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Yesterday the stock market crashed heavily all over the world and here are the main reasons :
1. Fear of recession in the US : after the heavy labor market slowdown in July and
an increase of unemployment, investors start fearing a possible recession.
a recession is a heavy slowdown in the economy caused by a tight monetary policy
(high interest rate) investors fear that the Fed has waited too long to consider cutting rates and they believe US economy is close to a recession. So the Fed is currently under a pressure to cut rate as soon as possible
2. the Bank Of Japan hiked its interest rate last week: currently the Bank of Japan has the lowest
interest rate in the world so investors borrow money at low coast in Japan (only 0.1% interest)
to reinvest in the USA, UK, Canada, Europe at a higher interest rate (5%). but last week
the BoJ hiked its rate to 0.25% meaning all the investors that have borrowed money from Japan at 0.1%
will now have to pay it back at a higher rate of 0.25% which is absolutely not profitable for the investors
that why they panicked and heavily sold their shares in USA, UK, canada and Europe to pay back their debts before
things get worst for them causing the US and all other stocks and indices market to crash yesterday.
what happened yesterday was the result of fear and uncertainty among investors.
as usual, in times of fear and uncertainty, USD get weak and safe heaven assets like Gold, JPY, CHF skyrocket.
so it's recommended to stay bullish in XAUUSD and XXXUSD pairs and bearish in USDXXX.
probably this was trade of my life. 50% closed with around 15R and the rest around 37R. Thanks @SMART Trade
Repost from N/a
GBPJPY : drops 100 pips after mitigating our POI as expectations for interest rate hike increase few hours before BoJ officials meeting.
Repost from N/a
Fundamental Analysis (July 31st)
As expected, the Bank of Japan hiked its rates earlier this morning by 15 basic point. GBPJPY and all other XXXJPY pairs kept dropping as expected. Focus is now shifted to the United States where Fed officials will met this afternoon to discuss the possibility of a first rate cut in September. In early July, fed chairman Jerome Powell indicated that the Fed won't wait until the inflation reaches Fed's target of 2% before cutting rates. Investors hope to get more clues in today FMOC. Overall, today's meeting will probably have a dovish tone (XXXUSD up and USDXXX down)
Trade : an excellent pair you can keep an eye on is XAUUSD. Gold has a highly negative correlation with USD and Fed's interest rate. Any indication of interest rate cut will send gold high.
Thinking of starting public zoom for market analysis every Sunday starting from August. Which option below do you think is better ?
#Quizresult
AS PER RULE Both ARE VALID SETUP ,
BUT IF YOU NOTED ABOVE THERE IS TREND LINE LIQ SOO SELLING AT (A) IS A RISKY YOU SHOULD WAIT FOR HIGH PROBABILITY SETUP NOT VALID SETUP,π‘β
#smarttraders #tradingquiz
(You see that your strategy is not the problem)
Closing my trades before TP is a problem I still struggle with but I have really improved this year. How did I do? Just have a logic and realistic TP.
Having a logic TP is targeting nearest liquidity area (most of SMC traders target next BOS which is not a logic exit because it takes lot of effort for the market to brake a structure and make a new HH or LL)
Having a realistic TP is having realistic RR, 1:3 RR is perfect (average 1:2). The lower your RR, the higher will be your win rate. But most trader want to have high win rate and high RR 1:10+ ngl a complete delusion
Repost from N/a
USD bouncing despite Fed Chair Jerome Powell dovish speech on Monday. Bets that the Fed will cut rate in September are now priced at 90%. USD is now backed by expectation that former US President Donald Trump is more likely to win the elections after he escaped a assassination attempt.
Interpretation : USA is under a huge political tension currently, and there more uncertainty in market. For more safety, investors will invest more safe haven assets like gold, JPY And CHF. you can actually see gold soaring near its all time high since the opening of the market yesterday.
Look more for buys on gold this week, and sells on USDJPY, USDCHF
I have noticed that some of you were confused by the quizz result about SCOB yesterday so I have retaken the explanation in a clearer way (I hope) in this illustrative picture.
Note :
-PDH/L stands for Previous Day High or Low
-when I used the expression "the next candle should close above or below", i was speaking in a more general way how to identify SCOBs. but in the specific case of our quizz, the market is bullish so the next candle must close above the previous candle (must close below if it was a bearish market)
