• Mike

MARKET CONDITIONS (July 30, 2018)


The Forex Market as a whole is generally characterized as Trending or Consolidating


Trending Markets

  • The market moves in waves with structured highs and lows, long expansion periods, and small retracement periods.

  • Trending markets have larger daily trading ranges (volatility) and higher volumes (liquidity)

  • Q4 and Q1 are typically strong trending quarters


Consolidating Markets

  • The market either moves sporadically or within relatively small support and resistance levels

  • Consolidating markets have small daily trading ranges (volatility) and less volume (liquidity)

  • Q2 and Q3 are typically consolidating quarters


We are currently in a consolidating market and most of the currency pairs that we trade have been acting accordingly...with one exception - the US Dollar. The US Dollar has been screaming higher over the past few months, primarily because of our strong economy and the fact that the US is one of the few countries that is aggressively raising interest rates. With the rest of the world electing to keep their interest rates near historic lows, the imbalance between the currency pairs is reaching a tipping point. This imbalance is one of the biggest unreported aspects to the trade wars that the nightly news likes to warn us about.


However, there are signs that a correction might be in our future. The US Dollar hasn't been able to break major resistance over the past few weeks and has paused at a significant technical level. Also, the Bank of England is poised to raise rates later this week. In fact, this week is one of the busiest news weeks in months with Europe, Japan, England, New Zealand, Canada, and the US all on the schedule to release major economic numbers. Expect the market to move!