 Hi, my name is Leon Rowe, currency trader and trading coach at Trading180.com and welcome to this week's Sublime Demand, Forest and Gold Fundamental and Technical Analysis. Getting into the week ahead, zooming in a bit, it says it will be a busy week in the US with inflation reports and retail sales data taking a central stage. Investors will also be looking at any signs of contagion in the financial sector from the fallout of Silicon Valley Bank. Elsewhere, the European Central Bank will decide on the course of monetary policy and China will publish data on industrial production and retail sales. Finally, the unemployment rate will be released in the UK and Australia and Q4 GDP growth in New Zealand. So those are the main things to kind of focus on. You can see the details in the paragraphs below as well. Let's go to trading economics and it should be in the week ahead section. Let's get into some of the technicals and more fundamentals and starting off on the US dollar index and the dollar has had a lot going on recently. So let's get into that. So there was the jobs report that happened on Fridays at the US payrolls, top estimates. Wages cooled in mixed signal for the Fed. So firms added 111,000 jobs last month, the 11th month above forecast and the Fed picture muddied a central bank mall's bigger rate hike. So let's read a couple of the paragraphs here. US payrolls rolled rows in February by more than expected while a broad measure of monthly wage growth slowed offering a mixed picture as the Federal Reserve considers whether to step up the pace of interest rate hikes. And so it's a bit of a tricky one because you have jobs growing, a lot of jobs, but inflation cooling and wage average hourly earnings, I think it was that that cooled. And so the main threat at the moment is inflation. And so the Fed are, you know, probably more likely to, if they see inflation coming down and measures of inflation coming down, then they are more likely to potentially look to do a smaller hike in a bigger hike. And so, but it's a bit 50-50 at the, you know, at the time anyways, non-farm payrolls increased 311,000 after 504,000 advance in January, the Bureau of Labor Statistics report showed on Friday the unemployment rate ticked up to 3.6 as the labor force grew and monthly wages rose at the slowest pace of the year. So again, the headline figure is really, you know, talking about payrolls. But, you know, the outlook now, of course, is muddied or overshadowed by as SVB collides with jobs reports. So the biggest bank failure since 2008 could keep Fed hikes measured and payroll reports beat estimates, though monthly wage gains cool as we've already know. So a hard job just got harder for the Federal Reserve after the biggest US bank failure in 2000 and since 2008 and shadowed another strong payroll report officials weighing in February's job state have boosted the case for a half base half point rate hike this month must now also consider if the collapse of Silicon Valley Bank gives ground for caution that they cannot ignore. And so the markets and banking sector turmoil will be a strong argument in favor of a 25 basis point rather than 50 basis point hike, said Stephen Stanley, Chief US Economist for Santander US Capital Market and minimum it should serve as a reminder to policymakers that they have implemented a lot of tightening over the last year and not all of the impact of those moves have yet shown themselves or shown themselves yet thus it serves as a compelling reason to tread carefully because by hiking rates the the effect of hiking rates is obviously high raising borrowing and lending costs and that tends to contract the economy and so one of the failures triggers I guess for SVB as I understand was to do with the bonds on their balance sheet and the bond prices and as the Fed has hiked rates bond yields were going higher and bond prices were actually going lower and so with bond prices obviously going lower and if you've got bonds on your balance sheets then you know it's basically devaluing you know your balance sheet and what you've got right so there was a triggering and this is just a basic understanding of it it's quite complex but ultimately you know the hiking of rates has an effect on you know the financial markets and this is basically one of them and it's obviously triggered a bank to actually you know fail and so the bank the Federal Reserve have to take the fact that into account when looking to you know potentially hike rates and how much they hike rates as you know those rate hikes work their way into the economy because they tend to lag you know by maybe you know six nine 12 months and so at the moment the dollar index I would assume you know with the contagion you know that's going on the finance the financial risk off that's going on I would expect you know the dollar to weaken at least or an event to probably trigger the dollar to weaken and so if you do want to get you know short on this on the on the dollar you really looking at maybe some sort of pullback into you know a decent zone and then looking for a short trade as long as that risk off maintains and it's being triggered by you know SVB and what is going on in the States and so moving on to the dollar index I'm sorry the dollar yen you expect the yen to actually strengthen in a risk off environment yes the Fed are hiking rates which is typically you know appreciates a currency but with strong risk off sentiment you know coming into the market potentially if you know the Fed you know government don't step into ease fears and you know and somehow make depositors you know happy and give their