 Hi, my name is Leon Roe, currency trader and trading coach at Trading180.com and welcome to this week's supply and demand forest technical analysis, if you're new welcome and if you are returning welcome back and we're going to get into this week's fundamental and sentiment analysis as that's really what drives the markets and we use the supply and demand technical analysis to determine value and where we want to enter on a price chart right so week ahead from Trading Economics it's going to be a light week on the US economic calendar with investors focusing focus turning on flash market PMIs existing home sales and corporate earnings so a light one for the US elsewhere flash PMIs surveys for the UK Eurozone in Japan and Australia will also be in the spotlight alongside UK unemployment and wage data that's going to be quite important as well and I'm going to allude to that in a sec Eurozone consumer confidence and Japan trade balance and inflation rate that's quite important the People's Bank of China European Central Bank of Bank of Japan will also provide an update on monetary policy so that be interesting while traders will also keep an eye on WEF annual meeting that will take place in Davos so the really the focus I guess is going to be on a few currencies this week if I go to Forex factory you've got the monetary policy statement so monetary policy statement pretty much is the Bank of Japan and other banks as well because you've got the Bank of Canada as well monetary policy report and they basically given forward guidance on what they what they are planning to do with interest rates if they're trying to strengthen or weaken their the currency and that's what really interest rates are doing right and also we've also got it doesn't mention that we've got New Zealand CPI which is going to be quite important a consumer prices index in there as well and so some there's a lot of central bank news matter of fact so Canadian overnight rate depending on what they're doing expected to hold at 1.75 which is probably going to be what happens but CPI will also be interesting for the Canadian dollar but I just want to focus a little bit before we get into the charts on the pound and consumer cutback on spending again adding to economic gloom for the pound so British consumers failed to increase their spending for a record fifth month in a row this was on the on the Friday adding to signs of economic weakening that might prompt Bank of England to cut rates this month yeah so we also had earlier in the in the week I think it was Wednesday I think was the inflation report and the inflation report was went from 1.5 to 1.3 CPI for the for the pound as well which was not good so the further away that the bank get away from the inflation target the more likely they are to cut interest rates now this is the CME group so this is CME Bank of England watch tool I'll put a link in the description box below for those of you who want to use this and keep an eye on this and basically it works exactly like the Fed watch tool where it's the probabilities of a potential rate cut hike or hold so the the probabilities of an increase are now at 72% one month ago so last year on the 12th sorry the 19th of December it was at 12% a week ago the probabilities of a rate ease was at 21% and now it's at 72% so you know as the probabilities increase for a rate ease and that's because of you know Brexit you know low inflation Mark Carney came out I think it was last week with his last week Thursday saying that you know he's worried about the economy and what was happening and they was pretty much dovish on interest rates you can start to see it's a buy the rumor sell the fact scenario yeah I've been you know short the pound from last year trying to get short the pound you know in our trading 180 group and we basically base our decisions off of our custom fundamental analysis spreadsheet which ranks the economies based off of data points like interest rates inflation and GDP as well as some others United States is number one the United Kingdom is number six number one being a strongest number eight being the weakest so United Kingdom and Swiss Frank are actually the weakest some of the weakest at the moment so for us we've been short you know the the the the pound trying to get short the pound from from last year matter of fact and we'll look at the charts and see so everything's now coming to coming to a head potentially in the next 10 days for the pound but let's get into the the technicals and we'll start off on the US dollar index which is a measure of dollar strength against the major currencies like the euro the pound and the yen as well as the Australian dollar so we've made pretty much new highs the you know the dollar basically being number one against all currencies so we're seeing you know pretty much dollar in a bit sideways and now it's you know strengthening I'm gonna keep this supply zone here for now just for now yes there's you know the candles closed but this could be potentially just a stop hunt not to say that we trade this but prices could still reverse from here so I'm gonna keep that there if there's another bullish data closes beyond that then pretty much that supply zone has gone and it's now created a bit of a demand zone here so we've made higher highs higher lows like this yeah so we know higher highs and higher lows lead to you know