 Hi, my name's Liam Rowe currency trader and trading coach at trading 180 comm and welcome to this week's supply and demand Forex and gold fundamental and technical analysis if you're new or warm welcome to you And if you're returning a legally warm welcome to you and don't forget to like subscribe and share liking helps the YouTube algorithm and there's really a free way to support the channel, right and Get the hopefully get the quality content out to the traders that need it and Trading 180 our trade process is really to apply Fundamental analysis to establish our directional buyers for the medium to long-term not necessarily short-term day trading And then apply our technical analysis strategy. So supply and demand strategies the time trade entries established profit targets and risk management. So getting into the week ahead and Going to trading economics on the week ahead We have earning seasons, which isn't necessarily Concerns us in currency world, but central banks in the euro area Japan Canada and Brazil will be deciding on monetary policy, which is always important So we've got definitely some potential market moving News or price moving news if there are any surprises, right because generally the market has Priced in what they think the ECB are going to say Same thing with the Bank of Japan and Canada. We don't trade the Brazilian currency So important data to follow include the third quarter GDP data from the US. That's always important Eurozone and That's pretty much it. We've got Australia inflation rate Japan industrial production and Elsewhere, we've got the UK Chancellor Rishi Sunak will be revealing his autumn budget, which is interesting for the For the guys that live in the UK that would definitely be keenly watched unless every just for You know for the fundamentals, but understanding what is going to go on in, you know Just every day lives and taxes and stuff like that and what's getting what's public services are being cut, etc But getting now into a bit of the nitty-gritty and we start off as we generally do on the dollar index So zooming out We can see the dollar index is a measure of just a measure of dollar strength against the Major currencies like the pound the euro and the yen but zooming out on a price chart We can see that, you know over the past couple of weeks. We did come to this supply zone which was a bit of a major high definitely watched by institutions and overall again, the power for these resistances to the upside when you think about what's happening fundamentally the the dollar should want to strengthen and part of the reason why that is is because Going back to trading economics the Fed is on track to begin tapering which is a reduction in the bond purchases although it would be premature to Raise rates Fed chair Powell said during a panel discussion at the virtual bank for international settlements in South Africa Reserve Bank Centenary conference so power also mentioned that supply bottlenecks are still weighing and have gotten worse in some Cases recently at the same time high inflation and pressure pressures on wages will likely last into next year But will abate. Yeah, so one of the also again a bit of a quote was that Fed the chair added if we see serious risk on inflation Expectations persistently rising we will use our tools the tools being basically to high crates so they do expect the To taper which is generally positive for a currency but Raising rates might not be Imminent so raising rates right now. So Overall generally, I would say probably daughter is should be more positive than negative Especially when you compare it to other currencies, which is what you're supposed to be doing as a fundamental trader anyway So looking at the US dollar, I Expected, you know a bit of a pullback in fact pretty expect a bit more of a pullback into that zone To look for any kind of long trades not on the dollar index, but just as some sort of confluence So if you do get prices pullback into a demand zone, for example when the dollar yen Dollar Swiss and you've also got a demand zone on the dollar currency index You can use that as current as a confluence and then obviously you want to see Pricist, you know a bit of a reversal candle Whatever your entry is and there's some bullish price action And then that's pretty much the direction that I would or I am trading in of course not financial advice the If you are looking to potentially short the dollar because ultimately nobody knows exactly where prices will turn right? This is reason why we manage risk So price may continue to come down a bit more But that was owed only be seen as probably a bit more of a bargain area to buy the dollar So if this level doesn't work, then I'll be looking for obviously Long trades long trade confluence within this area But if you can if you do want to get short you're looking at this area up at the 94s above that 94 31 Area for a potential short trade although again Understanding why you'd want to get short there is really probably saying that the other dollar is actually quite expensive up there, but the Fed again Fed Chair Jerome Powell is talking about Tapering so that's generally positive and just quickly as well In case any of you don't understand what supply chain disruption is It's really a demand issue. So I'll read a couple of you know sentences and maybe a paragraph or so Explaining this so the stress is on the global economy or caused mainly by an increase in