money back you're probably going to see the dollar yen look to probably sell off and as we know there's no demands only in the world that all supplies only in the world that's going to hold because ultimately price is driven by valuation and valuation is derived from understanding what gives a currency or an asset class is valuing in this case you know the dollar is being revalued based off of you know more of economic problems in the short term at least in a risk off environment rather than you know the monetary policy it looks like anyway so Monday is going to be very interesting but if you do want to get short on the dollar yen you're looking for any kind of price pullback down into into any kind of lower zones and if you're looking to buy the dollar again you'd have to really see a kind of turnaround in risk sentiment for you to want to be a buyer i'd probably say the first zone is going to be maybe the one three ones one thirties dollar swiss pretty much similar to dollar yen in terms of risk off sentiment so at the moment you've got this going on and i think with the swiss frank wanting to be oh say wanting to be but is the risk of currency or a risk of currency of choice you're really looking at a pullback into a zone before looking at getting short again will this with this demand zone hold it's going to be very very hard to say and again you'd really want the the trigger to be more the fact that they've you know the US government have found a way to to ease you know the financial markets fears but also as well talking about you know the financial markets bond yields plunge most since 2008 as traders rethink the fed path and so again you know US two-year yields fall sharply 30 basis points on year-end rate cut wager now and so financial contagion fears outweigh strong February jobs data and so government bond yields fell the most since 2008 after US bank failure spurred traders read to reassess the outlook for additional federal reserve hikes a shorter dated treasury yields plummeted for the first for a second day as traders reverted to price pricing in a quarter point rate hike as the feds at the feds march 21st 22nd meeting instead of a half point move the market also resumed pricing in a quarter point cut by the end of the year so again lots to really kind of think about and in fact something else as well this was actually quite interesting talking about traders braced for more market shocks after a week of wild swings and so there was some and there was a statistic right here it was it says beyond the impact of speculators past swings in treasuries on the scale of Thursdays and Fridays hold worrying signals for the cross asset landscape and the US economy so data crunched by a bespoke investment group showed at nearly 50 in nearly 50 years of history two-year treasury yields have posted a two-day decline of 45 basis points 79 times with two exceptions in 1987 and 1989 all of these episodes were either during or within six months of a US recession so six months of the US recession right so those are pretty high probabilities right and so you know you're looking at the dollar at the moment you know against various risk assets like you know the Swiss franc I think maybe where the bond traders are looking at reprising obviously the dollar and the effect of those interest rate hikes and the way they're having on the economy and if obviously there are more banks that come out and more financial institutions come out as being very more in trouble then you're probably going to see the dollar start to sell off slightly and then you're probably going to see you know the risk assets like the Swiss franc and the yen start to come into play you know when it comes to selling on the dollar and so any pullbacks would be decent again sell off or sell trades against the dollar but if again things start to sort themselves out I think the dollar could be a decent buy at these night is 91 area zooming out you do have some zones from 2021 which I don't know about these to be fair they are interesting and they are there but it'd be difficult to trade I would probably rather look towards waiting for a more of a reaction of those levels before looking at trying to sell but I think this week potentially coming down until that 91 area 90 cent 50 area could be decent for a buy but again that all depends on you know what happens on the on the Sunday open Monday morning dollar CAD pretty much same thing I think the CAD has been typically a bit on the weaker side as they are a central bank that are not looking to high crates anytime soon or at all they were not holding a part part of the cycle and so you would have expected the dollar to continue obviously appreciating against the CAD but with the risk of sentiment and the risk of sentiment originating in the States this is going to be a difficult trade to take I would assume that this would kind of put a cap on the the upside for the US dollar so if you do want to be long on that trade then I think that's pretty much what you're looking at if you're looking at any kind of buys then I think any move back down into that zone there especially the I think the lower end of that zone is going to be decent for a potential buy but again you'd have to really understand the fundamental side of things or the risk sentiment side of things for you to want to get involved in that level and a pullback into that zone before looking at getting long New Zealand dollar pretty much similar thing here and so you've got a nice actual support and resistance in that area that prices is looking to bounce off of and again there's some upside potential based