 Hi, my name is Leon Rowe, currency trader and trading coach at trading180.com and in this video I just want to go over I guess some fundamental analysis that I did in the private members group on the 4th of November, which was this day here, right? And In that private members group I explained to them and you're gonna watch the video in a sec Pretty much why I had a short bias on the dollar, right? This is you know in real time private members group that we hold every Wednesday and You know from that day, you know from the 4th of November until you know the absolute lows You know prices pretty much went around 400 pips now You know picking again a direction When it comes to trading is is is is a big problem for traders generally, right? The second problem is again, you know the timing of when price is going to turn around but if you can And we do it trading180 If we understand which way prices should generally want to go over the medium to long term meaning medium to long term Meaning, you know month to three months Then everything else becomes a lot easier in a sense that the timing then if you understand that you just want to get Sure, all you're looking at is generally just Short trades right at areas of supply or whatever your strategy is so You know the banks use fundamental analysis So why don't we right and I and fundamental analysis is very misunderstood a lot of traders think that you know all you need to you know everything that you need to know is in price action and If that is true, then you know good for them but if you are struggling to pick a direction and you know look up look at a Currency pair and and decide which way it's going to go over the next, you know month or two or three Then fundamental analysis really is for you. It's not easy I'm not saying it's gonna be something that you can master in you know a week or two This is a lot of hard work, which is a reason why you know Probably 90% of YouTube is stick to technical analysis because who can't learn from technical analysis in a couple of days All you need is support and resistance, right break pullbacks and all that and all that stuff trading is obviously a lot more complex than that and And so anyway, I just wanted to show you And I'll continue to show you as well make some more videos You can always go back through my my my youtube channel and look at my past videos on Really how I trade You know the markets using fundamental analysis as my anchor as my guiding light and how You know traders managed to stay on the right side of the trades once You know the fundamental analysis they've completed and the trade idea they've got is sound, right? I'm not saying that we're gonna win every single trade. That's not you know, it's impossible But if you you know, just pick a direction to trade, right? All you're looking for is generally just pullbacks in that direction. Yeah, just pullbacks in the direction of the trend That's all you're looking for anyways Look, I look forward to what say I look forward, but I hope you look forward to watching the video Here's the video here that we did on the 4th of November in the private members group As well just to kind of show you that this was the Video right here course if you do want to join the group you'll get access to all of these videos all these past videos but this was the The webinar that I held on the 4th of November bank hacks and timelines stop-hunt entries And and many other things that I covered in that video But here it is and here's a snippet from it anyway, and I hope you enjoy it And it kind of proves to you and shows you you know that fundamental analysis really is key to successful trading anyways Fed hike Fed hike Fed hike, right? Or are they hiking which is basically a Really a no so Bloomberg at the moment. This is that this is the latest Headline and pal sees fed patience on hikes right but ready to pounce an inflation So fed to start tapering asset buys by 15 billion in November Tape on track to end in mid 2022 can speed up or slow down so for those of you who are new Yeah, but those of you who are new what is what is tapering? So during the The the pandemic and the coronavirus last year what the central bank was doing was literally buying a whole load of government bonds And government bonds are basically government debt Yeah, so they were the buyer of last resort because there was no one else out there that was gonna support any kind of you know By any kind of government debt, right? So the bank stepped in and pretty much was just buying everything buying buying buying buying a load of loaded Government debt to support the government now what they're doing is I don't I can't remember don't know the figure of what they were doing But they were buying let's just say for example Reducing up was it was it something like 60 billion or something like that 60 billion a month? I don't know Something like something in that region. Let's just say it was it was something like that. Yeah, I'm 60 billion every month And what tapering is basically just another word for is just reducing the amount of debt that they're going to buy, right? So, you know, they're saying that they're gonna to start reducing Ken said you mean right now Yeah, yeah, exactly. I don't know what I can't remember what it was right now. What is it right now? What do you know what the um? What the what they're buying every month is it 15 billion a month? I thought they said Yeah, is the taper but what what was the actual government there? It doesn't even really matter just I'm just leaving it as an example. Yeah I noticed they're tapering in it by 15 billion in November So let's just say it was it was 60 billion they were buying but now they're tapering by 15 But it was 120. Oh damn it was that much. Okay, so now what they're doing is they're reducing their um, they're uh, they're 120 billion I was thinking to myself a hundred hundred billion sounded about correct, but I didn't think it was that high but obviously it was But all they're doing is just reducing it by that they're tapering asset buys by 15 billion So let's say for example, it is 120. Yeah It was what it was 120 every month that they're looking to they're looking to buy in government debt Now they're gonna be looking to buy, you know 105 for example 80 bill in treasuries and in mortgages. Oh, yeah, yeah, yeah Yeah, the details don't necessarily really matter too much It's more more about the the reduction in what it is that they're buying right so instead of instead of 120 billion for example Now they're reducing it by 105 billion. So what so what does that really mean? Yeah, what that actually means is that the government now are not so much dependent upon the bank to support them Yeah, and by their debt. Yeah, because there are other they're gonna potentially be other investors now that are seeing a recovery and Now can step step in and start buying, you know the debt and then the bank can, you know Can reduce their their bond purchases that is positive for the For the for the dollar or should be positive for the dollar, right? This has already been kind of priced into a certain degree, you know, the rumor started, you know months ago months and