 Hi, my name's Leon Roe currency trader and trading coach at trading 180.com and welcome to this week's supply and demand Forex and gold fundamental and technical analysis if you're new a very very warm welcome to you And if you're returning an equally warm welcome to you, sir, I wasn't around last week Took a week off as it was my anniversary. So Had to spend time with the missus But but yeah, don't forget to like subscribe and share if you Like this the analysis that I do pretty much nearly every week Again, it will really really help us a free way to support the channel as well and gets the quality content out there for those That really really need it. So Let's get into the The week ahead and see what is going on. So week ahead zoom in into trading economics Dot-com great website. So week ahead investors will be keeping an eye on the ISM manufacturing PMI and PCE Inflation and the development surrounding Chinese real estate developer ever grand, right? That's important inflation It's important because it drives monetary policy as well as manufacturing in PMI Are really kind of related to gross domestic products Fed chair pow will testify on Coronavirus and and cares act before the Senate and lawmakers will try to pass a funding plan to avoid the government shut down on October the first which is just around the corner. Of course, they're gonna pass, you know a funding plan They're never gonna let the the US You know not fund The cares the heads acts also two days ECB forum on central banking should give more clues on the monetary policy outlook And it's really important that we as forex traders understand the driving forces behind Center behind, you know central bank monetary policy because ultimately that is what is driving price in the medium to long term So that's worth a watch and traders will also pay attention to the outcome of the German federal elections So that's again a risk of event that is coming up this week So getting now into the bit more in-depth fundamentals and technical analysis and let's start off on the dollar index dollar index You know last week obviously, I wasn't I wasn't around but Really they were saying the week before that and in previous weeks that the path of lease resistance is probably to the upside And the dollar index is just a measure of dollar strength against various other currencies like the euro the pound again mainly and Again, I've been calling it right been calling it down here We've been calling it in fact from all the way back here when the Federal Reserve, you know was was getting really hawkish We've been saying that literally what you want to do is look to just buy, you know The dollar overall right not necessarily against every single currency Currency pair but overall the rumor is is that they're looking to potentially, you know, high crates and talking about hiking rates Recent FOMC, you know events the Federal Reserve left monetary policy unchanged But there is a clear intent to dull back stimulus this year And that's again positive for a currency or should appreciate a currency Curie tapering is set to be announced in November with the committee shifting towards a 2022 rate rise So there the monetary policy is doing everything to appreciate the currency, which is the reason why you're seeing we go back You're seeing this is being priced in right the dollar index is going higher Not because there is some sort of pin bar against the level of demand It's not about technical analysis to that that predicts direction What predicts direction in the medium to long-term is fundamental analysis. It's not Elliot wave It's none of that nonsense Technical analysis is not a predictor not a great predictor of what future price is going to is where it's going to go Right in the medium to long-term is fundamental analysis because this is what is driving, you know the currency It's understanding what the central banks are doing To appreciate or depreciate their currency right with inflation looking less and less transitory We continue to expect liftoff in September 2022 so liftoff being a potential rate the first rate hike Next year we're in September now in the September so about a year from now So tape is coming soon and then comes the hike so Again, just understanding where the dollar index is so what you want to do is really to look for overall dollar You know if you are looking to trade this, you know the dollar is look for confluences With regards to demand zones and other currency pairs So if the dollar starts to for example starts to pull back a little bit into a demand zone And then you get a nice demand zone Let's say for example on the dollar yen or the dollar Swiss dollar CAD for example or supplies on the dollar CAD Actually, no sorry demand on dollar CAD and then you want to look for you know Just just confluences by trade right these are the areas that you're looking for Confluences so for me the path of this resistance is still to the upside I'm not saying that it's gonna go up this you know this this week Nobody knows in the short term but over the medium to long term any pullbacks I think a continued buying Opportunities if you are looking for any kind of short-term reaction And maybe trading that pullback. I don't know why you would but you know traders would trade anything In any direction Technical traders do anyway What this is actually quite a really nice area for you know a bit of a pullback So again, you wouldn't necessarily trade this the dollar index the DXY you would look for short trades on any kind of dollar crosses And also as well, I just wanted to talk a little bit about before we go into the next currency pair is is On my community tab is understanding, you know the language as well It's really important that you look at language and what is what is happening when you read the news So what does it mean? I said I put out a poll which says what does it mean when the central bank indicates? They are tightening on a cheap policy, right and they intend to high-grade to 74% they intend to cut rates is 26% the 74% the majority of you have do have it right tightening actually means that they are looking to Hike rates and again, what does hiking rates mean right for a currency if we scroll down a little bit more? I have it here about two months ago I put if a central bank is hiking rates the demand for that current currency should typically Increase over the medium to long-term true or false a lot of you guys said true 91% said true And again, that's pretty much what has been happening Right, that's exactly what's been happening on the