 Hi, my name's Leon Roeb 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 or warm welcome to you And if you're returning and watching my videos every week and equally won't welcome it back to you And don't forget to like subscribe and share if you find the videos I provide every week of use and thank you to all the positive comments in the You guys have been posted in the comment section I really do appreciate the positive ones and before we get started into the Weeks analysis just wanted to go over a question a fundamental question a bit of fundamental education And really the poll was what effect should reduction of bond purchases by central bank have on a currency and 203 votes 77% of you voted currency appreciation and 23 voted currency depreciation. So the actual answer is currency appreciation. The reason why is because Bond purchases from central banks Banks have to increase their balance sheet and by increasing their balance sheet. They're really increasing the money supply, right? So they're increasing supply of an asset to buy bond purchases. So If they're increasing supply then prices should move down, right? Because there's more supply than demand But if they start to reduce bond purchases meaning they're reducing their balance sheet reducing the supply Or the amount of debt that they're buying. Yeah, because got bonds are basically debt so If they reduce the amount of supply and reduce their balance sheet then the reduction of supply should cause currency Appreciation so well done to those of you the 77% of you who got that question, right? And I'll be going over some other questions in the upcoming week. So now when you're When you're looking at fundamental News and analysis you now understand that when central banks are starting to talk about Taper and tapering bonds meaning the reduction of bond purchases that should have Appreciation effect on the currency right the currency should strengthen when we start to see reduction tapering of bonds and increase in interest rates, etc. Anyways, let's get into The this week's Analysis and just because you're new our trade processes to really apply fundamental analysis to establish trade direction And then apply technical analysis So our supply and demand strategies the time trade entries established profit targets and risk management. So let's get into the upcoming weeks Fundamental analysis news and let's zoom in on the week ahead and The US China will be publishing inflation updates for July and the coming week Well, second quarter GDP releases from the UK is really what we're looking at And factory production numbers from the eurozone will also be keenly watched other important data Follow includes US consumer confidence Germany trade balance Japan current account and Australia business morale Elsewhere sell true at central banks. Okay, though. Those are currency that we don't trade So for me really the important the really important news Is going to be inflation which is probably expected to be high for in the US anyway But the UK second quarter GDP should be positive and we'll get into some UK news as the pound central banks have Bank of England anyway have a signal that they're looking to hike interest rates, which is Positive, but the data has to support the narrative before a rate hike can happen The data has to support that decision. So let's get into now the Technicles and a bit more in-depth fundamental analysis starting off on the dollar index DXY and the dollar index Last week we had really a really nice move off of this demand zone and the dollar index is just a measure of dollar strength against the major currencies like the Euro the yen pound and the Australian dollar and What we've had from last week is basically prices came down into this this demand zone And then we had again positive news and really it was really driven by The expectation for jobs the US jobs everything you could want and more so the US jobs market has posted a solid set of figures for July with employment gains exceeding expectations unemployment falling wages accelerating and the participation rate Increasing momentum is building towards early federal Reserve policy action and that's what really drives prices in a medium to long term is Understanding you know GDP and where we are in the business cycle Are we in the recovery phase the expansion phase and if we are then the currency should appreciate and employment and jobs is one of the markers that we use to To understand whether a currency is is strong So Again last week the expectation of that you know came into play We had a bit of a pullback into that nice zone and then you know We got the news on Friday positive jobs news and then we had the dollar really start to go higher so Again if you're looking for any kind of buy trades on the dollar this we just use this as Confluence so any kind of pullbacks into a demand zone is You know is a buying opportunity and as long as the data supports the narrative We should be on the upside and I did say I have been saying that if if anything I'm probably long dollar In the private mentoring group the guys know that the cut the currency pairs. I've been trading against the the dollar You know like the yen and the Swiss franc and as long as risk stays on Basically, it's it's buying it's really kind of buying the dollar against other