 Hi, my name is Liam Rowe, currency trader and trading coach at Trading180.com. I welcome to this week's forex and gold supply and demand fundamental and technical analysis, getting into the week ahead, jumping straight into it, 23rd of July. It will be a very busy week in the US with the spotlight on the Fed's interest rate decision and the advanced estimate of second quarter GDP growth. More important releases to watch out for include the PCE price index and that's important. For monetary policy, durable goods orders and S&P global PMI readings. Additionally, investors will closely follow the interest rate decisions from the European Central Bank and the Bank of Japan as well as inflation rates for Germany, France, Spain and Australia. Finally, there will be the release of flash PMI readings for Australia, Japan, France, Germany and the UK in the Euro area along with the LFO business climate report for Germany. So lots of market moving news data coming out this week and now starting on some technicals and looking at the dollar index and from a fundamental perspective, in terms of interest rates, the Fed are expected to hike two more, they've signaled that they're hiking two more times according to their dot plot, but the market pricing in only one more hike and so going to the Bloomberg article, Fed seen hiking final time in a 22 year peak in an economist survey. So most economists expect the Federal Reserve to lift interest rates one more time next week as it ends a 16 month hiking cycle that has been the most aggressive fight against US inflation in 40 years and so here at the end of the hiking cycle is near but also as well the Fed are seeing actually holding rates higher for longer and then see a cut in March so there's that as well. So at the moment the dollar index could be potentially bouncing around this 100 area and even actually start to probably go lower as I think the hike has been priced in already so we might start to see a range or an auction between maybe these 103s of prices can get all the way up here but more than likely I think prices are likely to kind of come to the downside and maybe start to hit those 99, 98, 97 in the short term. I do think towards the end of the year though the dollar actually might be a buy but in the short term and in the next maybe quarter I think the dollar is going to be a sell providing the data supports that narrative so what I mean by that is that inflation needs to remain low and trend towards the Fed's 2% target and then that will in turn cause the Federal Reserve to not want to rate hike rates and hold rates and then you want to really kind of trade any divergences in monetary policy so if the dollar are holding rates but yeah there's another central bank who are still looking to hike rates then you want to buy the one that is hiking rates and sell the one that is holding rates right and that will be the situation for the dollar and so I think any pullbacks on the dollar are going to be shorting opportunities providing again the data does support that narrative anything that supports more rate hikes for the dollar then the dollar is a buy so the data needs to confirm the bias moving on to the dollar yen and now I'm actually medium term bearish on this as in my bias is to buy the Japanese yen now the yen the Bank of Japan sees little need to act on yield curve control for now sources say and really yield curve control is is a way that the central bank was devaluing their currency by controlling the yield curve and by removing yield curve control that is expected to appreciate the currency it's one of the steps towards actually central bank potentially hiking rates and so at the moment Bank of Japan officials see little urgent need to address the side effects of this yield curve control program at this point though they expect to discuss the issue according to people familiar with the matter central bank looks at the cost of benefits of yield curve control at every meeting and we'll reach a final decision as policy meeting next week after scrutinizing economic data and financial markets up to the last minute according to the people now one of the things that you need to look towards to determine how soon the Bank of Japan are looking to adjust yield curve control is inflation and their inflation came out recently a bit stickier than than they expected a little higher so that should put pressure on the Bank of Japan eventually whether it's going to be you know this week in July or at their next meeting whenever that is in the future the expectation is for the Bank of Japan to eventually adjust your curve control so as prices if prices do start to come up to this one for five area 146 and even before that but just from a technical analysis perspective these highs are even above I think these are going to be really nice areas for me anyway to look for shorting opportunities because you have again one central bank that is looking to actually appreciate their currency to get inflation down via monetary policies and you have another central bank the the the yeah I'm sorry the daughter the Fed who are looking to actually hold rates as inflation has come down to their two percent target so there's a divergence in the trade idea so that's what I'm looking towards in the coming war from now until the coming months looking at the dollar Swiss and there were some analysis from last week nothing's really happened last week there has been a bit of a move to the upside in terms of any kind of levels to kind of look towards any buying there