Global Prime: Daily Market Digest

[IvanGlobalPrime]

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Forex Indices: The Daily Breakdown [01-14]

The North American currencies found strong buy-side flows since the last European session. The British Pound is still the bet performing currency over the last week though even if the structural resistance faced at an index level disallowed further progress. This hidden resistance, unless monitoring the GBP index, won't be noticeable!

Let’s get started…

• Opportunities in the Forex indices (video format)
• Analysis of the Forex indices (written format)
• Education -The Global Prime Academy (professional training)

Opportunities in the Forex indices (video below)​

To see an expanded version, right-click and select ‘open link in new tab’. The indices show the performance of a currency vs a G8 Forex basket. Indicators are available to use these measures via Tradingview and MT4.

The North American currencies (USD, CAD) found strong buy-side flows since the last European session. The British Pound is still the best performing currency over the last week though, even if the structural resistance faced at an index level disallowed further progress. This hidden resistance, unless monitoring the GBP index, won’t be noticeable! Meanwhile, the two currencies most punished remain the Euro and the New Zealand Dollar. Holding short-side JPY exposure has not paid off despite the buoyant behavior of global stocks. AUD and CHF are in wait-and-see mode.

In my video analysis below I use concepts taught in the brand new Academy website such as momentum, volatility measures and market structures to come up with the daily outlook in the currency market.

EUR INDEX​

The single currency remains outright bearish. To put things into perspective, the Euro has been sold in 9 out of the last 10 sessions. The losses have accelerated the moment that a sticky area of support was cleared. Remember that these equally-weighted FX indices studied are a formidable tool to evaluate the technical merits that a particular currency enjoys to appreciate or depreciate in different time horizons. By breaking through the support the chart above exhibits, the odds were stacked in favor of a sell-side continuation. The next clear target is the 100% measured move.

GBP INDEX​

The Sterling saw further buy-side flows in early London only to peter out such exuberant momentum by the time the North American flows made their way in. If you hung onto gains in the Pound, the smart move would have been to start dialing down the exposure at the macro structural resistance so neatly represented through the purple area. If we can historically document, as we in fact do, that the Sterling has been struggling so respectively around this area, and in light of such an overextension from the previous balance area (over 1.3% appreciation), the chances are that considerable profit taking will be seen. The overall stance is still bullish nonetheless.

USD INDEX​

The USD, after briefly sitting at a key area of support, a strong wave of demand kicked in through the London session, which is not surprising given the significance of this area. As stated during yesterday’s report, “I can’t help but anticipate near term buy-side flows; hence, anyone looking to short the USD into this area is asking for trouble.” Fast forward, the US Dollar has now regained its central ‘mean’ line and it looks ready to keep auctioning higher.

CAD INDEX​

I am running long exposure in the CAD following a commanding bullish outside bar reversal through the London session. Such sudden gyration led the CAD to re-take the control ‘mean’ line. The index has now cleared its 2021 peak, which leads me to believe that the outlook has now strengthened. In other words, the currency finds itself in an excellent technical context for further follow through to the tune of 0.2% appreciation from the last US close candle. Why this % movement you may be asking? That would structurally coincide with a strong SR flip from last December.

JPY INDEX​

The sell-side bias in the Japanese Yen no longer is justifiable after 2 days of stagnation. The grey vertical line above exhibits the entry level. As one can notice, we never got out of second gear. The moment the trigger line in the bottom window turned bullish, that was the time to bail out of the position. I am sitting out any exposure for the time being as even if the Yen has regained its control ‘mean’ line, the majority of metrics stay bearish, which suggest that any upside momentum is lacking the technical backing I’d like to see when we cross this vicinity.

AUD INDEX​

If you follow me along, you received my warning to stay clear of AUD long exposure heading into Wednesday as we were trading straight into the top-side of a validated range. Long and behold, buyers have temporarily dissipated as the currency struggles to break past this resistance. Given the strong uptrend in the AUD, I can picture buyers having another go to the upside, and if this starts to happen in the coming 24h, the risk of a breakout will keep increasing.

NZD INDEX​

The strong demand in the NZD failed to find follow up as a strong supply emerged in the last London session. While no entry signal has been fired, the short-term bias has shifted to the downside even if I fail to anticipate how holding shorts can get you into ‘home-run’ trades. The bullish macro trend is very strong and not far below the NZD faces major support. Overall, I am patiently sitting this one out until a long signal pops up.

CHF INDEX​

After clearing a huge area of support, the initial backside retest of that area led to a resumption of the downtrend. However, the lack of further sell-side follow-through has resulted in the establishment of a range. This nullifies any opportunities to get engaged in CHF exposure even if the overall bias is still quite bearish as per the all-red metrics we obtain via the SMT and the trigger line indicators. Bulls need to retake the magenta area overhead to regain the upper-hand.

Education -The Global Prime Academy​

Announcing The Global Prime Academy. Check out our brand new Academy website. Are you ready to learn a set of strategies to take your game to the very next level?

Let me give you a brief background on why we’ve created the Global Prime Academy. The universal praise I received about my trading and content I produce has been incredible. However, clients were frustrated unable to find a structures frame to absorb all this knowledge. Part of these golden nuggets are now going to be encapsulated in easy to follow and digestible lessons.

​

 

[IvanGlobalPrime]

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Breakout In The Aussie Index​

The rally in the Australian Dollar index is the gift for bulls that keeps on giving. In the last 24h, there is further evidence that a new technical milestone has been achieved by printing new multi-year highs and hence strengthening its bullish outlook.

