 Hi, my name's Leon Roe currency trader and trading coach at trading 180 calm 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 an equally warm welcome back and Don't forget to like subscribe and share if you find the information in this video useful It's a free way to support the channel and really promotes the quality Information that I provide every week to those that really need it. So starting off before we get into really the nitty-gritty is Really, I like to put out some some questions. I haven't done so for a while, but The last one on one of the last ones I asked was when does a central bank typically? Prefer to hold interest rates and why is that important? It's because interest rates are one of the primary drivers of currency value meaning that it creates demand or supply right you get The the higher Interest rates are is the more demand that you will Typically see and the lower the interest rate is the less demand, right? so but what we traders tend not to understand is why Interest rates are potentially going higher or lower and it's really one of the factors is to do with inflation and so when does the central bank prefer to hold interest rates is when the When inflation is really at 2% right because central banks have a 2% goal So 83% of the voters in this question got it right and it's because central banks have a 2% inflation goal every year and that's when they will Want to hold rates if they if inflation is above the 2% target then central banks will tend to want to high crates And when inflation is at you know below 2 especially if it's in the minus Then they will typically want to have a cut rates or go into some sort of quantitative easing So the answer to the question is when inflation is at 2% And that's when central banks will prefer to hold rates and have more of a neutral bias. Anyways, let's get into the the week's Fundamental analysis and before we do just to give a quick reminder of the trade process and really how we should How trading 180 really kind of approaches the market and myself is really applying fundamental analysis to establish medium-to-long-term directional bias and even the short term the short term is more random and then apply technical analysis and supply and demand strategies to time trade entries establish profit targets and risk management, so Let's go on to this week's week ahead and Zooming in the week ahead federal reserve chairman power will speak Friday at the Fed's annual Jackson hold Wyoming conference with investors looking for any details on the central bank's plans for tapering its massive asset purchase program That's going to be important because tapering means really Will create demand it reduces the need for the economy to rely on the bank and money printing So that is actually positive and should appreciate the dollar which basically we've been seeing and we'll get into the the dollar Technicals and price action in a sec other important releases include the European Central Bank meeting minutes second quarter GDP Updates for the US Mexico and Germany and flashing market PMI data for the US UK Eurozone Japan and Australia So investors also await data on US personal spending enjoyable goods orders Eurozone Consumer morale and China industrial profits really I think that the most important news events on this is going to be obviously Jackson Hole the ECB meeting minutes as well and The second quarter updates for the US. I don't think it's going to be that important There's going to be that market moving and the reason why is because we've already got the the preliminary numbers the first numbers and The updates are generally close to that so unless there is a massive miss on the preliminary I think the second quarter GDP updates are going to come out as expected It's already pretty much been priced in to the market. So let's go and get on to the technicals and a bit more fundamentals as well in depth and starting off on the dollar index and dollar index is a measure of dollar strength against the major currencies like the Euro the pound the yen and I think the Australian dollar and As I've been saying pretty much since the Federal Reserve announced tapering back in June you can go back and look through all my videos and Go back to this this area here in this time here It's 15th 16th 17th of June when I did the analysis I was saying you want to be a buyer of the dollar, right? And this is pretty much what's been happening. This is not You know predictions based off of some sort of Elliott wave Nonsense, this is the market doesn't move based on Elliott wave or price action. It moves generally in a medium to long term based off of Fundamental analysis and fundamental analysis is understanding interest rates inflation and GDP right and the relationship between those So it wasn't hard really to understand where prices were going You know, we're likely to go right in in in the medium to long term But what we do have is obviously more Is more positive news surrounding the dollar and every time we get positive news surrounding a dollar? We should make you know higher highs and higher lows now. You're not necessarily looking to trade the The dollar index, but what you are looking to do is understand Where the direction of travel is and then you can then trade dollar crosses, right? So what I'm gonna do is I'm going to Include all of this in a zone and the reason why this is is because We make lower highs and lower lows Hi, and then low lower highs and lower lows at areas where there are areas of demand, right? So Wide demand zone. Yes, but we also want to break that down With using support and resistance because