the last week.

    Overall, I won’t deny there are conflicting signals as part of the RORO model today, which can be perfectly rationalized on the fact that markets have been turned off, so the best advice is to wait until flows return back to normal levels to start gauging whether what side gives on the risk pendulum, even if one should recognize that by only taking as reference the S&P 500, US30Y and the DXY, the path of least resistance points to be risk-friendly.

    Key Technical Levels In FX Majors
    [​IMG]

    Interested about downloading today's key levels in the major pairs? Find the MT4 templates, updated daily, by clicking the following link.

    EUR/USD: Selling Into Hourly Support

    The selloff in risk assets through the open of business in Asia this Tuesday has taken the exchange rate to test an area of support in the hourly chart. The micro recovery, which so far has achieved two legs up, occurs in the context of a macro bearish trend, established ever since the poor German PMI last week. That event, plus a series of additional disappointing PMIs out of Europe, were the catalyst that allowed to break the bullish structure of the last 2 weeks.

    [​IMG]

    GBP/USD: Pressure Builds Against Support


    The supply in the Sterling has not abated as of late, with the exchange rate finding a temporary bottom at an area of hourly support. However, so far the rejections of the area have been quite limited in nature, with each rebound carrying less and less conviction. What this means is that the stage may be setting up for an eventual breakout to the downside. The bearish trend in the EUR/USD, which leads to broad-based USD buy-side flows won't be helping the Pound. The fact that acceptance has been found under 1.30 for the last 2 days is not a good omen either. GBP looks set to trade more lively as UK politicians return to parliament for more Brexit discussions after the Easter holidays.

    [​IMG]

    USD/JPY: Sharp selloff in Asia


    The aggressive supply imbalance in the Yen does not make justice to the elevated levels in US equities and US yields. In other words, it looks like the selloff is overdone and a likely retest of the resistance area between 111.85-90 may be brewing as value exist to buy this dip, even if in conflict with technicals in the low timeframes for now.


    [​IMG]

    AUD/USD: Intraday Downtrend Accentuated

    The Aussie was sold at a key technical juncture as a descending trendline converged with a horizontal level well visible off the H4 chart, which adds further weight. The level of liquidity at 0.7118 is now under threat of order being filled ahead of 0.7110 and 0.71 round number. Buyers will need to recover the 0.7150-60 level to negate the near term bearish trend currently underway in this exchange rate. Aussie traders await the Aus CPI release as the next key mover for the AUD.

    [​IMG]

    Important Footnotes
    • Risk model: The fact that financial markets have become so intertwined and dynamic makes it essential to stay constantly in tune with market conditions and adapt to new environments. This prop model will assist you to gauge the context that you are trading so that you can significantly reduce the downside risks. To understand the principles applied in the assessment of this model, refer to the tutorial How to Unpack Risk Sentiment Profiles
    • Cycles: Markets evolve in cycles followed by a period of distribution and/or accumulation. The weekly cycles are highlighted in red, blue refers to the daily, while the black lines represent the hourly cycles. To understand the principles applied in the assessment of cycles, refer to the tutorial How To Read Market Structures In Forex
    • POC: It refers to the point of control. It represents the areas of most interest by trading volume and should act as walls of bids/offers that may result in price reversals. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals the constant evolution of the market auction process. If you wish to find out more about the importance of the POC, refer to the tutorial How to Read Volume Profile Structures
    • Tick Volume: Price updates activity provides great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement. Studies validate that price updates (tick volume) are highly correlated to actual traded volume, with the correlation being very high, when looking at hourly data. If you wish to find out more about the importance tick volume, refer to the tutorial on Why Is Tick Volume Important To Monitor?
    • 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.
    • Correlations: Each forex pair has a series of highly correlated assets to assess valuations. This type of study is called inter-market analysis and it involves scoping out anomalies in the ever-evolving global interconnectivity between equities, bonds, currencies, and commodities. If you would like to understand more about this concept, refer to the tutorial How Divergence In Correlated Assets Can Help You Add An Edge.
    • 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
     
  9. IvanGlobalPrime

    IvanGlobalPrime Private

    Joined:
    Aug 1, 2018
    Messages:
    25
    Likes Received:
    0
    Find my latest market thoughts

    AUD Hit By Lowest Aus Y/Y CPI On Record


    The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.

