 Hi, my name's Leon Rowe, currency trader and trading coach at Trading180.com. Welcome to this week's Forex and Gold Supply and Demand Fundamental and Technical Analysis for the week ahead, starting the 15th of January. If you are a new watcher, a warm welcome to you and if you're returning, an equally warm welcome to you. And if you do find the weekly analysis videos that I record and post every Sunday useful, please don't forget to like, subscribe and share the content with your fellow trading colleagues. So getting into the week ahead, the 15th of January, it says from TradingEconomics.com In the United States, the eyes will be on retail sales, Michigan consumer confidence and export import prices. Housing indicators such as building permits, housing starts and existing home sales will also be closely watched along with speeches from various Fed officials. Overseas China will take centre stage unveiling crucial data including Qt for GDP growth, retail sales, industrial production, unemployment rate and the house price index. Meanwhile, the global economic picture will be painted by inflation rates and retail sales in the UK and Canada. That would be important. The Germany, sorry, Germany will contribute insights into the ZEW Economic sentiment index and Japan will release inflation figures. Finally, in the Euro area, investors will monitor ECB, European Central Bank, President Nogard's speeches and balance of trade and industrial production. And so, yeah, we've got quite a lot of news coming up this week and I just want to also say a warm welcome to all of the new starters in the Trading 180 Discord group mentoring area. And by the way, there is a more detailed fundamental and technical analysis of members only one. If you go to the Discord group right here, if you click on the trading videos, there's a link in there with a password and it will take you to this site right here and you will have access to the members only weekly and fundamental analysis. These videos around two hours long, as well as the weeks videos as well with trade setups, group call as well, the live group call recording that we had on Wednesday and other important information that I don't typically share on YouTube. So let's get into the week's technicals and some fundamentals now. Many of you may have seen or if you haven't seen that I produced a video called the Equally Weighted Currency Index and so if you go to my YouTube page, Trading180.com and you click on here Forex Strategy using Equally Weighted Index to identify the best forex trade setups and pairs, you will get the calculation as to how to and why I'm now using the Equally Weighted Dollar Index rather than the Dollar Index and really the kind of the cons to using the Dollar Index, the DXY over the pros of using the Equally Weighted Dollar Index and so this Equally Weighted Dollar Index, something I've been using for a while, I just haven't necessarily shared it with YouTube and publicly but I thought this year I might just share it publicly also as well that Equally Weighted Video will show you how to get the Equally Weighted Index for not only the dollar but also every other currency in terms of the major currencies, the euro, the pound, the yen, the Australian dollar, Canadian dollar etc. So yeah here we are with the Equally Weighted Dollar Index and looking at the dollar overall from a technical analysis perspective and zooming in what we see really is a supply zone right here, supply and prices really come up to here now fundamentally the dollar is it's got some mixed data right it's got some mixed data and it talks about US inflation picking up signalling bumpy path for the Fed so on Wednesday we had consumer price index advanced 3.4% the most in three months and underlying inflation measures watched by a Fed remained firm so there was a lot of headline inflation that came out was actually supportive of Fed rate holds for a bit longer so we're in the cutting end of the cycle and in terms of the interest rate cycle and the interest rate cycle depending on how soon the Federal Reserve and other central banks are going to cut rates and cutting rates actually devalues the currency will depend upon what happens with inflation and gross domestic products and so if inflation is coming in lower than expected or is disinflation and coming in lower below there to their 2% target and lower then it means that the Federal Reserve are likely to cut sooner so if it remains sticky as they say or doesn't necessarily come down as fast as expected then the Federal Reserve are likely to hold rates for longer and also again going back to my YouTube channel I basically explain this in a couple of videos one being the forex fundamentals webinar and it's called use macro economic cycles to understand news for swing traders and I also have another one somewhere I can't remember if it's here here is a forex trading webinar use leading and lagging interest rates to predict big trends so if you also have a look at those two videos on the YouTube channel and that will really kind of explain things a lot clearer so we had on Wednesday CPI come in and pretty much the analysts were basically saying that the the Federal Reserve may actually start to will continue to kind of hold rates for a bit longer but then on Friday we had another inflation measure which was a producer prices index and that ended up falling so that ended up boosting bets on Fed rate cuts and so because the PPI declined for a third month in December the longest since 2020 basically rate cut bets were back on so we can see that actually reflected in the Fed watch tool so this is a CME Fed watch tool and if you go to March 2024 this is the expectation and the probabilities of a rate cut or a rate hold in March in the market has actually increased its bets on a rate ease to 81% in in March whereas you know one week ago it was around 64% right and so the market is the market getting ahead of itself who knows but let's see what happens but