 Hi, my name is Leon Rowe, currency trader and trading coach at Trading180.com and welcome to this week's supply and demand forex and gold, technical and fundamental analysis. If you're new, a warm welcome to you and if you're returning an equally warm welcome back. And if you find my analysis useful every week, please don't forget to like, subscribe and share with your fellow trading colleagues. So if you're new, just a quick introduction to my trade process and what I do is I combine fundamental analysis alongside technical analysis to really find the best trades available. And what does that really look like in reality is we use a fundamental analysis spreadsheet that identifies all major currency pairs and look for convergence or divergence trades. So what does that mean? That really means divergence trades are looking for if strength is going to continue and weakness is going to continue or whether convergence trades which are strength is likely to fade and weakness is actually going to subside. So we've got convergence trades as well. So step number two, once we've established the fundamentals and whether we want to be long or short currency pair using our fundamental analysis spreadsheet is you supply and demand zones, capture pain relief and stop hunt manipulation, technical strategies for trade entries because it's really all about establishing a trade direction using value first and understand identifying where the bargains are and then looking at the technicals for trade management and entries and profit targets. So let's get into the fundamental and risk sentiment analysis and looking at the dollar and the dollar is evolving from a haven into a must have recovery plan. So it was recently over the past there recently but over the past maybe since maybe August last year there has been a really a short dollar theme throughout the markets and I think a lot of our traders that trade may be in the short term anyway a bit played overplayed and the dollar may start to pull back. This is where I talk about where you have convergence trades where a weak currency potentially may turn actually strong in the short term or appreciate in the short term and I think the dollar may do so. The dollar is due for a pullback to be fair and again everyone prices don't go down forever and so just quickly the dollar has long been a safety trade for global investors but post recessionary phases with the help of fiscal aid it can double as a bet on a global recovery with that in mind as capital flows to the US increase so might the bid for the currency much to the chargrin of traders who enter 2021 with overstretched short dollar positions. I'm still medium to long term bearish you know personally on the dollar not financial advice of course but I think in the short term if you're looking at price which we will do chart analysis you can see on the dollar index we have been you know in a bit of a major downtrend so when you have major downtrends you're looking at probably some sort of pullback an extended pullback to major zones and we'll go over that in the technical analysis side so economists see much to like in Biden's stimulus even if imperfect so Biden released his stimulus so economists are much to like about how President Joe Biden Joe Biden's 1.9 trillion stimulus plan will attack the pandemic and support the recovery even if key elements may be inefficient or fail to provide long lasting relief so again just like everywhere else really when it comes to you know the economies and recovery every economy really is introducing some sort of stimulus plan to really support the economies so really nothing new this is to be expected but I think this probably will give the dollar some sort of short term boost or the narrative is that it should give the dollar a short term boost and appreciate the currency but I think overall again medium to long term being more short the dollar and again just some more sentiment on the US dollar dollar could gain strength from unrest there's been a lot of unrest is the media has been reporting on and sock jens jukes is pretty much said that there could be some the dollar could benefit from that being a safe haven currency so again more short term sentiment potentially bullish for dollar or if you are looking for trend continuation meaning you know short in the dollar you're just looking at this as a pullback and areas to look for short trades technically on the dollar so you wouldn't necessarily be buying into dollar strength you'd look for maybe like I said some pullbacks into areas where you would like to potentially get short talking about or moving over to the ECB and talking about stimulus ECB won't need extra stimulus to fight pandemic economists say so again as I was saying before everyone in every country really is battling with the virus but I think with Europe more economists think anyway that the European central bank won't need a boost to its monetary stimulus again to pull the euro economy out of its crisis according to a Bloomberg survey which could be seen as bullish more bullish for the euro because if you don't need to you know add stimulus then you're not devaluing your currency therefore unlike the US who are adding obviously extra stimulus so there's a bit of maybe potential divergence there and Christine Lagarde defends ECB economic outlook even as banks cut forecasts so I think one of the forecasts projections for the economy GDP was a rebound of 3.9 percent is still plausible but again with all the lockdowns going on not so sure but there are vaccine rollouts as well so that is factoring into the forecast for a