demand, especially in the US So the first step towards understanding the great supply chain disruption of 2021 is to recognize that the phrase itself is not quite accurate Supply chains are not disrupted so much as overloaded. Yeah, and the effects are more national than global so Think about it like this right? So they've got a more of a Supply can't keep up with demand. There's a lot of demand, but The supply chain what's what's delivering, you know goods and services and commodities that the transportation etc. It's it's There's a lot of demand right which is the reason why they say things like bottlenecks, right? So Container shipping rates is this is a an example, right? So container shipping rates for example for instance were more than five times higher in September than they were in September Sorry, September 2021 then they were in September 2020 All right, so you've got again more demand five times higher now than they were a year ago making matters worse overall congestion rates congestion Especially at US ports was as high as 80% so you've got loads of Shipping containers and boats etc But you haven't got enough ports meaning that there were four times as many ships waiting For a berth as were docked at any one time. So this is what's causing the problem. It's just the the supply chain it's not a It's I guess a bit of a problem a massive problem in fact But it's something that can be resolved and hopefully will be resolved but For now and this is the reason why Jerome Powell is saying that the inflation is potentially Transitory because of the inflation is being kind of driven up by the fact that there's a there's a scarcity in In commodities, right? So if they're scarcity in commodities and not enough commodities then prices generally will go Higher inflation will go higher. So That's really where the problem is so one supply chain starts to get sorted out then inflation should come down hence the reason why he's saying it's And and central banks around the world believe that it could be a bit more transitory because once this ends then they should come down, right? That's really the the The theory anyways getting back to the to the technicals and other currency pairs to analyze and moving on to the The Japanese yet Dollar yen and again, we've seen this massive run-up Again due to fundamental analysis when we think about how, you know, potentially strong the US dollar is in comparison They haven't got the same issues as Japan and we're more in the risk-on environment. You can see that the The stock market is making new highs But we you know should have a pullback which we do have a bit of a pullback into this demand zone now Will prices turn around here? We understand that this was definitely a higher high higher load It was this was seen as a bargain price Last week or the week before 13th of October into the 40th of October So the question is will this be a bargain now personally? I'd prefer prices to really, you know come down to these areas here But this is going to be the first area to look for any kind of a Buy trades if you're looking to buy the dollar if you're looking to sell the dollar meaning or buy the Japanese yen Then that is a bit of a supply zone right there So you're really looking for prices to come back into the zone before looking at getting short But in getting short, you know, you're what you're ultimately saying is that the the The Japanese yen isn't is a bargain because ultimately Something can be expensive for ages and something could be cheap for ages right a bargain for ages But it's best to look at the market As in looking for bargains. That's what we naturally want to do buying a you know wholesale We don't generally go out to the shops and look to see if something is Expensive, you know, I mean, so we have to look at the market in that in that in those terms. So Yeah, I think this zone is is a decent zone technically from a from a value perspective I'm not necessarily the most keen on it, but again It's a decent area to get to get long Moving on to the dollar Swiss and the dollar Swiss has come down Pulled back a bit more and that demand zone didn't hold too much But now we're down into the 91 50s, which I think is decent and we consider I guess The yearly highs and the yearly lows We are probably more coming towards the the Fair value right. Yes, we're coming towards that fair value area and So with that being said in the context of that, I think anywhere probably starting to buy around now Is decent again? It's not financial advice And you really have to understand that when we're in a risk-off environment If we are in a risk-off environment, it's a risk-off sentiment that comes into market next week. The Swiss Frank would generally Benefit from that but in a risk-on environment the US dollar should win hands down not saying it's gonna win every single week And it's not really, you know smart to kind of think of it as winning and losing but It's more it's more looking at it from a perspective of where should the par for these resistance be right? We should, you know be trending higher right overall We don't know where the market is going to turn around but again the par for these resistance should be to the upside So looking at you know buy trades in and around these areas I think for me anyway is is is decent and I'll look for that Looking for sell trades that I think you're at your first area is going to be at this 90 0.9 to 40 area and nice technically, but