Chinese PMIs, Euro Inflation Twist, NFP, Power of Confluence & CHF Pairs Printing Money
Good morning Traders,
Wake up and smell the pips with Currencies & Coffee - your daily shot of forex insights and trading inspiration.
Here’s what we have covered today:
☕Chinese PMIs, Eurozone Inflation Twists and NFP
☕Utilizing the Power of Confluence for High Probability Trading
☕USDCHF & EURCHF... Printing Money
🗞️MOVERS & SHAKERS🗞️
China's Economic Health Check: PMI Readings
China's recent data slip-ups have left the market pondering if the world's second-largest economy is losing its post-recovery pep. Time for another glimpse into China's health with its upcoming official manufacturing and services PMIs (May 31 at 1:30 AM GMT) and Caixin's manufacturing PMI (June 1 at 1:45 AM GMT). Anticipated to reveal stronger May results, these PMIs could signal a rejuvenated China, reviving AUD and NZD along the way. However, beware the PMI pitfalls – underwhelming readings may stir risk aversion, knocking these currencies off their feet.
Eurozone's Inflation Puzzle: CPI Flash Estimates
The ECB's hawkish stance has taken centre stage as the Eurozone's inflation drama unfolds, leaving the EUR on tenterhooks. The upcoming Eurozone headline and core CPI flash estimates (June 1, 9:00 am GMT) might throw a plot twist. Exceeding expectations could be the cliffhanger that sets the scene for a potential ECB rate hike or prolongation of high rates, boosting the Euro. Even more so with Germany's recent technical recession lurking in the shadows.
For more juicy ECB revelations, don't miss the ECB President Lagarde's suspenseful speech at 9:30 am GMT and the cryptic ECB meeting minutes at 11:30 am GMT. Unravel the ECB's plans and arm yourself with potent trade strategies!
U.S. Employment Outlook: NFP Reports
As we buckle up for a new month, the U.S. non-farm payrolls (NFP) report promises an adrenaline rush. The previous month's thrill ride saw a job boom that uplifted the USD. However, this month's report teases a slowdown in job creation, a slight uptick in unemployment, and a tempering in hourly earnings growth. If the job market defies the odds and outperforms, it could dash hopes of a Fed rate cut and rocket the USD upwards.
But remember, it's not all smooth rides in the employment theme park. The NFP reports aren't always the thrilling ride you'd expect. Sneak peeks such as JOLTS job openings (May 31, 2:00 pm GMT), Challenger job cuts (June 1, 11:30 am GMT), ADP report (June 1, 12:15 pm GMT), and the ISM manufacturing PMI employment component (June 1, 2:00 pm GMT) might give us early indicators of how wild the NFP ride might be on Friday, June 2 at 12:30 pm GMT.
Fasten your seatbelts and put on your trading caps – it will be an exhilarating week of vital data and central bank intrigue!
ECONOMIC CALENDAR
Utilizing the Power of Confluence for High Probability Trading
Confluence, in the world of trading, refers to the alignment of multiple trading signals, techniques, or indicators, leading to a higher probability trade setup. When several factors come together at a certain point on your chart, it increases the likelihood of a price response at that level.
Understand the Concept of Confluence
Trading using confluence means waiting for multiple technical analysis tools or indicators to align and point to the same trade setup. This could include factors like key support or resistance levels, trend lines, Fibonacci levels, or candlestick patterns.
Identify Areas of Confluence
Areas of confluence could be where a Fibonacci retracement level aligns with a key support or resistance level, or where a trend line intersects a moving average. These areas often act as strong barriers that can trigger significant price responses.
Use Confluence to Confirm Trade Setups
When multiple factors align, it gives more weight to the trade setup and increases your chances of success. For instance, a bullish engulfing candlestick pattern occurring at a support level that aligns with a Fibonacci retracement level would be considered a high-probability trade setup.
Manage Risk with Confluence
Confluence can also help manage risk. The areas of confluence act as significant price barriers and, therefore, can be effective points for setting stop-loss levels.
Stay Patient for High Confluence Setups
One key aspect of trading with confluence is patience. High confluence setups don’t occur all the time, so it's important to be patient and avoid forcing trades when the conditions aren’t right.
Action Steps:
1️⃣ Understand the concept of confluence and its significance in trading.
2️⃣ Identify potential areas of confluence on your chart.
3️⃣ Use areas of confluence to confirm your trade setups and increase your chances of success.
4️⃣ Implement confluence into your risk management strategy.
5️⃣ Practice patience and discipline to wait for high confluence setups.
Utilizing the power of confluence can greatly enhance the probability of your trade setups and improve trading performance.
SIP, LAUH, TRADE 😁
Don't be this guy ;) Plan the trade and trade the plan.
📈LATTE LINEUP📈
-USDCHF🎯- ( Full target, from last week )
Last week, our Mastermind subscribers were alerted to a trade opportunity on USDCHF. Our analysis began by utilizing the 4-hour time frame as our higher time frame (HTF), providing valuable insights. Here's a breakdown of the trade:
HTF (4-HR): On the 4-hour chart, we observed a clear bullish trend, characterized by a new higher high formation. Subsequently, the price retraced towards the previous 4-hour high and resistance level, now acting as support. This zone also aligned harmoniously with the 50% Fibonacci retracement level, enhancing its significance. To further strengthen our bullish bias, we witnessed the formation of an indecision candle within the zone. This candle signalled the participation of buyers, confirming their presence at this confluence area.
LTF (15-Min): Utilizing the lower time frame (LTF) of 15 minutes, we patiently awaited a clear shift in market structure. Our entry strategy involved a break and subsequent retest, confirmed by candlestick patterns. This LTF confirmation complemented our HTF analysis, aligning both time frames for a higher probability trade setup.
As the trade unfolded, all the elements we shared with our subscribers played out precisely as anticipated. The price surged towards our target, delivering profitable results.
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-EURCHF🎯- (Full Target, From last week)
Mid-last week, we identified an enticing setup on EURCHF, and our valued Nexus Hub members were promptly provided with comprehensive commentaries to seize this opportunity. Let's delve into the trade breakdown.
HTF (6-HR): Our higher time frame (HTF) analysis focused on the 6-hour chart, where we observed a crystal-clear market structure. The price action formed a distinct lower low and subsequently retraced towards the previous HTF low, which now acted as resistance. Notably, this level coincided with the 70.50% Fibonacci retracement, heightening its significance. A massive rejection candle emerged, signalling strong selling momentum and confirming our bearish bias.
LTF (30-Min): Transitioning to the lower time frame (LTF) of 30 minutes, we witnessed an ideal setup. A double-top pattern broke to the downside, followed by a retracement. The previous support was then tested as resistance. A significant engulfing candle formed during the early Euro session, aligning perfectly with our analysis. Utilizing the insights from our HTF and LTF analysis, we identified an opportune entry point. We aimed to mitigate potential losses by placing our stop-loss order as close as possible to the previous high. Our target was set at the previous HTF low, ensuring a favourable risk-to-reward ratio of at least 1:3.
By precisely executing our trade plan, we harnessed the power of multiple time frame analysis and successfully capitalized on the EURCHF trade opportunity. Maintaining strict risk management practices and adhering to pre-defined profit targets remain crucial to our trading strategy.
That's all for now, but the spirit of trading lives on. Keep the fire burning and the profits growing.
Until next time,
The C&C team.