Trade At These Times & Profit More

GM. This is Currencies & Coffee, the newsletter that quenches your FX thirst like a Kool-Aid Burst on a hot summer day.

Here's what we have covered today:

☕ Key Economic Events to Watch This Week

☕ The Power of Europe, London, and NY Trading

☕ EURCAD Breakdown, CADCHF & EURUSD Setups

🗞️Movers & Shakers🗞️

Here is a look at whats in store for the markets this week:

US Retail Sales (April 15, 12:30 pm GMT):
Expectations are set for a modest 0.4% month-over-month increase in March's headline retail sales, a slowdown from February's 0.6%. The core retail sales are anticipated to rise by 0.5%, improving from the prior 0.3%. However, recent trends have fallen short, suggesting a potential underperformance that could influence dovish shifts in Fed policy expectations.

China’s Economic Indicators (April 16, 2:00 am GMT):
China will release key economic figures, with projections pointing to a slowdown: industrial production is expected to drop from 7.0% to 6.0% year-over-year, and Q1 GDP is likely at 4.8%, down from 5.2%. Retail sales and fixed asset investment are also forecasted to weaken, potentially affecting market volatility.

U.K. Employment Update (April 16, 6:00 am GMT):
The U.K. is bracing for a slight increase in unemployment, with the claimant count expected at 17.2K for March, up from 16.8 K. Additionally, wage growth is likely to decline slightly from 5.6% to 5.5%, which could temper the Bank of England’s hawkish outlook if the trend continues.

Canada’s Inflation Data (April 16, 12:30 pm GMT):
Canada's CPI for March is estimated to rise from 0.3% to 0.7% month-over-month, indicating stronger price pressures. However, core inflation metrics are expected to remain stable, which could potentially impact the Bank of Canada’s next moves, especially if the data triggers rate cut speculation.

New Zealand’s Quarterly CPI ( April 16, 10:45 pm GMT):
New Zealand’s first-quarter CPI is anticipated to rise from 0.5% to 0.6%. This subtle increase might maintain the Reserve Bank of New Zealand's current policy stance, though weaker-than-expected figures could spark rate-cut considerations.

U.K. CPI Report (April 17, 6:00 am GMT):
The U.K.'s CPI is expected to cool from 3.4% to 3.1% year-over-year, aligning closer to the inflation target of 2%. This slowdown and a projected core CPI drop from 4.5% to 4.1% might influence the Bank of England’s rate cut timing.

Australian Employment Outlook (April 18, 1:30 am GMT):
Australia might report a dramatic decrease in job additions, from 116.5K in February to just 7.2K in March, potentially raising the unemployment rate from 3.7% to 3.9%. Given the Reserve Bank of Australia’s cautious stance, a weak jobs report could strengthen the case for upcoming rate cuts.

The Power of Europe, London, & NY Session

Today, we're diving deep into the world of high-volume sessions, focusing on the Europe, London, and New York (NY) sessions. As an experienced trader, I understand the importance of trading during these high-volume sessions for optimal trading outcomes. So, grab your cup of joe, and let's explore the advantages of trading during these influential market periods.

Understanding the Sessions

The Asian session, spanning from 21:00 to 09:00 GMT, is characterized by lower trading volumes. It primarily involves market activity from countries like Japan, China, Australia, and New Zealand. While the Asian session may present some trading opportunities, the lower volumes often result in erratic price movements and unreliable confirmations.

The Europe session, commencing at approximately 07:00 GMT, marks the start of the trading day in major financial centres such as Frankfurt, Paris, and Zurich. During this session, currency pairs involving the euro (EUR) witness increased volatility and liquidity, presenting ample trading opportunities. Traders should closely monitor economic news releases from European countries, as they can significantly impact price movements during this session.

The London session begins at around 08:00 GMT and is widely recognized for its influential role in shaping market trends. With London being a prominent global financial hub, this session witnesses heightened trading volume and liquidity, particularly in currency pairs involving the British pound (GBP). Major economic news releases from the UK and Europe during this session often lead to significant market movements, creating exciting trading prospects.

The New York session, starting at approximately 12:00 GMT, overlaps with the end of the European trading day. As the largest financial centre in the world, New York generates substantial trading volume and liquidity, making it a vibrant session for traders. Major currency pairs involving the US dollar (USD) witness significant activity, with economic news releases and events from the United States driving market movements.

The Significance of High-Volume Sessions

High-volume trading sessions like the Europe, London, and NY sessions offer increased liquidity, market depth, and trading opportunities. These sessions involve major global financial centres and attract substantial participation from institutional traders, banks, and retail traders. The higher volumes provide more reliable confirmations and stronger price movements, enhancing trading precision.

Escaping the Asian Session Trap

In the early days of my trading journey, based in Sydney, Australia, I consistently traded during the Asian session. Since the Euro, London, and NY sessions started later in my day, I believed it was the logical choice. However, I soon realized that low trading volumes during the Asian session resulted in unreliable confirmations and traps in the market. Determined to improve my trading outcomes, I implemented a rule to focus only on high-volume Europe, London, and NY sessions. This pivotal change transformed my trading results, as confirmations carried greater meaning, leading to more consistent profitability.

SIP, LAUGH, TRADE 😁

📈LATTE LINEUP📈

-EURCAD- (Trade Recap from last week)

Last week, I shared a sell setup on EURCAD. Once we had our Higher Time Frame (HTF) confirmations, I was looking for a shift in market structure on the Lower Time Frame (LTF), which is exactly what we got.

I used the 30-minute time frame as my entry time frame. We can see a clear shift in the market structure with a break and retest of the LTF support, which was confirmed by bearish rejection candles. I took my entry on the closure. My stop loss was above the previous highs, and my target was the previous HTF low.

The price went on to drop nicely to my partial profits zone around 85 pips away, where I closed half my position, leaving the rest to run to target. The price reversed, and I closed out the rest of my position when my trailing stop loss got hit.

-CADCHF-

HTF (Daily): The price recently made a higher high, and I'm currently waiting for a retracement to retest the broken resistance as support. This also aligns with the 50% Fibonacci level, forming a strong confluence area to continue the trend. I'll wait for a sign of buyers stepping back in at the zone through bullish engulfing or rejection candles before looking for an entry on the LTF.

LTF (1-HR): Once we have our HTF confirmations on the LTF, I'll wait for the buying pressure to translate into a shift in market structure from lower lows and lower highs to higher highs and higher lows. Once we have a break and retest of LTF resistance confirmed by bullish engulfing or rejection candles, I will look to take a long position. My target will be the previous HTF high, and my stop loss will go below the previous LTF lows.