Let’s get started…

• Opportunities in the Forex indices (video format)
• Education -The Global Prime Academy (professional training)

Opportunities in the Forex indices (video below)​

To see an expanded version, right-click and select ‘open link in new tab’. The indices show the performance of a currency vs a G8 Forex basket. Indicators are available to use these measures via Tradingview and MT4.


The rally in the Australian Dollar index is the gift for bulls that keeps on giving. In the last 24h, there is further evidence that a new technical milestone has been achieved by printing new multi-year highs and hence strengthening its bullish outlook.

In the video below, I analyze the state of affairs in the FX space, even if it is the AUD that looks most attractive for long exposure. I use concepts taught in the brand new Academy website such as momentum, volatility measures and market structures to come up with the daily outlook in the currency market.

Education -The Global Prime Academy​

Announcing The Global Prime Academy. Check out our brand new Academy website. Are you ready to learn a set of strategies to take your game to the very next level?

Let me give you a brief background on why we’ve created the Global Prime Academy. The universal praise I received about my trading and content I produce has been incredible. However, clients were frustrated unable to find a structures frame to absorb all this knowledge. Part of these golden nuggets are now going to be encapsulated in easy to follow and digestible lessons.

 

[IvanGlobalPrime]

Find my latest market thoughts

System Hopping: Way Out Is From Within​

There is nothing wrong system hopping a few times to test things out. Changing the way you trade the markets during your journey as a trader is actually healthy to find out what clicks for you, just realise that sooner or later, you cannot be stuck in this vicious cycle of constantly jumping around how you approach your game plan.

This article on ‘system hopping’ has been re-purposed as a ‘guide’ from Global Prime’s academy courses.

There is a very fine line that separates a gradual fine-tuning of one’s strategy without altering its core edge, and the risk of over-refinement, which sooner or later, leads to the dreadful path we’ve probably all faced. I am referring to completely moving away from the strategy we were using in the first place also known as system hopping.

Whenever that happens, what’s important is not as much that you changed your strategy, but why you keep repeating this cycle? Getting to the bottom of this question yields the best revelations. What led you to decide the former system is no longer valid assuming you back tested it and it proved profitable? Were your expectations to get positive results unrealistic? Did you lose faith after experiencing a bad losing streak? Did you feel you couldn’t adapt to the strategy based on your personality as a trader?

Coming up with a congruent answer to these questions will reveal what’s the actual driving force leading to make these decisions. Let me tell you, for the most part, it has to do with understanding first and foremost how you enjoy trading. What ticks for you that resonates with who you are as a trader, your true identity.

There is nothing wrong with changing the way you trade the markets a few times during your journey as a trader, just realise that sooner or later, you cannot be stuck in this vicious cycle of constantly jumping around how you approach your game plan. That’s why understanding yourself and why you make certain decisions is the number 1 question you must always ask yourself.

If the strategy was performing alright but you are the type of trader who doesn’t like to sit on your butt waiting for hours the right setup to pop up but rather you are more the kind of active ‘scalper-like’ trader in and out, sooner or later, that’s going to manifest in how you perform by making an unnecessary amount of mistakes or simply getting dead bored.

The opposite can also be true. If you are very methodical and really like to be very patient, only waiting for the right setups to occur in higher timeframes, an intraday strategy that gets you in and out of the market for quick profits will probably not sit well with you.

Perhaps you are the type of trader who likes to specialise on one single setup on multiple markets. Do you like to focus in just one market? Do you have the capacity to be actively engaged in multiple markets while also deploying multiple setups with an edge? Be aware, if that’s the case, a huge amount of concentration is going to be required.

‘Know thyself’ must always come first before you choose the strategy. The moment you get to really know the type of trader you envision you’d like to be, that’s when the search for the holy grail is over, as you start to look from inside out as opposed to be stimulated from outside factors from which to adapt.

 

[IvanGlobalPrime]

Find my latest market thoughts

Forex Indices: Technicals Favour CAD Longs​

Ahead of Biden's Presidential inauguration in the US and with Martin Luther King Jr. public holiday, the Forex market went through a day of rather suppressed volatility. These dynamics were particularly true in the heaviest currencies by order of volume transacted. I am referring to the US Dollar, the Euro and the Japanese Yen.

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Let’s get started…

• Opportunities in the Forex indices (video format)
• Analysis of the Forex indices (written format)
• Education -The Global Prime Academy (professional training)

Opportunities in the Forex indices (video below)​

To see an expanded version, right-click and select ‘open link in new tab’. The indices show the performance of a currency vs a G8 Forex basket. Indicators are available to use these measures via Tradingview and MT4.


Ahead of Biden’s Presidential inauguration in the US and with Martin Luther King Jr. public holiday, the Forex market went through a day of rather suppressed volatility. These dynamics were particularly true in the heaviest currencies by order of volume transacted. I am referring to the US Dollar, the Euro and the Japanese Yen. In currencies such as the British Pound of the Canadian Dollar, solid buying was observed, including a long signal to speculate in further upside in the latter. For a full-fledged analysis of the market, keep reading below…

In my video analysis below I use concepts taught in the brand new Academy website such as momentum, volatility measures and market structures to come up with the daily outlook in the currency market.

EUR INDEX – NEUTRAL TO BEARISH​

A period of consolidation at a key technical crossroads has ensued following the sharp sell-off experienced last week. This area coincides with the 100% projection target away from the last observed bracketed area and the lowest point from November last year. The concentration of volume around the 100% measured move via the POC outlines the interest by market makers to slow down the ongoing depreciation of the single currency. However, attempts to sustain the buying waves off the lows have proven ephemeral with the Control Line (13ema) capping the upside.