support and resistance is just past Previous supply and demand zones that have been projected into the future. So that's really one of the supplies and stuff I think I think this area as we can see level It's been a it's been used several times where there might be a bit of a limit to any kind of dollar strength also as well I think it's where the The investors I guess are waiting on signals on Jackson Hole, right? If if the Fed come out and Jerome Powell comes out and says He's maybe a bit hawkish or dovish I should say on on the On the dollar meaning that he's not necessarily looking to high-grades anytime soon Or doesn't give a signal that they are then you could see a temporary fall on the dollar But if they are they continue to be Hawkish and signal that they are looking to taper then you could see more upside potential and Again getting into a bit more nitty-gritty. We did have the u.s. Finance initial employment unemployment claims Sorry drop off for fourth straight week, which is positive So applications for the u.s. State unemployment benefits drop for a fourth consecutive week a trend that suggests labor market conditions are Improving as the economy recovers, right? So that's that's very positive on the negative side. We do have the Delta variant That is causing havoc around the world and causing some risk-off sentiment, which has been really kind of plaguing certain commodity currency trades, but Delta case wave in the u.s. Northeast may be nearing its peaks or parts of the u.s. Northeast may be near the peak of the latest covid-19 wave though There are still key areas of concern hospitalizations and deaths are likely to mount in the weeks to come so Hopefully there is a potential peak to the covid Hospital hospitalizations in the wave and once that starts to come to an end Then we should see some positive you know economic data When it comes to not just the u.s. But also around the globe and more risk-on sentiment rather than risk-off So there are obviously Headwinds I guess in the with the dollar just like any other currency but in general I think the path of least resistance is to the is to the is to the upside and We also have the CME group. They do a Fed watch And they got a Fed watch tool and I've clicked on the probabilities tab and what you'll see here Let me just zoom in a little bit is Meeting probabilities. So what the market does is it factors in? Rate hikes, right? So zero to in five points of Basis points and in a hike and these are the hikes right? So this is where we are currently at zero point two five percent If you scroll down and these are the dates of the meetings You can see the probability of a rate hike gets more and more right? So we get to twenty twenty three and we get to actually there should be a forty percent hike Currently and this is of subject to change as well depending on as the data comes out But currently if things stay as they are Then by twenty twenty three forty percent of the market think That there will be a rate hike. So what do you do from there? You basically buy the rumor, right? This is buying the rumor. You're trying to get in And buy the dollar while it's a bargain because if they start to high crates, you know by the time they do high crates the market would have made money and Every other retail trader would be looking to buy as they actually high crates But that would have already been priced in right? So this is an important tool to Keep an iron Fed watch tool. You can always Google it see me Fed watch tool and in 31 days We'll see what the next Meeting is saying but the the Jackson Hole Meeting will definitely be a Banks will be watching that institution watching that and the reason why is because that if they do sound a bit more hawkish Then in fact these numbers could actually change for the better, right? So if you're buying dollars, that's always going to be positive. Anyways getting back to Dollar index. So if you do want to be a buyer Really waiting for pullbacks and then looking for This is confluence in any other dollar cross if you do want to get short now is pretty much the time But obviously what I would say wait for Jackson Hole and what happens with Jackson Hole before looking at making any kind of dollar Decisions moving on to the dollar yen Dollar yen again is a bit of no man's land. I think it's going to be the same thing with all dollar currencies This week all eyes are going to be on Jackson Hole. So I Don't necessarily expect You know any movement as far as if prices go to the upside It's probably just just positioning who knows whether, you know, it's going to be a sustained move because again traders are looking at the future and forward guidance, so they're really waiting on The the Jackson Hole And Jerome Powell, so I think any moves this week on Dollar pairs and I think maybe pairs overall are just going to be pretty much Exercises in liquidity hunting and drawing traders to the upside and then stopping those out and then join traders to the downsides And stopping those out until we get a clear direction from the Fed. This is probably what we're going to see In in the short term. So again, if you do want to get involved though this week in any kind of dollar trades then probably looking at Short trades going to be here long trades are going to be at this demand zone Is this the money supply zone isn't necessarily the greatest? I would probably say the best area of shorting is here. This is a nice fresher area of supply And this level has been touched to think a couple of times as well So I think any moves down to the 108 level it would be looking at getting long on those Would be the