VWAP: Unveiling the Power of Volume-Weighted Average Price in Trading

Reposted from The Private Banker.

Step into the world of volume-weighted average price (VWAP) and discover a powerful tool that can enhance your trading strategies. VWAP, a widely used technical indicator, combines the forces of volume and price to provide valuable insights into market trends and trading opportunities.

Unlock the secrets of VWAP as we delve into its significance and application in financial markets. Learn how this dynamic indicator calculates the average price weighted by trading volume, giving prominence to periods of high trading activity. By incorporating volume data, VWAP provides a more comprehensive view of market dynamics, going beyond mere price analysis.

Explore how VWAP acts as a magnet, attracting price action towards its level, and how it can serve as a benchmark for assessing the effectiveness of trades. Discover its applications in intraday trading, where it can guide entry and exit points, and in position management, where it aids in determining stop-loss and profit targets.

Unleash the power of VWAP in identifying market trends and gauging market sentiment. Gain insights into its ability to reveal institutional trading activity, identify areas of accumulation or distribution, and detect potential reversals or breakouts.

With its versatility, VWAP can be adapted to various trading styles and timeframes, making it an invaluable tool for day traders, swing traders, and long-term investors alike. Harness its potential to improve trade execution, optimize risk management, and enhance overall trading performance.

As you embark on your journey with VWAP, discover the practical techniques for incorporating this indicator into your trading toolbox. Learn how to interpret VWAP in conjunction with other technical analysis tools and indicators, unlocking new dimensions of trading precision.

Whether you are a seasoned trader or a novice exploring the world of financial markets, VWAP offers an enlightening perspective that can elevate your trading strategies. Embrace the power of VWAP and join a community of traders who leverage this dynamic indicator to gain a competitive edge in the ever-evolving landscape of financial markets.

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Understanding Auction Market Theory: A Comprehensive Module to Market Dynamics

Reposted from The Private Banker

Auction Market Theory (AMT) is a powerful framework used by traders and investors to analyze market dynamics and make informed trading decisions. By studying the interplay between buyers and sellers, AMT provides valuable insights into price discovery, market sentiment, and potential trading opportunities. Our comprehensive educational modules delves into the core principles of Auction Market Theory, highlighting its relevance in understanding market behavior and maximizing trading strategies.

The foundation of AMT lies in the concept of market auctions, where buyers and sellers come together to establish equilibrium prices. The market’s price and volume profile, along with key reference points such as the Point of Control (POC) and Value Area (VA), play a crucial role in identifying areas of supply and demand imbalance. Traders leverage these insights to anticipate price movements and identify potential turning points in the market.

Furthermore, our educational modules explores the significance of market structure and the role of market participants in shaping price action. Understanding the behavior of different market participants, such as institutional investors, retail traders, and algorithmic trading systems, provides valuable clues about market sentiment and potential shifts in supply and demand dynamics.

In addition, our educational modules examines the practical application of AMT in various trading scenarios. It highlights the importance of analyzing volume, price patterns, and market internals to confirm trading signals and assess the strength of market trends. By incorporating AMT principles into their trading strategies, traders can enhance their decision-making process and achieve a more nuanced understanding of market dynamics.

In conclusion, Auction Market Theory is a powerful tool that empowers traders and investors with a deep understanding of market dynamics. By incorporating AMT principles into their analysis, traders can gain valuable insights into price discovery, market sentiment, and potential trading opportunities. Our comprehensive modules serves as a valuable resource for both novice and experienced traders looking to unlock the potential of Auction Market Theory in their trading endeavors. Tab the link below to read our summary of content:

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European Shares Edge Lower as Investors Await Fed Meeting Minutes

 China's Services Sector Sees Slowest Expansion in Five Months

• European shares dip as investors await PMI data and Fed meeting minutes for insights into future monetary policy.
• China’s services sector experiences slowest expansion in five months due to weakening demand.
• Industrial activity in France and Spain surpasses expectations.
• Escalation in technology dispute between US and China as export controls on metals used in semiconductor manufacturing are implemented.
• HCOB Eurozone Services PMI for June 2023 revised downwards to 52.0, indicating modest and weakened growth.
• New workloads increased at a marginal pace, the slowest in five months, attributed to weaker sales performances to non-domestic customers.
• Volumes of incomplete business stabilized, while the rate of job creation softened to a three-month low.
• Input cost inflation slowed to a 25-month low, and output charge inflation reached its lowest level since October 2021.
• Business confidence declined to the lowest level recorded so far this year.

