 Hi, my name is Leon Rowe, Covency Trader and Trading Coach at Trading180.com and welcome to this week's Supply and Demand Forex Fundamental and Technical Analysis. If you're new or warm welcome to you and if you're returning an equally warm welcome back and if you find my analysis useful every week, please don't forget to like, subscribe and share with your fellow colleagues, especially liking the content as well. Just that like button as it helps the YouTube algorithm and really gets the quality content out to the universe, really. So just a little bit, just in case you're new about Trading180, we combine fundamental and technical analysis. A lot of traders will, especially on YouTube, will just say one or the other, but we combine both to really have a consistent edge within the markets and there are edges beyond just looking at a price chart that you really need to be or should be aware of things like interest-based inflation, central bank monetary policy, etc. and understanding value and why you should be buying a currency and why a currency is likely to be devalued by central bank policy and just quickly how we do that is Trading180 anyway is we have a fundamental analysis spreadsheet which we identify all major currency pair fundamental convergence and divergence trades to establish really price reversals or trend continuations and also once we've done that, use supply and demand zone strategies, capture pain relief strategies and stop hunt manipulation technical strategies to really enter our trades and identify the best risk reward trades and if you want to find out a bit more about that, you can go to Trading180.com. So first things first as we always do every week is get on to the fundamental and risk sentiment analysis. So starting off in the US and inflation is rippling through the markets and it's just what the feds want to see now why is inflation important is because central banks have a mandate to reach a 2% inflation target. So at the moment they're a bit below that and the more the higher inflation gets to that target then they'll achieve the target. The problem is though is that you want rising inflation when your economy is doing well. At the moment the US economy isn't doing so well especially with the viruses well really no economies are doing great to be fair but you don't want high inflation or rising inflation and your economy isn't doing well that's what's known I think is stagflation where you still have high unemployment and the economy isn't growing but you have rising inflation and especially inflation that might overshoot the 2% target now the Federal Reserve have employed I guess a monetary policy called the F-A-I-T which is the federal average inflation target so even if inflation reaches 2% in maybe one quarter what they're looking at is they won't raise rates or look to raise rates unless the average maybe over I think is about a year or so the average inflation is at 2% rather than just that single figure and if you have no idea what I'm talking about an inflation and interest rates kind of confuse you what you can do is have a look at my YouTube channel type in fundamental in the search and then I have a ton of free videos that really goes over interest rates inflation and GDP the relationship between them and yeah we've got hours and hours of videos on the YouTube channel and if you really want to take your fundamental analysis to the next level you can join the mentoring group at Trading180.com so the US at the moment with inflation are doing okay but economy wise they're not doing so great with neither is anyone and moving over to the to Europe and the European Central Bank ECB keep stimulus steady as economy grapples with longer curbs so again with Europe they have kept their monetary support for the coronavirus stricken economy unchanged betting that recently scaled up stimulus package is powerful enough to soften the impact of extended lockdown so stimulus is obviously designed to support the economy they don't want to necessarily still weaken the currency or add even more stimulus they're going to apply I guess a wait and see approach and hopefully they don't have to devalue their the euro too much and they try to avoid that so let's they're in a kind of wait and see approach the euro is suffering from deflation which is really an expensive currency or an appreciating currency and in a recession you really don't want to have an appreciating currency in fact central banks want a devalued currency they actually aim with interest rate cuts and stimulus they actually the aim of that is to actually devalue their currency because the cheap currency makes them more competitive on the world stage and the guard against signals new recession even as easy behold stimulus so you know everyone is kind of worried about this double-dip recession especially in Europe and again if the if Europe were the only country to kind of really maybe experience this double-dip recession I would probably say that you know the euro should be really a sell but in the I guess the coronavirus environment that we're in it's basically judging who is the best of the worst yeah who is the dog with the least fleas that's always once told to me by my mentor Mark Chapman who is the dog with the least fleas the dog with the least fleas wins so Europe aren't doing too badly not as badly as some other countries so I think Europe are still okay a bit middle of the road to be fair when it comes to buying euros but moving over to the UK and UK inflation subdued during a brief respite from lockdown so again talking about inflation so Britain's inflation rate picked up in December after shoppers were allowed back into the stores between lockdowns but held well below the Bank of England's target and again the target is 2% so again why is that important exactly the same reason why it's it's important for the for the Federal Reserve right it's because rising inflation forces central banks to hike rates and if they're hiking rates they're basically what they're saying is that they're making their currency more attractive and increasing demand for that currency