recovery so the European central bank's latest projections for economic growth in the euro area still very clearly plausible despite the resurgent coronavirus and renewed lockdowns President Christine Lagarde said so trying to really have some sort of positive sentiment with regards to the European economy negative rates in the UK was is the rumor so which kind of came and got some cold water poured in it as soon as it kind of came out by the Bank of England Governor Andrew Bailey so negative rates worked abroad now it's Britain's turn the Bank of England should look to experience look to experience sorry in Europe as it ponders its next step on monetary policy so there were calls for potential negative rates or at least a cut down to zero by some analysts and economists but as soon as that idea was kind of put into the market the pound climbed as market pushes back on negative rate speculation so it was again a bit of a by the room itself the fact the room was starting it could be negative interest rates which would have been negative for the pound but the pound rallied as traders pushed back expectations for when the Bank of England might cut borrowing costs to the end of the year after Governor Andrew Bailey said there were lots of issues with negative rates so maybe not so much the fact that they're not going into negative rates just when they go and not when they possibly may go into negative rates rather than sooner well later rather than sooner is the expectation so as soon as they really start to potentially go into negative rates or you start to hear the rumor then what will happen is is that the the the pound should actually decrease in value because rate cuts have the should have the effect of depreciating a currency so sterling broke above the 1.36 dollar guilt yields roads and money markets moved price pricing for 10 basis point rate cut to December from August on Monday so the comments by Bailey dampened speculation that a rate move to zero could come as soon as next month so Goldman Sachs strategies had put those odds at four to one so four to one 25 percent but now obviously things have potentially actually they have changed and the UK economy some more positive news for the UK UK recession risk eases as GDP declines less than forecasts but within this there is that things will get harder before they get better so it's clear things will get harder before they get better and today's figures highlight the scare and the challenge we face Chancellor of the Exchequer Rishi Sunak said in a statement but there are reasons to be hopeful our vaccine rollout is well underway I think the UK has been handling the pandemic probably the one of the worst in the G7 G8 countries but it seems that the the pound especially with Brexit being sorted for now the pound has some positive sentiment around it also as well just from a global perspective and global growth China ends up ends 2020 with record trade surplus as pandemic goods saw so China saw an export boom continuing to December pushing the trade surplus to a record high in the month and bolstering what is already the world's best performing major economy so a risk on tone definitely when it comes to the global growth and and some optimism when it comes to again the global economy gold so gold slumped recently you saw gold price action kind of dropped drastically gold slump on yields dollar fires warning at everything rally so with some dollar potential dollar strength coming into the the market some short term dollar strength that may also affect the the price of gold and I but I honestly think that's again a short term thing I think medium to long term with all the money printing that has been going on with central banks around the world and currency devaluation gold again the the analysts and the medium to long term forecast for gold is still around $2,000 $2,100 etc so that and money printing really isn't stopping anytime soon inflation is coming back in you know there's the the idea that inflation with all the money printing inflation should start to kick in and what is inflation inflation really is currency devaluation so that should be also positive for gold in the medium to long term so you could look at this as just buying opportunities for gold by the dips as they say heading into the week ahead so fourth quarter earning seasons continue next week with companies such as IBM, Netflix, Intel and PNG a Procter and Gamble reporting that's more to do with obviously stocks elsewhere flash PMI surveys for the US, UK, Eurozone, Japan and Australia will be keenly watched while central banks in the Euro area, Japan, China, Malaysia, Indonesia, Canada, Brazil and Turkey will be deciding on monetary policies so a busy week for the central bankers and again definitely listen to what these guys have to say or read what these guys have to say because if these guys start saying central banks start saying they're changing monetary policy adding stimulus or just continuing down the path then that gives us a good idea as to whether we should be you know long or short or any currencies or a change in those long or short positions other key data to follow including US building permits and housing starts and existing home sales UK inflation data and retail trades Eurozone consumer confidence China fourth quarter figures and Japan trade balance and inflation so pretty busy week for some countries now let's get to the technical analysis and starting off on the US dollar index and the US dollar index again we've seen this you know massive downtrend you know over over the past more since really March so again the dollar