if if the Fed do end up cutting in March that is actually going to be priced in so there could be the potential for the the dollar to actually sell off but also as well there are things that are supporting the dollar one of them being seasonality so this is a chart where it shows the seasonal performance of the euro dollar since 1999 and typically within the week two to week nine of of the years the dollar actually or the euro dollar gets weaker or devalues in exchange rate which means that the dollar actually gets stronger and so there are reasons for that but that is one of the measures also supporting the the dollar and also as well if the market is wrong about the the rate cuts and the chances of a probability of a rate cut in March they say they have to reprice and say some good data comes out for the dollar then in fact the dollar should increase in value and I do think that the dollar you can find reasons to buy the dollar or sell the dollar my bias is still actually to continue to to buy the dollar on a pullback I understand there's definitely some short send a short term sentiment which could push the dollar lower this week depending on what happens with other currency pairs as well but if the dollar does come down to this demand zone and the data supports that then I would be a buyer or if prices push higher then pull back into a newly created demand zone then that's really where my bias is but I definitely will understand if you know traders out there who are watching this video disagree with my analysis and want to take short trades because there's also very strong cases for taking shorts on the dollar also as well one of the things you have to be aware of is risk sentiment risk sentiment is another thing that kind of supports the dollar in a risk-off environment the the US dollar does tend to strengthen and one of the major risk events right now that is taking place is that global inflation it says here it was about to be tamed now Red Sea Attacks fan revival fears so there was a US and UK led airstrikes responding to Houthi attacks on ships and pandemic price surge was on verge of being tamed in 2024 so long and short of it is is that due to the attacks and the tensions in the in the Red Sea area inflation could actually start to rise again and actually global growth could also stall a little bit which means a risk-off environment which also helps actually support the dollar in potentially a short term now it depends on how things do escalate so if prices do come down and in terms for the dollar index and you know the the attacks are still escalating and dollar and prices come down then that could be a decent buying opportunity in terms of buying the dollar in a risk-off environment so that's where we are in terms of the dollar you can look for buy and buy or sell trades either way I think is valid but overall my bias is slightly more still to the to the upside or any dollar long so I'm looking for pullbacks on that moving to the dollar yen in the dollar yen last week we did come up to this supply zone there was a bit of disappointing news in terms of the Bank of Japan where the data doesn't support the narrative so the narrative is that the Bank of Japan are looking to high crates at some point the most likely month is April but now the Bank of Japan is considering lowering its forecast for growth inflation sources say so if this is you know indeed true then if they are lowering their their growth and inflation targets then that essentially means that the yen or the Bank of Japan are going to maybe hold rates for longer which then means a weaker yen so you're starting to see that play out on the with the dollar yen going slightly higher of course if this changes in the data does support the narrative that the Bank of Japan will cut sooner then you'll start to see the yen start to strengthen but I think in the short term you could see prices go a bit higher and again that also depends upon what happens with the dollar data right but if you are looking at buying then you do have a demand zone there so any pullbacks into this zone are long trades if you want to get long if you're looking for short trades then maybe a pullback into this area of supply or just slightly higher as you've got a decent area of support and resistance within that large area of supply looking at the dollar CAD and my bias would be to go long on this you can see really from last week that we've had prices kind of grind a bit higher now I'm going to keep the level there but also what we do have is a level of demand in here so I think any pullbacks into this area here are going to be decent for a long trade and again any pullbacks down into the one three twos I think really where the path at least resistance should be I think the Canadian dollar are actually forecasted to cut rates at the same time actually as the US dollar so either way in a risk-off environment you would still think that the dollar should want to strengthen eventually over the medium to long term over the Canadian dollar so let's see what happens with that of course if you're looking to buy the CAD now is a decent time or if you wait for prices to move to the upside so maybe the one three sixes one three five fifties are just above that I think that's a decent level to look for some short trades also as well you do have horizontal resistance where the banks have been buying and selling right I make sense as a level and that's actually quite a nice technical level looking at the pound dollar and the pound had some decent news this week or last week and it's got some news coming up this week as well as you can see you know from trading you've got the unemployment rate you've also got and that's almost at the Tuesday yep so unemployment you've got inflation rate expected to actually come down a bit and also as well retail sales coming in at minus point five so that's not necessarily great for the economy but last week we did have some growth in the month-on-month