GBP INDEX – NEUTRAL TO BULLISH​

The Sterling has regained the upside with impetus. A close above the purple rectangle above the current price would seal the downside head-fake move. If this occurs, I am suspecting follow through continuation in the British currency to the tune of about 0,20% towards the previous swing high ahead of a rally extension to its 2021 peak for an additional 0.15% gains. However, this bullish premise is still premature and won’t be vindicated until there is a resolution with a close above the aforementioned purple rectangle.

USD INDEX – NEUTRAL​

The world’s reserve currency has paused its rally at the highest point in 2021. The velocity of the move away from the previous pocket of demand (highlighted in a purple rectangle) warranted profit-taking judging by the behaviour of price action which saw a gradual tapering in the size of each successive candle as the overhead resistance got approached. I remain neutral to bullish in this market owing it to the location we trade at even if we are nowhere near a trigger signal to take new positions in this market.

CAD INDEX – BULLISH​

The CAD exhibits bullish tendencies that I’d anticipate can continue. The market looks ripe to expand its 2021 gains on the back of a crossing of price back above the Control Line with most of the proprietary metrics giving us the blessings to speculate on further follow-through this Tuesday. There are no noticeable resistance areas to account for until the supply candle originated on Jan 15th through the European session (circa 0.2% away). This results in a relatively clear path to eat up nearby supply and exploit this voidness in liquidity.

JPY INDEX – NEUTRAL​

The Japanese Yen looks overstretched by any measures. This is typically the worst time to speculate in long exposure unless the interest is hedging, scalping the market, etc. The market has, not coincidentally, stalled at the 100% projection target from what constituted a well-defined broad bracketed area. If the risk-on dynamics return, this is a more than reasonable location to start unwinding JPY longs in what I suspect could be a move back to re-visit the control line (13-ema). Alternatively, a break and close through the 100% proj target allows an extra run of ~0.2%.

AUD INDEX – NEUTRAL TO BULLISH​

The short-term trend in the Aussie has been bearish but once stepping out to see the big picture, the current correction is far from compromising the overall bullish structure. In fact, the Aussie has reached an area of support in the chart where I’d expect selling to abate for a potential retest back towards the control line. The peak printed on Dec 31st that was convincingly broken a week after is now being retested which is what leads me to believe of the substantial risks that exist to see renewed buy-side interest in the currency.

NZD INDEX – BEARISH​

The New Zealand Dollar remains unloved as buyers continue to be far outweighed by the selling wave hitting this market. As a matter of fact, the sell-side pressure has been so strong that even the 100% measured move away from the previous bracketed area has now been cleared. That said, this market is grossly oversold and proof of that is the intersection of price with the lower bollinger band alongside a 2-times ADR deviation away from the central ‘mean/control’ line. I remain bearish but it’s no time to enter positions at this stage in the bearish phase.

CHF INDEX – BEARISH​

I can’t help but anticipate renewed weakness in the Swiss Franc following two consecutive failed attempts to break through a major resistance area. A re-take back below the control line would result in further technical evidence of a potential transition back down to retest the origins of the demand candle from Jan 15th through the European session. Overall, the market is in a consolidation pattern with significant risks of auctioning lower from the top-side to the bottom-side of its currently established range.

Education -The Global Prime Academy​

Announcing The Global Prime Academy. Check out our brand new Academy website. Are you ready to learn a set of strategies to take your game to the very next level?

Let me give you a brief background on why we’ve created the Global Prime Academy. The universal praise I received about my trading and content I produce has been incredible. However, clients were frustrated unable to find a structures frame to absorb all this knowledge. Part of these golden nuggets are now going to be encapsulated in easy to follow and digestible lessons.

 

[IvanGlobalPrime]

Find my latest market thoughts

Statistical Edge In Trading: Have You Found Yours To Exploit?​

If a trader finds a repetitive approach to trade the markets with a positive expectancy return over a large number of trades, this is what we understand as a statistical edge. The law of large numbers vindicates such premise.


This article on ‘statistical edge’ has been re-purposed as a ‘guide’ from Global Prime’s academy courses.

Finding a statistical edge in trading is quite simple, in fact, there are thousands of systems out there that do generate a statistical edge in financial markets. However, in most cases, this simplicity doesn’t translate in this ‘statistical edge’ being easy to apply overtime. Think about dieting, it’s simple knowing what not to eat, but ‘daily temptations’ makes it not easy.

What do we understand as a statistical edge?​

In a nutshell, if a trader can find a repetitive approach to trade the markets via the entry style, the management of risk and keeping the psychological aspect in check, a positive return over a large number of trades is to be expected. The law of large numbers vindicates such premise.

Out of all the 3 cornerstone groups (system, risk management, psychology), assuming you are sufficiently diligent to follow the rules of your system and control your capital at risk, it then really boils down to psychology, particularly in what I believe to be the elephant in the room, which is developing ‘confidence’ around this ‘statistical edge’ your system provides.

Backtesting to the rescue​

If your aim is to build confidence in a specific strategy that will act as your trigger mechanism to enter the market, you should definitely go through a rigorous process of backtesting it to determine if it has proven to be profitable over a large enough sample of trades and most importantly, through different trading conditions (trends, ranges, high/low vol, etc).

The longer the in-sample, the more robust your statistical edge can be, which leads to increased conviction upon its expectancy. By backtesting a strategy, you also avoid the common pitfall of letting the short-term results determine your level of commitment towards your strategy.

You will sooner or later face a rough patch of losing streaks, which is where it will test your conviction towards the strategy deployed. Back in the days, I made countless mistakes of letting these short-term results justify that it was time for me to seek out yet another way of trading, known as system hopping, with the elusive thinking that losing streaks could be avoided.

