This Week’s Economic Calendar
The previous week marked the first week in office for the new U.S. President, Donald Trump, alongside a fresh cabinet forming a new administration. As expected, during transitions of this magnitude, such events create opportunities for market makers to manipulate price delivery, as seen in the high-resistance runs into liquidity and inefficiencies observed across the indices last week.
This serves as a timely reminder to prioritize careful risk management in our trades and executions as outlined in our individual trading plans. In such volatile repricing, it’s crucial to reduce risk and manage expectations in order to preserve capital and avoid potential blowouts, ensuring we stay out of the 95% failure statistic.
Looking Ahead:
This week is data-heavy, with the spotlight on the FOMC rate announcement scheduled for Wednesday at 2 PM. Expect heightened volatility-all week long. Focus on high-probability setups that align with a higher time frame draw on liquidity at time of day,while managing risk effectively.
Please note that this is not financial advice.
Monday:
Given that it’s the first day of the week following large-range week on the U.S. dollar ,last trading week of the month,and a Monday, patience and managed expectations are key. A medium-impact economic news driver at 10:00AM is expected to inject volatility into the market. The recommendation is to observe the opening range and then focus on identifying the most probable higher time-frame draw on liquidity during the 10:00 AM silver bullet.
Tuesday:
Expect heightened volatility in the AM session, given the key medium & high impact news driver scheduled for 8:30 to 10:00 AM, coinciding with the Silver Bullet hour. Both the AM and PM sessions are expected to present low-risk, high-probability opportunities.
Wednesday:
Heightened market volatility is expected in the PM session, driven by the FOMC rates and press conference scheduled between 2-2:30 PM, likely leading to consolidation ahead of the event. During the event, there may be periods of heightened volatility and whipsaws in the market. Traders, especially those with less experience, should manage expectations carefully. Focusing on the pre-market session for low risk setups and observing the opening range is ideal on a day we expect the AM to be more difficult. For those experienced enough to handle increased volatility, consider setups post-2:30 PM after the FOMC event.
Thursday:
Expect heightened market volatility between 8:30 AM and 10 AM due to the impact of Red and medium-folder news drivers expected to flood the market in the AM session. Traders are advised to focus on identifying the most probable higher time-frame draw on liquidity post-news release. Alternatively,the AM Session beginning at 9:30 and the PM session is likely to offer high-probability trade setups too.
Friday:
Red and medium-impact news drivers are scheduled for 8:30 AM and 9:45 AM, respectively, expected to inject volatility.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 AM Silver Bullet window or 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 AT&T, Brown & Brown, Boeing, JetBlue, T-Mobile, Nasdaq, Tesla, Starbucks, Meta, Microsoft, IBM, UPS, Mastercard, BlackRock, Apple, Intel, Caterpillar, ExxonMobil, Chevron, and Phillips 66. 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
After weeks of prolonged, one-sided expansion into premium targets, the past week concluded with a bearish down-close weekly candle, taking out fund-level, tightly trailed stops and retracing into a discount of the weekly dealing range. Given the strong bearish close, how we trade in a discount of the weekly dealing range will be closely monitored moving forward.
On the commercial side, for yet another week, they continue to accumulate strong short hedges, as shown by the COT data released on Friday. This reaffirms their bearish stance heading into Q1 2024. With the correlation between the commercials’ positioning and the technicals aligning, we can anticipate potential intermediate to longer-term downside expansion toward discount targets.
What does this signify for us as traders?
The increased short hedging activity from commercials as we transition from January into February indicates expectations of a bearish U.S. dollar in the near term. This insight supports our long-term macro outlook; however, we will rely on technical analysis and institutional order flow on lower time frames to confirm or invalidate these expectations. The U.S. dollar remains bullish until proven otherwise, with a break in structure to confirm a shift-from a buy to a sell program.Attention should be given to premium targets moving forward, as the creation of new highs could mark a potential smart money reversal, in line with the commercial positioning and data.
Seasonal Tendencies
The US Dollar
We bid farewell to January as it comes to an end this week and prepare to welcome February—a new month with fresh volatility. Historically, February is to be a bullish month for the US Dollar based on seasonal data, with an intermediate-term low priced in early in the month,subsequently delivering into premium targets above market price.
While this seasonal framework provides a general road-map for expectations, it must be validated by institutional order flow and inter-market analysis to become actionable. In the coming week, we will focus on gathering further insights, particularly by observing how we trade within a discount of the weekly dealing range we are currently in for actionable insights on what price is to do next.
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