really wasn't anything this is back in 2015 so I wouldn't necessarily use that as any kind of indication that you know prices should bounce from here so these were really the options that you had either you had prices pulling all the way back up to this supply zone or you had a move that caused prices to make a bit of maybe a higher high at the moment which is happening and then move to the downside then you need to pull back to that supply zone and then that's the trade there or currently we've actually got a bearish candle close on the daily so what you then be looking for is maybe some sort of move to the downside move back up into that supply zone and then move to the downside there so this isn't really a pair that I'm looking to trade but these are the options that you have for the dollar Swiss for me no no real buying unless we start to again get some sort of higher high here and then maybe even a pullback into this area here which would actually now be considered bit of demand you can put that on there not the strongest actually in fact it's okay as it goes it's taking out that level of supply as it goes so you've got lower highs lower lows there so yeah in fact you could look at that as an area of demand and bit of a pullback if you do want to buy the dollar against the Swiss Franks so yeah that is a decent area to look for any kind of buy trades the dollar CAD dollar CAD again not pair that I'm looking to trade right now but the this level is obviously held if the Bank of Canada continue to hike after the Federal Reserve has have held rates then you should want to see at least some pullback and then a move to the upside or to say to the downside before looking at yeah before taking the Bank of Canada trade if you're looking at the Federal Reserve continuing to hike rates beyond their next hike then that actually would be a really nice buy if again the Bank of Canada as seen as not hiking rates now the kind of 50 50 the Bank of Canada rate hike expectations have reduced a bit doesn't mean it's totally off the table but at the moment it has reduced so can they I think there are opportunities to short the Canadian dollar if they have actually decided to hold their interest rate hiking cycle the New Zealand dollar so last week there was a really nice level that stop-hunted but with the RBNZ rate hold expected this was you know pretty much likely to happen the dollar yes was seen as you know the weaker of them the two last week but overall when it came to who was going to be hiking the Fed was still expected to hike right and so this was a really nice trade setup technically if anyone does want to buy the New Zealand dollar then looking at any areas now or down into these this demand zone here personally I don't think I'd really want to be a buyer of the New Zealand dollar although there are rumors that the New Zealand dollar and the RBNZ could start to actually look to hike rates if inflation is persistent but they haven't signaled that just yet so let's see the data will have to support that so if you do see a pullback up into that area there I think that's a decent zone to look for any kind of short trades or you could look towards this level of resistance pass resistance here and any pullbacks into this level here before looking at a short trade overall I think the dollar should be the stronger out of the two pound dollar and again some scenarios that were playing out from from last week technically and we saw this move to the downside and this was really driven by UK inflation so softer than forecast UK inflation is latest boost for bonds so reports add to repricing sparked by US data last week so the rally sweeping across global bond markets received a boost on Wednesday amid mounting science pressure price pressures which is inflation are easing in some of the world's biggest economies so in the UK bond led the advance for two year you'll set for its biggest slide since March after data show the nation's inflation cooled more than expected so with that basically the expectation was for a larger hike because inflation you know in the UK is that is one of the highest highest in like the G10 and so when inflation you know came down more than expected basically the market started to reprice the value of the pound against the US dollar but that it didn't take great hikes off the table and so I do think the pound is still a buy at least in the short term they had some positive economic news as well and so I do think now prices coming down to this area the one two sevens if it can get here I think is going to be a really nice buy for the pound against the dollar as again the market is pricing only one more hikes or one more hike then why I've got Fed equals Fed twice yeah so so one more hike where is the Bank of England the market is still pricing in two to three hikes so I think any pullbacks into this one two seven area one two seven fourteen I think are going to be it's going to be a really nice buy for the for the pound against the dollar trading those interest rate differentials and also as well we do have a supply zone right here so if you did want to get involved in trying to short the pound in the future then you have really that area there to look towards but my bias would be towards going long on the pound dollar euro dollar again you had a pullback into this support resistance turn and support but no demand zone yet and so in fact I've deleted it but really that's the play I think you'd have to see demand really kind of prove proof of demand before looking at a