GDP numbers it says here UK recession risk lingers despite rebound in November GDP so the December figures probably hit by strikes and whatever sputtering economy leaves a bleak backdrop for next election so although the UK saw a modest rebound in November although not enough to rule out the prospects of a technical recession for the second half of 2023 is the headline and so again going back to the pound I think there are opportunities this is more of a a trade where you can again look for either longs or shorts at the moment but I think if I'm looking at long trades it would have to be really down at these lows and if you're looking for I'd say long trades on the on the pound then it'll be really down at these lows just beyond there that's a bit of a very nice top hunt level if not down at these in this demand zone at the one three one two fives also as well right now you could see if the dollar does start to strengthen I think anywhere now is going to be quite nice for also a short I think there's definitely this week is going to be is going to determine whether the pound is uh overall buy or an overall sell I think if unemployment comes in higher as forecasted and inflation comes in lower or much lower than expected then that dollar and so that pound should want to sell off as the Bank of England then will start to or the market should start to price in rate cuts sooner so there's the pound dollar you've got the pound yen and again I was in the group we were looking at this as a potential for a stop hunt but due to the weaker yen there was no setup here in terms of there wasn't an entry so um yeah no one took that trade or no one should have taken that trade in terms of that being a stop hunt now we're in a bit of no man's land so um you're going to have to look for now uh supplies and a daily supply zone up at these highs if you are looking to get short and buy the yen now if you're looking to buy the pound then I think this level technically is really nice very nice demand zone so any pullbacks into this zone right I think are going to be it's going to be very nice technically but again it really does depend upon what happens uh this week with the uh with the pound also there is some yen news inflation rate as well I think that is going to be also key for um for the bank of Japan as if we get higher inflation then uh rate uh rate hikes will be back on the table or at least an increased probability of rate hikes coming sooner so that's where we are in terms of the the the pound uh yen on the pound dollar so this was a I guess an explanation from last week's trade which um I am actually out of now the guys know in the room uh know that I'm actually out of this trade it was a decent trade got in at one position two positions and um ended up closing the final trade my final target was actually down at these lows the reason why I um exited the trade that was when my target was I think it was the 108 30s um the reason why I exited exited the trade is because I really wanted the data to support my narrative in terms of short euro dollar I'm still bullish on on the dollar or more bullish on the dollar than I am on the euro but the uh the issue is was was kind of PPI so I've thought to myself let me um just take profit and maybe reassess if prices do come back up again what I'll do is I'll enter into this uh supply zone again or if we do have a low a low something like this right made then what I'll do is I wait for a pullback up into a uh a supply zone which would be around here and then look for a short trade something like this so either way I can try and get back in if the opportunity presents itself so um yeah took some profit took all of my profits matter of fact on that trade and looking at the uh European central bank it says here that Christine Lagarde says ECB to cut rates when short inflation is set for 2 percent um nothing new there pretty obvious but this is more what you would call jaw boning where central bankers are just basically you know talking up or talking down their currency and it says here that most officials see first cut around mid 2024 market says they reckon that it's going to be earlier and the inflation has fallen steeply in recent months and is near as 2 percent goal so um she's not saying anything new um she's reiterating um what what really central bank policy is and so um but that has kind of supported the euro at least in the short term um but let's see what happens if you are looking to be a buyer of the euro then your nearest demand zone is going to be around here and in fact there is a there is a bit of a demand zone there but it's not the strongest area of demand um I don't think in an in and around this area uh but you can always look for a uh a move back down if prices you know break past this supply zone oh actually I don't think that's even a supply zone yet but if it does make new higher highs then it pulls back down into this area here then that could be quite nice as well for a potential uh buy trade so yeah you can look out for that also as well there is a level of support and resistance within there which adds to some extra confluence within that demand zone so um yeah either way you look at it I think the uh there's some decent levels here but my bias would be more to look for short trades as I think that the market may be wrong um in terms of uh rate cuts but again I think the data uh out coming out of the US will either uh support that and if it does then I would change my mind on the dollar but if it doesn't if it continues to kind of you know support the dollar in terms of um pushbacks on rate cuts and when they're supposed to happen then I will be a buyer of the dollar looking at the euro yen euro yen this was actually quite a decent uh stop hunt that happened uh here but then again I think the data that came out uh for Japan and the weakness in the the yen push price is higher so um we can delete this now and actually look at this now to be some demand so there's