I think overall I think the 93 40s to 93 60s is probably the better area and I'm gonna just drag that down as well Encompasses all of that supply So anywhere within that zone I think is going to the higher end of that zone is going to be really nice for a potential for a sell moving on to the dollar CAD and Canadian dollar Is one that I'm looking to buy If there's any kind of pullback not necessarily for against the dollar, but any other currency pairs But I do think that In a in a straight fight you should the Canadian dollar I think is just you know edges the US dollar especially when you consider commodity currencies But I mean commodities going higher anyway, you know, I always predicted to go to $100 a barrel And that should also support the Canadian dollar So if you are looking for any kind of short trades Waiting for pullbacks. That's going to be the first area that 125 1.25 area to look for potential shorts if you're looking for any Long trades and buying the US dollar against the Canadian dollar. I think now is probably a decent area to look for some long trades So Not really much to kind of say about this this pair. I'm not really interested in it myself But technically you're at some decent some decent areas some nice areas as from a technical analysis perspective Looking at the New Zealand dollar US dollar and the New Zealand dollar is again way ahead of Of most currencies when it comes to monetary policy and this is why you're seeing You know this type of price action, right? You get that kind of parabolic move You have to kind of expect a bit of profit-taking bit of pullback But if you want to get long on this currency pair at the moment It's a bit of a difficult one. You'd have to really expect prices to either pull all the way back down here Or to create some sort of higher highs higher lows and then you're looking for a pullback into a demand zone Or it could happen something like this where you get that pullback and then you get that so ultimately Right now there's nothing really setting up if you want to get long on the New Zealand dollar US dollar If you want to get short of course, there's always a technical reason It's always going to be a technical reason why you should look for any kind of trade In the direction when you're just looking at the technicals doesn't mean it's the smartest thing to do But there is a short trade here And if you're looking at probably where the range is the overall range probably up top From this high To this low is is is decent although that level has been touched several times So it's not the most reliable level to look for any kind of short trades around there because you're pretty liable To get stop hunted in that area So yeah, not really much. I don't think at the moment on the New Zealand dollar But those are the options so far Looking at the pound dollar and the pound Yeah, this was a decent area to look for potential shorts, but just price didn't work out I didn't take this trade. I'm not really interested too much in this currency pair And unless it comes to like the one three nine area The guys in the in the discord group will know exactly why we're looking at that one three nine area, but um Ultimately, we don't know whether it will get up there, right? Not too sure how we're going to be patient and it gets the trade that he believes without us And in which case that's fine But um, but if it does come out to one three nine area, that's probably where I wouldn't look We'll look for any kind of short trades, but if you are getting short now There is um, you know, you should be in some decent profit depending on where you managed to get involved in this trade With the pound fundamentally Britain's economy finds out what it means to live with covid so you've got a bit of a cocktail of of stagflation potentially going on stagflation meaning where you've got Economic an economic slowdown, but you've got rising inflation. So Households face rate hikes. Yeah, so that's basically more money out of their pocket If you're if you if you have a mortgage, for example, um, you know that interest rate hikes will affect your Repayments on your mortgage and if you're already struggling to pay your mortgage or your, you know, household bills That's one thing that you don't really need. So you we've got tax rises on on on the uh on the rise That's going to be another thing to to really kind of Stop consumers or people in general from really going out and spending in the economy, right? Because ultimately that's what we want to happen. That's what boosts Economic growth is spending not saving Inflation so devaluation of a currency and an energy crunch, right? And we've got the petrol crisis still and and and and the like so On top of that the economy is faltering just as covid cases and deaths are rising. So You know after 19 months spent attempting to ward off covid 19 while safeguarding jobs and businesses The uk is heading into winter with a growing problem. The corona virus is spreading rapidly Just as the economy starts to get going In the opposite direction. So there's problems massive massive problems. The uk cases are accelerating faster than in other western european countries Or nations while deaths have jumped to their highest since march government ministers Have are having to deny they are planning for a new lockdown. So and at the same time Yeah, economic growth is slowing inflation is running high. The bank of england is expecting to hike rates