How to break out of this cycle?​

The way I overcame this seemingly vicious cycle with no end in sight for many aspiring traders, involved the combination of finding a strategy that resonates with one’s personality, and running result simulations as far back as one possibly can with a true sense of authenticity and honesty. Failure to do so is a clear sign of non-commitment to your development as a trader.

In my case, after I completed years of obsessive testing, the next phase was to trade the strategy live with minimal capital on the line starting from as little as 0.25%, and only increase the risk/month if the results had proven profitable over this period. Note, I did that because I already had years of experience chasing my own tail in the market.

Even for newbies, it is recommendable to start on a live account to know what’s like trading the strategy with real-time data yet removing the risk of unnecessary money lost due to lack of experience, hence why the capital at risk should be comically low when starting. You should do that for as long as necessary until your results start being more consistent. Only then look to increase your capital overtime but only if the results are on your side. You must find filters to grant yourself permission to take these risk parameters to the next level.

Don’t fall for advertised EAs​

Also, as a word of advice, don’t fall victim about the over-reliance of automated systems sold for a few hundred dollars. There is a reason why people would advertise these EAs. They tend to perform well in certain market conditions during backtesting only to blow up when conditions change.

Lastly, don’t try to be a hero by not using stop losses (cost of conducting business) and stay away from an over-reliance on money management (including ideas like same-pair hedges, baskets, grids, averaging down recklessly, martingale variants, etc). These strategies are all inherently very risky.

Education -The Global Prime Academy​

If you are interested to follow traders that have found a statistical edge in trading. Not only that, but they are willing to teach it to you, then you should consider the brand new Global Prime Academy website. If you ready to learn a set of strategies to take your game to the very next level, you should definitely check it out.

 

[IvanGlobalPrime]

Find my latest market thoughts

The Technical Breakdown – Forex In Rotational Hiatus​

There is an absence of sustainable trends with rotations in the valuation of currencies the norm. To find out the individual technical merits of each currency, watch the video..

Let’s get started…

• Opportunities in the Forex indices (video format)
• Analysis of the Forex indices (written format)
• Education -The Global Prime Academy (professional training)

Opportunities in the Forex indices (video below)​

To see an expanded version, right-click and select ‘open link in new tab’. The indices show the performance of a currency vs a G8 Forex basket. Indicators are available to use these measures via Tradingview and MT4.


By distilling the performance of currencies in the last 24h, the clear winners included the Euro and the Swissy, followed at a fair distance by the USD and the Kiwi. The latter had a far better performance than the AUD as the market unwound long bets amid risk aversion. However, it was the drop in the CAD that was the most relentless. As one steps out into the weekly performance, there is an absence of sustainable trends with rotations in the valuation of currencies the norm. To find out the individual technical merits of each currency, watch the video below…

In my video analysis below I use concepts taught in the brand new Academy website such as momentum, volatility measures and market structures to come up with the daily outlook in the currency market.

EUR INDEX – MEETS TOUGH RESISTANCE​

To see an expanded version, right-click and select ‘open link in new tab’
Following a rise of such magnitude (+0.8% appreciation pre-ECB trough to peak), the Euro leaves me watching the current action from the sidelines with a rather neutral stance. From a swing-trading perspective, there is minimal value engaging in long-sided business after such vertical movement in price. The currency is now struggling to breakout the previous support from Jan 13th where I could anticipate a short-term setback to release some of its overly bullish pressure. If it transpires, a retest of the control line (13ema) is a real possibility.

GBP INDEX – BULLISH BREAKOUT IMMINENT?​

To see an expanded version, right-click and select ‘open link in new tab’
The Sterling keeps exerting upward pressure against a major area of resistance. There have been two failed attempts over the last week to break through yet the Sterling keeps at it. Should a resolution above the purple-coloured area be confirmed via an 8h candle close, there is significant risk of a more sustained gains ahead for the Pound as it would clear what’s become the stickiest area of resistance for months, ever since the first test of the high was established back in early November last year. Since then, multiple failures at this area have occurred.

USD INDEX – BOUNCES OFF RANGE SUPPORT​

To see an expanded version, right-click and select ‘open link in new tab’
The USD has re-taken its control line within the context of a defined range of about 1%. Structurally, by following the logic of range anatomies, the decisive rejection off the low may shift the focus towards the upside once again. However, the momentum indicators monitored in the bottom window prevent me from turning bullish by hinting it is too premature to engage in longs. Therefore, in the near-term, I would not be surprised in the slightest to see a retracement back down to release some of the buy-side pressure and along the way find out how committed buyers are.

CAD INDEX – SHIFT IN STRUCTURE TO BEARISH​

To see an expanded version, right-click and select ‘open link in new tab’
On the back of a 1% drop from peak to trough, this is not a market that looks ready to be traded from a swing trading standpoint. All the momentum indicators have turned bearish, which makes me overall bearish the CAD, but at the same time, we’ve travelled on a straight line from overbought to oversold conditions in the span of just 48h ever since the outcome of the BOC last week. That said, this bearish breakout has led to the validation of a trap pattern, which makes me think any retracement between 0.3 to 0.5% from the low will be met with initial heavy selling.

JPY INDEX – TIGHT RANGE​

To see an expanded version, right-click and select ‘open link in new tab’
The Japanese Yen has entered a phase of extremely tight consolidation. This narrow passage finds price activity encapsulated between the control line to the topside and a previous area of support on the way down. There needs to be a pick up in volatility that unravels the current stagnant action in the index to shape up the next bias in the index. Until then, stand pat.