off of just more risk off sentiment but again the risk of originating from the US so as the dollar starts to sell off you could see the potential for the New Zealand dollar to appreciate but typically you would think that the New Zealand dollar is not really a pair or currency that you really want to buy in a risk off environment but technically this is a really nice level and so if you do want to be a buyer right now it's decent technically if you want to be a seller of the New Zealand dollar then I would say probably around here let's drag this down in fact that's where that supply zone is and then before looking at getting before looking at getting short on the side of that level pound dollar pound dollar again pounders actually had some decent news and continues to get it have some decent news and the surprise UK growth rebounded means technical recession could be avoided and so the UK economy grew faster than expected in January though underlying volatility in the data means that the GDP is affected is effectively flatlining so lower gas prices mean that any recession is likely to be very modest now and may technically be avoided altogether so that's uh some positive coming out of the uh of the UK very surprising by the way because I thought um you know the UK economy would have uh actually fared a lot worse but um in this environment I think uh the the dollar if they can obviously sort certain things out uh with regards to uh SVB bank then for me I would want to still my bias is still to the short side on that um on that uh pound dollar and even up into the one uh two threes but again depending on how severe the uh the risk of sentiment is then um actually in fact the pound could be a short term uh buy on any kind of pullbacks into you know demand zones down into here before looking at getting uh long the euro dollar the euro dollar probably might start to go higher in fact um and again this is aided by um you know the the the the dollar uh issues but also as well ECB is seeing taking rates to 3.75 percent uh peak as bond exit to quickens so economists predict formal hikes finishing in July and pace of quantitative tightening to be increased survey shows and so that's all contributing to uh the euro um increasing in value so the European Central Bank will step up its fight against stubborn inflation by raising interest rates four more times and unwinding its five trillion euro bond portfolio at a quicker pace according to a Bloomberg survey of economists and so three hikes of 25 basis points each will follow the next week's all but certain half point move bringing the deposit rate to 3.75 in July uh respondents said and so um with the European Central Bank being quite hawkish I would actually consider this now and with the US um having the problems that it does I would I would assume that prices would continue to go higher so any pullbacks see any pullbacks down into just below that 105 area I do think in fact that could be a really good buying opportunity uh for the uh for the euro against the dollar with the problems in the United States um if you're looking to get short and buy the dollar then you're looking at this area right here would be within that supply zone would be probably the best one of the one of the better areas to look for any kind of short trades and then you also got a supply zone right up top right here supply so this is obviously proven to be a an expensive area and this was a bargain error for the euro as you've made higher higher higher lows the prices have come back down into that zone and that's seen as a potential bargain and hopefully if you're looking to buy the euro then that can continue going higher um Aussie dollar and again in a risk off environment you would have expected the US the US dollar to really be the one to strengthen but even with all the the issues of risk off and the Australian dollar um in a weakening this week in terms of the RBA's dovish tone in the market actually expecting a rate hold for the RBA um you haven't seen the the Australian dollar sell off so again this could be an opportunity to potentially buy the Australian dollar against the um the US dollar although it wouldn't be one of my potential buyers i'm looking to buy also or short the US dollar i think the strongest pairs are going to be either the swiss franc or the the the yen so um but technically it's a really nice area that i do like and um but i just don't like the uh actual buying of the Australian dollar in a risk off in environment um but also as well the the Australian dollar will be helped by uh china data so if the data starts to come out really strong in china then that Australian dollar should want to increase in value at least over the medium term and then finally we have gold and gold again reacting to the chaos in the market risk off uh asset seeing prices you know come back saying this last week of prices come down into this zone here you'll be a buyer of the uh of gold then looking for you know some more upside potential which is pretty much you know what's happened uh could anyone have predicted the uh svb then um then yeah that would have been a really nice uh trade but um this whole level itself was actually quite decent anyway this has been a level where um you know obviously the banks have been doing lots of business in and around this zone here so the uh 118 uh the 18 sorry tens the one the 1820s to maybe the 1800s somewhere around there was definitely previous historical um you know business level and um yeah it seems like gold now should benefit especially like I said in a risk off environment you would have to expect prices