pullback into the zone and looking at that as a buy trade right here so some traders do trade a lot of traders in fact do trade support resistance areas there's going to be a lot of traders looking at buying at this area is very obvious let level but personally I want to see proof of value proof of demand before prices before I look to buy right the institutions have to kind of tell me that they're that this is a bargain price right and so but the nearest area of supply at the moment has to be all the way down at these demand zones unless obviously new demand zones are created now looking at the euro ECB's higher for longer rate plan fails to convince economists and so most analysts in surveys see two more hikes to 4% deposit rate per first cut seen in March with high uncertainty over path ahead and so the European central bank plans to maintain interest rates at their eventual peak for an extended period isn't convincing economists who see it starting to unravel in just six months and so although in the short term we have you know expected two hikes remember when we went back to be the Fed we were talking about you know economists expect rates to stay higher for longer yeah and see the first cut in March the European central bank yeah is expecting in fact the cuts to come a lot sooner after they've hiked right so at the same time it looks like the yeah the European central bank are looking to probably and bait embark on rate cuts in March as well so both central banks looking to potentially or economists are thinking that both central banks are looking to cut in March so let's see what happens there but in the short term I do think the euro versus the dollar should want to move higher but the pullback could be deeper before it goes higher right so it could start to bounce off of this you know if you get a buyer at the one away so that'd be brilliant right but likely you're likely to see some bounces probably off of these you know maybe 111 10 areas but for me that would have to create the demand before again me looking for any kind of move to the upside so those are really the the options that you know you you have if you're looking to trade you know daily supply and demand zones and talking about supply there is a supply zone here now and so that's really where you know the options are my bias is still to the upside based off of interest rate divergences and if again the data supports that narrative euro yen and I think the euro yen has come up to a really nice technical area especially if we have yield curve control announced on Friday I think this is going to be a brilliant area to look for a short and so but it depends again on what the market thinks and what happens with the Bank of Japan we do have some demand demand zone there as well really created demand zone as we have higher highs higher lows being made so high low high right there and so any pullbacks into the demand zone is going to be nice supported by the fact that in the short time the Bank of Japan is holding rates and your curve control is not is not adjusted right and so prices pull back and that scenario happens I think that's going to be a really nice buy for the euro but if the opposite happens in terms of the Bank of Japan actually adjust your curve control then I think that is going to be a really nice short and in fact I don't think these these demand zones are really going to hold it's going to be a lot of supply coming into the market a lot of buying for the yen looking at the pounds euro pounds and euro pounds broke through that area and that was really kind of based off of the the expectation the inflation data coming down the expectation that the Bank of England we're going to reduce their hiking or the amount of hikes that they were going to do in terms of 50 basis points now reduced to a 25 basis point hike and so right now we've bouncing off of this supply zone this pair is a tricky pair because both central banks are hiking the looks like the Bank of England they're probably just seen slightly slightly more hawkish but there was again a repricing of the Bank of England rate hikes and so I think we should want to see some sort of area like this you know contain the the valuation of the euro and the pound so if you do want to get short I think that's going to be a nice area to go for short trades if you're looking for a long trade it looks like at the moment you have to wait for prices to really kind of pull all the way back down to the lows and less some new demand is created somewhere within this area Aussie dollar and the Australian dollar again came up to this really nice technical area if you want to be a buyer of the US dollar last week that was a really nice area to look for buy trades but with the Australian dollar actually looking to potentially look to hike rates twice inflation is going to be important this week for the Australian dollar and so if inflation is sticky or higher than expected then I think this area here is going to be really really nice for a buy trade for the RBA against the Fed so you've got actually in fact quite a wide supply zone I'm going to draw it from I shall keep that one there draw this one from really it's like this high to here supply and then you've also got supply and then you've also got an area of some support resistance in that area as well just one of the confluences you can use so if you do want to look for any kind of long trades I think right now as it comes into the monzone in anticipation of higher inflation or at least sticking patient for the RBA