Soon and households are facing a cost of living crisis. So it's just it's an absolute potential mess not necessarily a mess at the moment, but Very very mixed messages. So I've been saying is for maybe the past month or so that I'm looking for short trades on the pound not necessarily against the dollar is my number one trade, but pound Um, I'm looking for more short trades against the pound against stronger currencies So, um for me the direction of travel should be to the downside Not saying it's going to be this week, but overall, I think again if you look at where you know, the trend is Over the past, you know, maybe four or five months. We've definitely seen Prices are trending to the downside and that's not an indication as to why you should want to potentially look for A a trade to the downside. It's just letting you know Where the weakness is in a currency which is driven by risk sentiment and fundamental analysis. So For me this area is nice if prices can come up to that 139 area. I think that for me is going to be A bit of a trade but other than that, I'm not really interested in where it is right now Um, ultimately, uh, we could I say we but the uk economy could get resolved and You know things get back on track and if it does, I think this is going to be a really nice level Or any buyers in these demand zones potentially should be decent buyers, but ultimately you're um, you're really kind of, uh, betting on I think A bit of a I would say a losing cause but there's there's a lot of there's a lot of confusion in the market and also as well uh financial times, uh Saying that investors worry over potential Bank of England rates mistake. So traders fear policy makers will move too aggressively in their attempts to tame inflation so investors Investor concern is rising that the bank of England is moving too swiftly to tighten monetary policy as it gives up to become one of the first Central banks to raise rates following the coronavirus crisis Generally a hiking rates is positive for a currency Um, unless um, it could a rate hike could obviously do damage, right? And that's what we just spoke about um in the in the Bloomberg article, right? So we've got um, uh, Rate hike potentially could cause damage to a recovering economy So it might not be necessarily the most positive thing in the world. Um In fact, it's probably going to be a bit negative. So with all that being said for me, um, I'm looking at potential shorts on the On on the pound You know definitely in in in the near future And I'm just waiting for the technicals to really kind of set up if they do then for me The pound is a short moving on to the Euro dollar Euro dollar again, I'm overall short on this currency pair I think a really nice zone to get short out would be, uh, this one one seven Area just underneath that's the one one six to start looking for potential shorts Uh price obviously reacted here on this supply zone, but when you think about where we are from a An expensive or cheap area Selling at shorting at lows isn't the best thing to do, right? It's not the smartest thing to do You really want to pull back before looking at getting short Anywhere getting short would be buying the u.s. Dollar So with that being said, um You know, it's it's a case of uh Just waiting for if we can get some sort of pullback if not if prices continue to do something like this Then again, just to pull back to that area would be where the supply zone would be so So again, we've got options But ultimately until these this this price action starts to play out I think for me looking at getting short around this 117 between 117 117 55 area for me is probably going to be The best type of trade Europe not doing too well So Europe's recovery stumbles over supply squeeze driving inflation as I was talking about earlier I mean the world is it's got problems with You know supply chain problems and uh euro area businesses are reporting a sharp slowdown in activity caused by an aggravating global supply squeeze that's also Producing record inflation so word as um There's a quote here that says the ongoing Pandemic means supply chain delays remain a major concern constraining production and driving prices even higher both in manufacturing and in Services sector says chris williamson chief business economist at iHS market Which compiles the survey after strong second and third quarter expansions GDP growth is looking much weaker by comparison in the fourth quarter so um fourth quarter um doesn't look great for the for the euro so um I think the us is probably going to be ahead of them So that being said, I think again the path leads resistance is to the downside if the data still supports that narrative If you do want to be a buyer of the euro, then I think the earliest place to really buy the euro is going to be really at the bottom of this range so Around this 115 60 115 20 area Moving on to the euro yen yen and uh euro was an absolute tear against the end look at that parabolic um And we did manage to just touch this uh the top end of that supply zone So again from a technical analysis perspective the question is why would you want to get short here? If the Japanese yen is the weaker out of the two right and which obviously it is but uh right now There was a bit of profit taking going on at this moment here So uh, I think again similar to that the euro um the uh, New Zealand or the u.s. Dollar I think from a short trade perspective you've got plenty of