basically making it more expensive and they don't want to make it expensive not at the moment anyway not with you know double-dip recessions and and the like so there was a rumor that came out last week that the Bank of England may want to start to cut rates but at the moment that has been dashed by the central bank governor so the pound climbs as market pushes back on negative rate speculation so the pound is rallied as traders push back on expectations for when the Bank of England might cut borrowing costs to the end of the year after governor Andrew Bailey said there was lots of issues with negative rates so although the central bank is looking at inflation as a guidance as to what they should do with interest rates and stimulus they also look at the economy but for now I think the pound is again another middle of the road type currency and a bit difficult between the majors to be fair at the moment it's not really clear-cut my preference at the moment and the guys in the group really been taking advantage of the the commodity currencies like the Australian dollar the Canadian dollar as well as the New Zealand dollar buys and really selling safe haven currencies like the Japanese yen and the Swiss francs so those are really the currency pairs you've been looking at so far as well as you know bits of the your binary euro against other currencies like the yen etc moving on as well to some more UK news as well so the UK recession risk eases as GDP declines less than forecast so that's actually quite positive for the UK right so again that came out last week so again more positive news coming out for the UK and an interesting article from Bloomberg Business Week was forecasts for economists surveyed by Bloomberg and 2021 growth forecasts and what you'll see at the bottom I don't know if you can see it right here but you've got 0 5 10 15 percent that is the annual GDP growth and what you'll see is you've got the range forecast for the UK in fact is the only economy that actually has a forecast range I guess some economists expect negative GDP growth for 2021 up to around just above the five maybe six percent growth the median forecasts and the Bloomberg economists forecasts you know you can pretty much see where you know the growth may be and in fact it looks like India you know the emerging markets China are you know projected to grow the most in the world and you've got some some interesting ones like Canada for example US Australia forecasted that's quite surprising Japan not doing so well when it comes to growth and forecast so again these create divergences between growing and shrinking economies the economy that grows the most is should have a stronger currency as is more going to be more demand for that currency because obviously businesses are growing investment etc and the country that has the the weakest growth is the one that you should probably look to sell so looking towards now the week ahead and this week the week ahead in the US it will be a very busy week with economic data including fresh GDP growth figures Fed and monetary policy decision and corporate earnings with reports from Apple Microsoft Facebook and Tesla investors will continue to focus on the pandemic especially with new and more contagious strains of sorry strains and will carefully monitor President Biden's legislative agenda in a divided Congress elsewhere IMF is set to release the world economic outlook and growth figures from Germany Mexico and Hong Kong will be also in this spot like so very busy week GDP is definitely going to be the because this would be the I guess the fourth quarter growth figures and again if they come out as expected better or worse is really going to determine where you know traders expectations for the valuation of that currency will be so the US is is up first I guess for fourth quarter growth so lots to watch this week now moving on to the technicals and starting off as we do every single week on the Dow Jones dollar index and the dollar index is just a measure of dollar strength overall against the basket of currencies like the euro the the pound the yen the Australian dollar and others and basically how we use this is just to gain some sort of confluence of overall dollar strength and we can use supply and demand zones as as confluence on dollar crosses so if you're seeing if you want to be a buyer of the dollar right now in a demand zone of the dollar index then you'd look you look for buy trades on the dollar yen dollar CAD dollar Swiss for example and that's really how we look at it so fundamentally you need to decide which one you want to be a buyer or a seller of I think me short term I think the dollar does have room to go to the upside I think if it's not now then it will be you know it will be there's no definite synom in trading but this area would be really good confluence I think for a buy trade at the lows of the range in the short term but I think in the medium to long term the dollar is still really a sell so we're actually within a decent range so if you take that as the expensive area and that as a bargain area yeah so this would be an expensive area and this is a bargain why is this a bargain area because prices went higher right there was definitely demand for the for the dollar at this 89 20 area so if price does come back down to here that would be the first bargain area that you want wanted to look for at the moment we're actually at fair value because between an expensive area at the moment that's an expensive area and that's a bargain area there is fair value that's all 50% is fair value so if you think the dollar is actually fair value and you want to be a buyer and you start to see bullish price action right there then look for buy trades on the dollar any of the dollar crosses and again I think short term wise I think the maybe the next month or two the dollars probably going to you know may look to strengthen again it just depends on you know fundamentally what's going on with you know Joe Biden inflation and and really GDP this week I think if GDP outperforms this week then the dollar I think it will be a really