This Week’s Economic Calendar
With inflation at 2.7%, interest rates are expected to rally as a preventive measure to curb rising inflation and return it to the desired 2% target for the U.S. economy. This strength in interest rates, especially in the 5- and 10-year Treasury yields, translates to a stronger U.S. dollar. This was clearly evident in the just concluded week’s price delivery, with the dollar expansion to the upside following a retracement into discount levels, allowing smart money to accumulate long positions buying retail sell stops before rapidly repricing into premium levels. We remain bullish on the dollar until proven otherwise by a break of structure.
Looking Ahead:
The upcoming week is data-heavy, with the FOMC rate announcement scheduled for Wednesday at 2:00 PM being the key highlight. Traders should prepare for notable price swings during these news releases and look to capitalize on opportunities that form after their release.
Please note that this is not financial advice.
Monday:
Given that it’s the first day of the trading week after a weekend and a Monday, it’s crucial to exercise patience and manage expectations medium and Red-folder news drivers at 8:30 & 9:45 AM respectively are expected to inject volatility, providing price runs to algorithmic reference points at this time. 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:
Red folder drivers are expected to hit the markets at 8:30 AM, injecting volatility. As a result, today is expected to present optimal trading opportunities. 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.
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 premarket 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 throughout into AM session. Traders are advised to focus on identifying the most probable higher time-frame draw on liquidity post-news release or alternatively the AM Session beginning at 9:30 and the PM session for higher probability trade setups.
Friday:
Red and medium-impact news drivers are scheduled for 8:30 AM and 10 AM, respectively, 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 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 will focus on earnings reports, with several large-cap institutions set to release theirs. Key players to watch include FedEx, Nike, Paychex, Birkenstock, CarMax, and Conagra Brands Inc. Traders should anticipate heightened volatility and potential consolidation in the lead-up to these report releases.
The Cot Report For The US Dollar
The U.S. dollar has displayed significant strength to the upside, displacing away from the discount FVG we monitored last week. This expansion is also being supported by extremely bullish interest rates, confirming expectations of higher prices and bullish institutional order flow in the near and intermediate term. With Christmas approaching, a “Christmas rally” is anticipated, further reinforcing algorithmic strength for the dollar.
The commercial positions we monitor in the COT reports remain heavily bullish, with large long hedges already in place and additional positions being added. This underscores their expectations for a stronger dollar in the long term, as confirmed by Friday’s data release. The discrepancy between fundamentals and technicals has also been resolved, with alignment fully restored, solidifying the bullish institutional order flow into the new week unless proven otherwise.
What does this signify for us as traders? Supported by both fundamental and technical factors, we maintain a bullish outlook on the U.S. dollar, with intermediate-term targets set at 108.11, 109.18, and 110.00.
Seasonal Tendencies
The US Dollar
Expectations for the U.S. Dollar based on seasonal data, suggests an intermediate term high being priced in early in December, followed by a displacement lower and consolidation for the remainder of the month. However, this has not been the case so far, as the U.S. dollar has shown continued strength due to global events, technical analysis, and fundamental factors supporting higher prices.
The U.S. dollar remains heavily bullish, with 110 expected to be delivered as an intermediate-term target moving forward. We continue to trust our buy models until a break of structure is justified within institutional order flow.
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
