 Hi, my name's Leon Rowe, Covenancy Trader and Trading Coach at Trading180.com and welcome to this week's supply and demand forex and gold fundamental and technical analysis. If you are new, first time watcher to this video, a warm welcome to you and if you're returning an equally warm welcome to you and don't forget to like, subscribe and share with your fellow trading colleagues if you find my YouTube videos of use every week and it really does help the YouTube algorithm get the video out there and it's a free way to support the channel and the quality content. So unlike many other channels, I apply fundamentals and technicals so we apply fundamental analysis to establish really our directional bias and the market and the big banks of financial institutions use fundamental analysis regardless of what is purported and purported out on general YouTube and Facebook and Instagram channels, it's all about the fundamentals first and then we apply technical analysis to time our trade entries, established profit targets and risk management and in this video I'm actually going to show you pretty much proof of that concept. Anyways, let's get into the weekly week ahead, I should say. So let's zoom in a little bit. So flash PMI surveys for the US, UK, Eurozone, Japan and Australia will offer a first look at the state of the global economy in June with investors paying close attention to any signs of a persistent surge in price pressures. There are some price pressures inflation coming in. So also central banks in the UK, China will be deciding on the course of monetary policy that's always important because really the central banks, their monetary policy decides on really the valuation or how the market values a currency. So other important releases include US final first quarter GDP and I was saying to the guys in my private discord group is that the first quarter data of what a final first quarter data isn't really that important in a sense. It's not really a market mover because what's already known has been known. The one that you really want to focus on is the advanced quarter two. So the first quarter because there are three reports. There's the advance, which is the first one, the preliminary, the second, second estimate and then there's the final. It's the first advanced first quarter data or second quarter data that you really want to pay attention to that is the market mover. But the final one, pretty much what's known is known, durable goods, orders and PCE data, Canada and Mexico retail sales, UK and EU consumer morale and Australia retail sales. So decent week, nothing really too major apart from really understanding I guess the monetary policy, which is probably already known by now or the rumor unless the central banks really have a surprise in their pocket like what the Federal Reserve did earlier in the week. Pretty much what's known is known. So let's get into the technicals now and looking at the dollar index and the dollar this week has literally just gone through the roof and this is really because the Federal Reserve really surprised the market with more of their hawkish view talking about rate hikes. And if you don't know rate hikes will tend to have or the effect of a potential rate hike again buying the rumor will have the effect on currencies of really strengthening a currency. So the market has to revalue the currency for example the dollar in this case and really kind of price in what they think the value of the dollar will be against other currencies if the Federal Reserve do start to hike rates and the reason why they are hiking rates is because of pretty much runaway inflation at the moment. I think inflation for the US is about 5% so it's above their 2% target not too sure what's going on with their federal average inflation target but it's definitely a problem. And so the synopsis of this is one monetary policy was unchanged. The new Federal Reserve forecast signals officials are not so confident in their transitionary inflation narrative. They basically were signaling that inflation was temporary but now they've had to actually talk it down. It's called jaw boning. So they're really trying to influence rather than having to cut rates also say hike rates. They're actually talking it talking it up which is which is an actual thing central banks will do. They will talk the currency up or down without actually maybe having to not hike interest rates or cut interest rates first. So that's what they've pretty much done. With growth also revised up the Fed are now indicating we should be braced for 50 basis points of rate hikes in 2023 with the prospect of an earlier QE taper that potentially has an earlier conclusion. So again took the market really by surprise. And so on the Wednesday this is pretty much what you saw the market now is pricing in fundamentals right because it's all about fundamentals first and risk sentiment and then you know to choose our direction. So the Federal Reserve caught the market offside and you've seen you know this move here. So many traders will say well why didn't this technical analysis work? Why didn't this supply zone work? Why didn't this supply zone work? Why did price go through the supply zone? Your technical strategy doesn't work. It's not about technical strategy solely. We have to be on the right side of the market or attempt to be on the right side of the market by