really decent buy trade so let's see if it disappoints then then again regardless of what inflation is doing I think the dollar will continue to be a sell so let's see what happens with the dollar index and games use that as confluence moving on to the dollar yen and the dollar yen last couple of weeks we did have you know set off from this supply zone right here we do have lower highs and lower lows being made so we do have another supply zone there and again understanding which one you want to be a buyer of I think with the dollar yen in a risk of more on sentiment because of global growth and the vaccine I think if any pullbacks to this demand zone with some potential dollar strength I think it's really a decent trade I think right now you'd have to kind of wait for if you're a buyer of this currency but you'd have to wait for price to kind of go above that zone or into that supply zone pull back to a demand zone and then look for some long trades if you're looking to get short on the dollar and buy the Japanese yen then this zone here is okay I think the I think the higher zone is probably the better area and even fresher zone right at the top here is probably the most desirable the 105 I think is is a really nice area to look for potential short trades and again you'd be buying the Japanese yen in a risk off environment or risk off sentiment so that's the analysis dollar Swiss dollar Swiss so again we're contained between you know this high which is going to be 0.895 and 0.87 so I think again if I'm long going to be long dollar I actually do like this area here and especially like this area here I think the Swiss Frank will devalue especially against the dollar I don't think the dollar is really going to go down that much against if it does go down not really that further against the against the Swiss Frank so again understanding where we are in a ranging market environment taking the high to the low so an expensive area to a bargain area we are at fair value so I think that is probably the first chance we probably have of getting long if you want to get long there if you're waiting for a bit more of a bargain then if prices do come down here personally I do like that for a buy trade of the dollar but again it really just depends on you know what GDP does this week you think GDP is going to be better than expected then that is definitely a buy trade from now and I'm going to draw the supply zone from there moving on to the dollar CAD again dollar CAD from last week we've got we're in again a bit of a range at the moment in fact what I'll do is move that and that moves to there that's where supply is not the strongest area of supply even though we've made lower lows there but now you have to again understand zooming out bigger picture where are we do you really want to get short at you know market lows or do you want to wait for a bit more of a bargain I think this 128 to 129 12850 to 129 is a really good zone to look for any kind of short trades if prices can get up here I'm not really too keen on this zone here the level's been touched once twice is okay but I think fresher areas of supply or demand are really where we should be looking I think the Canadian dollars probably due a bit of a pullback I think overall long-term forecasts do say a lower Canadian dollar sorry a lower dollar against the Canadian dollar exchange rate but I think I would really want to be a buyer of the or buy of the CAD and shorter of the dollar around these areas here or start looking anyway so that's that if we are looking for any kind of demand zones and a buy trade I would probably say this lower zone is decent for a potential buy not the best really want again prices to approve that there is strong demand here and then wait for a pullback and then look for any kind of long trades for now intraday wise I guess it's okay but I wouldn't I'm not really convinced that there is really strong demand right now for the dollar against the Canadian dollar New Zealand dollar US dollar so again there was a nice trade around here prices came in again when you see something like this just when you see prices come into the daily zone just go down to the lower time frames look for an entry whether it's a pin bar an engulfing candle whatever your entry is you know to look for and then that's where you get the best you know risk reward type trades so we use daily zones but we actually go down into the intraday charts to to look for entries so nice entry there moved up about 100 or so pips so that was there about 120 pips that was nice this week if you managed to get involved in that now again we're kind of middle of the road where do you want to be a buyer or a seller personally you'd have to really believe that the dollar is going to get stronger the US dollar if you do believe this week and there is positive news and that is actually a really nice trade if not I think the highs are really really nice for a potential sell I do like this if you want to be a continuation trader I guess a trained trader and looking for buy trades again whatever prices are really kind of pulled back into probably a fresher area of demand or the top area of this demand and then look for any kind of buy trades in a risk on environment commodity currencies tend to do well but again it depends on what happens with the dollar this week when it comes to GDP moving on to pound dollar pound dollar not greatest chart in the world massive demand zones here in the way that we draw them but if you do have large demand zones then what you want to do is break them up with support and resistance zones within these within these areas so that's where you would look for the best areas of support and resistance within areas of demand if you want to be a buyer of the of the pound against the dollar to me this pair I don't really like this pair fundamentally so I'm kind of staying out of this but if you do want to be a buyer of the pound then it's literally again pull backs into a demand zone probably down into this one three five round number you can also go down into a lower time frame and look for get some more accuracy so