is due a pullback it really is so in the short term you could see obviously prices start to come up to these areas here where you've got some where you've got some supply here you've definitely got some supply around here as well in these areas and I really think I'd actually do like this area around here for any kind of confluence right where you've got a nice area you've got some consolidation or what traders would say you know I say I say as well accumulation phase of the dollar or short in the dollar and then you've got you know kind of this drop here where I think this fresh area of supply we're looking at the as confluence within these using the US dollar index as confluence right and you want to get short I think anything around it's not these short trades or price start to sell off around that area there I think that's a really nice area for some dollar selling trades if you're looking at this area here it's okay as well because you never know prices could you know move up to the upside for a little bit but I really do like the the underside of this area as a some dollar confluences for a for a sell trade if you're looking for a dollar buy trades you're looking at demand zones so demand there and there's a bit of demand right here so you're looking for bit of pullback into this area as well so this 90 area before looking at any kind of long trades and again not long trades on the dollar index you'd be looking for just confluence with this so you're looking for pullbacks and if you see you start to see bullish price action at these areas then you're looking for any kind of dollar buying on the dollar crosses like the dollar dollar yen dollar cad dollar swiss etc so just come up to a nice supply zone a decent supply zone so if you do start to see some bearish price action here just use that as confluence but I do like this this 91 92 price supply zone as you know the ultimate confluence for any kind of dollar short trades moving on to the dollar yen and the dollar yen we've got some demand prices are proven that there is definitely demand at this 102 50 area looking at any kind of supply so again for any kind of short confluences looking at that area there's a supply and then you're looking at just level bit higher probably around here and then around here for short trades so again you can see price reacts off of this this supply zone personally I'm not a fan of this currency pair you know the yen is we're not really in a risk off we haven't got really a risk of sentiment or major risk of sentiment so for me I don't really like buying the Japanese yen in a risk with risk on more risk on coming into the market so if I was going to get involved in this currency pair it probably be to the upside and looking for a pullback into this area here before looking at getting long I think prices do need to enter into a range at some point you know prices are are a trending or ranging and we've been really trending for a while so I think this fresh area of demand could be if we get a pullback that might be actually be a nice buy opportunity for the dollar in the short term moving on to the dollar Swiss and the dollar Swiss has come up to this supply zone around here so that level has been touched you know once already twice is okay but not the best again understanding where we are from a currency pair situation I'm not the biggest fan of buying the Swiss franc and I think if I am going to get long or if I'm going to get long on any of the currency pairs as far as either the Swiss franc or the dollar it's going to be the dollar in the short term I think the Swiss franc there was not a call of the Swiss franc talking about the central bank intervention is really at record levels over the past like eight years so they are desperately trying to devalue their currency the Swiss national bank so I think that may start to play out and I think the pullback into this zone I'm going to be very very interested in in buying the dollar I'm not really a dollar bull but against some other currencies like maybe the yen or the Swiss franc that's definitely something I am interested in there's a level there and if we've actually made higher highs here so in fact that would be the first area to actually look towards sorry about that I should just change that to demand so that area there is where I want to look for buy trading it's got the added confluence of support in that area support and resistance so you've got support there bit of support there daily support so prices can come down into this area here into that support zone that for me is going to be the first area I might look for a buying opportunity to take advantage of some potential dollar short-term dollar strength over the Swiss franc moving on to the dollar CAD dollar CAD we've got I start off with supply draw a couple of levels so we've got some supply here we've got a little bit of supply which didn't break just wick so that's decent from a demand zone perspective there is a bit of demand right there which is held so we're in this quite this tight range at the moment again with dollar strength potentially coming back into the market we're looking at where we are from you know this this massive kind of downtrend your you know you have to kind of expect some sort of dollar pull back at some point this actually use a decent area to look for that you know long trade if you are looking for long trades but the Canadian dollar may benefit from a strong commodity rally especially in oil so again if you are looking for more trend continuation plays I would probably wait for price to come up to somewhere within this zone here