demand here so if you do want to be a buyer of the euro right and by the way looking at the euro the euro is expected to go into a recession next in the next GDP quarter on quarter reading that's the expectation now if they do avoid a recession then I think in fact the euro could be a decent buy because I do think that the euro would have to be repriced but um if they continue if if the data comes out and they're in a recession then um then the euro for me there's no reason to really kind of buy the euro um in the short term anyway so any pullbacks decent buys or if you're looking to buy the yen right now you'd either have to wait for prices to come all the way up to the highs or for prices to make maybe break past that demand zone then a pullback into what would be a new supply zone and then a move to the downside uh looking at the euro pound um I've actually now entered this on one of my uh one of my pairs to look for trades as I do think that the pound should be the stronger out of the two so any pullbacks into a level of supply is where I would look for some uh some short trades to buy the pound over the euro so let's see what happens there I think out of the three the dollar the euro and the pound I think the euro is still the weakest the pound and the the the dollar are probably second weakest but again it depends really on when the market expects rate cuts to happen as well as actually when the rate cuts do happen so um but the euro for me out of the uh euro and the pound I think because they're one of the first central banks so they're gonna they're looking to cut before the bank of England the pounds should really be the buy and the euro should be the sell trade so any moves back up to here I think a nice buying opportunities for the pound shorting opportunities on that pair uh Aussie dollar the Australian dollar I'm gonna talk about and I'm gonna break down an Australian dollar Swiss Frank pair uh that was a small win and uh the fact that I came out of that trade um based off of risk off so um that's going to be my my trade breakdown for the week um so stay tuned to continue watching but the Australian dollar um US dollar uh again there was really no strong demand anywhere there's a level of you know resistance but without any kind of demand in that area that's not an area that I'm looking to take in terms of daily demand and supply uh daily demands by the price is really to pull back to this uh demand zone of around what's that 0.656 um and if you're looking for any short trades then you're looking at um really a pullback into the uh supply zone up here now um again the Australian dollar are seen as the currency that uh will probably the central bank that will hike the last or one of the last central banks to hike uh sorry to cut rates I should say not necessarily high creates but cut rates uh the Australian dollar did have some uh news on inflation that came down so uh rate rate um rate hikes are definitely off the table but I think uh the Australian dollar is one of my pairs to buy this year if we get China uh recovery so if you get Chinese recovery then we should actually in fact uh be a buyer of the Australian dollar and also as well if the US dollar do enter into and certainly a matter of time and it enter into their rate cutting cycle then in fact the Australian dollar should be actually a really decent buy for 2024 so I think any pullbacks could be a nice positioning uh for some long trades and also as well again you do have um some confluence with resistance within that area there that 65 round number so that looks quite nice um in terms of uh a level to look to buy the Australian dollar um but for in the short term a bit more difficult and not really a pair that I'm looking at so that's on my list of things to pair pairs to trade and finally gold looking at gold gold is looking at being a buyer over the medium to long term uh and really gold rallies on geopolitical risks and fed rate cut bets producer prices index unexpectedly declined in December geopolitical concerns from airstrikes boost haven demand so uh the stars are aligning for gold at the moment and so with all that being said um basically it's looking for you know buy trades right if you believe that the dollar should weaken at least over uh this year um gold should be the buy and if there's going to be even more risk off uh tensions then you should see prices at least move to the upside now if you're looking to short uh gold it really means that overall fundamentally and resentment wise you think that everything's going to be okay and the dollar is going to strengthen this year so um I don't know whether that is is likely to happen I think we are now entering into the rate cutting cycle uh I've made my feelings known as well again on my channel this year uh which was here and I talk about interest rates um cuts this year and due to the political business cycle so I break down what the political business cycle is and why the federal reserve are likely to uh cut rates uh this year which actually will end up supporting uh gold so we could see lower prices of course you know in a short term we could see pullbacks but pullbacks I think overall should be looked at as as buying opportunities whether you're trading gold or buying physical gold or investing into some sort of ETF but again this is not financial advice I can't give financial advice uh so you know definitely do your own research so now I'm going to get into um the Aussie Swiss trade that I ended up taking break down of that and it was a small win uh but I'll break down as to the reasons why I came out early on that trade so here's the trade on the Aussie Swiss and um and so yeah I had entered on this uh bearish daily candlestick time frame and it was against this demand zone but if you zoom in the demand zone wasn't actually quite hit it was about a pip away but um but yeah it was pretty much um a buy in my opinion anyway um I'm not really necessarily going to um you know not take