week currencies If you do think that the dollar may start to get weaker Then you're looking at you know somewhere around this zone to look for short trades But as I say pretty much every week Fundamentals really and risk sentiment is what drives market valuation and drives price in the medium to long term There's no technical analysis level that's going to stand in the way of any kind of Fundamental bias Right, so just because there's a supply zone here The chances of it, you know working out When you know, you've got strong dollar buying potentially is is slim not to say that it won't there might be some profit taking up here But event as long as we've got positive sentiment any expectation of Fed tapering and the rate hike potentially on Into the next maybe six months to a year or pretty about a year or so then The market is going to look to price that in doesn't take it doesn't doesn't look Or take cues or take direction from technical analysis. So I think the dollar is on the up and up and as long as again They support that narrative. We should continue to see dollar strength going into the the dollar yen Again, dolly yen did come down to a zone In fact, this really should have been drawn from here And that's where prices did come down into because you've got to explain you've got the last Bearish candle before prices make new highs, right? So that's rare where the strongest area of demand actually is and then prices came down into that 10890 area And then pretty much bounced from there really nice trade that And again positive sentiment risk on The Japanese yen doesn't do well in a risk on environment So pretty much this is what you're going to continue to see will this supply zone Hold maybe maybe not but I'm gonna get rid of that and just just pretty much say If you do want to get short at any point then yeah as long as prices come into this supply zone There is just there is a supply zone there, but for me, I think demand And buying dollar is really where it's at So if we can create some maybe some higher lows and higher highs and pull back into that zone It would be really really nice for a for a buy trade with prices can come back to 209 area That would be quite nice for a buy Moving on to the dollar Swiss Swiss didn't quite come into this demand zone down at the lows But now it's created proof of values create a nice demand zone there So if prices ever do come back down into this zone, that is going to be a really nice buy trade for a sell trade You're looking at this area here but again the Swiss Frank is really not the The currency to buy in a risk on environment if risk starts to come back off again again concerns about the Maybe global growth China slowing down the corona virus spreading and possibly you know, you could see You know look for short trades of prices come up into that zone but for now I think that the the market is really kind of forward-thinking and I think the the dollar really is the one to To buy at the moment. It's positive sentiment all around dollar CAD It's a dollar CAD Again, this is this is again two currencies that are kind of competing with each other You've got the US which are potentially hiking rates as well as Canada hiking rates and Canada didn't have the greatest news on on Friday Eva So Canada jobs recovery continues in July amid re-openings So Nash the nation adds 94,000 jobs in July mostly full-time positions But the game was less than the 150 jobs Expected by economists, but there is there was some positive news was that the unemployment rate fell from fell to 7.5 from 7.8 in July. So unemployment is moving in the right direction so Again, you've got two currencies Bank of Canada as well to two central banks I say Bank of Canada and the Federal Reserve looking to hike rates at some point in 2022 2023 So when you've got two currencies that are really, you know, looking to strengthen their currencies It's it's a harder trade, right? What you actually want to look for is a currency that is looking to In obviously hike rates and then a current against the currency that is not hiking rates anytime soon is lagging behind So that's more of the way you would find the divergence, right? That's what is known as divergence trading and So with the dollar cad for me It's a more of a difficult read and when it's more of a difficult read then pretty much I Personally, I'm not trading it But if you are then I would probably say this one to eight one two seven fifty area It's probably the best area to look for any kind of long trades and their Certainly short trades and any long trades looking for probably a pullback into this one to four area for a buy Moving on to the New Zealand dollar US dollar and the New Zealand dollar again is one of my buys just not against the US dollar So we did have again some positive news come out and we've sold off for the the US dollar was kind of increased in strength, but from the perspective of a Or or again two central banks looking to hike rates in the New Zealand dollar the reserve Bank of New Zealand are Probably going to be one of the first potentially high creates maybe at some point this year is the rumor could be this month Or it could be in I think it's like September or October if not this month I think it's the most this month might be a bit too premature But if they do then you should expect