understanding the fundamentals and where the market where the smart money is pricing and putting their money in and they don't do it via technicals. They do it by fundamentals and then they enter using technical analysis to establish their risk right risk award. So we know now that the dollar hawkish bias yeah there's no technical analysis level that's going to stand in the way of fundamental analysis. So now what we want to get long unfortunately there are no really demand zones and this price has really come all the way down here or they established higher highs and higher lows right. So you've got to wait for a pullback then a move higher that then becomes a new demand zone and then you're looking at a pullback into that zone and we're not necessarily trading the dollar index. Dollar index is just a measure of dollar strength against major currencies but we look for the dollar index as confluence right. So if you see a bullish price action on the dollar index then you go to one of the dollar crosses to look for obviously some bullish dollar price action on that and then again look for the confluences but if you do think that prices should want to turn around at some point and you want to get short then this really is the zone again I'm not really I don't really understand why you'd want to do that other than just following a simple technical strategy which is quite basic and it's how traders really kind of lose money because the path of least resistance is to the upside regardless of whether this pulls back or not it's more about dollar buying and at least in the short term anyway. So looking for some zones again nothing really on the as far as confluence on the dollar index when it comes to demand zones so yeah we just have to wait for something if we are using that as confluence don't necessarily have to but it is obviously a confluence booster. Now moving on to the dollar yen again with dollar yen we did get a bit of a pullback matter of fact at this area probably some profit taking going on but again the path of least resistance is to the upside so again we've come down into this zone zoom down again what we tend to do in the group is zoom down into lower time frames to look for entries but if this zone doesn't work out if prices do pull back a bit deeper because again with the banks they don't necessarily want to buy at highs they want to buy for cheap so even though there is a you know hawkish bias a bullish bias it's not surprising to see prices pull back a bit more down to a more favorable demand zone before going higher because at the moment there's lots of traders going long right so if there's not enough liquidity to the upside meaning that if there's not enough sellers there's not enough people selling the dollar in order to facilitate buying because you need enough sellers if everyone wants to buy there's not enough sellers above the market there needs to be sellers below the market and that's where the that's where price will seek it's called liquidity hunting this is where what the market will do to seek out and trigger sellers so that they can facilitate buying so if it's here cool if it doesn't if prices still continue to go lower then you're looking at a better buying opportunity why buy a you know 110 when you can buy a 10940 for example exchange rates do matter but if you do see some sort of risk off environment coming to come into the market and the the yen is more of a risk off currency meaning that there's fear uncertainty in the market then you should see a move to a sustained move to the downside but for now I do think that this is probably just more profit taking than anything at the at the highs and then we should probably continue going higher within the next weeks and months again considering that the market believes that there are going to be where the Fed is going to continue on their hawkish bias and potentially raise interest rates because the market may not believe the Fed right the market has to believe the Fed because the market is where the money is who really pushes prices higher or lower dollar Swiss dollar Swiss I was really considering getting long I was saying to the guys in the group around here but I was kind of waiting for a bit of a catalyst I didn't really get into this trade but I know some of the traders that did in the group are really well done to them for holding on we've got again supply zones being taken out new demand because new information in the markets and now we've got demand zone here in fact I'm going to delete that pull this probably down here no in fact that's not it there and then that's where demand zone is there so again just like the dollar index unfortunately there's really no daily demand zones until we come all the down to the 90 cent level and I don't know whether we're going to do that anytime soon so again the only other thing to do is to look for a bearish day or a couple of bearish days and the break higher and the move comes back to that demand zone because demand zones are higher highs and higher lows and supply zones are lower highs and lower lows so that's really what you have to look for sometimes you have to wait for the price to create the zone it's not forced trades sometimes we have to wait on price to tell us where demand is if prices won't pull back to where we potentially want it looking at supply zones I think at the moment we do have a decent