dollar from back in June 15th 16th around that time And the Fed said that they are looking to hike rates look at what's happened with the dollar index and really again It's just a race It's a race With the central banks to kind of hike rates, right the the the current sees the bank the central banks that are not hiking rates Just yet are going to really be left behind So here is an article which talks about on the Financial times and then to super cheap money central banks begin tightening cycle tightening that keyword again, right? They look into appreciate their currency So no longer a central bank seeking to do whatever they can to ensure money is available for households companies governments to borrow exceptionally Favourable rates basically cheap money along with Norway's monetary policy Sorry and monetary tightening the first in any advanced economy since the pandemic began for emerging economy central banks Pakistan Hungry Paragraph Brazil also raised cost of borrowing this week while the Federal Reserve and Bank of England both Signaled a move towards tightening monetary policy, right? So the central banks are tightening right and I went over this a couple weeks ago I think might have been in the last weekly Analysis video or the week before that where this is a diagram by ING which Gives what they think are basically a central bank forecast regarding rates, right? So European central bank They're looking to they the ING think They're looking to potentially reduce Their PEPP and APP boosted QE Monetary policy But if you look at for example the Federal Reserve the tapering starts tapering ends in court 2022 and they look into high crates, right? So arrow up means high crates European central bank They don't think the European Central Bank is going to high crates anytime, you know Within the next couple of years, right Bank of England again looking to potentially the forecast that they look into high crates in the fourth quarter of 2022, right? Of course things can change. Yeah But for now that's you know data has to support the narrative Bank of Canada hike potentially hiking rates, you know in the next year, right? So The point is is that if you understand the language and what tightening means you can start to read these articles and then Understand what it's actually telling you yeah And then what you do is you look for the currency in the central banks that are looking to tighten first High crates first Verses the currencies that are not an essential banks that are not that's pretty much how it works So let's get into it's been enough time on that I guess the dollar looking at dollar yen technical wise again, we've seen positive Dollar appreciation into a nice zone I think that if you really want to get involved in this you have to wait for pretty much a pullback into this demand zone before It's 109 39 area before looking at getting Long but right now again even in the face of what I've been talking about there are still traders that are gonna want to get short And if you do want to get short That area there is okay. Just realized that that level has been touched several times before so It may it may not you know hold the the more times the level is touched the more It's open to a manipulation, right above that area there where all the stops pretty pretty much are right? I think from a technical analysis perspective. I do like this area here If there was any kind of short trades the Japanese yen benefits from a risk-off Environment meaning when there's lots of fear uncertainty and doubts So for example, there's lots of fear and uncertainty coming into the market. Let's say ever grand You know starts to really kind of pick up and Across the globe and trade and traders are fearful then actually in fact This area does look like a really nice area to look for potential shorts because you should see money float into the Japanese yen Which is a safe haven currency if not further higher dollar Swiss pretty much very similar to the dollar yen in terms of fundamentals again, if you're looking at Understanding where money is flowing into and out of the path of these resistance should be the up to the upside until or unless there is a Lot of for example Risk-off sentiment and if there is a risk-off sentiment Then you should part of the resistance would be to the downside, right? Because money is going to be flowing into the Swiss franc rather than the dollar even though the dollar does act In fact as a safe haven currency And can act as a safe haven currency, but generally you would see money flow into the Swiss franc. So That's where we are with that if you do want to get sure I think that's going to be a decent area to look for any kind of short trades Into that supply zone area right there. So if you do get a pullback and again, there's some sort of Risk-off sentiment, and that's a decent short but other than that I think any pullbacks into these daily demand zones are going to be buying opportunities Moving on to the dollar CAD dollar CAD Technically, I really really like this trade didn't take it though as it wasn't really in my List of currencies to really kind of trade a really really great technical setup That we had seen in the group and we've been looking at this for weeks now So I'm not so sure if many people took it because fundamentally it's to compete in currencies, but I'm really nice short trade there and ultimately just understanding Which way you want to be looking to trade again You've got two central banks that are looking to potentially hike rates at some point so It's it's a harder buy or sell right it's harder to predict where you know price will go What you want to see is a divergence right divergence meaning that you've got a Central bank that's hiking and one that is potentially cutting or even holding rates right holding rates There's a divergence there between that and that that's that's what you're looking for when it comes to understanding where Currencies price movement should go So with that being said you've got two central banks that potentially looking to hike rates where's the divergence, right? There's no divergence there. So for me, I stay out of those types of Currency pairs, but technically decent buy and a decent sell if you're looking at those zones New Zealand dollar Again, New Zealand dollars probably going to be one of the first to look to potentially high crates Hence the reason why you've seen this massive move over the past few, you know weeks or just month or so Come down into a nice, you know demand zone there pull back a little bit for me again It's