This Week’s Economic Calendar
The month of August, recognized as a summer month, is typically associated with reduced liquidity, leading to consolidation ranges and high resistance trading, as past data suggests. However, recent escalating tensions among global powers, combined with mounting threats of conflict and the imminent U.S. presidential election, have significantly influenced the marketplace. This has led to rapid repricing and volatile swings around news releases, which could result in a rather different price delivery in August compared to previous years.
The indices, in particular, which have broken structure to the downside followed by a beautiful repricing into discount targets, continue to remain bearish. This is confirmed by institutional order flow, emphasizing the focus on sell models in a sell program until a new significant break in market structure is observed.
As we enter the new week, key reports will come into focus, with the Non-Farm Payroll (NFP) numbers announcement on Friday being particularly significant. The emphasis remains on meticulous trading and tight risk management to navigate the evolving markets effectively.
Please note that this is not financial advice.*
Monday:
Given that it’s the first day of the NFP (Non-Farm Payrolls) week, combined with the start of a new month and a Monday, it’s crucial to exercise patience and manage expectations. The absence of news drivers expected to inject volatility into the markets translates to the recommendation of waiting for the opening range. Then, focus on identifying the most probable higher time-frame draw on liquidity around the 10:00 AM silver bullet.
Tuesday:
Red and medium folder drivers are scheduled from 9:00 AM into 10:00 AM, coinciding with the silver bullet hour, which is expected to inject volatility into the markets. Consequently, the day is anticipated to present optimal trading opportunities. Traders should consider the 10:00 AM silver bullet distribution hour and the PM session for higher probability trades.
Wednesday:
Red and medium-folder news drivers are expected to flood the market in the AM session, starting as early as 8:15 AM. These news events will likely serve as volatility injections into the markets. However, it’s important to note that the FOMC rates and press conference are scheduled for later in the day, likely leading to consolidation leading up to this event. During the event, there may be periods of heightened volatility and whipsaws in the market.
Traders, especially those who are not experienced, are advised to manage their expectations heavily on this day. It’s recommended to focus on the 7-8 AM silver bullet or, if you have the experience to navigate the heightened volatility, a setup after 2:30 PM.
Thursday:
Highlighted as the day before the Non-Farm Payrolls (NFP) report, we can expect price to deliver within the context of high resistance and low probability trading conditions. Traders are advised to exercise caution, particularly if they lack experience.
On this day, multiple medium and red-folder news drivers are scheduled between 8:30 AM and 10:00 AM, which is expected to inject volatility into the marketplace. If traders choose to participate, they should recognize that it’s a lower probability trading day.
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 driver, 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 AM Silver Bullet hour or 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 revolves around earnings reports, with several large-cap institutions scheduled to release theirs. Specifically, McDonald’s, PayPal, Microsoft, AMD, Pfizer, BP, P&G, Mastercard, Meta, Apple, Amazon, ExxonMobil, and Boeing are in focus this week. Traders should expect volatility and potential consolidation in the lead-up to these reports.
The Cot Report For The US Dollar
The previous week for the US Dollar was characterized by a repricing to the 104.6 level in a premium as anticipated in the previous weekly write-up, closing at 104.32 without significant intra-week expansion. Seasonal tendencies and the Commitments of Traders (COT) report continue to suggest lower prices for the Dollar Index in the long term. This outlook is further supported by the interest rates, specifically the 2- and 5-year interest rates, which are leading macro indicators of market health and remaining heavily bearish. This bearish sentiment could translate into near-term weakness for the US Dollar.
How we trade at the premium target of 104.60 as we enter the new week will either confirm or negate this data.
Analysis of the COT report, focusing on commercials engaged in hedging activities, reveals that commercials continue to hold more short positions than longs. This confirms their anticipation of lower prices for the US Dollar in the near future from a fundamental standpoint.
What does this signify for us as traders? Once again, the US Dollar remains bearish, as confirmed by fundamental factors. However, this outlook remains subject to institutional order flow and market structure. Going into this week, we will be watching to see if premium PD arrays will continue to resist price, followed by acceleration into discount targets, or if we will see a transition to bullish order flow on the daily chart. Currently, price is held in a range between 104.6 and 104.080. For longer-term macro projections, we need to leave that range, but so far, we remain in consolidation. Expectations will remain managed accordingly.
Seasonal Tendencies
The US Dollar
Seasonal tendencies for the U.S. dollar highlight the likelihood of a consolidation range-bound market in August. This can be attributed to the fact that August is a summer month where central banks and institutions with deep pockets are less willing to take on new risks. This, coupled with the tight weekly range of 99.5-107.38, points to one course of action: managing expectations and looking for a delivery into intermediate-term price targets. We are unlikely to see directional long-term price runs until we expand out of the weekly range, likely into the last quarter of the year post-U.S. presidential elections.
Stay informed for sound decision-making, and always adhere to strict risk management protocols.
Until our next update, trade wiseley
Happy Trading!
Adora Trading Team