technical supply zone but again why would you really want to buy the Swiss franc here yes we have had really kind of bullish price action and there probably will be maybe some sort of profit taking going on at some point but that's not where really the kind of smart trade because it's not really trying to buy value trying to buy bargain prices and supply and demand what you don't know is really where previous value was so this was previous value for the Swiss franc because it was because prices went to the downside this was actually seen as a bargain area for the Swiss franc the question is why is this at this point in time considering the fundamentals and the sentiment why is this now a bargain for the Swiss franc against the dollar and the dollar has just announced that they are potentially hiking rates in the next couple of years and the Swiss franc for example are nowhere near hiking rates so even though there is profit taking here and even though you might see a sell-off is that really the smart move and this is where traders go wrong constantly in the market I see them just taking random trades and technical trades not understanding that technical analysis isn't what drives prices anyways it's up to you of course make your own decisions and good luck but for me I've got a long bias on the dollar for now dollar CAD again really similar to a lot of the other dollar pairs and you're going to see that where again no supply zones really were going to where prices weren't seen as a bargain prices were definitely now seen as a bargain down here for the dollar so again looking for pullbacks although I do believe that the CAD is one of the stronger currencies so if I was looking for any kind of short trades on the dollar the CAD would be probably one of the pairs that I would look for it it's not the best trade in the world and in fact I'm not even interested in trading going short on the dollar even if I think I'm a buyer I am actually a buyer of the CAD there are easier trades to trade the CAD against or easier currencies I should say to trade the Canadian dollar against and the US dollar definitely isn't one of them so if you are looking for short trades there's one if you're looking for long trades again similar to in fact exactly the same as the dollar Swiss and dollar yen you really have to wait for higher lows and higher highs to establish and then look for any kind of buy trades in and around those areas for now because I highly doubt that prices are going to come back down to this one to one 50 area anytime soon New Zealand dollar US dollar again selling off and similar to the CAD I think it's one of the stronger currencies when it comes to currency appreciation yes the dollar has strengthened but I do believe that if prices are going to turn around then I think this zone for the Australia sorry for the New Zealand dollar maybe one of them also as well I think there might be a bit of confluence within this area I think we've got some long term support and resistance there decent potentially right now for a potential reversal but again if you're buying the New Zealand dollar which you are if you're going long is the US dollar the one you want to buy it against and for me not really there are definitely better trades out there weaker currencies and we've got some supply right here so yeah but this is a decent opportunity for some potential long trades and again if you're looking for any kind of short trades pull back to that zone there before looking at getting short pound dollar sold off this week just like all other currency pairs and against the dollar anyway and we are seeing a we're probably going to see some potential continue downside we do have supply I think it's hidden demand sorry hidden supply yes it is and again you're looking for a pullback into a zone to the underside of that zone you're looking at getting short if you're looking for any kind of long trades buying the pound against the dollar then you're looking for any kind of buy trades pretty much now and with the UK going to some fundamental analysis UK inflation also jumps above the Bank of England's goal and heats up debate on prices so the UK's inflation surged unexpectedly past the Bank of England's target for the first time in almost two years is lifting the pound and adding to speculation about when monetary policy could be tightened tightening is just another word for a hike in rates so the central bank target is 2% and consumer prices rose 2.1% from a year earlier the highest since July 2019 and economists and the Bank of England had expected an increase of 1.8 so it's more than expected correlation jumped to 2% since August 2018 so what that does is that puts pressure on the also puts pressure on the Bank of England to potentially have to do something about rates right what you're going to do about rates you're going to hold are you going to hike rates continue to hold if they hold rates then you're probably going to see the dollar continue to strengthen but if the pound and the Bank of England decide that they want to also be quite hawkish against we'll say hawkish against the dollar but just hawkish in general and start to talk about raising rates potentially right then you probably will see some sort of ranging market because you have two currencies that are potentially hiking rates so it's more of an even fight when you have an uneven fight for