This Week’s Economic Calendar
Risk-Off on the US Dollar
The delivery into premium targets on the US Dollar was confirmed across correlated assets, especially the indices, which delivered to targets, and took out fund-level stops with low resistance. This allowed us to confidently anticipate lower prices and trust sell models into discount targets, completing a textbook market maker sell model.
With December now behind us and volume returning to the markets, speed in delivery, low resistance liquidity runs, and expansion profiles into targets can be expected. We will continue to trust our sell models in a sell program, as we remain aligned with institutional order flow, maintaining a bearish outlook on the indices in the near term.
Looking Ahead:
This week is data-heavy, with two key events:
-FOMC Meeting Minutes on Wednesday at 2:00 PM
-NFP Numbers on Friday at 8:30 AM
Expect notable price swings during these news releases, and look to capitalize on high-probability opportunities that form after their release.
Please note that this is not financial advice.
Monday:
Given that it’s the first day of NFP (Non-Farm Payrolls) week, and a Monday, patience and managed expectations are key. A medium-impact economic news driver at 9:45 AM is expected to inject volatility into the markets. I recommend looking for opportunities pre-market, if the market structure suggests it is high probability or observing the 9:30 AM equities open and then focusing on identifying the most probable higher-time frame draw on liquidity during the Opening Range (9:30-10:00 AM) capitalizing on the volatility near the 9:30 opening bell.
Tuesday:
Expect heightened volatility in the AM session due to key high impact news drivers scheduled for 10 AM, coinciding with the silver bullet hour. This marks the second most probable trading day pre-NFP. Both the AM and PM sessions should offer low-risk, high-probability opportunities.
Wednesday:
Heightened market volatility is expected in the PM session, driven by the FOMC meeting minutes release at 2:00 PM. Focusing on the pre-market session (7:00–8:00 AM), macros, and observing the opening range (9:30-10:00 AM) for low risk setups is ideal on a day we expect the AM to be more difficult. Traders are advised to conclude their trading by 12:00 noon at the latest, avoiding the PM session to protect capital in lower probability high resistance price delivery in anticipation of the NFP numbers on Friday.
Thursday:
Highlighted as the day before the Non-Farm Payrolls (NFP) report, where we can expect price to deliver within the context of high resistance and low probability trading conditions. Traders are advised to exercise caution and recognize that it’s a lower probability trading day, particularly if they lack experience.
Friday:
Marked by the anticipation of the Non-Farm Payrolls (NFP) numbers, there is an expectation of heightened volatility in the markets following the release of this high-impact news, potentially offering optimal trading opportunities. However, it’s important to note that trading ahead of such high-impact news is not recommended due to increased uncertainty and risk. Instead, traders are advised to wait and observe the liquidity and inefficiencies that unfold after the news release. For higher probability setups, consideration can be given to trading during the 10-11 AM Silver Bullet and the PM session.
Earnings Spotlight: Major Corporate Reports Unveiling This Week – Key Insights for Investors
Earnings Reports Impact: A gentle reminder to fellow traders: anticipate significant price movements surrounding earnings reports in large-cap companies. This period often presents strategic trading opportunities, capitalizing on heightened volatility for smoother trades.
The upcoming week centers on earnings reports from major large-cap institutions, including Jefferies, Delta, RPM, AAR, UniFirst, KB Homes, and Penguin Solutions. These key players are expected to drive heightened market volatility, with potential consolidation likely, leading up to their report releases.
The Cot Report For The US Dollar
The Previous Week in Review
The US dollar reached premium targets, supported by institutional order flow, which remains heavily bullish. Discount PD arrays provided support for price, while breakaway gaps confirmed algorithmic strength.
Reflecting on prior newsletters, attention was drawn to commercials heavily offloading positions, balancing their books, and wrapping up the year. This decoupling between fundamentals and commercial activity remains unresolved, signaling no clear smart money accumulation yet.
Institutional order flow remains dominant, with additional data from the new year needed for clarity on commercial positioning and future intentions.
What does this signify for us as traders?
With commercials yet to provide noteworthy data for informed decision-making, the gap between technicals and fundamentals persists. As such, our focus will remain on institutional order flow, leveraging top-down analysis and price action for actionable insights.
Seasonal Tendencies
The US Dollar
The New Year of 2025: Fresh Volatility Ahead
The year 2025 is finally upon us, and we anticipate fresh volatility as fund-level traders resume risk-taking. This will likely inject volatility into the markets, offering low-risk, high-probability setups into targets.
While seasonal tendencies for the US dollar suggest a sideways January, fundamental metrics such as interest rates and T-bond prices, combined with institutional order flow, indicate otherwise. The US dollar remains extremely bullish across the board, defying seasonal expectations.
Technical analysis, particularly institutional order flow and top-down analysis, continues to serve as the cornerstone of decision-making, offering clarity even when technical and fundamental correlations diverge.
Stay informed for sound decision-making, and always adhere to strict risk management protocols.
Until our next update, trade wisely.
Happy Trading!
Adora Trading Team