not really a pair. I'm looking to you know trade so much They're better pairs to buy against the the New Zealand also a sell against the New Zealand dollar So but if you are looking at getting long on this currency pair Here's a decent zone to try and look for long trades or even better would be the zone below it Or you're looking at the absolute low of that range, which I think would be brilliant for a potential buy And I say brilliant, but in a sense that I think this would be an absolute bargain for the New Zealand dollar Even though the US dollar is looking to potentially High crates too. I don't I can't see this really going down too much further beyond that 0.68 level so that's decent for a potential buy if we ever get down there pound dollar pound dollar is very interesting in fact again, we've got two Currencies that are potentially looking to high crates, right? We've got the pound and we've got with the Bank of England this week came out and said that they were looking to again Tightening that word again tightening high crates. Yeah, but rate rate But rate hike still some way off, right? So banks what they tend to do is they want to talk up or talk down their currency, right? So at the moment in order to To get inflation down they need to talk up their currency needs to make their currency appreciate right, so I think right now that this is Bank of England are talking up their their their their pound and But again in this the analysis from ING is that they think that Given the headwinds or the number of headwinds facing the economy this winter We think a rate hike is unlikely until the second half of 2022 later than investors are expecting So what really are the headwinds right the headwinds at the moment are? We've got currently panic buying. We've got supply chain problems petrol shortages We've got also energy crisis at the moment so energy suppliers Avro and green cease trading You know, we've got shortage of CO2 as well So in the UK there there are there are some issues and problems right facing, you know gas shortages hits UK food Hgv vehicle driver shortage for supermarkets There's a lot of things going against the pound at the moment So although the central bank might say they're looking to high crates at some point I think in the short term I think in a short term the pound actually might be a potential Short right or any kind of short prices come back up into this area here, which is going to be where the next Suppliers only is around there. I do think that the pound in the short term anyway is I think a short until We do sort out our our problems as far as you know, we get over these these crises and shortages I think the pound is definitely there will then be a buy but for now I think my my bias I think is actually to the short side for the panel I think there's a great opportunity is it against the pound dollar that would be one of the pairs that I would start to Short but I look for a technical setup before looking at getting short if you think that the market is going to So to kind of ignore the lot of the risk of sentiment local risk of sentiment For the UK then I think in fact anything below this one I think it's one three five area one three five fifty is actually a really really good zone to look for any kind of buying Opportunities but for now, I think the path of resistance is to the short side But getting involved in that for now I think you know you'd have to wait for quite a deep pullback about 200 pick pullback or if prices make lower lows Lower highs basically a pullback into that zone and then something like that Moving on to the euro the euro is the laggard at the moment. So again Proof is in the pudding right We understood and the guys in the group all in my private mentoring group in a discord group all understood why they should really have been getting short on the euro and You know, this is pretty much what has been happening. So It's just really kind of pullbacks to To to to supply zones right or areas On a price chart where you feel that Prices should want to reverse from and in fact I I did a video this week Which was I released it. I think it was yesterday It's a forex news trading masterclass live FOMC euro dollar analysis and trade setup and again, this was from a meeting I had on the Wednesday as FOMC was happening With my private members Discord group, which is basically right here. This is you know, I'll group Have a meeting every Wednesday with the guys and we go over, you know, fundamental analysis live And look at price and look at you know fundamental analysis, right? So what I did was kind of shared this hour and a half long Webinar that I had kind of just gave you kind of 22 minutes of it where I literally break down FOMC as it's happening and The trade setup that occurred as well It's isn't hindsight bias everything that I actually said actually ended up happening I'm not saying I'm a genius or anything like that But it's just if you understand how the markets work you have Probabilities on your side, right? You have the probabilities on your side A good trade can lose and a bad trade can win in this instance good trade setup actually won, right? So it's a great example a lot of traders will tell you You know think they know how to trade the news and typically what traders traders, you know They they they don't understand a FOMO in and they don't really understand how the market really works And this video if you don't understand how the market works Or even if you think you understand how the market works this video will Pretty much set you straight on really how the market actually does work Especially in the short term and how traders FOMO in and how to take advantage of that FOMO and how to really kind of trade the news news events anyway Let's take a look at that after watching this And also as well just looking at the ECB again the theme being central bank is loanier than ever After a hawkish turn led by the Fed, right? So the Federal Reserve are looking to hike rates But but the but the European Central Bank are lagging behind again going back to this Central Bank forecasts on this line. You don't see any rate hikes, right? There's no expectation From the banks that the European Central Bank are going to hike rates so So with central banks from Washington to London this week since signaling more alarm over faster inflation The ultra-stimulative path to of the eurozone and some of its neighbors appears lonelier than ever So they're really one of the few banks that are are lagging behind right so What it's basically saying is is that a