example when prices one central bank is hiking rates another is potentially either holding or potentially cutting rates that's when you see a trending market that's where you see you know markets even trend to the downside or trend to the upside because you're it's strong versus a weak currency when you have two currencies that are both strong or both weak the market has to establish a bit of a value range because I don't know where really the market should price in a price discovery in a sense so that's where you get a ranging market so we could potentially on Thursday I think it's Thursday Tuesday one of those days where the Bank of England are making their speech making their announcements potentially we could see some more upside somewhere around who knows really but depends on how far prices go before the actual speech and sentiment from the Bank of England but again is the British pound is the dollar really the the currency or the is the US dollar the currency to buy the British pound against or for I would say probably know there are definitely easier trades out there so the pound dollar for me isn't necessarily a fantastic trade at all because you've got two strong currencies I look for this this is my ultimate scenario strong versus weak currencies and that's what you should really be looking for euro dollar euro dollar again euro not not not surprising that none of these demand zones there was no value found in these demand zones because there's been a massive shift but what we do have in fact I should keep that one there yeah because we're in that but what we do have technically as prices have come down to a decent zone and if you still want to be a buyer of the euro then this is probably your chance or probably the low of the range as you can see it was in April we did have a really strong you know demand zone prices went quite a lot higher from there moved a good you know few hundred pips so this potentially may be the limit of the move this the 17 1.1750 area could be the limit of this move fundamentally though we do have the Fed spurs Goldman and Deutsche Bank to abandon the bullish view on the euro so euro sinks as much as 1.1% the biggest euro drop since April 2020 and Goldman says hawkish Fed and tapering debate are headwinds so Federal Reserve hawkish turn prompted both Goldman Sachs Group, Inc and Deutsche Bank AG to abandon their calls that the euro will rally against the dollar so again they're making their decisions based off of again fundamental analysis and monetary policy yeah so the smart money the big money have abandoned it for now again not necessarily it's not permanent not set in stone but until the the euro really start to and the ECB start to become probably more hawkish it's probably short all the way so again if we need to look for short trades you're looking for lower highs and lower lows then a pullback into what would be called a supply zone before looking at getting short that's really how this works but if you do want to get long on the on the euro dollar for whatever reason then you know pretty much now and the 1.175 area or the zone is where you'll probably be looking for and if you do want to take your supply and demand trading and fundamental analysis to the next level I really highly suggest that you check out the supply and demand course that enrollment starts in the next 15 days July the 5th 2021 it will be for a limited time only I only really have enough time to kind of mentor a limited number of students and again you get access to our fundamental analysis spreadsheet where we look at really the best pairs based off of our economic data and fundamental analysis so if you do want to be a member of our group our discord group definitely check this out on the 5th of July and again it will be open for a limited time only probably maybe about a week or two depending on how I feel about it and how much people we actually get and then I will close it for the foreseeable future so let's get back to the charts fundamentals and moving on to the euro yen I am pretty bullish but I do have a long bias on this and what's really happened so far is that the euro has sold off due to dollar strength they kind of work in opposition so it's taken out a few demand zones I do think the yen is probably the worst the dog with the most fleas and we want to trade with the dog with the least fleas so I do think that this is just a nice really nice pullback into a zone that I probably want to get long on soon but it depends on really what happens in fact that's really the way the supply zone starts so let's see what happens at the moment when a bit of no man's land but let's see what happens if price can come out at 130 level and establish potential buyers if there is some risk off right so risk off sentiment does come into the market then the yen will want to strengthen but let's see what happens you know at this zone again if you do want to get short you are looking for a pullback all the way up to there or you are looking for lower highs and lower lows and then a pullback into that lower high moving on to the Aussie Australian dollar US dollar and there is a kind of pullback to around this zone here quite a wide zone you might say which is fine in fact I'll draw it from around here yet so again understanding that the Federal Reserve has literally caused a bit of caught a lot of traders offside taking out