I think that's going to be a nice area to look for some long trades if you did want to look for any kind of short trades in case the RBA don't hike rates and the Fed continue to hike rates then I think that's going to be a decent area to look for some short trades right there and finally gold and so gold we've got yeah prices have really come up to this top the top end of this supply zone coinciding with some dollar strength of course gold and dollar work inversely so this was you know the plan or one of the plans anyway or one of the scenarios that could happen so we've had a move to the upside and it has capped which has coincided with dollar index in fact you know making a bit of a rally right there and so that level as well has started to drop but if you believe that the dollar is going to get weaker then you're looking for really kind of pullbacks on gold either into that demand zone or into this this demand zone here I think it's going to be a really nice area to look for the 1900s decent air to look for some some buys on gold if you're looking for at least some short-term or medium-term dollar dollar sells and so yeah that's where we are and before I forget at the end of this video which is pretty much now the next section is going to be about trading psychology I'm going to share a video that I held with the group on our webinars on Wednesday private webinars and trading psychology and the five wires and the root issues when I was really kind of struggling with my trading psychology and these are really the main root issues that I had to deal with when dealing with trading psychology right and the five wires I'll explain that in the actual next video so in the next part so stick around for that and again end of this video thank you for watching this far and don't forget to like subscribe and share with your fellow trading colleagues if you find the videos I provide useful every week and I hope you all have a brilliant trading week take care and speak to you all until the next video got what's to do with trading psychology questions for group call and it's quite a comprehensive question I guess and I wanted to kind of simplify it because I think as Jeff pretty much pointed out it's like you could write a 300 page essay on it but they are great questions so I'll read it out and then I'll give my take on it so Sunny said basically that we appreciate if I could delve into some of the crucial aspects of trading psychology and maybe we need a separate webinar for this if other members of the group are interested I'm particularly interested in learning about the following topics trading psychology exploring exploring the psychological aspects of trading such as fear grieving in patients understanding how our emotions can cloud judgment and hinder objective decision-making tips and techniques to maintain and a disciplined and focused mindset sorry in any market situation managing emotions in drawdown strategies to cope with drawdowns as they are are an inevitable part of trading absolutely how to stay composed and avoid compulsive actions during these downturns ensuring we don't fall into a downward spiral of emotional decision-making absolutely and the power of fundamentals building a strong belief in the significance of fundamental analysis in the midst of a highly volatile and speculative market how fundamentals can serve as an anchor during turbulent times helping us to stay grounded and make informed in trading decisions so there's a lot there but what I wanted to do is to kind of maybe just narrow it down to I guess the my my basic approach to trading psychology and I don't know if many of you know about the five wise there was a five wise does anyone know about the five wise asking yourself five wise or asking to solve a problem five wise anyways basically it's a technique so five wise is not is a iterative interrogative technique used to explore the cause and effect relationship relationships underlying a particular problem so in trading you know our particular problems you have to be aware of are why we do certain things why do we take profit too early why do we you know not follow the rules that we set out why do we you know go against certain things that we know we should be doing and then we keep making those same mistakes right so those are the issues that we that we go through as trading and our trading psychology yeah so this is the primary goal of a technique is to determine the root cause yeah or defects or problem by repeating the question why five times the answer to the fifth why should reveal the root cause of the problem and so the technique was described by Tai Chi I think that's a pronounced it oh no a Toyota at Toyota Motor Corporation but there are criticisms of this of course there's others at Toyota elsewhere criticize the five wise technique for various reasons but it's a great for me using this I use this over the years especially you know when I was trading with Mark and just asking myself why constantly so not just settling with you know the first answer I came to and what I discovered in fact just my own personal wise where these these were my main root issues when I asked myself you know why doesn't necessarily mean you know I asked myself five why sometimes I've got to this answer all these answers you know maybe after asking myself why three times or two times or four times you don't necessarily have to ask yourself why five times but this is why these are the ones I kind of settled on over the years and remembered as well and so my root issues