before looking at getting short if you're looking for any kind of long trades now if you're trading the daily if you're trading intraday you probably wait for a bit more of a pullback you know and maybe the four hour if you get a pullback into that zone before looking at getting long there moving on to the New Zealand dollar US dollar so this has been on that absolute rip roaring trend we haven't got any major supply or recent supply anyway from from 2018 so I don't like putting supply from 2018 I'd rather let supply prove itself strong supply prove itself recently before putting any kind of supply zones on there from a demand perspective there was demand there and that's broken now it did react you know in the this week you can see where prices came down to that demand zone there reacted for maybe about a few pips or so and then kind of broken down here but when you think about where we are in the trend we're due a quite a large pullback anyway so I think this is going to be the first area to look for decent a decent pullback we've got staggered demand zones around here as well so any kind of pullbacks to this area especially I think the 70 cent area is really nice for a potential long trade if you're looking at again taking advantage of maybe some short term US dollar strength then you've got supply right there and you've also got a supply zone here as you've made lower lows lower highs and looking at getting short here or short here so decent I don't think the first level is necessarily the best I think that 73 areas definitely seen as an expensive area now prove an expensive zone so look towards the highs I think for any kind of short trades if you can get a bit of a pullback into that area there in the short to medium term moving forward to the pound dollar and the pound dollar has a bit of an ugly chart to be fair we've got some demand wide areas of demand really and I think all of this area would be demand not pretty but that's just the way it is but we break down these areas of demand with areas of support and resistance and support and resistance really is supply and demand zones that have been projected into the future so just a quick recap on that this actually was a supply zone right here when you look at where prices actually went came in came out that was a supply zone and that supply zone has been actually projected into the future right and it becomes what traders would term is support and resistance right so you've got a bit of resistance here resistance there yep a bit of resistance then it becomes support there and there so supply and demand is the really the really the building blocks for all technical strategies in my opinion and then you've got also another zone around here of support as well so these are the daily zones that I would probably daily prices that I would if I was looking to be a buyer this is where I would look within this wide area of demand to be a buyer either there or if prices do come down to here and here the reason why that is is not only do we identify you know value but we also identify where other traders will be looking to buy and sell you know technically and this is where hopefully the most there's more demand orders then supply orders at these levels at least from a technical analysis perspective so if you're getting long these are the areas if you are looking to get short by the US dollar then that area there is going to be a supply zone but it's by no not even close to being a strong area of supply not even by a long shot you really want to see prices kind of you know come down prove that there's value there and then maybe this starts to become a stronger area as prices start to fall but for now with just this you know this this area of supply here it's not strong at all moving on to the euro dollar euro dollar as pulling back so if you're a trend trader what you are looking at is pullbacks to demand right so that's where you want to look for any kind of long trade this zone here is a really really nice zone I've put out a video earlier during the week about why this area of demand is is I think is a really good zone to look for again when you have lots of say lots but when you have a massive trend with no real major pullback you should expect really a deeper pullback to some degree and around here is going to be fair value this 1.195 area I think is a really nice zone to look for any kind of pullbacks but if you're looking at a demand zone this week and potential for this demand zone to work then that's actually quite a nice trade as well if you're looking for supply zones i.e buying the US dollar then you're looking at there and you're looking at the highs really here this is obviously clearly either a bargain area for the US dollar or an expensive price for the euro dollar exchange rate so this would be actually quite nice a nice short I do like that for a short technically but my bias is to the long side as I think that the long term price predictions were at 1.25 so 1.25 being somewhere just up here so let's see what happens with with the euro dollar moving on to the euro yen and the euro yen actually like this zone here for the for a buy zone this 1.2450 is really nice for I think a buy trade for the euro and just below that as well if you're looking at and this would be more of a risk on trade if risk is off the Japanese yen tends to strengthen but uh if you do want to be a buyer with the yen you've got a supply zone there and you've got a nice supply zone I really like that supply zone there the at the actual high is the 1.27 area technically I do like that but my bias would be to the long side so