reasons to go short technically but Fundamentally do you really want to be a buyer of the Japanese yen? I mean you wouldn't again in the risk-off environment, right? So risk off um The Japanese yen tends to act as a safe haven currency and you should see prices want to fall But until the safe haven is still that risk off, you know environment starts to happen I think the power for these resistance should be again to the upside But the nearest uh demand zone again is going to be way down these winning 12928 area and less prices do make higher highs And then a pull back into that should be demand zone around here before getting uh long Moving on to the dollar Aussie dollar and Aussie dollar the Australian dollar isn't necessarily doing fantastic, but it's really being driven by Um commodity prices. So commodity prices go in higher um and with the um the Australian dollar being a commodity currency um, you've really had uh the It benefit the Australian dollar has benefited although um, I think now they are starting to turn a corner The Australian economy is starting to turn a corner. Um, so I do think I'm looking potentially I've got all my radar to be a buyer of the Australian dollar at some point from a monetary policy perspective They're not they're literally looking to hold rates or not do anything with rates at the moment So it wouldn't be anything to do with monetary policy more to do with just the economic recovery. So um against the the us dollar is a bit of a harder trade because you've got the uh US dollar who are ahead from monetary policy perspective So for me, uh, it's not necessarily a pair I look at but if you are interested in this currency pair then Really a short from now or if it pulls back up into this higher 75 76 area might be a decent short And if you're looking for any kind of long trades, I think that area That demand zone around here the seven zero point seven four two to zero point seven three eighty Is a decent area to look for potential long trades Moving on to the Aussie Yen and the Aussie yen again, uh, we came up to the yearly highs yearly highs broke through the yearly highs And we've come back down. So I think removing that supply zone is a bit of supply here Not necessarily the strongest area of supply. Um, but again with uh, with a bit of a recovery in for the for the Australian dollar You're seeing That massive demand for the currency Um, again buying at these highs. I'm really not keen on buying at those highs, but um Buying at these those would be a whole a bit of that 90 sorry that 81 area But um, whether we get down there or not is another problem. So again, if you're you know, trying to plot Really these paths and understand what potentially could happen We could see, you know prices obviously bounce around here If you want to get long here, we could see maybe some lower lows lower highs price Move up then pull back to that zone Or prices may start to go all the way down to the zone and then look for any kind of buy trades in and around here But um, for me, I I'm not keen on that on that area There's obviously going to be a trade there at some point But is it the best trade in the world to take that's the question For me, I don't like it because it is, you know in a quite expensive area when you consider This was a bargain and this was obviously a bit of expensive and uh, yeah, we're definitely uh In that area, but I do think there's potential upside and finally looking at Gold and gold again a bit of a tricky one fundamentally simply because Um, you've got some pros and cons going for and against gold inflation is a is a pro against Gold but a strengthening dollar isn't right. So um, if the dollar does look to strengthen then Gold should literally go to the downside But uh, ultimately if inflation is seen as getting out of hand Then gold should go to the upside as as gold is a hedge against inflation, right? So it just depends on on which view you take For me location-wise, it's not great. It's not great I think for me the path of these resistance is still to the downside if you're looking at a strong or stronger dollar um And I think as long as the economy US economy continues to grow I think, you know prices pretty much should start to do this um But ultimately, um until you know that the US economy does start to falter Like I said, I think I think the uh, I think really it's kind of short trades I'm not interested in in trading gold at any point. I think if I was really interested in trading gold It'd be at you know, the extremes, right? So the extreme lows extreme highs would be something I might be interested in again, fundamentally Things would have to kind of be aligned with price, but um Anywhere I think around here if you're looking at short trades is decent But just again be aware that there is potential for a bit of a stock hunt above that 1834 area as that is a very obvious Level and obvious high so there's going to be a lot of stops above that area So be Be careful. You are getting short. Maybe have a bit of a wider stop loss, but um Overall, I think you're looking at the bed But the recent levels are basically down into this 1760 area But again, I think ultimately if I'm looking to take any trades If I was anyway, it'd probably be either at this 1730 area or really down at the absolute lows The 1680 zone Anyways, that brings us to the end of this week's fundamental analysis. Thanks for watching Hope you have a great trading week and uh, take care