really prices to rise And the the New Zealand dollar to appreciate But again with two central banks looking to hike rates for me, this is more of a difficult week I'd probably my bias is skewed more towards the New Zealand dollar buy so any kind of moves into a demand zone is really where you should be Looking and let me just tie this chart up a little bit if anything I've prepared to pull this up to here and it's going to be I think this whole area really going to be demand right there So let me just get rid of this so it looks a bit. It doesn't look a bit messy But at the end of the day, this is the way we draw our zones and we can always Clear and clarify where about in this demand zone We want to be biased by looking at things like horizontal support and resistance Both on the daily and also some intraday zones as well So within that demand zone where exactly do you want to be a buyer? And that's where you use support and resistance from horizontal diagonal and also things like moving averages To to decide where you want to be actually a buyer within this zone The overall is not really a pair that I'm looking to trade any time any time soon as there's no There's no monetary policy divergence moving on to the pound dollar pound dollar So we had some positive news around the dollar last week it was to do with the central bank looking to potentially high crates and So Bank of England rings alarm bell for Sunak who is the UK's chancellor of the Exchequer rock bottom rates may rise So so basically central banks pledge for modest tightening may end the aid and basically the aid of you know monetary Support you know for public finances so So So the chancellor is in a bit of a sticky place because of the fact that he wants to continue the low borrowing rates But the central bank are saying what we may have we might have to high crates Why we have to have the high interest rates because of inflation and potential I Guess The fact that inflation is getting a bit out of hand so they may have to look to start to high crates soon Sooner rather than later. So You've got a chance there of the Exchequer against really the the Bank of England, so With that being said the rumor is that the Bank of England may want to high crates So for me, it's literally buying the pound But against the dollar probably I would say probably definitely not I'd be buying a pound against something like the pound up against the yen or the Swiss Or the Swiss Frank, but if you are looking to trade this pair Then any kind of shorts in and around this area or up into this area is where you're looking for short trades If you're looking for long trades, it's really a pull back down It's just one three seven area if it gets down here for a long trade But again, not really a great pair to look to trade Euro dollar Euro dollar and again, you can see the effect of monetary policy When the Federal Reserve came out back in June talking about potential tightening and tapering and potential hiking rates you can see pretty much what's happened the European Central Bank on the other hand are very dovish, right? Very dovish meaning that they're not looking to Hike rates or even think about tapering at all and they won't rush ECB European Central Bank won't rush to signal future of pandemic program. So You know given how much uncertainty Sorry, given the uncertainty given how much time is left. There is no need to decide on that says Kaz Kazaks who also leads Latvia central bank. We will discuss it at the moment And but at the moment it would be still be premature. So they're talking about, you know, the bond purchases That they're that they're doing and potentially, you know, reducing their bond purchases So policy makers have set up their September meeting with new forecasts will become available as as a crucial session to scrutinize the euro area's economy and its prospects and to start debating post pandemic monetary stimulus. So again They're talking about the Whether they're going to still support the economy And and buy bonds or whether they're going to reduce it. But this and they don't they're not thinking about it What if, you know, they're going to maybe announce it in the future? Whereas The Federal Reserve are really kind of announcing it now But they did say that, uh, where is it? I think somewhere here. There's a quote That talks about It goes yes is it it's quite unlikely that we will come out in late March 2022 and say this is it We've done our job and we terminate it. Kazak says, um, we would like to warn the markets in advance But only as much as reasonably possible. So what you're saying is is that Um, if they are going to, uh, reduce, uh, you know, uh bond purchases and taper then, um, They would, um, they they go into signal that they will they're going to tell the market that they will But for now they're keeping stung on it, which means that they're lagging behind Which obviously is the reason why you're seeing this happened, right? Euro's getting weaker and the dollar is getting stronger. So prices came up to this nice, uh supply zone Again from last week and, uh, if you guys were looking to sell Well done on that trade right there. Um, potentially looking for any kind of buy trades There could be some profit taking here But I think the path of these resistance for now is to the downside until the