you can I can see actually where you've got a nice area of support there so you've got support support support resistance support so there's going to be confluence of support and demand within this overall higher time frame demand zone so that's pretty much one way that we kind of break down these zones we've got lots of other confluences that we use this is pretty much you know the just the basics of understanding where the strongest areas of supply and demand are and we just use one of the confluences we use our horizontal support so going back to the daily I still do think that we are buying in quite a high area I would really probably look for if I was looking for a range I'd probably say if it can come down to this one three four area you know that fair value zone that would be actually quite nice for a potential buy so then we've also got another area to look for fair value because really the move started this move to a higher high on a higher time frame started from here and we're here at the moment so if you get a decent pullback into fair value that's quite nice as well so decent areas to look for pullbacks buying at highs isn't really advisable but um but yeah let's see what happens and again if you're looking to sell the dollar also actually buy the dollar and sell the the pound there's really no major areas of supply and if there are it's back in 2018 so I don't really like looking at those zones from you know back in the day I would probably wait for price to prove that there is supply here and then wait for a pullback into a supply zone and then that would be the the play really so at the moment no supply zones or major supply zones for the for the to buy the US dollar moving on to the euro dollar euro dollar did get involved in this earlier this week um so trades worked out uh quite nicely um so nice fresh area of demand prices came back down into this zone um we had an extreme trade um in in the group so uh and a signal so um and I ended up getting involved in this trade and making a little bit so far and seeing what's happening um on the lower time frame but uh if you do want to get involved in the uh in this trade uh from a buying perspective then we do have higher highs and higher lows being made so I can probably drag that to there and there now and if you want put a pullback not the strongest area of demand to be fair but it's a decent zone especially maybe on an intraday if you looked at the intraday one hour you can see pretty much where you know the 1.206 would be and 1.208 would be probably the area to look for any kind of long trades um from a selling perspective I think this zone is actually quite decent looking at where the high to the low is coming up to fair value so if there is again some positive news around US GDP um then this actually would be quite a nice sell that should be a very nice sell um so uh decent because then the US dollar would probably be more on the front foot to be fair um and it depending again I think we'd have to really wait for then the european GDP to come out in order to kind of stem maybe the to continue downtrend if that comes out positive then obviously you probably will not get more of a downtrend but um again in the short term I really do like this this zone this one two nine area around here so this could actually be if prices do come down to this zone here I think this is really nice for a potential buy trade um I think I did a video on this or maybe it's in the private members group but um I might post it in on YouTube for the public it depends um yeah so I think this zone is okay for now again if you do get positive news for the US dollar then I think you will get a definitely a reversal around here best area though I think for a short trade is going to be up at the highs I do like that area there for a short trade moving on to the euro yen and the euro yen um we have a really nice trade that occurred it was a it was a cpr zone it wasn't anything to do with necessarily daily demands but um really nice cpr level here which actually worked out for the group um so that means a good couple of maybe about 150 pips or so so um we're back up to this area here and again I think if you really want to be a buyer of the yen then that's a very nice short trade technically um but again fundamentals and risk sentiment really the reasons why prices will move so um if you're looking at buying the yen you have to really kind of understand that you're buying a risk off currency overall I think the the the euro should appreciate against the yen so any kind of pull backs into these zones will be decent buying opportunities but this is your first selling opportunity and I think the high is really a nice technical selling opportunity if you're looking to buy the Japanese yen so again if prices come up here and then you get more risk off sentiment then that would be actually a decent uh self trade moving on to the Australian dollar US dollar and the Australian dollars US dollars we can see has been in this massive uptrend risk on sentiment growth etc I think now is probably a time where we're entering into a bit of a ranging market and this could again start to reverse and pull back deeper we need a deep pull back because you really can't have prices have these shallow pull backs yeah and not have a deeper retracement so we are at the highs don't really want to be buying at the highs overall this level's been touched once twice already so I think if the dollar does start to strengthen I think that level's probably going to go and then we're down into maybe the 75 76 is 75 for a potential buy trade and I do like the lower end this 75 area for a potential buy I do like that so but if you do want to be a again a buyer of the US dollar and in anticipation of a potential good number for GDP and some positive news then I think now is probably the time to look for short trades and you'd have to have your stop if you're having a wider stop above there if you're entering intraday you know so in the lower time frame let's say the four hour then you just have to be prepared to enter a couple of times maybe potentially have