The STOXX 600 trades lower by approximately 0.5% around €460, displaying a micro balanced behavior within the developing value area during the European trading session. The revised PMI data, showing a decline, contributes to a selling sentiment, although absorption around the prior POC level offers support for the buying side.

The euro is trading 0.1% higher against the dollar, exhibiting a relatively balanced pattern on the daily interval, with evident interest from euro long buyers near the lower extreme. The short-term perspective reveals a wider swing, influenced by negative economic data that reinforces the possibility of interest rate increases to address inflationary pressures, which could benefit the euro. However, technical resistance might be encountered around the prior VWAP close level, while absorption around the lows keeps the euro in positive territory.

The dollar remains relatively unchanged, with a slight increase in the short-term perspective, rising by approximately 0.15% on the monthly basis, which might exert pressure on the euro and equities sector. Technically, the market could explore lower prices, potentially providing support for the euro.

The upcoming FED meeting minutes hold significance as they may provide insights into the US monetary policy trajectory, guiding the assessment of rate developments. The current hawkish rhetoric has a bearish impact on equities and commodities, while benefiting the dollar due to the tightening cycle. However, any indications of a dovish tone could offer support to the US stock market.

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Reposted by The Private Banker.

Euro Area Producer Prices Decline in May 2023

 First Month of Decline in Producer Prices Since December 2020

• Producer prices in the Euro Area declined by 1.5% YoY in May 2023.
• This marked the first month of decline in producer prices since December 2020.
• Energy costs experienced a significant 13.3% slump, contributing to the overall decline.
• Prices for intermediate goods dropped by 1.5% and inflation slowed for capital goods, durable goods, and non-durable consumer goods.
• Excluding energy, producer price inflation decelerated to 3.4% YoY in May.
• On a monthly basis, producer prices fell by 1.9%, marking the fifth consecutive month of decrease.
• Energy costs saw a substantial decrease of 5.0% in May, driving the overall drop in prices.
• Prices for intermediate goods declined by 1.0% and non-durable consumer goods dropped by 0.1%.
• The cost of capital goods remained unchanged, while durable consumer goods rose by 0.3%.
• Excluding the impact of energy, producer prices showed a decrease of 0.4% in May.

The decline in producer prices in the euro area may provide a boost to production and help alleviate inflationary pressures, particularly in light of the current hawkish stance of central banks. This data could have a bearish impact on the euro, while the equities market could potentially find support from the positive price developments.

Reposted from The Private Banker

US Markets With Hakwish Comments and Earnings

US stock markets with the SPX Futures contract are down by about 0.6% as investors monitor earnings and how markets react to the recent comments on monetary policy.

The Fed’s Bullard mentioned he would favor a terminal rate of about 5.50% and 5.75% while Bostic sees one more rate hike of about 25 bps before a potential halt of further hikes. Currently a rate ease is expected around November and December with higher probabilities which pressures markets as the easing projection moved from July to November.

Mixed and weakening earnings reports seemingly are another bearish factor to conclude into the current more likely bearish biased market structure while depending on the New York trading opening’s auction process, which tends to lean on buying, the market may lift higher by absorption.

The hawkish comments come along with a higher dollar which pressures commodities such as Gold which is down by about 1.6% and Crude oil which fell by about 1.7%. Meanwhile, Bitcoin which rallied recently due to the banking crisis fell by about 4% in the European trading session.

European inflation eased towards 6.9% from 8.5% by the central bank’s efforts to tighten monetary policy with current viewpoints of another rate increase of about 50 bps or 25 bps. The lower inflation read pressured the euro lower by about 0.3% against the dollar in the early trading session.

Looking at the E-mini S&P 500 we can observe some selling and long liquidations around the swing high back from February on the daily interval. Further hawkish remarks might lead the market to cycle down in a bearish rotation while any positive hints towards a dovish projection might lead core buyers to add to positions around VWAP key levels of the Quarterly and Yearly perspective. Another viewpoint to monitor in the short-term perspective is the lower volatility for the month which might surprise a soaring market, depending on economic data or events. Current calculations, which are slightly mixed, might point towards a balanced market behavior as traders could lean on the extremes to conclude a particular bracket area.