pretty the best areas to look for long or short trades depending again on your fundamental bias dollar Swiss and again dollar Swiss We are making there is some demand here not the strongest area of demand to be fair is Hasn't really made any higher highs so but there is demand there if you do get a pullback It's okay. Not not fantastic and personally I would probably not want to look for a daily demand I'd really want prices to kind of make some new highs before looking at getting involved in that trade or if prices Do come down to this one. Oh, I'm sorry this 0.905 area That for me is a really nice area of demand You can see that strong demand right there and then looking for any kind of long trades in and around that area Again the Swiss Frank in a risk-off environment does do well and we do have some risk-off sentiment But so equally does the US dollar and I say equally but The dollar does do well in the in a risk-off environment and a risk-on environment So a bit of more of a tougher trade in the risk-off environment But I do think overall the dollar is way ahead fundamentally of the Swiss Frank and the Swiss economy So again, probably popularly resistance is to the upside even if you get a pullback Should be hopefully more dollar buying dollar cad The cad has seen very You can see pretty much what's happened is The oil has pretty much sold off this week risk-off First of all the cad doesn't do well in a risk-off environment and secondly with oil setting off You know and the dollar doing actually doing quite well. You've seen this pretty much happen. So fundamentally this was to be expected so Looking at where we are currently. I'm going to move this fly zone up here Yeah, it's probably it and Again Understanding from a risk-off situation. You would really want to buy the US dollar from a risk-on perspective commodity currency The the Canadian dollar if you start to see oil bounce back the Canadian dollar is the one to buy Not necessarily I wouldn't say against the US dollar for example But I would probably more trade that against the the Swiss Frank and the Japanese yen But let's see what happens But if you do want to get a short here that is really a nice You know pin bar But it depends on again more fundamentals because if there is more risk-off sentiment then there's no pin bar in the world That's going to want to hold, you know and reverse, right? It's just basically a sign of profit-taking because you don't know whether that's profit-taking or it's a reversal, right? If I'm a trader that got involved here, of course, I'm going to look to take some profit somewhere around here Right. So you have no idea whether this is profit-taking or reversal the only time you will know whether something is likely to be a reversal Is if you understand fundamental analysis whether this is a bargain for the Canadian dollar or likely seen as a bargain for the For the Canadian dollar against the US dollar or not, right? If it is then this is likely to continue to the downside if not then this is going to continue going to the upside It's literally as simple as that. You can't take so much meaning from you know Looking just at pin bars in isolation. You have to understand what's going on in the in the background So from this currency pair, I'm not really to really trading it at all Harder to read when it comes to the fundamental analysis But as long as risk remains probably more off than on then that the path for these resistance is to the upside and again waiting on Jackson Hole as well because you could have a reevaluation of the dollar if Jerome power comes out as being more dovish than hawkish, New Zealand dollar US dollar again being in a more risk-off environment we've seen The commodity currencies sell off. So again, there's no demand zone. There's no technical analysis. That's going to stand in the way of Fundamental and risk sentiment analysis, right? So you've seen this start to happen Set off Let's start drawing some demand zone. See if there's anything that we can potentially get said is a demand zone there Not the demand zone in and around here. So interesting news matter of facts on the RBN said is that they Governor or says that next RBN said meet in live even if outbreak Persists so governor or speaks in interview with Bloomberg television It would take a significant shot to change rate hike plans of rate hikes are generally positive for the For a currency. So what that actually means is that? If they're the first to hike rates, in fact, this could be seen as an absolute bargain I really would like to see risk on Come into play For me anyway, because that was going to be really really nice a really nice level to look for long trades But as long as risk remains off or more often on I should say then It's in the short term, it's a more unpredictable But if you do want to get long in this I totally understand why you would and I do think that this is This is these levels here. I think are brilliant for Potential upside but again, New Zealand dollar against the US dollar not so much buying that I'm looking pretty more looking at weaker currencies like the The New Zealand Swiss in the New Zealand yen for potential buyers if you're looking for any kind of sell trades We're in for price to come up into this supply zone this 0.70 level before looking at getting short pound dollar and The pound's been suffering a little bit Doesn't necessarily do great in a risk-off environment and also we've seen some positive news out around the US dollar there was Some news that came out against the pound and it was to do with inflation So inflation actually pulled back so UK inflation