your stop loss around here potentially if you get stopped out there then just enter a few times because if you've got enough downside potential let's say for example you've got a nice you know eight to one nine to one type trade yeah if you lose a couple of trades but your potential downside if you're right about it it doesn't matter if you lose a couple of times you know because you've made up for it on your risk reward so decent risk reward here we are we are at the highs of the of the daily time frame chart as well so lots of downside potential to be fair I do like that from a risk reward perspective but overall my long-term bias medium to long-term biases to buy the Australian dollar so you have to make a decision of whether you want to be a buyer of the dollar and then buy me of the US dollar and then be a buyer of the Australian dollar me personally it's it's just a lot more easier and simpler to just pick a direction pick a a currency fundamentally understanding its overall strength from a medium to long-term perspective and then wait for pullbacks into those zones rather than trying to you know take every single trade and every single every single supply or demand zone moving on to the Australian dollar Japanese yen and again a measure of risk sentiment you can see that we've been in really a risk some risk on sentiment and you can see the Australian dollar the commodity currency is the one to buy prices didn't quite come down into this into this demand zone here unfortunately if it does come down into that and you into that zone at 9 79 47 and beyond then that's a decent area to look for any kind of buy trades I would say probably the better area would be where you've got some support and resistance confluence so just around there if it gets a deeper pullback that's quite nice and again just be aware that you are buying at market so as long as the upside potential is worth it then it's worth a trade but a deeper pullback is probably more preferable if you are looking to buy the Japanese yen based off of some sort of risk off sentiment that may be coming into the market and as well I would probably say you really need to see if you want to buy the Japanese yen and really confirm risk off sentiment you want to see the stock market really falling as well so not just a pullback you want to see the narrative of why the stock market you know is you know is is kind of crashing and don't like to use extreme language like crashing but if the if the negative sentiment around the stock market bubble pop in etc then money would tend to flow into safe haven assets like the Japanese yen after the stock market that's so we have to also watch so what the stock market is doing in order to really trade the the Japanese yen or the Australian dollar and finally moving on to gold and gold this week traders were thinking a bit got a bit stop hunted here and I say I've got a bit they did get stop hunted here I did a video in the private members group there was a nice stop hunt which we couldn't really take advantage of because the time that happened in the evening was was I think it was like 10 o'clock I think if I go down to the lower time frame yeah so that was there was the stop hunt right there that was it 11 o'clock in the evening so you know loads of trades would have had desktops below that level there so that we could have taken advantage of that but it's just the time at evening that it happened couldn't take advantage of that but that does create us I guess present another trading opportunity for us in order to get long which again I share with my private members group with prices come down here and as the traders know this creates something called a capture pain belief zone so if prices do come down here this would be really nice for a buy trade not financial advice of course none of this is financial advice gold for me is still a buy there are I guess what they would call headwinds because of potential dollar strength if the dollar starts to grow and I say dollars also grow GDP starts to grow then again there's probably going to be some short-term negative sentiment around the around gold but you have to also understand that if inflation is rising yeah which basically inflation is is devaluation or depreciation of a currency and it starts to get out of hand then gold will benefit from that so if it starts to overshoot that 2 percent or that 3 percent etc then gold is still a buy and remember that there has been trillions of dollars of money you know currency printing money printing devaluation going on and that is going to feed its way into the market at some point fundamentally so you know you've just had Joe Biden's you know I think he said something 1.9 trillion dollar stimulus or something like that so it's it's crazy we're going into the trillions now before when I remember when the billion was like wow a billion now it's like a billion is is is nothing it's like a trillion dollars you know I mean it's crazy the amount of money that's being flooded into the market and gold benefits either way right from inflation or a I guess uncertainty around you know the economy so gold again maybe short-term potential pullbacks but just look at this as long-term buyers if you can get a nice buy there especially down into this 70 I'm sorry 1786 really really nice buying opportunity around there from a selling opportunity I don't think there's anything right now until prices really come down prove that there's supply here and then a pullback into that zone that would be where you'd look for any kind of short trades other than that you're looking for probably a sell around the 1942 1965 area all right guys so that's it for this week don't forget to like subscribe please like definitely subscribe as well share with your fellow colleagues leave a comment thank you as well to all of the the comments the constructive criticisms even the you know the haters out there that don't like the way that I I trade is so good you know I mean everyone has their own opinions and you know peace and blessings to you all take care have a great week and please stay safe and take care