months and months and go probably in what was it like March April May something like that and So that's the reason why the dollars kind of being strong for the past like, you know, six months or so five six months So so The next really that the main the next step after tapering, you know, once they go from 105 to maybe, you know 90 billion to you know, 75 billion for example, and that's what's gonna happen potentially every month And as they start to reduce and reduce and reduce The next step is is for for a central bank is to really start to potentially look to hike rates Yeah, because there is obviously the problem of inflation, right? And if you have taken the test then you'll understand that if inflation is above their 2% target then Rates have to be hiked or the likelihood is that rate high A hiking rates is potentially coming. So It's it's a slow path towards or slower path towards a rate hike, but it's positive steps Yeah, it's still positive steps. Now you can compare that for example to this is what we This is this is what we have to do in currency world. Yeah is we look at for example Europe, right? Who says Lagarde is is says ECB is very unlikely to high crates next year Yeah, so they're not they're not looking to the guard is saying that Christine Lagarde is not looking to high crates any time soon Where is the potential? There's a potential for the Federal Reserve to start hiking Next year. I can't remember where they said it. It was somewhere. I've read so many different things But I think it was there was supposed to be a hike in 2022 always start in 2022 anyway, right? Whereas Europe are pretty much not Looking to do any of that. So again the divergence at the moment Yeah, when we consider, you know to currencies for example, you know the dollar or put it as a euro dollar trade, right? Europe Look into high crates maybe in 2023. Who knows all right 2023 The Fed on the other hand are potentially depending on obviously the data are looking to hike or look to start hiking next year 2022 So with that divergence right there or I should say one leading this one leading and it's one lagging Yeah, for anyone who's new Which one should you be buying and which one should you be selling? Either Hubble or Oma Should be buying the dollar exactly that's that's basically where the path for these resistances All right, you should be shorting the euro dollar any pullbacks You know to levels should be areas You know to potentially short that's it So you have your direction So then it's just a case of just looking to take trades in that direction Yeah, that's pretty much what what we're doing and this is how we do our fundamentals from a from a from a macro perspective Is understanding the bigger picture we understand GDP? Yeah and inflation right and Then we can basically see from monetary policy or interest rates. All right interest rates Yeah, what the currency is going to do is it going to is the central bank looking to strengthen it is looking to weaken it Or is it just happy with what it's where the value of that of that currency right now again depending upon inflation and GDP Hubble says supply zones all the way for the EU absolutely absolutely currently that's exactly it and all once you establish That trade idea. Yeah, it sounds complex like a trade idea What have I got to learn for a trade idea? But this is this is a trade idea, right? I'm not I'm not saying that you've got to get short every single supply zone or every single supply zone is going to work They're going to be sometimes in history where you know for a week or two You may get you know a hundred or two hundred pit pullback Ultimately the path of these resistance will be to the downside And this is where traders tend to trip themselves up, you know, I mean if they don't stick to the plan, you know, it's You'll end up trying to go long highs and then trying to sell it shorts and just you know It's a mess right ultimately what we should be doing is looking to you know, just Just to short the the euro dollar until proven otherwise Like I said, are there moments where you can possibly go long? There might be some negative sentiment around a dollar. They might be some positive sentiment around a euro, of course But we evaluate that and no situations and then decide whether it's just maybe short term medium term or long term If it's a long-term thing if the euro starts to strengthen now based off of certain data Then obviously you can start to look to buy the euro But then you would say well, do you want to buy it against the dollar? Is that the bet is the dollar the weakest currency out there? No Then you start to look for the weakest currency you start to go. Maybe you're a Swiss or Euro yen Yeah, and that's that so Ken says especially if we start seeing higher inflation and jobs for the dollar exactly so if we start to see higher inflation and jobs and There was a jobs This came out today so the US companies add more jobs than forecast ADP data shows And why is jobs important because in a growing economy, right in a growing economy in a healthy economy? Employment and unemployment is watched because companies will be employing right in a recession There's high unemployment and low employment in an economy That's growing in the expansion or the boom phase or the recovery phase of the economic cycle You know, you have high employment or higher employment employer employment is growing and you and the unemployment is going down Right, so this is why? Jobs are is something that you have to kind of look at and at the moment There was some positive news today, you know business payrolls increased by 571,000 last month after revised 523,000 gain in September according to ADP research Institute data the median forecast for Bloomberg survey was called at for a 400,000 rise so You know, there is positive data there is rising data, right in July-August kind of tapered off September and then you know, the estimate was 400k But it obviously came in a lot higher. So You know, they added US companies added more jobs than expected. So that is a is a is a decent sign for For for is it non farms is non farms in non farms of the first Friday of the month. I really should know that I've been doing this for years, but First Friday of the month is non farms. So That's pretty much, you know Positive sign right and if the data supports the narrative the data supports that narrative Then it is literally just shorts all the way, right? Even if in the short-term prices go 10 might go higher just if you're looking at better prices to go short That's pretty much what this is so So, yeah, so so for now no major surprises, of course The divergences are still there. You can nitpick all you want all day is as to what, you know Jerome Powell, you know is is really saying and things like that and I definitely advise people to do that Of course, you know look at the devil is in the details, right? But overall you've got to You know, you've got to Look at who is the dog with the least these what sounds worse if something sounds a bit uncertain But something sounds a bit more uncertain then, you know, the one that's more uncertain is going to be the one that you want to sell