SEE ALSO

Interest Rate Projection Turns Dovish While FOMC Awaited: US Stock Markets

4 WEEKS AGO

The intraday perspective is imbalanced and out of the prior price range. The New York trading session might be able to lead the market back into the previous price range by buying around the swing lows from Monday’s session. However, current bearish calculation would point core sellers to add around the developing VWAP. 

Original post by The Private Banker.

Copper Concerns Of Lower Supply And Rate-Increases

 Copper, which fell by about 0.5% and trades around $4.08 per pound in the European trading session, is elevated by a weaker dollar and higher demand with concerns of lower supply.

Chinese credit growth is strong and supports the nation’s intentions to support the infrastructure construction which supports the price of the base metal.

The London Metal Exchange shows that inventories fell towards 56,000 tonnes which is the lowest since 2005, driving the price even higher as Goldman Sachs projects a global shortage of copper inventories around September.

The state owned company Codelco from Chile estimated that output will sink around 7% after a 10.6% decline in the prior Year. Supply concerns seemingly are the pressure factor as prices get driven higher just like with the OPEC+ production cuts for the oil price. This might add to the inflationary pressure, prompting central banks to conclude the best projections for interest rate hikes. The current more dovish view with potential cuts around July to November might be lifting for commodities as the dollar is weakening.

Looking at the technical perspective of the Copper market we can observe some selling around the Year’s upper value extreme on the daily interval. Seemingly the market closed with a selling tail and absorption in combination with long liquidations around the prior swing highs which could initiate the price to pullback as rotation to the developing VWAP or lower value extreme as secondary buying option for core long positions.

Taking a glance at the current TPO profile structure of this market, we can observe a balanced prior structure as the market cleared the unsecured low and might hit absorption to bring the price back into the previous price range which could initiate more buying. For the moment, the market is imbalanced with a slightly bearish bias for this session. Any bullish scenarios might target the prior POC level.

Current calculations, including the aspect of volatility, might show a mixed view which could lead the market to a balanced behavior, confluent with the fundamental supply concerns and the technical perspective.

SEE ALSO

Crude Oil Output Cut Suprised Lead Price To Soar

2 WEEKS AGO

The managed money sector is more likely mixed as investors seemingly closing positions on both sides as of the COT data from the 11th April while net buying increased for three weeks.

Hawkish remarks by Fed Gov. Waller that inflation is too high spurred the fears for additional rate-increases in combination with visible weakness in the U.S. economy by lower-than-expected retail sales, pointing to lower spending. And the higher inflation expectations, pressures commodities and equities for the session.  

Original post on The Private Banker. 

Copper Drop Due Demand Worries With Bullish Nuance

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Copper fell by about 0.4% in the European trading session by upcoming fears of lower demand and concerns of recession which pressures demand for industrial products.

• The recent PMI data showed that China’s factory activity contracted in December due to the Covid cases as well as the property sector which hurt the market context.
• A bullish factor to consider would be Chile’s output drop of about 6.7% as global copper stock have fallen to record lows.
• Additionally, mining giants forecasted supply drops of about 50 million tones which might boost the price of the metal.

The technical perspective might changed its bias to a slight bullish tendency in the new month and Year with positive volatility and a potential weakening dollar which might boosting commodities, depending on the FOMC minutes later on the session to shed details of further inflation worries and the rate hike path. Increases of the rate with higher projections might be concluded as bearish while a potential easing with a dovish tone may support the metal.

The prior month’s low of December has been taken out and might initiate buyers for core long positions in combination with absorption. The daily interval dipped below the prior month’s balanced price range and a possible close inside of the particular range could conclude an additional buying signal with a buying tail and swing failure. The mentioned core buyers might target the upper balance extreme as rotational scenario.

The hourly interval as short-term perspective already worked its way back into the day’s developing value area to target the session’s highs and the prior VWAP close level.

SEE ALSO

Copper Prices Pressured By Investors Concern Of Demand

2 MONTHS AGO

However, forecasts pointing to the downside, according to algorithm calculations which depend on further economic data input and the mentioned FOMC minutes.

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