that I remember were first of all unrealistic trading expectations yeah so the reason why for example I would I would not I would you know tend to jump from strategy to strategy yeah was because all not follow the strategy and maybe add to certain things and you know try to tweak a strategy and maybe take away things and add an indicator would not add this indicator and add this entry and not was because of unrealistic expectations yeah yeah well I will do by the way I will do John I'm realistic patient from trading expectations so you know what does that mean so it comes from obviously we all get into this to make money right but the realities of trading in the way that I do for example what the way that I've discovered and actually I didn't necessarily discover it but I guess the way that I settled on it was actually I rephrase that so the realities of of trading you know we kind of get into it in terms of like you know taking 10 trades a day or 100 trades a day and more that you do more trades that you take you know should be the more money you make you know that's an unrealistic expectation you can say I can take a thousand trades over the year and break even or I can take maybe 10 trades over the year and make money right so you know the amount of trade you take doesn't equate the amount of profit that you'll make and so you know just from unrealistic having unrealistic expectations you know and what was sold online on YouTube and you know you can you know make money and you know and consistently in you know a month's time and you know making quick money fast a lot of money fast that psychologically was some of the reasons why I was you know repeating a lot of bad habits and not necessarily accepting of you know certain things that you know Mark and other people were were saying that I even though I knew to be true I was thinking to myself well you know that was going against what my belief was at the time which was you know I was believing that unrealistic expectations in trading was actually realistic and so that was detrimental to you know my trading psychology as to why I was doing making certain mistakes consistently another one was my belief in my trading approaches so over the years you know before you know kind of was trading with you know included fundamentals in my trading and trading technical analysis the belief as to the reasons you know belief in the actual system that I was trading or the strategy I was trading or you know the approach is a massive one as well right and you only really kind of get belief by backtesting and even backtesting you know there's difference between knowing something and believing something yeah so we can know the results of our backtests but but doesn't mean that we believe it yeah and what I mean by that is is this is we believe that or there's a difference between believing that you should go to the gym and knowing that you should go to the gym yeah so everyone here knows that if you go to the gym yeah it keeps you healthy etc but we don't do it every day right we just you know we'd rather sit on a sofa watch TV Netflix whatever it is surf the net and do whatever it is right now imagine believing that you must go to the gym or let's say for example something really bad's gonna happen or you'll die you will end up going to the gym it's not I'm saying like religiously you don't you know you wouldn't even hesitate right and so there's a massive difference between knowing something and believing something and so you have to have and develop a belief I believe there's no one that can tell me that fundamental fundamental analysis of fundamental approach doesn't work right now you know I mean or or ever so I've developed that belief where it was you know people who are new to trading fundamentals or just trading in general have to develop that belief over time so that was one of the reasons why you know I was making the mistakes that I was doing in trading and my trading psychology was affected hyper-focusing on outcome over the process so that's again instant versus delayed account balance gratification right so we've all been there where we hyper-focus on just that one trade or those two trades not realizing that they're only really one or two trades in the sequence that you're going to take for the rest of your life right you're going to take hundreds and thousands of trades obviously if you stay within the trading you know if you continue to trade but really focusing on that one trade and not looking at the bigger picture which is and it kind of goes into the next point which is basically accepting of probabilities and the law of large numbers and understanding probabilities and the law of large numbers so the law of large numbers just being the way that numbers are distributed and randomly and over a long period of time so we know that we can if you flip a coin for example it's 50 50 right heads or tails you have 50 percent chance of getting heads or tails but if I flip a coin 10 times it might get maybe two heads and eight tails if I flip it you know 20 times I might get five heads and 15 tails but over a longer period of time a hundred flips a thousand flips I will get closer to that 50 percent probability heads or tails right but in the very very short term even though we know it should be 50 50 yeah in terms of you know what result we get when we don't typically get that on a coin flip and it's the same thing with trading right if we're we don't hyper focus so much on the coin flip over over time in terms of why you know this is