of gold to continue to go higher doesn't mean it's going to go higher like that of course you know prices could pull back before going higher of course but um who knows right but ultimately the path of these resistance at the moment as long as there's turmoil in the financial markets right now um you know owning gold is a great shout not financial advice of course anyways guys that's it for this week um I hope you have a great trading week remember to manage your risk and um yeah if you have any questions let me know and I'll try and get back to you as soon as I can take care and speak to you all soon. Hi my name is Leon Roe currency trader and trading coach at Trading180.com and in this video I'm going to be explaining why support and resistance zones are supply and demand zones now many of you watching this video would have been under the impression due to youtube um popular videos and instagram and facebook that actually support and resistance is different from supply and demand and the only difference is really um the way that you actually um trade the zones but the support and resistance zones are actually past supply and demand zones and I'm really going to get into it um in this next uh maybe five ten minutes with an example as well I'll use probably gold um recent gold uh analysis um to really kind of highlight the point so uh first of all what we have to do is really understand um you know supply and demand versus um support and resistance and again like I said this is just a difference in really how they approach so what we have to do is first of all when we're looking at um supply and demand is we're understanding uh value right so typically this is how traders will draw or this is how I draw anyway um and understand supply and demand yeah so supply and demand is higher highs and higher lows where this area here is going to be an area of uh demand because if we take this this first leg from this low yeah to this high this is where demand started yeah and this is where supply comes in because prices cannot go past you know a certain price point so let's say for example that's price and that's time when we're on a price chart yeah whatever price this is yeah let's say for example it was five yeah at this point in time this was seen as an expensive area therefore prices couldn't make its way higher so then traders probably started selling taking profit there was more supply here than demand then buy orders yeah so this is where all the buy orders were more demand more buy orders prices go higher until the imbalance in supply and demand where there's more supply here right traders not seeing this as an area where this is an absolute bargain area they're seeing that as in as an expensive area all right this is expensive yeah and then profit taking etc goes on yeah now when prices start to fall obviously there's more supply orders than demand orders but when you get another leg higher so many traders recognize this as higher highs and higher lows so buying starts here again yeah so more demand starts here buying and as prices make their way higher yeah when it goes past a previous expensive area yeah previous expensive area was considered expensive here because we know that for a fact because prices couldn't push higher buyers weren't willing to buy this you know this this this price point whatever this price point is but if later on prices do do something like that yeah go higher then this is then seen as the as a potential strong area of demand because this is where the origin of the move was in the same way that this was the origin of the move that made the move higher yeah so when we're looking at trading supply and demand it's always higher highs higher lows yeah this drop base rally rally base drop thing is is you know is something different when we're looking at price charts it's always about higher highs and higher lows this is what we need to determine this is what makes sense yeah so as new highs are made yeah the swing the higher low this whole area here becomes the strongest area of demand right now with support and resistance how traders will trade support and resistance is pretty much similar thing where you get higher highs and higher lows and what traders will look at is a previous area yeah of what is known as resistance yeah and then looking for the for a pattern here right so this was a previous expensive area here and so traders are now looking at trading the the the the underswear they were trading the underside of that and I look into trade the the other side of that because this is what resistance as we're taught should turn to what support yeah this is going to be support if obviously prices are actually supported but in anticipation of that that's where traders are looking to trade but if you actually now look at similarities between support and resistance and supply and demand it's just the case of we as supply and demand traders are trading down here yeah at that area right there so if we're looking at this being bargain area or the cheapest area and we know that to be true because buyers were buying and buying and buying so much so that even at a previous expensive area prices went to the upside yeah so this has to be the most recent bargain when traders when traders are looking at buying here they're actually not buying in the best place are they support doesn't always represent the best place to buy now it's the best place if it's part of your you know support and resistance strategy yeah but from a demand zone perspective and what we know to be true about you know what price is doing is showing us this cannot be the best area to