posts a temporary slowdown in its way to 4% So the UK inflation eased in July in what is widely seen as a blip on its way to double The Bank of England's target this year. So so in the short term Inflation came down to 2% and as we know and as I've said before when when prices come back down to The 2% target What generally happens is that central banks prefer to hold interest rates that have more of a neutral bias, right? so if they have more of a neutral bias in the short term and Whereas there's another bank that has maybe a bit more a bit more hawkish in them in the short term Then you're seeing pretty much a bit of a pullback, but that isn't necessarily expected to last because you scroll down The Economist Yale Self-in chief economist at KPMG said we expect we expect inflation to accelerate further During the rest of the year rising significantly above the Bank of England's 2% target and supply chains remain under Strain faced with a strong rebound in demand said said the Economist so this might be just a blip when it comes to the inflation but we want to see inflation numbers start to rise before looking at the Buying the pound and the reason why is because the data has to support the narrative the narrative being that if Inflation is rising above that 2% target Yeah, then it puts more pressure on the bank to do what high crates and if they are hiking rates Then the British pounds should want to appreciate that's the way that it goes So there is a nice watch it nice, but it's a decent level of demand here. It's been touched several times so for me probably a deeper pullback Into one of these zones again not the prettiest, but I think that With support and resistance in and around this area this one three five Area, I think that round number is really nice again prices have been touched here here and then they've Reacted there. So I think this one three five level would be really nice for a buy in the short term No, I think the way the dollar has the advantage any pullbacks into supply a short trades You can get involved in some short trades if you want to trade this currency pairs a path of these resistance It's probably to the downside until really the pound starts to Show that inflation is rising moving on to the euro dollar euro dollar The euro is weak and I was saying this to traders in the private mentoring group that we are probably likely to continue To go to the downside. I was saying this last week as well In fact that we would see some more downside potential and this is pretty much what you're seeing so we've there's no demand zone again that will stand in a way of Of really the fundamental analysis so Fibre Tracement is what I'm looking for. We've got supply right here And we've got in fact supply there as well so understanding where we are I think this being a bit of support Broken support should turn resistance. I do think that Any kind of pullbacks? I think not necessarily the underside of that zone. I think probably this zone here would be a better area To look for any kind of short trades But again, it is highly dependent upon what the Federal Reserve say a Jackson Hole So any pullbacks into that zone into the one point one seven area Is definitely and above that is going to be if you're looking for short trades that for me is is really the best area The underside of this area looks a bit too obvious for for short trades And there is a potential for this actually to be a bit of a stop on anyway For those of you who are in the private mentoring group you'll understand that the front them the stop on here and But I think again the path of his business is still to the downside So let's see what happens and again the euro fundamentally Euro slide takes currency to line in the sand for balls So prospect of monetary easing risk aversion weighs on the euro currency minutes from Fed meeting could spur declines says Saxo banks so the euro is on the cusp of breaking down to new lows against major book major global peers weighed down by the prospect of prolonged monetary stimulus from the European Central Bank and a rush for safe haven assets and So again, it's really more about monetary policy and this is a paragraph That's worth noting is but unlike major central banks including the Fed and the Bank of England the ECB has given little Indication, it's ready to scale back on its bond buying program anytime soon again Scaling back on bond buying would be positive for a currency would appreciate the currency And if the Bank of England the signaling that they are and the Fed a signaling that they are yet the ECB are not then The ECB out of the out of the three currencies should be probably lagging behind and that's lessening the euros a law Already one of the worst performing major currencies this month And again, this is not hard to tell right if you keep up to date with what's going on with the central banks and the fundamentals Then you would have known this if you don't then you are literally, you know trading blind, right? It was obvious That the euro dollar was going to go to the downside And this is just due to monetary policy, right? We knew from the Fed being more hawk is there the euro being more dovish and look what really what's happened the path for these resistance so For me, I think again until If if the Fed come out a Jackson Hole and I'll hawkish any pullbacks for me are buying opportunities for the dollar Euro yen again risk off. You're seeing pretty much the effect of risk off price is going to the downside I'm gonna move this demand zone as there's probably no more demand there down to this area here In fact, no in fact there is a little