    Quick Take

    The USD is on a tear, rising against all its G10 FX peers, while the Japanese Yen, surprisingly, follows the former in locksteps, disregarding the new record high on the S&P 500 (on a closing basis). Another currency that is defying Intermarket logic, at least on Tuesday, is the Canadian Dollar, initially boosted by Oil prices right off the bat post-Easter, but unable to hold onto its most recent gains as commodity take a beating. Talking about the commodity complex, the Aussie, and to a much lesser extent the Kiwi, was knocked down aggressively after we learned that Australian inflationary pressures are nowhere to be found; the annual CPI reading was the weakest on record! Lastly, we find a rather stable EUR and GBP currency indices, even if it'd be hard to believe by checking the EUR/USD or EUR/JPY charts. The demand flows towards the USD and JPY have been so strong (resumption of repatriation flows?), that the rest of G10 FX currencies, even if showing stability on an equally-weighted basis, were overwhelmed against the formers.

    [​IMG]

    Narratives In Financial Markets

    • The S&P 500, as the bellwether of US equities, conquers yet another milestone by closing at all-time highs after a +0.8% gain as a fresh raft of companies beat estimates.
    • Oil surged past the $66 mark earlier on the week as the US ends the waivers for nations buying Iranian Oil, which is likely to create supply disruptions. Another line of thinking, which may explain the inability of Oil to extend its gains today, is that OPEC+ members may step up production to make up for the void by the decrease in Iranian Oil exports.
    • The USD exhibited fortitude against its G10 peers as the DXY soars to its highest intraday level since late June last year as the preponderance of evidence continues to suggest the US economy is roaring ahead judging by the upbeats in company earnings during this Q1 earnings season. The strength in the USD has been accompanied by across the board appreciation in the Japanese Yen, an anomaly based on
    • the dynamics of surging equities.
    • The Bank of Canada monetary policy meeting is the next critical mover for the CAD, due at 14 GMT on Wednesday. Current market expectations are not as dovish as they are for the Fed, with about an 18% chance of a cut this year as opposed to 56% for the Fed. If BoC Governor Poloz tilts the balance towards the dovish side and removes any residual hawkishness, there is definitely room for the CAD to depreciate considerably. For today’s meeting, it will include a fresh round of quarterly forecasts in monetary policy reports, which only adds to the incentives for volatility to explode around the time of the event.
    • It’s important to be reminded that last Friday, The Politburo – China’s ruling body headed by President Xi – reviewed China's growth path and came to the conclusion that is no longer necessary to be as aggressive in their “six stabilisations” pillars (stabilisation in employment, finance, trade, foreign investment, investment and expectations), suggesting that while pro-growth policies are here to stay, the PBoC appears to be growing more comfortable with the set of measures introduced since last year to stimulate the economy. It helps explains the headline by Reuters that the PBOC is likely to refrain from further RRR cuts.
    • The more headlines about a tentative agreement between US-China on a trade deal, the more evidence we can gather, based on the muted market reaction, that a deal is fully priced in. On Wednesday, it was the turn of US Economic Advisor Kudlow, who said “we’ve gotten closer to a deal’, yet the market barely budget on the headlines, hence reinforcing the notion that when the actual deal does come forward and it’s official, the risk of a ‘sell the fact’ should be considered.
    • The Australian CPI readings came lower-than-expected in the March quarter, which implies the odds the RBA cutting interest rates in the months ahead just went up considerably. Aussie Q1 headline came at 0% vs 0.2% exp and 0.5% prior, while the y/y was 1.3% vs 1.5% exp and 1.8% prior. The RBA trimmed mean stood at 0.3% q/q vs 0.4% exp and 1.6% y/y vs 1.7% exp. We've seen a major selloff in Australian rates, where the 3-year fell towards 1.30% from levels near 1.4%. The market is now pricing in over 12bp of rate cuts by the RBA in its June meeting. This is the lowest annual increase in prices on record.
    Recent Economic Indicators & Events Ahead
    [​IMG]