AUD INDEX – PAUSES AT BROAD RANGE LOW​

To see an expanded version, right-click and select ‘open link in new tab’
The Aussie has found bids to temporarily pause the sell-side pressure at the bottom-side of its daily range. The risk of buyers outweighing sellers around this vicinity for a return back to the control line is a very realistic outcome to expect solely based on the technical merits. Besides, from a risk reward standpoint, it is at these levels where one can reap the most benefits. Following my default template of range anatomies and how price tends to behave within these environments, the next expected movement, until technicals negate it, is a recovery to the topside of the range.

NZD INDEX – SETTING UP FOR LONGS?​

To see an expanded version, right-click and select ‘open link in new tab’
The New Zealand Dollar may my attention in the next few candles for possible long opportunities. I like the fact that most momentum indicators in the 8h chart have turned bullish as price finds its footing above the control line after going through a much-needed correction of its recent highs. I’d be stalking for longs but I need to first see a re-grouping by buyers via a renewed upward momentum that results in the trigger line (bottom-window) to change its slope to bullish again. Until that happens, I am watching but not engaging.

CHF INDEX – BULLISH BUT AWFUL PRICE TO PAY​

To see an expanded version, right-click and select ‘open link in new tab’
The Swissy is at a high risk of being snapped back down towards its control line. The type of bullish momentum that has built up over the last 48h (+0.8% appreciation) tends to be unsustainable, which is why even if the majority of momentum indicators point to bullish tendencies, that’s just one piece of the puzzle. Structurally wise, this market is in need of a healthy pullback.

Education -The Global Prime Academy​

Announcing The Global Prime Academy. Check out our brand new Academy website. Are you ready to learn a set of strategies to take your game to the very next level?

Let me give you a brief background on why we’ve created the Global Prime Academy. The universal praise I received about my trading and content I produce has been incredible. However, clients were frustrated unable to find a structures frame to absorb all this knowledge. Part of these golden nuggets are now going to be encapsulated in easy to follow and digestible lessons.

 

[IvanGlobalPrime]

Find my latest market thoughts

The Technical Breakdown – The Pound Clears Multi-Month Resistance!​

Out of all the price action I've distilled in this report though, what especially jump out for me is the breakout in the Sterling index, at last clearing what's proven to be a hugely sticky area of resistance on the way up for months.

Let’s get started…

• Opportunities in the Forex indices (video format)
• Analysis of the Forex indices (written format)
• Education -The Global Prime Academy (professional training)

Opportunities in the Forex indices (video below)​

To see an expanded version, right-click and select ‘open link in new tab’. The indices show the performance of a currency vs a G8 Forex basket. Indicators are available to use these measures via Tradingview and MT4.


There has been a notable resurgence in risk-on dynamics that has resulted in violent gyrations in favor of the Pound, the Aussie and the Kiwi. On the contrary, currencies that tend to perform best in times of risk-off have been bashed, printing sizeable outside candles through the last European session. Out of all the price action I’ve distilled in this report though, what especially jump out for me is the breakout in the Sterling index, at last clearing what’s proven to be a hugely sticky area of resistance on the way up for months.

In my video analysis below I use concepts taught in the brand new Academy website such as momentum, volatility measures and market structures to come up with the daily outlook in the currency market.

EUR INDEX – SHORTS DOMINATE NEAR TERM​

To see an expanded version, right-click and select ‘open link in new tab’.
The outlook for the Euro in the short-term is rather bearish as the index regained the downside of its control line (13-ema). What’s most important is the flow dynamics under which it has achieved this retention of the control line. An initial bullish price delivery in Europe was met with a wave of selling creating in the process a bearish outside bar in the 8h chart. This set the stage for the downward pressure we’ve seen following up through the US session. The path of least resistance near term is skewed to the downside.

GBP INDEX – SHAKES WEAK-HANDED BEFORE BREAKOUT​

To see an expanded version, right-click and select ‘open link in new tab’.
The Sterling has confirmed a huge technical breakout after, at last, leaving behind what’s proven to be over recent most a very sticky area of resistance. This technical obstacle can now be stared from the rear mirror and that makes me think that dip-buying activity to extend the ongoing rally is the most likely scenario with a projected expansion of 0.4% to the next 100% projection. This price action is a trigger strong enough to qualify as a tradable opportunity to speculate on a long position for a risk reward of 3:1 as my default target.

USD INDEX – SOLD HARD, NEARS SUPPORT​

To see an expanded version, right-click and select ‘open link in new tab’.
The US Dollar has been bashed by a sudden shift in sentiment that sent the currency from its weekly highs down violently to make new weekly lows all in the span of 8 hours. The near-term outlook for the currency looks bleak even if the area where the index price has landed makes it a poor proposition to speculate in shorts. The risk reward is simply not there. Patience is warranted until the ebbs and flows result in better dynamics to bet on the USD. It’s time to sit on the fences until further technical developments.

CAD INDEX – OUT OF LOVE, NO ENTRY TRIGGERS​

To see an expanded version, right-click and select ‘open link in new tab’.
After a sharp movement from a multi-month high to the lowest in 2 weeks, the CAD has gone through a minor pullback mainly led by profit-taking and improved risk dynamics. However, the technicals remain notably bearish and as the index approaches back its control line, renewed sell-side opportunities may loom near. Also note, the highlighted purple rectangle constitutes the origin of the demand imbalance that led to the most recent bullish head-fake, hence reinforcing the notion of potential sells around this vicinity.

JPY INDEX – TIGHT RANGE, RISK OF STRENGTH​

To see an expanded version, right-click and select ‘open link in new tab’.
The Japanese Yen remains in a phase of tight consolidation. This relatively narrow passage limits the bearish opportunities now that we’ve hit the bottom-side of the existing range. Even if we clear the downside, right underneath we find further support, so for this market to really have my interest, a minimal projected drop of about 0.2% should occur from the current price. If that’s accomplished, it would clear these area of support, which would results in greater volatility to trade the Japanese currency. Until that happens, it’s wait and see.