There is some demand just there as well. Yeah, so we're still within that zone just slightly Delete this and again really the the question is is from a risk on perspective. You probably want to look for Buying the euro But from a risk off perspective The yen is going to be the one that really does appreciate and you're seeing that as we've seen that pretty much this week But again depends on sentiment So if you are looking to buy the euro, I would probably say now is a decent time or the 127 area if you're looking to continue selling the The Japanese yen or push it by the Japanese yen and shorten its currency pair any pullbacks to that 129 area It's going to be a decent Sell Aussie dollar Aussie dollar again with risk off being more prevalent than risk on and really the dollar being the dominant currency when it comes to monetary policy Australia is still suffering with lockdowns and potential higher unemployment As a result of their lockdowns you're seeing what's pretty much happening again a clear divergence between the two fundamentally and I think this is going to be the the first area to look for any kind of buys It could be some profit-taking here and if there is then I do think that that might be a decent area for a buyer But you'd really buying that based off of dollar weakness rather than Australian dollar strength if you're looking for continued sell trades Really looking for quite a big pullback up into this one. So it's 0.73 area before looking at short trades So, yeah, let's see what happens with that enough and really much to say I do think that the Australian dollar though once it starts to get their economy starts to get back on track I think the Australian dollar is going to be an absolute bargain at these prices But we'd have to really see the data support the narrative So I think that 0.7 or 70 cent level is going to be a Very key area For the Australian dollar, hopefully they can get back on track and if they do then it's going to be really nice buy I think Aussie yen again risk-off you're seeing the Japanese yen strengthen not surprising where the Direction of travel has been and Yep, so we're seeing Set off and Buying the Japanese yen, but again I do think that there is a pullback coming at some point Don't know whether it's just a sustained pullback, but if a risk starts to come back on Yeah, then I think the Australian dollar actually is a decent buy in and around these areas We are at a bit of a key area. You can see that this zone has been used once Twice not necessarily, you know the best set off there, but there was a nice rejection here and hopefully Within that demand zone there are going to be support and resistance traders looking at getting long here as well Profit taking at least which should increase some sort of demand if you're looking to buy And let's see what happens because even in a risk-off environment the market doesn't continue to go down forever, right? There's pullbacks due to liquidity liquidity hunting and then you're looking at potential Continuations, but the question is can you take advantage of the pullback and so let's see what happens there Again, you're gonna have to really wait for prices to come all the up to here To this 81 level before you've been looking at getting short or looking for Bit of a bullish candle bearish candle and then looking for a pullback into that Supply zone somewhere around there Moving on to gold finally and gold this week has really kind of just settled in really hasn't really moved at all Over the last week, so at the moment I do think that this area here From a demand zone perspective is decent for a buy this level has been touched several times So I do think that if prices do come down here I don't know whether that's gonna hold but again, this is really kind of driven by more risk Sentiment so if and and the dollar so it's a bit of a tougher trade if Inflation still getting out of hand then you can expect prices to go higher and also if the dollar is a bit more dovish The Federal Reserve a bit more dovish then that should obviously pushed gold Higher as well. There has been the company called Palantir buys gold bars as hedge against black swan event So companies spent 50 million on a hundred ounce gold bars in August the customers can now pay for software So basically Palantir Technologies said it's preparing for another black swan event by stockpiling gold bars Don't know what that black swan event may be But they seem to think that obviously they got a hedge themselves, right? They got to protect themselves So the company spent 50 million 15.7 million dollars on gold this month part of an unusual investment strategy That also includes startups bank check companies and possibly bitcoins. So Interesting that You know, there's companies buying gold and try still trying to protect themselves. We're not out of the woods yet But again, if you do want to get short on gold It's really kind of a pullback to this 1810 area if you're looking to buy gold the earliest opportunity is probably at this 1729 area to look for a buy in gold But again, the pitch is not that clear with gold And I think again, all eyes are on the Federal Reserve Jackson Hole and let's see what happens there Anyways guys that brings us to the end of the week for those of you as well who have reached out to me I will get back to you and you can get back to you shortly. I just been really busy this week and I definitely will get back to all your emails and comments So thank you for the support. Please don't forget to like subscribe and share and I will see you guys next week and next in the next video take care and Stay blessed