    Source: Forexfactory

    RORO (Risk On, Risk Off Conditions)

    An anomaly is underway, one that involves a surging S&P 500 (closed on a new record high), yet the Yen and the DXY index both underperformed the rest of the G10 FX space. The strength in the latter can be predicated on the stubbornness of the US economy, on track to print a solid advance US GDP number later this week as evidence of its robust health mounts (last week’s strong increase in US retail sales, reduction in US trade deficit, upbeat earnings…). If we combined these US-centric positive catalysts with news that China may be setting the bar higher to ease further, alongside the fact that US equities are making headlines by breaking into new record highs, we might be going through yet another episode of aggressive repatriation of USDs back into the US economy. Remember, the gap between the US economy and the RoW (rest of the world) appears to be widening in favor of the latter. With the exception of China, the general perception is that global manufacturing and export growth remains weak, including key regions that act as barometers such as South Korea, Singapore, not to mention the depressed state in the EU. Shifting gears now, making sense of the spike in the Yen index is more complicated, and my view is that such strong gains are unsustainable much longer, in other words, the Yen is looking rather cheap at present levels. Be reminded, credit markets in the US have seen junk bonds aggressively bought, as well as the VIX coming down, both signaling congruences for the risk rally in equities to continue charging higher.

    [​IMG]
    Latest Key Technical Developments In G8 FX
    [​IMG]

    Interested about downloading today's key levels in the major pairs? Find the MT4 templates, updated daily, by clicking the link.

    EUR/USD: Sell-Side Confluence At 1.1225

    The aggressive selloff in the exchange rate is likely to draw strong selling interest, starting from 1.1225, where an hourly horizontal resistance level meets a set of confluences. Not only the 50% fib retracement of the latest decline crosses at the same level but we also can spot the intersection of the 25-HMA, which keeps its slope with a pronounced downward angle, reflecting the decisive bearish momentum that exists in this market. Even in terms of market structure, Tuesday’s down leg represents the 2nd cycle down out of what’s expected to be a 3 push down given the magnitude and speed of the movements seen during the first and second bearish phases. Besides, notice that the EUR supply imbalance terminated, as I tend to always promote, at the 100% proj target.

    [​IMG]

    GBP/USD: Sellers Reach Projected Target


    The sell-side campaign initiated out of a head fake above 1.30 has reached its 100% proj target at 1.2928, an area where I am expecting market makers and a multitude of other account types to try to engineer a short-term reversal back to the mean. That mean, in my opinion, should find its ultimate limit up circa 1.2975-80, where the 50% fib retracement of the latest selloff comes at, aligning perfectly with an old area of support-turned-resistance. One wishes the Sterling would trade more often in line with technicals, but the reality of Brexit headlines will soon sink in again, even if the pressure to deliver a deal in the immediate future is now off the table, so one would think the risk of GBP moving headlines may have been downgraded a tad in coming weeks.

    [​IMG]

    USD/JPY: Sellers Abound Around the 112.00 Area


    For the Japanese Yen to be one of the outperformers as the S&P 500 closes at an all-time high, one has got to assume a high degree of interest to buy the currency around 112.00, a level that has been consistently rejected for over 2 weeks now. What this means is that a huge pool of liquidity is building up above market prices, and with the S&P 500 soaring and the US30y rather stable, the price discovery dynamics should continue to be skewed towards the upside, hence a strategy of buying on weakness seems to still be well justified for a retest of 112.00 and beyond. The way I interpret the 2-week long consolidation on the pair is a market in agreement to find equilibrium at higher prices, which tends to be the precursor for higher levels in line with the macro bullish trend.