stronger potential strong areas of demand so we need to see demand really push higher before we understand that this is definitely a strong area of demand so 80 prices push higher like that so if you do want to be a buyer of the dollar at the moment you're looking for a pullback into a demand zone proven demand before looking at getting long and again you would look for that as confluence and then go to any dollar crosses and look for buy trades or look to buy the dollar if you are looking to short the dollar potentially on some dollar weakness for whatever reason fundamentally then you're looking at now is the time and then obviously go to the dollar crosses and look for any kind of you know short trades on the dollar so next is the dollar yen so dollar yen again correlating with the US dollar strength and more of a risk on sentiment as well prices have obviously made their way a lot higher so still eat some of this and come up into this supply zone now again what we're looking for is really just a direction our direction of trading is determined by the fundamentals not because prices are in a supply zone that we're just gonna you know short here that doesn't really work like that what you should be doing is looking at bargain prices and understanding why you're buying one currency over another and at the moment the dollar is you know stronger than the yen the end does strengthen in a risk-off environment so if you do want to get short then I'll probably wait for some sort of risk-off sentiment to get short right here yeah from now if risk on continues then it's literally just waiting for pullbacks into demand zone I'm pretty much long on this currency pair so the next you know area that I want to be really kind of long on it's gonna be down here I think this is a really nice demand zone here for the time being so that's where we want to get long on that currency pair if I'm looking to buy the dollar dollar Swiss a lot of the guys in the discord trading group are actually in at this area here and this is really based off of a weekly weeklies demand zone if you go to the weeklies so one second go and then that's actually a demand zone now so demand I should have had this ready for you guys but here we go right so looking at the weekly yeah there was a weekly demand right here so a lot of the guys we saw a nice entry candle on the hourly pretty much picked off the absolute lows on this one and we're in a little bit of profit at the moment so hopefully we should see prices you know increase as the risk off sentiment fades and it's more risk on at the moment so and with dollar strength as well you know we're potentially looking at a decent move to the upside so that's a supply zone so at the moment daily demand is going to be at actually at these lows here so depending on what happens if risk off comes into the market then probably it may want to put you know an end to this trade but the next area to really look for any kind of long trades is going to be down here yeah also as well just a little tip that we haven't really had a pullback into any kind of fair value and this is what I was saying to a lot of the a lot of the guys in the group is if you're looking for targets what you want to do is look for prices tend to want to pull back to some sort of fair values on so the between an expensive and a cheap level 50% of that range was going to be fair value and what you've what you're seeing is prices making new lows but prices actually haven't pulled back to fair value haven't pulled back to fair value so now that we've picked off the absolute low somewhere around here and our entries were somewhere down here what we can now do is look for targets all the way up into potential fair value so this is going to be a nice swing trade at some point prices tend to come back up to fair value we've basically since November the 29th you know we've we haven't had no pullback zero pullback and so that's quite a nice target area where we want to look for potential long trades if prices continue to go lower then it just makes that target a lot you know the risk reward a lot better anyways if you do want to get short on the the Swiss Frank then you're looking at supply zones right here again more of a risk off sentiment play let's say for example there's I don't know some sort of global slowdown or you know talks of war again with Iran then you may you know if prices come up here then that would be a decent short trade to the downside dollar CAD and the CAD and dollars pretty much just gone sideways whole week you know hasn't done anything so really not much to talk about on this one if prices go higher that's where to short here if prices go lower yeah and you want to get short then this would create a bit of a supply zone that would be the last bullish candle before price as you want to go about this is would be the last bullish candle before prices make a new low one sec and then that would be a supply zone come with it right let me just draw that in in here so that would be the supply zone there yeah and then if this makes a new low then you wait for a pullback into this zone before looking at getting short so that's pretty much how it works but in the meantime there really isn't any supply zones at the moment it's just literally gone sideways so we're looking at other pullbacks into demand if we're going to be a buyer of the dollar right