Global PMI Parade, +80 Pip Mastermind Tease, Language of the Market

Greetings, Ambitious Traders!

Savour the delightful blend of currencies and profits as we embark on a new week.

Here’s is what we have covered today:

☕ The Global PMI Parade: Spotlight on Europe and the U.S.

☕Understanding the Language of the Market

☕80 Pip  Mastermind Tease

🗞️MOVERS & SHAKERS🗞️

The Global PMI Parade: Spotlight on Europe and the U.S. 🌐

European Performance Indicators: Our European counterparts start the relay race with a series of PMI readings on Tuesday, May 23. The day begins at 7:15 am GMT with France on the starting blocks, anticipating a mixed bag with a slower contraction in manufacturing (rising from 45.6 to 46.1) and a slight cooling in services (dipping from 54.6 to 54.0). The baton then passes to Germany, which is expected to witness a marginal improvement in manufacturing (from 44.5 to 44.9), but a slight setback in services (from 56.0 to 55.0).

The final European leg features the U.K., predicting a minor uptick in manufacturing and a small service dip. Stronger-than-expected readings could bolster the Euro and Pound, while weak data could apply downward pressure.

U.S. Manufacturing and Services Check-up: Later in the day, at 1:45 pm GMT, attention will pivot to the U.S., with anticipated declines in manufacturing and services PMIs. Traders closely watch these numbers as they influence Fed policy decisions. Stronger-than-expected figures could support the USD, reflecting economic resilience, while disappointing readings could weigh on the greenback.

RBNZ's Rate Decision: This week's significant event will be the RBNZ monetary policy decision on May 24, 2:00 am GMT. An anticipated 0.25% rate hike and consistent hawkish rhetoric could underpin the Kiwi. However, any hint of the rate hike cycle nearing its end could trigger profit-taking, tempering NZD's gains. Tune in to the RBNZ presser at 3:00 pm GMT for key insights!

Unravelling the FOMC Minutes: The minutes from the FOMC's May 2023 meeting are due for release on May 24, 6:00 pm GMT. Should the document echo the previous meeting's labour market strength and persistent inflationary pressures, it could reinforce the USD's strength and potentially hint towards a June rate hike.

Tracking the U.S. Core PCE Index: Watch for the release of the U.S. Core PCE price index on May 26, 12:30 pm GMT. An expected 0.3% MoM uptick could add to inflationary concerns. A higher-than-expected reading might boost the USD on more aggressive Fed action prospects, while a lower figure could soften the greenback.

ECONOMIC CALENDAR

Unleashing the Power of Candlestick Patterns in Price Action Trading

Candlestick patterns are a fundamental part of price action trading, serving as visual representations of market participant psychology. Recognizing and understanding these patterns can offer valuable insights into potential market movements.

Understand Candlestick Patterns

Candlestick patterns are graphical representations of price movements within a specific timeframe. Each candlestick has four components: the opening price, closing price, high, and low. Depending on these values, the candlestick can reveal crucial information about market sentiment.

Identify Key Candlestick Patterns

There are numerous candlestick patterns, but some of the most commonly used in price action trading are bullish and bearish engulfing patterns, hammer and hanging man, doji, and shooting star. Each pattern can indicate potential bullish or bearish reversals, helping inform your trading decisions.

Use Candlestick Patterns to Confirm Trade Setups

Identifying a candlestick pattern that suggests a potential reversal or continuation could be an opportunity to enter a trade. For example, if you spot a bullish engulfing pattern at a key level of support, this could signal a potential buying opportunity.

Manage Risk with Candlestick Patterns

Candlestick patterns can also help you manage risk. For instance, you might place a stop loss below the low of a bullish engulfing pattern or above the high of a bearish engulfing pattern.

Combine Candlestick Patterns with Other Technical Analysis Tools

For more reliable signals, combine candlestick patterns with other forms of technical analysis, such as support and resistance, trend lines, or technical indicators. This can help confirm your trading signals and increase your chances of a successful trade.

Action Steps:

1️⃣ Learn to recognize and understand key candlestick patterns.

2️⃣ Use these patterns to identify potential trading opportunities.

3️⃣ Implement candlestick patterns in your risk management strategy.

4️⃣ Combine candlestick patterns with other technical analysis tools for more reliable trading signals.

By mastering candlestick patterns, you can enhance your understanding of market sentiment, make more informed trading decisions, and improve your overall trading performance.

Sip, Laugh, Trade 😁

If you know, you know... :P

📈LATTE LINEUP📈

-USDCAD-

We shared an 80-pip tease last week with our Mastermind Subscribers. Once we had all our higher time frame bearish confirmations, we were waiting for a shift in the market structure on the hourly to go short. Everything went to plan with a textbook break and retest on the hourly for us to execute our position.

I banked half the position as the price reacted perfectly to a predetermined partial profit level and moved my stop loss to my entry to secure the position. This aligns with my personal trade management rules. As you can see, we then had a total reversal.  It’s extremely important to respect your levels and manage your trades.

It’s easy to fall for your greed and ego trying to hit full targets. Remember, guys, your job as a trader is to make money and not be correct. This requires emotionless execution in all aspects of your trading.

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GET CHARTING!

-CADJPY-

HTF(12-HR): In recent weeks, we successfully capitalized on a favourable long position. The upward trend in CADJPY has continued, forming a new high point. Our focus now shifts to a potential buying opportunity as we anticipate a drop in price towards the previous resistance, which we expect will act as a level of support.

This drop towards the previous resistance, now serving as support, presents a compelling area of confluence with the 50% Fibonacci retracement level. The convergence of these factors enhances the significance of this zone as a potential turning point for the market.

To confirm the return of buyers and position ourselves for a long trade, we eagerly await the development of candlestick patterns. Bullish candlestick formations indicate buyer momentum resurfacing, providing the opportune moment to enter a long position.

As we await the confirmation from candlestick patterns, we must exercise patience and let the market come to us. Remember, you can always have weekly market commentary through our Forex Nexus Hub.

-GBPCAD-

HTF(12-HR): In our analysis of the GBPCAD pair on the 12-hour chart, we have observed a significant shift in market structure, leading to a potential reversal scenario. The emergence of a double top pattern followed by a new lower low suggests a transition from a bullish to a bearish bias.

As the price retraces, our attention turns to the previous support level, which now acts as resistance. This retracement aligns intriguingly with the 50% Fibonacci retracement level, creating a compelling area of confluence. Within this zone, we anticipate the potential formation of critical candlestick patterns that will confirm market reactions.

By patiently awaiting the development of these candlestick formations, we can gain valuable insights into the participation of sellers within the market. These confirmations will solidify our bearish bias and provide a strategic entry point for potential short positions.

As the price still needs to play out, it's too early to call the entry game plan. As usual, once we have the  HTF confirmations, we will look for a shift in the market structure to confirm the selling pressure. Make sure to join our Forex Nexus Hub for up-to-date commentaries on the week's setups.