Fundamental data takes a back seat as the pandemic continues to dominate so patience required!

Fundamental data takes a back seat as the pandemic continues to dominate so patience required!

With markets remaining nervous as the pandemic continues to dominate and fundamentals take a back seat, patience is required in these tricky market trading conditions.

00:12

Initial PMI data and market reaction

00:12

The speaker discusses monitoring recent market activity related to PMI data releases. They note that the first data set, a French PMI, was released quickly, but emphasize the German PMI at 8:30 as more important. The market reaction is positive, with 50 identified as a key inflection point.

00:47

Understanding PMI inflection point at 50

00:47

The speaker discusses analyzing fundamental data through graphical representations similar to market charts. They explain that a value above 50 indicates a well-performing market economy. The graph shows a sharp decline caused by the economic shutdowns due to the virus.

01:24

Context of unusual economic environment

01:24

The speaker discusses the unusual and abnormal context of the past two to three months, emphasizing that the environment has been far from normal. They mention some relief that numbers have returned to 50, though caution that its sustainability is uncertain. Additionally, attention is drawn to the upcoming German data, which is regarded as particularly important.

01:55

Euro dollar chart congestion phase explained

01:55

The segment discusses the euro dollar market behavior leading up to a news release, focusing on the congestion phase visible on a 5-minute chart. This phase represents a balanced market zone called the volume point of control, where buying and selling transactions occur without a strong directional trend. Such congestion phases often appear before major news events and in less actively traded forex pairs. The 24-hour forex market also experiences varying activity levels depending on the local market sessions, causing congestion phases to be more common in certain pairs and times.

03:46

Impact of mixed trade messages on markets

03:46

The speaker discusses the current market situation where trends are forming and pausing amid conflicting signals. There is anticipation of new information arriving shortly, contributing to market volatility. A key factor influencing prices is the uncertain status of the trade agreement between China and the US, with contradictory statements from negotiators like Peter Navarro fueling confusion. This results in mixed messages affecting market price actions, making it challenging to interpret movements. The analysis includes observing price action, volume, and indicators to identify potential pauses, pullbacks, or reversals in the market trend.

05:27

Uncertainty due to virus and market confusion

05:27

The speaker discusses the ongoing deep uncertainty surrounding the virus situation. Although the virus appears to be declining in some regions, there is widespread confusion about what will happen next. This uncertainty is reflected among professional traders and fund managers, who are struggling to interpret fluctuating data and market reactions. Despite having extensive information, they recognize that they still lack clarity on the future trajectory of the virus and its impact in the coming months.

07:04

Monitoring virus developments and fundamentals

07:04

The speaker discusses the importance of monitoring both fundamental news and virus developments as the market awaits a vaccine. Turning to the Eurodollar on the ten-minute chart, they note a recent upward push and analyze key price levels, highlighting significant resistance around 1312. They emphasize watching how these levels hold or break, especially in anticipation of upcoming German economic news. The chart shows notable congestion and volume, indicating potential price movement either upward or downward.

08:12

The price action has moved outside the average true range, triggering a volatility indicator that signals likely price retracements within candle spreads. The speaker explains how this real-time indicator helps anticipate price behavior, noting examples of triggered signals followed by retracements and congestion. They describe a pattern of volatility with reversals and volume spikes, contrasting yesterday’s market behavior, which was more choppy and frustrating than outright volatility.

09:12

Despite the recent volatility and choppiness, the Euro continues to move higher while the dollar moves lower, creating a clear divergence. The speaker highlights the approaching release of German economic data and points to the Renko chart for further confirmation of this trend and divergence, setting the stage for potential market reactions once the data is published.

09:48

Price action, volatility, and indicator signals

09:48

The speaker discusses the current market trend, highlighting that it’s not clearly upward despite some pullbacks and rises. They explain that using a combination of indicators shows mixed signals, with the trend monitor turning bright red before continuing higher. The broader market conditions are complex, making trading decisions difficult. The speaker also examines recent economic releases, noting the German numbers are slightly better than expected but still weak compared to French data. They emphasize the need to wait and see how the market reacts, as the initial movements may just be knee-jerk reactions rather than a clear reversal.

11:28

There is a sequence of economic releases coming in around 9:00 and 9:30, including data from the Eurozone and the UK, which contribute to market volatility and interruptions in chart analysis. The speaker points out a critical price level at 1.1313, which has been pierced on the hourly chart. Typically, the price may break through such a level, then retest it before moving higher, requiring strong volume to sustain the breakout. These price movements are common and expected in market behavior.

12:33

Price action rarely moves in a straight line; it tends to rise with pauses and pullbacks that may appear as reversals but often continue in the original direction. Volume analysis beneath the candles helps confirm whether these pullbacks are temporary corrections or full reversals. The speaker notes that recent price action involved hitting a resistance level twice, followed by small pullbacks with low volume, suggesting the upward move will likely continue.

13:33

The discussion shifts to the emotional aspect of trading, emphasizing that managing emotions like fear, greed, complacency, and euphoria is crucial. Market makers and insiders exploit these emotions using news and market movements. Learning to control emotional responses, especially the fear of losing money, is essential for trading success. The speaker concludes that mastering emotional management is the best way to navigate the market effectively.

By Anna Coulling – creator of volume price analysis