european central bank start to Get a bit more hawkish. Um, I think the uh, this this really is going to continue going to The downside or unless the dollar actually misses any kind of, uh, data targets So, uh, those are your options really. Um, but I think the path of these resistance is to the downside and will continue to be Uh, euro yen euro yen are stuck in a bit of a range This range between the supply and its demand zone we've got Let me move this up here slightly There we go. So, um, again with both really currencies, uh, quite, um, uh, weak in a sense that Um, the european central bank quite dovish and also the japanese yen are very dovish as well. So when you have to, uh, Uh, depreciating currencies you should actually enter into some sort of range. So, um, really nothing to write home about with this Not really a pair that i'm really too interested in at the moment. Um, I do think though once the euros start to Become hawkish, then I do think that this pair is going to be a really good pair to look for, uh, buy trades So any pullbacks and you want to try and get in early and anticipate some european, um, central bank, uh, hawkishness And any pullbacks to this one to eight levels would be, um, a decent opportunity to look for any kind of buy trades If there's risk off comes into the market any pullbacks into supply zones will be a sell Aussie dollar and uh, the australian dollar, uh, pretty much the rba are quite dovish the, um, Australia are suffering with Some more potential lockdowns from you know, the virus, um, and the rba have come out and they are pretty dovish as well They were in a wait and see approach whereas the, um, the federal reserve are looking to again, um, High crates at some point soon and I say soon but within maybe another year or two So they're ahead really ahead of the rba for now So again the path of these resistance it looks like it's to the downside and until the, um, rba really start to Um become a bit more hawkish Then I think there is some upside definitely a lot of upside and again the, uh, the australian dollar has lots of upside potential But we have to wait for the data to support that, um, rate, uh, potential rate hike or at least bond tapering narrative So, um, until that happens again the path of resistance I think is to the downside So more, uh, more downward pressure, um, probably on the australian dollar against the us dollar But again, if you want to be a seller then I'd probably recommend Not not financial advice, of course But this is going to be the area that you'd probably want to look for any kind of, uh, sell trades Moving on to the ozzy yen and ozzy yen Um, again the uh, my bias would be more to buy the australian dollar, but um with the, uh, australian Central bank not being as as hawkish as, um, expected I think if any any kind of pullbacks Are really some decent buying opportunities because I do think that the australian dollar should come good at some point Within the next few months But uh, I think in the short term It does look like the uh, the australian dollar might be slightly a bit weak But with the against the japanese yen I think it still should potentially have some upside some more upside potential at least range probably from here But any kind of pullbacks into any demand zones. I think I'll buy an opportunities I wouldn't necessarily look for buying the look to buy it again unless again, uh, you know There is a lot of risk of sentiment moving on to gold finally gold and gold again moves inversely to the dollar We did have a couple weeks ago a nice little Buy trade as prices come down into this demand zone Then as price come up into the supply zone again, if you want if you are looking to Sell the dollar then you're looking to the players to buy gold or if you're looking to buy the dollar And you can't get on getting on buying the dollar then you're looking to sell gold and this is basically what's happened Gold is a hedge against inflation But uh with the central bank the fed looking to high crates at some point Um money will be coming out of gold and going into the dollar reason why is because the dollar starts to Actually starts to pay pays in it pays a yield. It pays an interest whereas gold doesn't so You know people investors generally want a return on their On their investment other than just looking at holding, you know and asset appreciation So with that being said with the with the uh with the dollar strengthening You're seeing gold start to sell off and um, if you do want to be a buyer of gold potentially Meaning that the dollar you think the dollar is um, it's still going to stay a bit weak Or may you turn around this week? Then this is actually a really nice zone to look for any kind of buy trades for gold But personally, um You know gold isn't necessarily clear cut. I think the the the bias is really with dollar strength at the moment So we could see more short trades um Coming into focus so any kind of pullbacks then into that demand zone probably from the Uh 1810 area around here That would be a potential uh selling opportunity If you have the medium to long-term view that the dollar will strengthen and gold should weaken Um anyways guys, that's it for this week. Um, again, I hope you have a great trading week Don't forget to like subscribe and share and take care until the next video