European major currencies, such as the Euro and British Pound, outperformed the US Dollar on Friday. I happened to read that the US dollar has been on a climb amid the outbreak of the coronavirus, which is threatening global growth. According to preliminary estimates for February, the United States was thrown into the spotlight after a gauge of business activity unexpectedly contracted. Wuhan virus woes were brought up.
Well, I had to re-read what I wrote a couple of times because I could not make sense of it. What does the worldwide known coronavirus, soon to be declared a pandemic, have to do with the EURUSD and the fact that there has been and still is a clear bearish bias? Unluckily human beings have the urge to read about fatalities and bad news. We love that as a race. We feel “safer and more comfortable” by knowing that “someone else” is in bigger trouble than us.
This does not apply to Forex currency pairs or the financial markets. Bad news or a very bad earnings release could shake the markets quite, but if you look at the bigger picture, you won’t even see what happened.
Take a look at the attached EURUSD weekly timeframe. The EURO has been in a clear downtrend for months, the US dollar has been pretty strong, and so is the Dollar Index #DXY. A single day or a few days of bearish candlesticks on the US dollar means nothing if you look at the bigger picture.
EURUSD has created a very strong weekly supply level around the 1.1025 price area. We are patiently waiting for a retracement to go short. However, even though the weekly supply level is strong, we need to see certain price action within the imbalance before we go short. Why? There is an even bigger demand imbalance that has gained control.
The EURO could continue to drop further down and break the weekly lows around 1,0777, but who cares about that? As supply and demand traders, we know where the strongest imbalance is located, we have to have the patience to wait. Many other cross pairs, stocks and indexes provide us with many other opportunities.
We must focus on what matters the most, and what is that in my humble opinion? It’s spending quality time with your family and friends because tomorrow is not guaranteed. Avoid a personal fight against the EURO, the POUND, Facebook or Microsoft. Place your hard earned money at risk where a high probability materialises, in the meantime enjoy quality time with your beloved ones.
This is the kind of price action technical analysis you will learn in our trading community. You will learn how to locate new supply and demand imbalances and trade without using any indicators, no news, no fundamental analysis, no earnings announcements, no volume or VSA analysis. Just supply and demand imbalances.
Trading supply and demand imbalances are ideal for beginners and those with full or half-time jobs. You won’t need to stay in front of the computer all day long trying to move price action with your mind.
As supply and demand traders, we do not need to pay attention to the news, fundamentals or any earnings reports. Once a big timeframe imbalance has gained control, earnings do just the opposite and react strongly to those imbalances. Why do you see positive earnings and then the underlying stock drops like a rock, or a negative earnings announcement and the stock rallies like a rocket out of control? You are probably missing the fact that there are big imbalances in gaining control.
You should not worry about fundamentals or earnings announcements unless you are doing very short-term trading and scalping.
You can use these imbalances to plan your trades in lower timeframes. Trading is just waiting for the right trigger points and scenarios to present themselves, this game has a name, and it’s called the waiting game. We need to patiently wait for the correct scenarios and setups to happen and wait for the price to pull back or dip into the price levels we want to trade, in our case these price levels are made of supply and demand imbalances.
Join our supply and demand trading course if you want to learn how to trade using our supply and demand trading strategy.
There are several ways of buying stocks and futures. When trading stocks, you can buy shares of the underlying stock or use options strategies to go long or short at these specific supply and demand levels, long calls or long puts or spreads. You can even buy a CFD (contracts for difference) if you are in a country where it’s allowed.
© 2013 – 2022
Set and Forget S.L
All Rights Reserved.
Any Advice or information on this website is General Advice Only - It does not take into account your personal circumstances, please do not trade or invest based solely on this information. By viewing any material or using the information within this site you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here by Set and Forget, its employees, or fellow members. Futures, options, and spot currency and stocks trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the Forex and futures markets. Don't trade with money you can't afford to lose. This website is neither a solicitation nor an offer to Buy/Sell spot Forex, cfd's, stocks or other financial products. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
High Risk Warning: Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in Forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.