45-ICT Mentorship Core Content - Month 5 - Qualifying Trade Conditions With 10 Year Yields

Last modified by Drunk Monkey on 2022-09-14 11:56
1 00:00:12,210 --> 00:00:21,150 ICT: Welcome back, folks, this is lesson 2.2 of the January 2017, ICT mentorship, we're gonna be looking at qualifying trade conditions with the 10
2 00:00:21,150 --> 00:00:34,200 year yields. Okay, the previous teaching 2.1, we had looked at the 10 year note seasonal tendency, but it has a strong tendency to rally in June. And we're
3 00:00:34,200 --> 00:00:46,800 looking at the 10 year note for September 2015. Here, you can see how, during the month of June of 2015 10 year note did in fact, make a low in June. And
4 00:00:46,890 --> 00:00:57,180 while the seasonal tendency is enforced, how do you know the seasonal tendency is most likely going to occur? Well, the first step is you want to start looking
5 00:00:57,180 --> 00:01:06,990 to qualify the swings in relationship to the dollar index. And that's seen by looking at these lower lows here. So our delineation begins at the beginning of
6 00:01:06,990 --> 00:01:21,420 June 2015. And subsequent lower lows that transpired after June 2015 began, we started seeing a slide in price and took out the low from May. But individually,
7 00:01:21,930 --> 00:01:33,300 there was five to six different candles that progressively kept making lower lows in the first half of June, that's been delineated here with this short
8 00:01:33,300 --> 00:01:45,420 little trendline. Now in the dollar index, this is going to be ideally seen with a series of higher highs. That's how markets symmetry should be posted and
9 00:01:45,420 --> 00:01:59,100 delivered in price. But let's take a look at what actually happens in the dollar index. At that same moment, we can see the dollar index for June 2015.
10 00:02:00,150 --> 00:02:13,530 immediately to the right or after June 1 trading day. We were making lower highs. So this is a cracking correlation. And we have confirmation now there is
11 00:02:13,530 --> 00:02:32,070 a trade idea unfolding in the 10 year treasury note against the dollar index. It's further confirmed by seeing the interest rate market declining at that time
12 00:02:32,100 --> 00:02:48,270 as the yield declines. The futures price on a 10 year note was actually rallying. Noodles also that the consolidation that the yield stayed in, which
13 00:02:48,270 --> 00:02:57,750 also led to a consolidation in the dollar index 10 year treasury and foreign currencies at the same time in 2015.
14 00:03:02,759 --> 00:03:19,859 Okay, we're looking at the June of 2016. Again, we're looking at that seasonal tendency seen here. The market was making equal lows. So they should be seen in
15 00:03:19,859 --> 00:03:36,929 respect to the dollar index with equal highs. Here's the dollar index going into June 2016. Do you see here the market made higher highs. This is a crack and
16 00:03:36,929 --> 00:03:48,209 correlation. The markets shown a willingness to go higher in the dollar index but it was not seen in the form of going lower on the 10 year notes. That's a
17 00:03:48,209 --> 00:04:01,079 correct correlation. There were therefore it is a qualifying condition. There is an underlying trade underway. And it's just further confirmed by visually seeing
18 00:04:01,079 --> 00:04:15,119 the the interest rate market seeing a decline in a 10 year yields. Again, notice the consolidation. While it looks like if He zoomed in really tight. It would
19 00:04:15,119 --> 00:04:26,129 look like an uptrend but we're still in a rather large consolidation and is attributing factors to why the currency markets had a consolidation this period
20 00:04:26,129 --> 00:04:26,519 of time
21 00:04:34,350 --> 00:04:48,540 Lastly, we have the 10 year treasury note March contract 2017. We have a lower high now I know you're looking at that big wick on the elections but just dispel
22 00:04:48,540 --> 00:04:58,620 that for a moment. Focus on the market structure alone without that wick. We have lower high formed in the first couple days of November relative to the mid
23 00:05:00,000 --> 00:05:22,140 October highs today should be seen supported in the dollar index as well, just contrary. In fact, we see a lower low. So for the dollar index to have a lower