here or a move up to get short right there New Zealand dollar US dollar and again prices have really kind of been in this range there was an opportunity to kind of get short in the week on the lower timeframes at this 0.660 level prices have sold off also a decent buy as well but not much pips in this unfortunately if I was going to be a buyer or seller of either one I'd be a buyer of the US dollar over the New Zealand dollar so looking at you know short trades here or the best area would be up at the highest as we know that this is definitely a strong area of you know supply around there so yeah we're looking at you know shorting probably up here or if prices again make start to make really new loads like this then you wait for a pullback into supply before looking at getting short like that pound dollar pound dollar so pound dollar again it was all about trying to look for potential short trades and again during the week this presented you know a really nice opportunity you know to get you know short a nice engulfing candle there when hourly etc so and now with the narrative of the central bank Bank of England looking to cut rates there should really be no reason to actually enter you know or sorry exit this trade anytime soon does that mean that prices are going to go all the way down no it doesn't mean that it just means that the balance and the balance probabilities we should see that happen if prices go to the upside and stop traders out then it was more of a manipulation than anything and but let's see what happens it's still do you know that the pound is still a short trade regardless of whether you lose one or two trades yeah because of Brexit because of potential trade deals not being done because of low inflation so overall you know the pound really is in my opinion a short but if you do want to buy the pound based off maybe some short-term sentiment and you're following price then I would say that area down here would be the best you know it's one two nine round number or just a bit lower than that you know here but you really want to make your decisions based on the fundamentals rather than you know just looking at you know buying a demand or just sending a supplier randomly looking at price action euro dollar euro dollar this is a nice a nice trade this week and I just want to allude to my YouTube channel and about three days ago I made a euro dollars short right video supply and demand with stop hunt analysis yeah and in this video I pretty much break down you know a trade on why you know there was a shorting opportunity you know round here why traders are being stop-hunted yeah why traders got stop-hunted in this whole zone right here yeah this whole zone right here this is where the stop-hunt occurred and why you should have been short you know in this supply zone which now turns out to be you know to have worked out nice entry candle there nice engulfing if you trade engulfing is there and that was a nice top of the high that was a nice two-to-one trade if you managed to get involved in that so watch that video you'll understand exactly why you should have been short here again it just comes down to fundamentals why are you buying the euro you know euro yeah is bring us over again yeah is number eight on our fundamental analysis spreadsheet and the dollar is number one that doesn't mean that you know every single day that the you know the dollar is going to strengthen yeah it doesn't mean that it's going to keep going down and down and down there are pullbacks there are manipulations there are stop-hunts etc there are sentiment plays where you know some days and some weeks the dollar might not be doing so well sentiment wise but overall bigger picture wise you know you really want to be you know short the the euro dollar doesn't make sense to to buy the euro especially because you know economically where they are and they're struggling overall and they're going through their own you know Brexit a lot of uncertainty so it's just about getting short on this currency pair there was a nice nice trade on that right there on the lower time frame so definitely check that video out and you understand the thought process and exactly you know why you should have been really getting short you know on here and you could have taken advantage of that trade so now we are where we are I would probably say if you're looking to be a buyer of the dollar you'd have to maybe wait for a move you know further down right so just for the price to create new lows and then that becomes an area of supply yeah and then looking for a pullback there and then you're looking at short trades around there if you do want to be a buyer because I can't give financial advice yeah and a buyer of the euro and you want to just try and get into some sort of trade to the upside then I would say the lower end is gonna be probably the better area to look for buy trades on the euro dollar yeah fresher area of demand and it could be potentially profit-taking here so you could get obviously a bounce here maybe take advantage of that if you want to get in and out on that trade euro yen euro yen prices came up into this just this higher area of supply actually got stopped out of this trade by literally the spread it must have been about a pippin a half or something like that and I was short on this there are some traders that are still short here in the group