    [​IMG]

    AUD/USD: Hammered After Lowest Annual CPI On Record


    The downbeat Australian CPI is likely to draw further selling interest towards the Australian Dollar in days to come, even if today's move appears to be quite overdone as the exchange rate has surpassed by a decent chunk its daily ATR. Expect a slow bleed lower for the rest of the day as the market ups the odds of a rate cut by the RBA in coming months. The June meeting has an implied pricing of -12bp, which essentially means a 50/50 show vs a mere -5bp prior to the event. The exchange rate is fast approaching a major macro level at 0.70c, which should attract buying interest. When the NZ CPI missed its CPI inflation expectations 2 weeks ago, the sell-side campaign by fast money, leveraged players and macro accounts went on for over a week. I wouldn't be surprised if the campaign to sell the Aussie were to perdure as long.

    [​IMG]

    Important Footnotes
    • Risk model: The fact that financial markets have become so intertwined and dynamic makes it essential to stay constantly in tune with market conditions and adapt to new environments. This prop model will assist you to gauge the context that you are trading so that you can significantly reduce the downside risks. To understand the principles applied in the assessment of this model, refer to the tutorial How to Unpack Risk Sentiment Profiles
    • Cycles: Markets evolve in cycles followed by a period of distribution and/or accumulation. The weekly cycles are highlighted in red, blue refers to the daily, while the black lines represent the hourly cycles. To understand the principles applied in the assessment of cycles, refer to the tutorial How To Read Market Structures In Forex
    • POC: It refers to the point of control. It represents the areas of most interest by trading volume and should act as walls of bids/offers that may result in price reversals. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals the constant evolution of the market auction process. If you wish to find out more about the importance of the POC, refer to the tutorial How to Read Volume Profile Structures
    • Tick Volume: Price updates activity provides great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement. Studies validate that price updates (tick volume) are highly correlated to actual traded volume, with the correlation being very high, when looking at hourly data. If you wish to find out more about the importance tick volume, refer to the tutorial on Why Is Tick Volume Important To Monitor?
    • 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.
    • Correlations: Each forex pair has a series of highly correlated assets to assess valuations. This type of study is called inter-market analysis and it involves scoping out anomalies in the ever-evolving global interconnectivity between equities, bonds, currencies, and commodities. If you would like to understand more about this concept, refer to the tutorial How Divergence In Correlated Assets Can Help You Add An Edge.
    • 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
     
  10. IvanGlobalPrime

    IvanGlobalPrime Private

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    Find my latest market thoughts

    Major Breakout In The USD Index

    POSTED ON: 25 APR, 2019

    The exuberant mood to buy the US Dollar post-Easter just keeps on going, reflected by the topside resolution in the DXY, where a close above the 97.60-70 key daily resistance has finally transpired.

    The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.

    Quick Take

    The exuberant mood to buy the US Dollar post-Easter just keeps on going, reflected by the topside resolution in the DXY, where a close above the 97.60-70 key daily resistance has finally transpired. If we can find acceptance above this level on a weekly close, it could send shockwaves across the market as it would have negative repercussions for emerging markets at a time when the global growth recovery is still quite fragile even if China has shown signs of life even if very domestically localized. The Japanese Yen, while unable to keep up the rapid pace of appreciation by the USD, is nonetheless one of the top performers too alongside the Sterling. The EUR remains on the backfoot, finally re-imploding in what should be interpreted as a resumption of its bearish trend, with the close sub 1.12 technically damaging. The Canadian Dollar, on an equally weighted scale, ended up mixed despite weakness was obviously manifested against the USD, GBP, JPY. The worst performer by a country mile though was the Australian Dollar, hammered by the major miss on Wednesday's Australian CPI readings as players now anticipate rate cuts by the RBA in coming months.