collective move to look beyond the pandemic slump and towards the risk Rising of accelerating prices emerged with a warning from the US Federal Reserve that it may taper bond buying programs soon and Prospect of higher interest rates as early as this year from the Bank of England. I don't know about this year And at least five other hikes from central banks around the globe So talking about hiking there that left a clear divergence again Divergence that keyword on policy with European central banks where Officials are still largely more worried about supporting the fragile recovery. Yeah, so again if you go back to the euro dollar Again, you're seeing that play out over time. Does that mean that in this during this period of time? You know that you should have been getting sure of course you should have been getting sure no one's saying that the markets Gonna fall forever, but you you know, you look for areas supply zones Right, and just keep looking for those supply zones as long as the monetary policy hasn't changed Just look for potential short trades because you're trading really the divergence. Yeah, there's periods where you know The divergence isn't so clear right and it looks great in hindsight But the point is is that once you understand the divergence is there and it becomes a lot more clear Then it's just looking for those divergences When you know if there's ever a pullback into, you know, some sort of supply zone. So that being said European the European central bank are lagging behind and The path of these resistances probably still to the downside not saying that you can't pull back this week or for the next Couple of weeks, but if it does I think overall as long as the European central bank remain dovish and the data supports the Narrative for the US Federal Reserve. We should continue to see You know Short trades at potential supply zones, but again, if you if there was a change in sentiment for the Europe for Europe And actually I think that these zones are going to be fantastic a fantastic buy, right? It's just you need the I think well, I need anyway I would like to see a shift in the In Europe's stance on when they're looking to potentially, you know Tape a QE and even talk about hike hiking race and be a bit more hawkish And then I think I'm gonna be I'm gonna really switch my bias to buying the euro Across the board really looking at the Euro yen gain Euro yen Brilliant brilliant supply zone from a few weeks. I'm sorry demands on from a few weeks ago Tough trade to take because there was a lot of risk-off sentiment, but pretty much see what happens what happened there really really nice demand zone and And I was a few traders in the group got involved in that really nice trade To the upside now looking at short trades potentially if risk-off sentiment comes into play then those Supplies and should be decent for shorts But again, you'd have to really kind of wait for risk-off to come into play Aussie dollar again Aussie dollar a bit of a strange one Aussie is again lagging I think the the US dollar is definitely ahead of the Australian dollar the RBA so again any kind of pullbacks into supply zones is probably where the power for these resistance is going to be and And Yeah, I think that's probably where we are the short trades in and around these areas As long as the the Fed stay hawkish in the market believes them, right? You're good. I think the Australian dollar is Is is is definitely more dovish But I do think that prices come down to this 71 area again like the New Zealand dollar US dollar I think that actually might be a really good potential buy At least for it for a few people saying it's going to reverse around here and go to the heavens But just technically it's a really nice trade. So any kind of Opportunity to potentially buy around here actually might be decent But again a really kind of small position But again poverty resistance probably more to the downside Aussie yen Again a pullback into These demand zones pretty didn't work There was no demand there Clearly from the market again There was lots of risk off this week on and last week, but then you've had a bit of a bit of buying around here So we do have a demand zone right there So any pullbacks into these areas if you're looking to buy the Australian dollar is To the upside it breaks through that I think that again is going to be a really nice zone at the absolute lows Looking for any kind of buyers on for the Japanese yen That's going to be where your first Supply zone is going to be so I think in fact decent area again from a risk-off perspective to get short there and Potentially if that area doesn't work short there, but again more looking at risk off sentiment rather than risk on if you're looking for short trades and Gold so gold Has not really benefited from the risk-off sentiment I think more due to the Fed being a lot more hawkish And again the dollar and the yen so the dollar and yen the dollar and gold work inverse right so understanding that If the Fed are more hawkish and gold They're gonna Gold is more likely to potentially start to go down at least in the short term and that's really because Gold doesn't pay any yield right if the dollar are looking to hike rates from zero point two five Potentially to you know zero point five. Yeah Just for holding dollars 0.5% Just for holding US dollars, you're going to get a yield which is what you know investors want whereas gold You can hold gold, but it's really just a price appreciation So for now if the coast is clear as well when it comes to risk sentiment Investors probably who really haven't got really a need to hold gold also as well You've got bonds right government treasury bonds. So government bonds again art is is is Is also a safe haven asset and again if bonds treasury bonds are paying out a Yield right after inflation then that's also going to take away Golds allure for now until there's some sort of risk-off event Potentially or the US don't do so well from an economic perspective. So Technically I do like this area in fact I put it there deeper area and just probably below that area if we can get some sort of a stockpunt around there That would be really nice for a for a really good buy. I think and if you're looking to short gold first area into that 1764 area to look for potential short trades if you're looking to If you think that you know the dollar should want to strengthen in the future anyways guys that's it for this week don't forget to like subscribe and share and Yeah, take care and hope you have a great trading week all the best