buy if we're taking this higher low yeah and higher high and the higher high principle this is going to be this level of demand is going to be the best area yeah and when we think about what supply uh sorry support and resistance levels are they are actually just failed supply and demand zones so again going back to this area here if all we saw was this high and a pullback this is a supply zone or supply level and then when prices come back to it yeah so it didn't work here but when prices come back to it this was a failed supply zone that turns into a support area or what traders would term support so it was failed supply failed supply and that is all support and resistance levels are yeah is that they are past supply and demand zones that have been projected into the future right that have failed to work and then traders are just trading the other side of that area yeah but also remember the most important bit is that while traders who trade tend to trade support and resistance areas yeah are getting in here the most important thing is that if we're taking this as an expensive area higher highs because prices couldn't push higher than whatever this price was here but the origin of the move up yeah the higher low is a proven bargain area then support and resistance isn't always the best area when we're choosing bargains because everyone knows the mantra the cliche buy low sell high is this low sometimes a lot of times when if you guys know about fibonacci you're pulling a fibonacci from a low to a high you're choosing a leg aren't you choosing a swing right and all fibonacci is is just looking at the discount so sometimes you get a 38.2 yeah percent discount some traders will look at the 50% yeah this might be 50% discount from the high to the low that's why traders trade pullbacks and it's not to say that support and resistance doesn't work of course it does it can work and it does work on a price chart but if you're looking at buying at the best areas you want to look for the bargain basement even the 61.8% yeah fibonacci is a nice discount is a very nice discount but it's not the best if this was a bargain here yeah and prices make their way down to a demand zone then that's going to be the best area to look for a buy trade if we know fundamentally because prices are driven by really free things fundamentals risk sentiment yeah so risk sentiment risk on and risk off and liquidity right outside of that i don't think there's really anything that the market's driven by fundamental analysis which determines value risk sentiment safe haven plays and risk tolerance and the amount of liquidity that there is for prices to move higher or lower yeah so what can we do all right what can we do to potentially trade both at the same time so combining support and resistance with supply and demand zones that's really what we're looking to do so let me draw that out for you right so what you want to see is you see something like this yeah remember higher highs and higher lows are areas where you know of the best demand zone so if you're in the demand zone that would be where it is yeah so higher highs higher lows and then you wait for a new high now again once a new high is made that's your level of demand or the best area to look for buy trades and then what you want to do is when prices come back down to this area is combine that with previous support and resistance so remember this was a failed this is a this was a supply zone yeah which traders would call you know resistance it failed here traders would normally get in here not supply and demand trades we're looking for proof right proof of value first we need the market to prove that there is strong demand here that's what we want and we can only do that if prices start to make new highs or what would be considered an expensive area so we need the market to prove that that is a strong area of demand and then when price comes back to this area here then not only do we look to potentially buy if our fundamental and resentment analysis says so but then we can also look to combine what other areas of support and resistance or failed supply zones in this case yeah because we know other traders are looking at trading this area right because any trader that's looking at resistance potential support is going to be looking here as well so we have not only understanding the bigger picture and understanding that we want to be buyers here yeah so buy orders of demand we're also going to have other traders you trade support and resistance looking at doing what buying as well yeah so there's going to be new traders entering into here who are looking to the left and understanding that this is a level of what they term to be support and resistance when pretty much support and resistance is supply and demand yeah so that's our order equation confluence because you've got to think to yourself from a technical analysis perspective why would there be more supply here than demand because if there was more supply there then prices would you know would drop yeah none of us truly ever know because the market is a probabilities game right but from a technical analysis perspective and if you know we're looking to buy anywhere this makes sense understanding how market participants enter the market technically this area here yeah which would be again resistance is not the best area to look for a trade doesn't matter if prices go higher good for them yeah good for those traders what we need to do is have proven proof of value yeah if i'm going to the shop i don't want to if i want to get a discount i'm not looking to get a 20 or 30 percent discount