    [​IMG]
    Narrative In Financial Markets
    • The Australian CPI came lower-than-expected in Q1, which led to the market expecting increased chances of the RBA cutting rates in the foreseeable future. Aussie Q1 headline came at 0% vs 0.2% exp and 0.5% prior, while the y/y was 1.3% vs 1.5% exp and 1.8% prior. The RBA trimmed mean stood at 0.3% q/q vs 0.4% exp and 1.6% y/y vs 1.7% exp.
    • In spite of the absence of US-related fundamental news, strong demand flows pushed the USD higher, with a very significant bullish technical breakout not only in the EUR/USD but also to its inverse twin the DXY, closing above the 97.60 resistance mark. The upside resolution should not be overlooked as it can finally stimulate the pick up in FX vol as technically speaking, the USD can now set sights on much more aggressive targets.
    • The market has turned more decisively dovish towards both the RBA and the BOC in the last 24h, following a major Aus CPI miss and the removal of the BOC rate hike bias respectively. These developments reinforce the notion of the USD and JPY singled out as the best alternatives in the FX ugly contest. The USD fueled on its brighter growth outlook vs RoW, while the Japanese Yen continues to be the preferred destination on spurs of ‘risk-off’.
    • The Bank of Canada abandoned its explicit tightening bias from the monetary statement while slashing the economic forecast citing slower global growth, sluggish housing and oil sectors. In the presser, the BOC Governor Poloz refrain from a dovish script to instead sound slightly more upbeat, noting that the slowdown will prove temporary while attributing the removal of a rate hike bias to emphasize a more data-dependant stance.
    • The US DOE released its weekly Oil inventory data, which saw an unexpected build-up of +5,479k vs 1,000k estimate. As a reminder, the prior day, the private API data showed a build up even greater at 6.9M barrels. The price of Crude Oil closed at $65.7 after a fall of -.32%.
    • Core durable goods orders and unemployment claims in the US are the two key events in the calendar later today. As a reminder, today we get public holidays in Australia, New Zealand, and Italy. In Asian hours, the BOJ will release its latest monetary policy statement, with no expectations for a change in the policy guidance.
    Recent Economic Indicators & Events Ahead
    [​IMG]
    Source: Forexfactory

    RORO (Risk On, Risk Off Conditions)

    The breakout in the DXY is very significant, especially as it occurs without the backing of US yields, just as the S&P 500 is flirting with its all-time high. What are these dynamics telling us? First off, a point must be reiterated, and that is, for the DXY to finally close above the hugely relevant 97.60, it sets into motion a macro technical play that may take us towards the 99.50/100.00 level. Secondly, the USD has strengthened its dominance as the best alternative in an otherwise all dovish CBs environment. There were 2 central banks the market was not yet fully convinced they would ultimately tighten their screws by flirting with the idea of lower rates. However, after the disappointing Aus CPI and Canada’s Central Bank monetary policy outcome, the RBA and the BOC now join the ECB, RBNZ, BOJ, Fed in their dovish bias, while the BOE remains stuck in a dead road until a Brexit resolution. What this means, is that, if the market has got to accumulate a currency among any other, amid an environment of 0 monetary policy divergence and slower growth prospects as the drop in the US30y bond yield towards 1.9% reflects, that currency has got to be the USD. Besides, with a stock market in the US in rude health and the economy growing relatively strong vs other G10 countries, the rationale for the United States to keep attracting capital inflows makes it a genuinely appealing choice. The fact that the Japanese Yen index is holding relatively steady at a time of resurgence in US stocks, it can be understood as a play towards poorer growth prospects in the RoW, while the currency also acts as a source of demand due to the depressed fundamentals elsewhere.

    Latest Key Technical Developments In G8 FX
    [​IMG]

    Interested about downloading today's key levels in the major pairs? Find the MT4 templates, updated daily, by clicking the link.