AUD INDEX – NEXT DESTINATION TOP-SIDE OF RANGE​

To see an expanded version, right-click and select ‘open link in new tab’.
The Aussie has been one of the most benefited by the impressive return in risk-on conditions. The printing of a bullish outside candle through the European session places the risk back to a re-emergence of buyers for campaign that may last all the way until the index returns to the top-side of its broad range (0.8% from top to bottom).

NZD INDEX – THE HOTTEST CURRENCY AT PRICEY LEVELS​

To see an expanded version, right-click and select ‘open link in new tab’.
The title says it all. I am overall bullish in the New Zealand Dollar but the levels it trades at makes it a nonviable tradable market until I see a release of the buy-side pressure at least to a pint where the control line (13ema) gets retested and a lager pool of buyers re-group to jump on the bandwagon. Until that happens, exercising patience is warranted.

CHF INDEX – IN TRANSITION TO HIT RANGE SUPPORT​

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The logic in the study of range anatomies makes me think that the Swissy is currently in a transition to retest for a third time the bottom-side of its range. This means the risk is skewed to the downside for a move that is projected to be about 0.25-0.3% from the NY close. All technical metrics and the price action (bearish engulfing in Europe) suggests this as a viable outcome.

Education -The Global Prime Academy​

Announcing The Global Prime Academy. Check out our brand new Academy website. Are you ready to learn a set of strategies to take your game to the very next level?

Let me give you a brief background on why we’ve created the Global Prime Academy. The universal praise I received about my trading and content I produce has been incredible. However, clients were frustrated unable to find a structures frame to absorb all this knowledge. Part of these golden nuggets are now going to be encapsulated in easy to follow and digestible lessons.

 

[IvanGlobalPrime]

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What Is A Bond’s Yield Curve?​

There has been so much talk about the yield curve in the U.S. as the reflation trade kicks into a higher gear. In this article, I will explain what the yield curve really communicates depending on its slope.

The Basics — What’s A Bond And Its Yield​

Governments or corporations around the world finance large portions of their expenses aimed at financing/maintaining projects or refinancing existing debt through the issuance of bonds also referred to as fixed income securities. A bond can be understood as an I.O.U (I Owe You) that includes the details of an agreement and conditions under which to return the principal capital borrowed plus the payment of interest to the lender. The interest rates in a bond transaction can be paid in variable or fixed terms.

Bonds can have different maturities. We call money markets those bonds with high liquidity and maturity or duration below 1 year for financing needs in the very short term. We could call the bonds in a portfolio that consists of average maturity of one year as short-dated fixed income. Then we have the medium-dated bonds with an average maturity of three years. Lastly, the long-dated bonds consist of average maturity six years or longer.

There are two core elements as part of the value of a bond. The first one is the pricing of the bond coupon. The higher the bond pricing goes, the more demand exists to own the bond, therefore the equilibrium between demand and supply must meet at a higher point. When a bond experiences high demand, the interest rate needed to be paid in exchange for the debt financing needs is lower in inverse proportion to the increase in the bond price. Conversely, if there is scarce demand for the bond, the price will adjust lower and interest rates will go up, as the bond issuer must provide a greater incentive through rates to attract new bondholders. Below, I illustrate the 10-yr US government bond yields (candles), which currently stands at 1.32%.



The most popular forms of bonds maturity by governments include the 2-year, the 5-year and the 10 or 30-year bonds. As an example, let’s imagine that investor A (The European Central Bank) lends capital to bond issuer A (Italy). If we are talking about a fixed rate coupon bond at let’s say 4% and $100 million par value, what this means is that Italy will agree to pay the ECB an equal percentage of its face value of $4 million annually, even as the value of the bond and its interest rate fluctuates based on demand and supply dynamics, in other words, in the perception of value.

Diving Deeper — What’s The Yield Curve​

The yield curve is a chart that plots, through a line, the interest rates paid by bonds under the same entity (government, corporates, etc) with different maturities. Yield curves are the best foreteller of future economic conditions. At the end of the day, what yield curves express is the time value of money. The most widely followed yield curves include the 10y — 3 months (Fed’s favorite) or the 10y — 2y maturities.

In theory, a perfect scenario in which an economy is expected to be thriving and expanding over time, a normal yield curve exhibits an upward slope which indicates that the longer the maturity of the bond coupon, the more the investor will demand in interest rates vs short-dated.

We then have the case of an inverted yield curve, in which short-dated bonds are paying higher interest rates than long-dated bonds. In its own right, that’s an anomaly that communicates the outlook for the economy going forward is decelerating and at times, as it’s happened in a significant number of occasions through history, the inversion of the yield curve tends to be an accurate precursor of recessions in an economy or at the bare minimum, it does suggest lack of potential growth going forward.

Another scenario an economy may find itself facing is the stagnation of the rates along different maturity intervals, which leads to similar yields across the spectrum. This is what we would call a flat yield curve and it communicates indecision and uncertainty about the prospects for the economy. A slight variation of the flat yield curve is what we refer to as humped curve, which occurs when short-term and long-term yields are equal but medium-term yields trade higher relative to the short-term and long-term.

Source: kbsonigara.wordpress.com

Yield Curve Shapes — Steepeners and Flatteners​

Let’s take this lesson one level up in sophistication by introducing the various shapes the yield curve can manifest into. First of all, we will make the distinction between what the flattening of the yield curve means vs the steepening of its interest rates.