the trade simply because it was like one pip away also as well there was actually an an intraday stop hunt on this level so if you go down to like the lower time frame you can see around here that you had a you had a level level level and then you had a bit of a movement you had a bit of a stop hunt right there and then prices started to move to the upside so um yeah that was the lower time frame analysis but I had entered really based on um on this candlestick here which also as well I use an rsi indicator and there's certain settings on that as well as something called the volume divergence indicator so there was a there was basically a setup here on um on some indicators as well uh that I'm not going to go into in this video so that was really the entry and entry trigger and so zooming in a bit what I do is I break down the trade into at least a minimum of three and try to enter um into uh the 50 pending uh order retracement as well as a hundred percent right and so uh the original entry was here right and I had about a 20 I think it was about 25 pip stop something I think like that and it was there and the second trade was at the same same stop loss but it was at the uh 50 percent so you can see here that the day after I entered prices came down and basically triggered me into my 50 percent yeah now this trade ended up being um we were having a talk about it um a bit of a a little bit of a frustrating trade in the group now on my broker that I use um my stock my my profit target was actually a 57 24 and so uh uh when prices came up here in this candlestick here I thought that on my broker I would have taken some profit but it didn't right it didn't take profit on this uh second position which I typically go for at least a one to one and uh then I'll try to swing trade the second that market order position and so um it didn't quite it was about a pip away a half a pip away from taking profit pretty much like the spread and then it went away from my uh my profit target so then it went up again it was about five six pips away on that day and then it reversed again and then on Friday came up to maybe around about two three pips again to near my profit target and then it's reversed and so um yeah so I didn't manage to actually take profit on um on the or hit my take profit target on this pair in a way that I would want to but um on the Friday afternoon I did post this um uh in the uh in the members area and I said and let me just make this a little bit bigger so you can have a bit of a read so I said to everyone it says it looks like we are heading into a risk of scenario oil hit $80 a barrel on supply issues uh on yeah supply issues so that may follow through to currencies over the weekend as it looks like the conflict is escalating I'm going to take the small profits I have on the sw- Ozzy Swiss and reassess uh over the weekend if you are in a risk of currency so if you're long dollars uh Swiss franc or the yen and you may want to consider holding over the weekend and this was the um the headlines the front page headlines on on Bloomberg as well as you know the main story from Reuters on the Friday was that the US and British strike Yemen reprisal for Hoover attacks on the shipping so in a risk of environment you would really expect the Swiss franc to to uh increase in value as it is a risk of currency and the Australian dollar to actually lose value so at the time um I took profit I think um the second position was somewhere around here I think it was about there um and the uh you know the uh the market um the market order was pretty much near break even as well it was somewhere around here it was a very very small win so um so I ended up taking profit I think here was around this um 0.574s or 0.575 area and so small win on both of those and really the lesson is is that is that it's okay to take profits if you're in a trade and the fundamentals or risk sentiment is going against you right now let's say for example price you know does continue to go higher right the market ignores the risk sentiment and goes higher oh well it was still the smarter thing to do because you know we can always re-enter a trade if it pulls back there's going to be hundreds of thousands of trades that we're going to take in our lifetime this is only one of those so even if it goes to the upside and then I miss out on this trade you know so what it is what it is whereas you know I would be a bit of a I wouldn't have to say a fool but I would be uh um wouldn't make this for the smartest decision uh to continue to hold this knowing that there are potential risk sentiment you know plays going against me in strong resentment place and so um I would rather take my risk off the table take the little bit of profit that I do have and then reassess over the weekend if the market doesn't you know react to this then fine you know to that risk event but if it does then of course I would say myself some money and I can also re-enter cheaper when um when the risk event does eventually resolve itself because typically things always do right because and even if it doesn't resolve itself the market stops really kind of caring and pricing it in because look at what happened with the um with the Ukraine and Russia conflict right that isn't even a factor now whenever we trade currencies or looking at the Swiss franc or the Japanese yen um when at the time the first few months of that conflict there was a lot of risk off sentiment which was affecting and flowing into those safe haven currencies you know years later we don't even consider it so in the short term smartest thing to do was to just take profit and then reassess um what is going to happen or what may happen and then when the dust settles then you can uh look to re-enter again once it comes down to straight fundamentals and so um with that being said that's the breakdown of the Australian dollar Swiss trade uh I hope you have a great trading week and speak to you soon take care and um all the best