if prices do come down here to the 1.2450 area that would be where I'm looking for any kind of buy trades again not financial advice moving on to the Aussie dollar and the Aussie dollar again just been on this absolute tear since November no major pullbacks so with risk on sentiment fundamentally you've really had it's been a really nice trade buying the Australian dollar and just continuing to buy the Australian dollar but now we're looking for pullbacks within these demand zones so let's see what happens prices being supported at the moment did price to come back to this demand zone earlier in a week kind of went to the upside so there was some injury trades to be had but I don't expect this to last for long maybe deeper pullback as the dollar gets stronger short term wise and then we look for say then we but I'm probably going to be looking for any kind of long trades within that zone there that would be quite nice there is I don't think there's really any major areas of support and resistance within that zone but we'll see if there's anything locally that we can use for confluences and using some other confluences so let's see what happens with that supply zone wise there is technically a supply zone here but again not necessarily the strongest area of supply if you're looking for a short trade at the moment on the Aussie dollar but moving on to the Australian yen and again the Aussie yen being a barometer of risk sentiment and you can see when risk is on traders will pile into the Australian dollar when risk is off you'll see traders pile into the Japanese yen so at the moment we've seen this you know this trade really monster trade especially since November anyway last year risk on vaccine news etc all right so we've just seen a nice trend now waiting for a pullback so for anyone who's been waiting to jump in on this trade this Aussie yen trade like myself then there are areas here that we could look towards to look for any kind of buy trades I do like this area around here this 7850 area got some support and resistance confluence and there's some other confluences as well that I'd be looking for not just the support and resistance so let's see what happens if prices can pull back from a supply zone meaning you're buying the Japanese yen I don't think that is really a strong area of supply at all until we start to you know really look you know prices really take out a level of demand and really kind of come down and maybe even go beyond this area that's when I'll see that there's going to be strong supply there but again you have to expect really a pullback a deeper pullback at some point probably into some sort of fair value we're looking at fair value fair values all the way down here so I do think around here is actually a really nice medium term zone as well so that area there this area this area doesn't work out the 7850 or just below that then 77 is actually a really nice area got a lot of confluence I think yeah it's got nice confluence there as well do like that that zone and finally looking at gold and gold again we've pulled back to this demand zone where you've got that area there you've got an area here you've got supply zone around here really that supply zone started from just before there so it was really all of this area here which is a level of supply and you can see where prices did react from that I do like this area as a potential buy but in the short term I think maybe if the dollar starts to you know gain its strength then we could see prices the price of gold really kind of fall down to this 178 and I think this is an absolute bargain for gold prices do come down here then that is a really nice trade to the upside also as well there are situations where the dollar and gold will go up in tandem by the way it happened for pretty much a whole year if you look at you know 2019 gold right into 2020 2019 into 2020 yeah you had a nice uptrend now if you go to if you go back to the dollar index yeah and we look at 2019 yeah if you look at 2019 which is here into 2020 yeah what was the dollar doing as well was doing pretty much the same thing yes we did have you know some pullbacks as well but overall we were you know on an uptrend so there are periods where gold and the dollar can do and do move together they're probably being moved basically probably but the dollar was being really moved to the upside I remember this because I was trading the dollar long as well and it was due to really the dollar being the best out of the worst currencies the economy was growing under Donald Trump Europe wasn't doing too well so the dollar was an overall buy in 2019 2020 but gold at the same time was obviously there were there were there were risk central banks were buying gold as a hedge against inflation money printing etc so there are correlations that tend to work out or the couple was well so just because the dollar is going down or going up doesn't mean that gold must go down as well you know you can have both asset classes move in the same direction so let's let's see what happens with that but going back to but going back to gold I do think that the that these these areas here are really nice for a potential buy if that doesn't work out then I think the 17 area is a really nice got some really nice upside potential if this continues to move to the upside anyways guys that's it for this week if you find my analysis useful again please don't forget to like subscribe share with your fellow colleagues definitely press that like button as it helps the youtube algorithm for my videos and until the next video take care and have a great trading week