Let’s start by introducing what a bear steepener is about, which is precisely the type of yield curve present in the US at present time. The steepener in a bearish environment for bonds comes as a result of long term interest rates accelerating faster than short term interest rates. It is indicative of an economy where inflation expectations start picking up, hence the market starts to anticipate an increase in the benchmark interest rate by Central Banks to combat inflation. This scenario tends to be bearish for the stock market. Within a bearish steepener environment, the worst scenario is one characterized by little to no growth yet inflation continues elevated. That’s what’s often referred to as “stagflation”.



Source: tradingview.com

Next, let’s look at a bear flattening effect in the yield curve, which happens as a result of short-dated yields accelerating faster than the long-dated yields. Under these conditions, short and long maturities move towards a convergence that may ultimately lead to an inversion of the yield curve should short-dated bonds pay higher rates than long-dated bonds.

In the example below, one can observe how the yield curve (10y — 2y) is bear flattening due to the effect of a rising 2y yields at a more pronounced rate vs the 10y rate. When this scenario is present, it indicates that the economic cycle is in a stable phase with a relatively expensive domestic currency keeping in check inflationary pressures. However, the fact that the yield flattens, it does indicate that risks are more skewed towards a slowing economy and higher funding costs by the banking industry (LIBOR, etc). It tends to suggest that the Central Bank is getting ahead of itself and that the tightening cycle is likely to terminate as the economy slows down further.



Source: tradingview.com

A bull flattener is probably the worst scenario an economy can face and it occurs when the long-dated rates are falling at a faster rate than the short-dated rates. When this happens, it’s often followed by a cut in the benchmark interest rates by the Central Bank in order to calibrate demand and supply for money, which tends to ultimately be a positive sign for equities as there will be less incentive to keep deposits in fixed income (less attractive). Notice, a bull flattening is a consequence of poor economic data. When the yield curve goes through this bull flattening shape, the currency tends to lose value as the anticipation of lower interest rates detracts capital flows from perceiving sufficient value as opposed to other countries with a higher yield spread.



Source: tradingview.com

Last but not least, we have the bull steepener, which is dominated by short-dated yields falling faster than long-dated yields. The market forms this shape in the yield curve when it predicts that the Central Bank will be lowering its benchmark interest rate, which tends to be a bullish sign for the stock market. Tends to be a far from an ideal environment to buy the domestic currency on anticipation of lower returns in bonds.



Source: tradingview.com

Wrapping Up​

There is enormous complexity when analysing the state of an economy. We are inundated with various economic indicators with each sector potentially painting a different picture. The right interpretation of a country’s government bond yield curve carries a lot of value to understand the most likely trajectory by the Central Bank and what policy tools could be most adequate to face each different set of conditions. Following the extraordinary inundation of easy money by Central Banks since the COVID-19 crisis, which has only turbo-charged a dynamic in existence since the Global Financial Crisis (GFC) , the majority of the global economies have gone through protracted flattening yield curves to the steepening of the curves, which is indicative of a global economy where inflation expectations start picking. This is well depicted through the charts illustrated below.



After reading this tutorial, you will hopefully be better prepared to interpret what the yield curve is all about and why the current global bear steepening curves we are seeing should be a source of encouragement for those looking to play long the commodity space or the Aussie as a vehicle of inflation growth, to name a few.

 

[IvanGlobalPrime]

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Why You Must Let Profits Run​

Let profits run is so critical. The more you detach yourself from the outcome of your next trade as the make-or-break in your level of confidence, the more relaxed and easier you will find it to accept as a random event where the price will be headed, yet each time your target is hit, you will gain a deeper and deeper sense of satisfaction as you remain true to yourself and the strategy.

This article on the popular adage ‘let profits run’ has been re-purposed from Global Prime’s academy courses.

First of all, let me break down my thoughts as they relate to the recurring behaviour of not letting profits run.

I’ve written this article after the following interaction with the member of my mentor room Egil Viking, who asked: “Ivan, do you find many trades reach 1R or 2R, do you consider taking a small profit at these levels or are you aiming for 3R? I dont know statistics but I guess if many trades ends in BE case then one should make at least some profits…”

Here is my answer: “It depends on the context. For instance, in gbpusd this week we had 1.39 RN. That was an area I imagined we’d struggle. Also, early on the week, I like to start accumulating wins so that I can use existing profit to act more aggressive at times. So yep, I can be more conservative early Mon or Tue but not exact science. It’s all about probabilities and random distributions. What is way more predictable is that as you increase the sample, the 2s and 3s R start to pop up quite frequently as well. To get those rewards, we must be consistent in keep pulling the trigger and be grounded regardless of the outcome. BE feels like a ‘negative’ experience because we think profit was taken away from us. Can’t think this way until position closed. Until that happens, it’s all an illusion and imaginary results you project, not the reality… let odds play out.”

The action of wanting to guarantee the taking of profits ahead of a predetermined target, over thousands of trades, I found it tends to be quite detrimental in optimising the trading results. Don’t get me wrong, there will be certain times when cutting a target from 3 to 2 may be justified if a major news catalyst is ahead, re-calibrating a target or early in the week if that’s your preference.

However, if you find yourself repeating this action way too often with no proper structure, there may be an underlying psychological issue here. You see, your trading account is a reflection of where you are in your development as a trader. When it comes to taking profits, an important trait that is manifested is your ability to be patient for your projected target to be hit.

In retrospect, the hasty action of taking profits before you let the market hit your profit also carries psychological benefits, as it reinforces your self-belief that you just simply let the market dictate the outcome of the trade, without you intervening to alter the results.

What sets out a very wrong habit is to be monitoring the trade live and just as the trade moves in the direction of your target, you cut the trade short significantly as the fear of your trade turning against you for a break even trade grows. That action is an admission from your side that you haven’t accepted the market to determine the outcome.