24 00:05:22,140 --> 00:05:40,290 low here, we've should have seen a higher high form in the 10 year note, that didn't happen. We see the opposite with a lower low in dollar index. We don't
25 00:05:40,290 --> 00:05:48,570 see the higher high in 10 year Treasury notes as you would expect to see with a lower low and Dollar Index. Again, it's going to be a mirror image of everything
26 00:05:48,570 --> 00:05:59,790 you see for perfect symmetry. When that symmetry is broken. It indicates there is a underlying trend or manipulation underway. You'll also see the open
27 00:05:59,790 --> 00:06:12,270 interest decline in November supporting the idea to deal with short covering by the smart money. And the Dollar Index moved up as a result. Again, because
28 00:06:13,980 --> 00:06:24,240 tenure note was in a move that was trending and had more range to go lower. That supports the trending move on $1 index, where I was allowed to trade for two
29 00:06:24,360 --> 00:06:34,470 complete months. And you can see it's supported with the increase in the interest rate yield on the 10 year note during a time when the dollar rallied
30 00:06:34,740 --> 00:06:45,960 market seek yield. And if the interest rates increasing, therefore, the dollar has a strong tendency to want to rally as well. Now, as a side note, when we see
31 00:06:45,960 --> 00:06:55,980 these things occurring in the price, you want to be blending these ideas with the quarterly shift concepts that's been taught in this month as content. So if
32 00:06:55,980 --> 00:07:07,050 we're looking for the next three to four months potential next swing, not that we're holding for that period of time, or our time horizon is three months out.
33 00:07:07,920 --> 00:07:19,080 Generally, it's going to be past that timeframe for the trade setups to come to fruition and complete, sometimes the trades will last longer and go full
34 00:07:19,080 --> 00:07:28,410 duration of three months and sometimes a little bit longer. And as I mentioned in this mentorship, my time horizon is about three months. That's it, and I
35 00:07:28,410 --> 00:07:39,030 think it's pretty much it's realistic, it's gonna get because long term trends. While they all generally take stay in the long term trending environment, they
36 00:07:39,030 --> 00:07:48,300 can reverse. And if it's in the long term uptrend, you don't want to be trying to pick the top. So it's important that I remind you every time we talk about
37 00:07:48,300 --> 00:07:57,630 this that my focus primarily is looking at a time horizon of three months. With the expectation I'm going to trade with the position that may go up to three
38 00:07:57,630 --> 00:08:08,790 months. But rarely, admittedly, I don't hold that long, usually half that timeframe. But you can go in and look at these times when the season will align.
39 00:08:09,660 --> 00:08:24,090 And there are qualifying SMT divergences between the dollar index and the 10 year note. When they have that pattern there, you can also qualify with an
40 00:08:24,090 --> 00:08:38,550 interest rate, try it. Or you can go into a forex currency pair and look for the s&p divergence against the dollar index. That way, those ideas blended together.
41 00:08:38,700 --> 00:08:49,980 Not that you need both of them. But one of them will give you a qualification for a trade idea that may be unfolding for a quarterly shift. Like getting in
42 00:08:49,980 --> 00:08:58,260 sync with the marketplace like this, and viewing the higher timeframe charts with these tools in alignment. It gives your trades high probability and it
43 00:08:58,260 --> 00:09:10,080 filters out a lot of noise. In even if you don't trade in a long term position. Capacity, you can use these ideas to get in sync with higher timeframe trend or
44 00:09:10,080 --> 00:09:19,320 higher timeframe order flow. And by doing that it puts all your swing trade short term trade day trade and scouts in line with institutional order flow. And
45 00:09:19,320 --> 00:09:26,580 with that it's very hard to go wrong. Not perfect. It doesn't negate the opportunity for you to lose money, but it certainly does put the odds in your
46 00:09:26,580 --> 00:09:29,850 favor. Until next time, wish you good luck and good trading