This Week’s Economic Calendar
The previous week saw a transition from a sell to a buy program on the indices post-CPI, supported by a daily change in the state of delivery. Through a run on stops, smart money absorbed “Retails” sell stops in a discount, subsequently repricing into premium targets above market price. This completed a market maker buy model. How price trades at these premium levels into the new week will either confirm a continuation or signal a potential reversal, depending on market structure and institutional order flow.
Looking Ahead:
the 47th U.S. President, Donald Trump, is scheduled to be sworn in on January 20, 2024. Expectations are that this event may inject volatility into the markets, potentially serving as a smoke screen for erratic repricing. The emphasis remains on the importance of adhering to strict risk management protocols moving forward.
Key Economic calendar Events This Week:
The upcoming week is light on economic news, with the unemployment numbers set for release on Thursday at 8:30 AM being the highlight. Expect heightened volatility around these news releases, and look to capitalize on high-probability opportunities that presents themselves into a higher time frame draw.
Please note that this is not financial advice.
Monday:
Bank holiday – Low volatility, avoid trading
Tuesday:
The AM session following a bank holiday often presents challenges, identified by consolidation and high-resistance price runs into liquidity and inefficiencies. To navigate this, focusing on the pre-market session (7–8 AM EST) and the key 20-minute macro windows) and observing the opening range (9:30 -10am) is ideal on a day we expect the AM to be more difficult for low risk setups.
Wednesday:
Today presents no significant news drivers expected to inject volatility into the markets. Focus on the market trading hours or allow the opening range (9:30-10:00 AM) to develop before identifying the most probable higher time frame draw on liquidity during the 10 AM Silver Bullet or the PM session, should a suitable setup present itself.
Thursday:
Expect heightened volatility in the AM session due to multiple key high & medium impact news drivers scheduled at 8:30 am into 11 am. Focus on identifying the most probable higher time-frame draw on liquidity post-news release or, alternatively, wait for the 10 AM Silver Bullet window to frame low risk, high probability setups.
Friday:
Red and medium-impact news drivers are scheduled for 9:45 and 10:00 AM, sharp, coinciding with the Silver Bullet distribution hour. If you haven’t met your weekly profit objectives, shift your focus to identifying the most probable higher time frame draw on liquidity during the 10:00 AM Silver Bullet window and the PM session, should a suitable setup present itself.
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 Netflix, United Airlines, Procter & Gamble, American Express, Verizon, Bank of California, North West, GE Aerospace, Interactive Markets, and Ericsson. 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
Following a bullish expansion, we anticipate a retracement into a discount, running out tightly trailed fund level stop orders while offering smart money the opportunity to accumulate further positions at more favorable prices in a discount. This was evident in the U.S. dollar in the recently concluded week.
Looking ahead, institutional order flow remains bullish, with discount premium discount (PD) arrays supporting price. This suggests an expectation of continued higher prices until proven otherwise by a break of structure to the downside.
After a prolonged period of relative inactivity, commercials are beginning to reposition for the new year, taking on fresh risks and adjusting their exposure. The latest Commitment of Traders (COT) report, released on Friday, revealed that commercials are heavily net short as we enter Q1 2025. This positioning reflects a notable shift, signaling a potential bearish outlook for the U.S. dollar over the long term. However, the U.S. dollar continues to display strength, creating a divergence between fundamental data and technical analysis. This discrepancy points to a potential smart money accumulation, to be closely monitored in the weeks ahead.
What does this signify for us as traders?
The commercials, whose activities we carefully monitor, are heavily hedging short positions, with a notable buildup of open interest, suggesting an anticipation of a bearish U.S. dollar in the near term. While this remains a valuable insight for long-term macro analysis, premium targets can still be anticipated before a reversal occurs. Without calling a top, technicals remain key, and with the prevailing institutional order flow still in place, the U.S. dollar remains bullish until market structure &institutional order-flow confirms otherwise through a clear break of structure.
Seasonal Tendencies
The US Dollar
Seasonal tendencies for the month of January continue to indicate lower prices, with expectations for a bearish outlook through the remainder of the month. However, as emphasized in the previous newsletter, seasonal tendencies alone are not sufficient to determine longer-term price swings. They must be validated by institutional order flow and inter-market analysis to become actionable.
Despite these seasonal expectations, the market has once again defied them, continuing to reprice higher into fund-level stops above market price. The prevailing bullish Institutional order-flow reflects a market in a buy program.
Given the divergence between fundamentals and technicals, seasonal tendencies have offered limited guidance. Institutional order flow and market structure remain the dominant factors in providing actionable insights for yet another week. These will be relied upon to navigate the market effectively.
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