going to be heads tails we just know that the heads of tails are going to work out in terms of 50 50 right but in trading we hyper focus so much over you know our first maybe five 10 results you know 10 trades that then we start to change right we start to change say this isn't working but you know when we had you know eight heads and two tails does that mean that the the the coin wasn't working I'm going to get another coin because you know the flips not working like there's something wrong with this you know this coin flip or this coin doing it wrong like you don't you wouldn't do that so the same thing but that would we do that in trading so you know hyper focusing on the proto on the outcome yeah and not the process and not understanding that you can have a really you know the perfect setup could be an a1 setup everything aligned and you can still lose you can have the worst setup in the world and actually win a trade so but over the long term your decisions should be based on making more of the correct decisions over making terrible decisions and it should lead to obviously a positive you know account account balance um and then you know I think yeah the realities of drawdowns right so is really accepting the fact that we go through drawdowns everyone's going to go through drawdowns and drawdowns might not necessarily just last for a day or a week a drawdown can last for a month you might not make a new um equity high on your account for months it can happen and it does happen and it will happen right not everything is going to be you know I made um you know money this month it's it's impossible and that goes back to unrealistic trading expectations regardless of what you see on tiktok or youtube or social media it's just that's not the realities of trading otherwise um you know we'd all be trillionaires right it's it's it's um really kind of unrealistic and and I get it when we're in drawdowns it can be really and it is I say it can be but it is frustrating right it's frustrating you think you automatically start feeling that you're doing something wrong you automatically start tweaking certain things and the strategy and you think to yourself okay well that's not working now and it's just a natural incline to try to change things um one of the things I would say is whenever I'm gonna um whenever I'm in a drawdown and I was in one and I'm in one say it was in one but currently I'm making my way out of my drawdown um what I do is I risk less so I rather than um you know increasing my position size I just reduce my position sizes yeah and that's something that's how I minimize the loss when I see when I feel it coming and I see it coming in the next trades or you know losers losers win lose lose win lose lose lose and I'm like okay do you know what let me just reduce my losses yeah until I start getting into that win streak and then you start feeling okay the fundamentals are working now right everything has I say working now they're always working but um let's say for example forecasts which have been an issue over the past three four months right forecasts have been um forecasts have been a bit you know say a bit but they've been wrong more than they've been right in terms of major ones like you know from inflation etc and so you know when the market does start to come back in terms of you know forecasts start to be a bit more accurate which I can I'm noticing a little bit you know they are they're not you know but at the same time I'm seeing the fundamentals play out a bit more and forecasts play out a bit more and a bit better that's when you can start to now increase your position size gradually do you know what I mean so from that perspective in terms of you know practical things you can do when you're in a drawdown is just understand that it's going to come like night follows day it's it's going to happen so what's the point in in trying to stress about it yeah as I said trying to stress but in stressing about it the practical thing to do is just recognize that when you're in one reduce your position sizes reduce your risk minimize your risk and then when you start to you know get yourself into the groove again and the market starts going your way again then you can start to increase some of your position sizes and then you know make the make those new equity highs again right but these are well for me my root issues and the things that I had to address over the years and by the way as well you're never 100% like master this there's always something here that pops its head up do you know what I mean or you kind of have to think about it to not think about it right so what I mean by that is if I say to you you know don't think about an elephant you're going to have to think about an elephant first before you say to yourself don't think about it yeah so you have to always think about these things yeah whenever you're going through it and then you say to yourself okay yeah you just did it right so um and these things never these things never ever go away you're constantly having to remind yourself I'm constantly having to remind myself if I'm looking to take profits at a certain you know area right let's say I'm up excellent I made I made decent amount of money on that on the pound New Zealand right so I'm thinking I think I took profit just before my target which was I think it was like 80% of the area where was it one second I'll show you so let me give you an example right so it wasn't it wasn't this one it wasn't that recent one move there it was this one right here