who did a wider stop than me and they're they're still in this trade so well done to them some trades work out some trades you know don't I didn't get a reentry either because I'm in some other profitable yen trades on other currency pairs like the the pound yen I'm in that one and I'm also in the Swiss yen so I didn't want to re-enter on the euro yen because I'm I'll be too yen heavy so I didn't bother to re-enter on this but there are traders in the group that have taken advantage of you know some price action you know in this area you know right here so well done to them and they're currently up but where we are right now I think we're gonna have to put a demand zone right here as we've made a new high demand quite wide areas of demand right here but if you are looking to get short it's not too late it's not too late this is a decent you know engulfing candle if you enter in engulfing candles so from a daily time frame perspective you've got enough you know movement to the downside yeah if you wanted to get short here in order to make that work so decent you know open on the on the Sunday open potentially decent move to the downside especially if risk off comes into the market yeah if risk off comes into the market that would be you know very nice if you do want to be a buyer of the euro then the first area to look for you know some long-trades is pretty gonna be around here and because you've got that wide zone of demand what you want to do is you want to break that down using support and resistance zones where you've got resistance resistance resistance bit of support bit of resistance so within this top-end area of demand we can see that this is where the supply and demand equation is probably gonna be strongest where you have not only demand traders getting involved here potentially not the ones that know about fundamentals but the ones that just follow technicals but you also have other traders you just trade technical levels and this area here is going to be an area of interest you can look back as well you know in the past where traders are going to be traded this level so net net you should get some a some you know demand here from a technical analysis perspective but if there's risk off comes into the market the euro is probably gonna end up weakening due to Brexit you know sentiment as well so I think this is a decent trade to the downside I really do quite nice and obviously the euro being the weakest of the major currencies at the moment so those are pretty much your options sell now if you want to buy the yen against the euro waiting for buy trades first at this area here then probably further down right here Aussie dollar and Aussie dollar two competing currencies but my bias is obviously to the to the US dollar rather than the Australian dollar so if this starts to pull back down here say pull back but if starts to continue going lower takes at this level of demand and this becomes an area of supply right here and then you're looking for pullbacks into you know that area before looking at getting short or if prices continue on the way higher then you're looking at that to be sure you will be a buyer of the US dollar if you're looking to buy but there'd be a buyer of the Australian dollar then pretty much now's the time I think you know the first touch is always the best touch but the second touches are okay as well alright so anyway probably around here the lower end before looking at getting long if not you're looking at that area there that nice fresh area of some of demand sorry in order to get long if you want to be a buyer of the Australian dollar and finally Australian dollar Japanese yen so this is looks like some sort of profit-taking we've had you know anyone who bought down here it's gonna be taking profit that you know towards the highs market highs as well this was actually a nice capture pain relief trade as well to the downside but with risk being on I think potentially we could have some more upside who knows but if risk is on the Australian dollar does well if risk is off the Japanese yen is strengthened so if if inter next week we get some risk off sentiment yeah then this now starts to look like a really good trade to the downside prices are coming to that supply zone and start reacting and so where that would be quite a nice trade to the downside if there is some risk off sentiment so yeah so pretty much again supply demand isn't just just technicals it's really driven by the fundamentals first and understanding where the money is flowing where is the value where is the work wire central banks you know trying to cheapen or strengthen their currencies etc strength versus weakness and then we come to the price chart and look forward to you know for supply and demand zones to time our entries alright guys don't forget to like subscribe and share thank you for all of your comments as well I really do appreciate the other positive ones and even the negative ones you know as long as they're constructive criticism and things like that you know everything is always welcome and if you want to join the discord group and join a really friendly group of traders and learn you know the most advanced supply and demand course you know I know online and that's what that's what traders have said to me then definitely go to trading 180 comm and check that out alright guys take care and I'll speak to you soon