half price is nice but i want the absolute bargain and you should too yeah so let's um look at this on a price chart let's go to gold and look at this on the on a gold price chart so on this price chart of gold um we've got what traders would typically term as support and resistance right so you've got a level of resistance there a level it's been rejected first of all yeah and then it's got a level here then you've got another bit of rejection there and then failed resistance becomes what potential support yeah but now i want you to look at this in i guess the the terms of supply and demand so let's get rid of this area here so what we've got is we've got let me uh bring up this we've got lower highs and lower lows being made low lower high lower low so this area becomes an area of supply yeah this area becomes an area of supply and let's just get rid of that for now yep that whole area now is an area of supply and then we just turn this to a supply zone so you can see yeah lower highs lower lows when prices come back up here that is supply the supply zone ended up holding brilliant now as we go forward drag this across and in fact we can move the supply zone up here like that if we go across into this zone here we can see that that level of supply because this would have been an expensive area correct this is what we know to be an expensive area why because prices couldn't go higher than this buyers didn't want to push prices higher this wasn't seen as an absolute bargain so we've got more selling sell orders more supply orders which drove the market down something's obviously changed so buyers ended up buying in here right higher high higher low higher high higher low higher high right there yeah at each higher high that pushes prices higher we have to say that's a potential bargain that is a potential bargain that is a potential bargain yeah but let's look at this in the context of demand so as we go through and let's just get rid of all this right so traders are now looking at this area as we pointed out before as an area of what support and resistance correct resistance resistance there should be where traders would be getting involved somewhere around here and it does all right now we don't necessarily have the strongest area of demand there is definitely demand here because there was buyers here and prices were moving higher yeah so there is some demand here is it a strong area of demand no not yet we want to see proof of value prices really need to go above this area here this area here before really saying that anything around here is a decent area of demand yeah so not yet not yet not yet then we start to get prices move to the upside so now we can start to see that this whole area here now starts to become a nice area of potential strong demand because buyers come into the market and they're pushing prices above what is considered a past expensive area yeah so now prices come back down or if they do come back down you can start to see where buyers are getting into the market there yeah they're starting to get in now here so as prices come down into this area higher highs higher lows this was the higher high here in this area so that was the higher high and these areas now start to look like what higher lows so then when prices come back down into these areas this is where you want to look potentially to get long because it was a proven bargain here back in april which led to a new high so now it's about trying to get involved in where we are currently today yeah with the combination of what resistance resistance turn to what support support so this was a past supply zone past supply zone that had been if you take this area here sorry yeah that had been projected into the future and is acting as what now support so whenever you see anyone else talk about supplying the difference between supply and demand and support and resistance this is the definitive video you will probably won't find anything else like this on youtube my ideas are my own original um and if anyone has um you know uh the same idea then great for them but uh this is original thought and this is what makes sense to me logically and is what was was made sense to me for a number of years yeah so there is no difference the search is over you don't need to um you know worry about it anymore as far as the difference you can trade both a lot of traders tend to say one or the other is is is better one isn't necessarily better than the other because they're both the same it's just the approach and how you look at the market yeah and why there's likely to be more demand here yeah so why is it likely to be more demand in this area because trade first of all we know that it's the bargain area because you've made a new high yeah made a new high so potential bargain we as supply and demand traders demand traders are going to get in here but then you've also got the added confluence of support and resistance traders who are looking at that level looking to the left looking to get involved in here as well so more buying yeah i must add a caveat to this though is that the more a level is touched the weaker it becomes yeah the weaker it becomes so what you really want to get involved in is the fresher areas of demand yeah fresh areas of demand you know first areas are the best areas to look for buy trades the more times you know three four touches of a level the less successful or the chances of success it actually becomes and you can back test that if you want to anyways guys that brings me to the end of this video hope you enjoyed it hope you found this useful as well and until the next video take care