a lot of stops I do think that the market will establish some sort of buyers as well because again the Australian dollar is probably one of the better currencies so although I am again bullish on the Australian dollar I wouldn't necessarily and it's not financial advice to look for a buyer of the Australian dollar against the US dollar because there is quite hawkish sentiment but if you do then this is a decent zone to get look for long trades and then we also have demand zone further down with some also some resistance turn potentially support confluence around here so that the 74 area could be where prices start to turn around technically because again the market is just establishing where value potentially is and where potential range will be markets won't really fall forever and again it depends on whether they believe the Fed and what happens with inflation moving on to the Aussie yen which I am bullish on and we did get a bit of a sell off which is a bit surprising but welcomed I do like this because it allows me to start to want to buy the Australian dollar for cheaper so let's see what happens in and around these zones we do have a bit of a support and resistance area within that wide supply and demand zone so we're just heading down into that now which is decent and we do have I think a lower some lower levels as well just in case so those are the two zones that I would be interested in again in a risk on environment you should have the Australian dollar should strengthen and the Japanese yen should weaken so I'm not really scared of kind of put off and you know when traders say don't attempt to catch a falling knife I consistently attempt to and so if I do see an entry trigger on the lower time frames I will be looking for you know to establish some long trades as long as the narrative stays the same so the Australian dollar is the one to buy and the Japanese yen is a sell also as well if you do want to be a seller again you're looking for really a massive pull back into that zone there or again lower highs and lower lows to take place and then get involved in the lower high and finally gold and gold selling off and this is really due to the the Fed so gold heads for its biggest weekly loss in more than years a spot billion heads for biggest weekly loss in 15 months gold may struggle to recover quickly commerce banks so gold traded little change headed for a weekly drop after regional Federal Reserve president said high inflation may call for the US central bank to tighten its monetary policy this year so really I've been saying this for the past few weeks and months matter of fact that gold is rallying due to inflation concerns this is the reason why you saw this happen here because inflation was going higher and gold is a hedge against inflation now the Federal Reserve are looking to hike interest rates to keep a lid on inflation so if they're looking to keep a lid on inflation and they're successful with it then gold that inflation trade may potentially have on its course and it's obviously going to be profit taking as well anyone who got involved anywhere around here anywhere around here anywhere around these demand zones right to the upside the best thing to do after the Fed come out and say that their hiking rates to potentially put a lid on inflation is to do what take profit so there's lots of selling going on there's lots of trade is going short as well based off of you know what they see is the potential inflation trade being temporarily over and this is the reason why you're seeing this you know it's massive move on gold it's not because there was you know some sort of Bollinger Band or Pivot Point or Elliott Wave you know Wave 2, 5, ABC nonsense it's all to do with fundamental analysis and what monetary policy does to asset classes so again we're in the demand zone but again the question is if you're looking for a buy is do you think that the that gold is a bargain right at this area if you do right if you do think it's a bargain and it's cheap price for gold then look for a long long long trade for me I'm in the short term anyway I'm probably more bullish on the dollar because of more sentiment driven but and so what that means is that I'm not looking for any kind of long gold trades any pull backs to any levels you might not get anything on the daily but maybe some intraday CPR zones for those that know about CPR trades and stop hunts will definitely be able to take advantage of any kind of intraday trades that potentially happen that are not necessarily in confluence with supply or demand zones now I think we're in this range at the moment prices are ranging between this high and this low so I do think that gold prices if if the dollar continues to strengthen then we should see prices really kind of come down to this area here and even maybe even past that maybe the 1650s and the 1600 levels again just depending on how the dollar how much the dollar does strengthen and whether again the market believes that the Federal Reserve will high crates you have to keep your eye on GDP right GDP is another major macroeconomic indicator as well as you know jobs and CPI right that's really where we look towards to understand what the Federal Reserve and central banks will do in general anyways guys that brings us to the end of the week hope you enjoyed the analysis until the next video take care and speak to you soon