Welcome to Lost In The Exchange - The essential FX newsletter to keep you informed and prepared for the week ahead.

In this weeks copy:

For the Majority of the year the market has been capped below $2500.oz, with some large swings in either direction, but lacking higher time frame biases.

We proceeded to build liquidity around $2280 then again at $2365 which I was anticipating being ran before breaking higher.

As always in times of war or conflict, we are seeing influxes into the precious metal and will continue to monitor for long setups only for now. There is no need to try and fight it, just because we fear there will be a hard sell at some stage. Technically or fundamentally it doesn’t look likely.

Continued interest from the Central Banks and high net worth investors keep pushing Gold prices higher, as they flock to safe haven assets in a bid to diversify.

We remain fundamentally bullish with expectations to continue this bullish momentum, taking advantages of dips when they occur.

To stay informed with live updates, join our community where we will utilise TPO & futures data to find the highest probability setups.

As mentioned over the weekend, I was expecting further USD weakness however I would have liked to have seen some deeper pullbacks across GBPUSD & EURUSD to give a reasonable entry. As of now, we have continued to rally from very shallow pullback zones.

We can consider the DXY chart from a simple technical basis, in that we are heading back towards these range lows below 101.

With FOMC meetings on Wednesday, the market will be listening to the tone of Powell, and whether or not he will continue to proceed with caution; given a robust service sector and soaring retail sales in July, it still indicates consumer confidence and inflationary pressures are lingering.

The market is pricing in a 0.25% cut next month, therefore we must look out for hints to any pivot from this current cutting schedule.

The retail strategies we see online tend to include FVG (fair value gaps) at the forefront of their analysis and entry models.

But here is what you are missing, and why they are often not respected.

A FVG is not necessarily an imbalance in order flow, there fore as a stand alone candlestick pattern, utterly useless.

Here is an example as to what I mean…

Figure.1 shows a FVG showing on a candlestick chart, however figure.2 shows us what this looks like on the footprint chart.

In figure.2, the footprint chart is calibrated to print grey/ green boxes as imbalances as seen at other price points. This shows actual imbalances in bid/ask of at least 3x.

As there was no real imbalance here, it is evident from looking at what we define to be a retail FVG, that the market did not return to them as a result. We observe similar patterns in other cases when these retail FVG’s collapse due to a lack of real order imbalance.

The moral of the story is that candlesticks do not show the entire picture. Without observing the discrepancies in bid/ask, you cannot determine whether there is a real imbalance in the market.

I would really urge anyone using these strategies to corroborate your FVG trading zones with footprints, then you will know if;

1. They will hold when retested
2. If they are likely to be retested at all, as FVG’s

Here are the tool I use to and funding companies I trust:

Futures charting software
Sierra charts
Live order routing is with Stage 5
Custom calibrated Futures charts

Personal Brokers:
IC markets
XM Markets

Funding
FTMO
E8 Funding


Have a great week everyone.