This tinkering of your positions can be an endless rabbit hole if you don’t set the right foundation and habits. The key here is to accept the randomness and unpredictability of each single outcome, while having blind trust, one that is supported through your backtesting/forward testing.

You’ve essentially come to trust your numbers. You’ve ingrained in your brain that over a large sample of trades, some of these targets will be reached, it’s the distribution we can’t pretend to know. That’s the random part that must be accepted. If too frequently you are altering the results, you are also disrupting the potential maximisation of your profits.

The more you detach yourself from the outcome of your next trade as the make-or-break in your level of confidence, the more relaxed and easier you will find it to accept as a random event where the price will be headed, yet each time your target is hit, you will gain a deeper and deeper sense of satisfaction as you remain true to yourself and the strategy.

 

[IvanGlobalPrime]

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The Sterling Is The Trend To Ride​

Welcome to the Daily Edge FX report, a technically-oriented newsletter aimed to help traders better navigate the FX markets with the assistance of unique research and unbiased market analysis.

Top Level Summary​

The activity around Forex dialed down due to the Easter long-weekend. Some markets, the likes of the EUR, JPY or AUD exemplify this lackluster action through the tight ranges established. It tells us low interest to engage in speculative bets has been present. Hence market makers (liquidity providers) took over the price discovery dynamics. On the flip side, we have a couple of markets, namely the GBP and NZD, characterised by bullish momentum. It is the former though that looks like it holds the brightest prospects. As such, I continue to be long the British currency.

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Video Analysis​

In the video below, I provide a distillation of the technical outlook in the main Forex indices. These views tend to be relevant and actionable for the members of my mentor room the following 24h of price action. Humbly speaking, I am yet to find other traders that conduct the technical study of currency indices on an equally-weighted basis as taught in the Academy courses.

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What Is The Forex Basket Trading Strategy?​

Do you wonder what trading strategy I deploy to trade the Forex market? Would you like to become proficient in getting a solid grasp of the concepts I touch in this report that allow me to make trading decisions? If so, check out the ‘Basket Trading’ video promo. As a Global Prime client, you have access to the Academy’s courses I’ve put together where I teach all the aspects.

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Forex Indices Break Down​

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

EUR INDEX – TRAPPED WITHIN SIDEWAYS ACTION​

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The Euro index is going through a period of stagnation. Through the 8h session flows, we can clearly see the loss of volatility via the contraction of the bollinger bands. Besides, both the upper and lower edge of the existing range have been clearly rejected in multiple occasions. This is a clear tell-tale sign of a market dominated by liquidity providers aka market makers.

CHF INDEX – RETRIEVES KEY RESISTANCE​

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The Swiss Franc index has come back up with a vengeance after printing over 0.3% gains in the US session. The move up has re-taken the most critical area of resistance in recent weeks. This type of breakout with the candle close at the very high of the session opens up the prospects for follow up continuation to the tune of +0.4% until the 7.04/05 resistance.

USD INDEX – KEY BREAKOUT OF SUPPORT​

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The USD index has extended the sell-off initiated off the highest point in 2021. The market has so far found enough sell-side pressure to break a key area of support. That said, there is a tough structural high to break just ahead in the form of March 8-9 previous resistance. I wouldn’t be surprised in the slightest if the USD starts to find renewed buying interest around these levels.

JPY INDEX – THE TINIEST OF RANGES STILL PREVAILS​

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The only short-term play in the JPY is to see a downside resolution of the current narrow range. Should this scenario eventuate, it’d make us re-align with the long-term bearish trend. Until the confirmation of such potential breakout trade occurs though, I am watching this market from the fences. The re-opening of Tokyo should bring life back to the Yen.

GBP INDEX – EN-ROUTE TO ITS TARGET​

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I remain long this market off a signal fired on March 30th. This is what in our mentor room we classify as a CLPB (Control Line Pullback). The market has so far run for about 2:1 RR. Through this leg up, the market is yet to touch back the 13ema (our go-to moving average aka control line). This is a testament of the strong bullish trend in the currency.

CAD INDEX – DOWNSIDE LIMITED BY SR FLIP​

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The Canadian Dollar index has landed and so far been rejected in multiple occasions at a key reference area. This area had acted as resistance several times on the way up, so once broken late last month, and with the underlying trend unambiguously bullish, it is no surprise that the market finds technical value at this vicinity. We might be on the cusp of a new long signal.

AUD INDEX – TIGHT RANGE VALIDATES LOW INTEREST​

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It shouldn’t come as too much of a surprise that the Aussie has been acting rather lethargic as the market activity dialled down though the Easter long-weekend. In the chart above I’ve spotted the current tight range established. Should a breakout occur, the downside looks the most appealing outcome given the void it exists to see follow through towards the previous double bottom.

NZD INDEX – BULLISH AFTER BREACH OF RESISTANCE​

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Despite no immediate long signal in the horizon, the market action as of late is undeniably bullish. This outlook has been vindicated by the resolution of price through a double top followed by a clear period of acceptance above this horizontal area. As such, and with all the 8h/D1 metrics bullish, I am of the view that any shallow dip may now provide long opportunities.

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Education – The Global Prime Academy​

Announcing The Global Prime Academy. Check out the Global Prime Academy website. Are you ready to learn a set of strategies around FX indices to take your game to the very next level?

The universal praise I received about my trading and content I produce led me to create the Global Prime Academy. It provides a structured frame to build a slid knowledge base on how I operate as a trader in the Forex market. A large part of the golden nuggets I’ve shared over the years can now be learned in easy to follow and digestible lessons.