I warned a couple of years back why it is a bad idea to keep most of your cash in the Banks. Since the SVB crisis, we can see a lot of other banks’ credibility also being questioned. Take for example Credit Suisse, they got rescued with the takeover from UBS. However it came at a cost, they decided to wipe out $17bn of AT1 bonds in the Credit Suisse deal. This has enraged many of the bondholders and they have pledged to sue the Swiss government.
Now the next one up is Deutsche Bank which has been in the news this week. Deutsche Bank is one of 30 banks considered globally significant financial institutions, so international rules require it to hold higher levels of capital reserves because its failure could cause widespread losses. The cost of insuring the bank’s debt against a risk of defaulting, known as credit default swaps, has surged as investors fret about the banking sector’s health. The concerns have grown after the credibility issues in the Swiss bank and in the US. It is too big to fail as it will affect the whole of Eurozone and also other banks around the world.
Hence why I have warned you in advance to not be in a rush to take a trade at the market open. There could be a gap.
OUCH! Deutsche Bank’s credit default swaps, which represent insurance of its bondholders against a potential default, spike as banking doom is back in Europe. Markets price 31% default probability for DB sub-bonds and 16% for senior DB paper. pic.twitter.com/APrSRh9yVb
— Holger Zschaepitz (@Schuldensuehner) March 24, 2023
Have a read through Marcs article from Marctomarket whose very good at summarising the markets.
The Forex Week Ahead+++++++++++++++++++++++
Do not be in a rush to open new trades at the open as there could be a gap. The $ recovered at the end of the week and it could continue to do so if the fears worsen in Europe over the banking sector. Remember the $ is still considered the safe haven so if there is uncertainty in markets usually investors will shift their money into the Dollar or any other safe haven such as GOLD, JPY or CHF. There are some speeches and also many economic news releases next week so make sure to keep an eye on them if you are trading those certain pairs. Also there could be unannounced speeches as well considering the Deutsche bank situation.
Keep watching the $index it is now at a major “make your mind up” area on the weekly charts. I said a few weeks ago that even though it was dropping I suspected a move up was more likely than down, so far that has turned out to be the case.
Remember I am looking for “A” grade trades from weekly & daily charts that I can place the orders and then just walk away. A “B” grade is one that I will watch on smaller timeframes to see how it reacts if it hits my zone.
EUR/USD: I wouldn’t touch the Euro yet considering the Deutsche bank situation. Also there is a trendline at the 200 MA which I would like to break if I was taking a short. Watch the video.
USD/CHF: A grade short at 0.94200, watch DXY for correlation.
Do not take the Euro/$ & Chf at the same time. They are correlated so it’s the same “bet.”
GBP/USD: Leaving it alone for now. No clear direction.
AUD/USD: Looking to short at 0.6820. Good idea to do a split order. Watch the video.
NZDUSD: I prefer the AUD.
USD/CAD: First area to long at 1.33 and the A grade for me is 1.30 which has been a MAJOR area of support and resistance in the past.
USDYEN: leaving alone for now
Some are A grades where I will place forward orders, most pairs have “areas of interest.” I have a lot of similar crosses so be very careful with the correlation.
EURGBP: 0.8670 is the A grade long for me. Keep an eye on the news.
EURNZD: I took partial profits and am currently up 290 pips! will look to enter again at 1.6860
EURAUD: I have split my order at 1.57 and 1.56 areas.
EURCAD: I have an order at 1.4450.
GBNZD: Interested to long at 1.94300 for multiple reasons.
GBPAUD: Correlated with GBPNZD, Looking to long around 1.7810
GBPCAD: 1.62400 is the sweet spot for me.
GBPCHF: 1.1490 is where I have placed my forward order. It is a major area of resistance but still far away, been waiting for weeks.
M3 -Shorter timeframes.
I do my analysis on daily and weekly charts first and make a note of the MAJOR areas of support and resistance. Then copy them onto Pierre’s Earth and sky template. Then I make a note of the weekly & monthly pivots points and add them to the charts. You will see lots of opportunities line up during the week. The important thing then is to select a bias for the next few days and do NOT take trades if the price is too near a trend line or pivot. Ideally, you want to buy when the price is near a major support and or pivot point line and has the potential to make at least 40 pips. Vice versa for a short.
New members, please note: If I am looking to take a trade long, for example, 1.5000, I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.
We are NOT a “tipping service” our aim is to teach you how to trade for yourself.
Watch the video below for more detailed explanations of this week’s analysis and trade plan (click the 4 arrows bottom right to view full-screen):