    EUR/USD: More Downside Opens Up

    The impulsive selloff in the exchange rate appears to have further room to go even if in the very short term the price has made it to its next 100% projection target at 1.1155. Note, the fact that such target, where market makers tend to be actively stepping in, has been violated, it implies that the fast money may continue to be interested piling into momentum trades amid the exuberant USD dynamics. If further selling transpires, 1.1120 is the next projected target ahead of the daily ADR at 1.1113 and the round number of 1.11. The market cycle is aggressively bearish, and a development that should be interpreted as structurally EUR/USD negative is the speed and magnitude of the bearish moves.

    [​IMG]

    GBP/USD: Yet To Reach Its 100% Proj Target


    The breakout of the previous low at 1.2915 allows for a new bearish 100% proj target of 1.2870. The bullishness in the DXY is out of question, especially on the break above 97.60-70 as seen. Throw into the mix the low interest to hold the Sterling on the Brexit uncertainty, and the path of least resistance continues to be for a bearish bias in the next 24h in line with the general USD strength theme. A descending trendline now guides the trend lower as yet another visual cue to refer to.

    [​IMG]

    USD/JPY: Fresh Bullish Cycle Develops


    The pair finds itself in a new bullish cycle that should draw interest from buyers to re-group and join the bid on a retest of the area between 112.00-112.05 ahead of a retest of the former range midpoint circa 111.85, where the ADR limit intersects on Thursday. It’s worth noting, however, that the exchange rate lacks sufficient value to justify such hefty levels at the moment, with the drop in the S&P 500 and US yields in the last 24h a clear negative for the pair. Overall, technicals underpin the exchange rate, fueled by a rampant USD, but the intermarket flows coming from US equities and yields should prevent the rally from finding enough committed buyers.

    [​IMG]

    AUD/USD: Macro Support Hit, Bearish Bias


    As calls for the RBA to further ease policy in coming months mount, on the back of the Aus CPI miss, so does the pressure by sellers to break the 70c. I must say that while the bearish bias is clear and supported by the whole spectrum of intermarket flows (Yuan, DXY, yield spread), the overextended bearish bar implies that the ris for a correction into 7025-30 exist. I am expecting the 7050 to be the line in the sand before an eventual resumption of the downtrend, aiming for a test of 70c.

    [​IMG]

    Important Footnotes



      • Risk model: The fact that financial markets have become so intertwined and dynamic makes it essential to stay constantly in tune with market conditions and adapt to new environments. This prop model will assist you to gauge the context that you are trading so that you can significantly reduce the downside risks. To understand the principles applied in the assessment of this model, refer to the tutorial How to Unpack Risk Sentiment Profiles
      • Cycles: Markets evolve in cycles followed by a period of distribution and/or accumulation. The weekly cycles are highlighted in red, blue refers to the daily, while the black lines represent the hourly cycles. To understand the principles applied in the assessment of cycles, refer to the tutorial How To Read Market Structures In Forex
      • POC: It refers to the point of control. It represents the areas of most interest by trading volume and should act as walls of bids/offers that may result in price reversals. The volume profile analysis tracks trading activity over a specified time period at specified price levels. The study reveals the constant evolution of the market auction process. If you wish to find out more about the importance of the POC, refer to the tutorial How to Read Volume Profile Structures
      • Tick Volume: Price updates activity provides great insights into the actual buy or sell-side commitment to be engaged into a specific directional movement. Studies validate that price updates (tick volume) are highly correlated to actual traded volume, with the correlation being very high, when looking at hourly data. If you wish to find out more about the importance tick volume, refer to the tutorial on Why Is Tick Volume Important To Monitor?
      • 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.
      • Correlations: Each forex pair has a series of highly correlated assets to assess valuations. This type of study is called inter-market analysis and it involves scoping out anomalies in the ever-evolving global interconnectivity between equities, bonds, currencies, and commodities. If you would like to understand more about this concept, refer to the tutorial How Divergence In Correlated Assets Can Help You Add An Edge.
      • 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
     

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