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90-ICT Mentorship Core Content - Month 10 - Relative Strength Analysis - Accumulation and Distribution

Last modified by Drunk Monkey on 2022-10-17 10:11
1 00:00:03,659 --> 00:00:10,379 ICT: Welcome back, folks, again, we're dealing with commodity. So it's very important to read the disclaimers here and understand and remember that I'm not
2 00:00:10,379 --> 00:00:18,149 a CTA and not a commodity trade advisor. Everything we discuss here is only referring to a paper trade capacity only.
3 00:00:29,790 --> 00:00:40,320 Gang, welcome back, iced tea mentorship, June 2017. commodity trading lesson number two, we're gonna be talking about relative strength analysis. And we can
4 00:00:40,320 --> 00:00:42,270 see professional accumulation and distribution.
5 00:00:47,340 --> 00:00:58,260 Okay, when we deal with commodities, there's two main camps or groups of markets that make up the commodity market. And it's the agricultural and the financial
6 00:00:58,260 --> 00:01:08,820 market. The first in the agricultural are the grains. And I'm going to, I'm going to tell you the ones that I like to follow. And there's other grains
7 00:01:08,820 --> 00:01:19,320 obviously, like oats and such, but I'm not going to concern myself with that. For the grain markets. We have corn, wheat, and soybeans and they trade on the
8 00:01:19,320 --> 00:01:32,910 Chicago Board trade ends in exchange for the grain markets. And there's other grains that can be traded like canola in boats and something like that, but
9 00:01:33,120 --> 00:01:41,970 they're very thin markets. But these are the three that I historically as a commodity trader back in the early 90s. These are the three I actually started
10 00:01:41,970 --> 00:01:58,500 to follow a lot of the live stock sector of the agricultural markets, we have feeder cattle, lean hogs, and live cattle. Out of the foods area, we have cocoa,
11 00:01:59,910 --> 00:02:13,290 orange juice, which is kind of thin but I included when it's really a freeze. Like in Florida, if there's a an issue with the crop down in Florida, there's a
12 00:02:13,290 --> 00:02:20,610 really nice it's a really fun market to be trading in. But otherwise orange juice is kind of thin, but included because it is one of my favorites to watch
13 00:02:20,610 --> 00:02:34,260 for that very reason. Coffee and then sugar in the fibers, we have cotton. Now there is lumber market, but it's kind of thin as well. And other financial
14 00:02:34,260 --> 00:02:47,430 instruments, we have the debt instruments, which is the 30 year treasury bond, 10 year treasury note and the five year treasury note currencies, the comm dials
15 00:02:47,460 --> 00:03:01,080 here we see Aussie dollar, Canadian dollar, Japanese yen, British Pound Swiss franc, Euro dollar and New Zealand dollar. The metals we have gold, silver, in
16 00:03:01,080 --> 00:03:12,690 high grade copper. Now there are two other metals palladium and platinum that I did follow early on in the 90s. But I just fell out of interested in in these
17 00:03:12,690 --> 00:03:22,530 are the three metals I like to follow. In the energies, obviously, we have crude oil. So when we look at the commodity market as a whole, this would be your
18 00:03:22,530 --> 00:03:32,640 basket of commodities to follow. Now much like Forex, there's a nice sample size to choose from which one you want to be trading and which one you may want to be
19 00:03:32,640 --> 00:03:43,800 a specialist in. I liked the treasury bond in the currency markets and dabbled in gold and silver and copper, when there's a real strong tendency for it to
20 00:03:43,800 --> 00:03:54,000 move in agricultural, I like soybeans, wheat, and feeder cattle and live cattle. And on a seasonal tendency. I like to lean hogs. I traded cocoa, orange juice,
21 00:03:54,030 --> 00:03:56,040 coffee, sugar, and cotton.
22 00:04:01,500 --> 00:04:11,100 So when we look at the commodity market, and we look for relative strength analysis, relative strength analysis is basically factoring your analysis around
23 00:04:11,130 --> 00:04:19,650 the most important market to be following right now when you're bullish in the most important market to be found when you're bearish. And there's really two
24 00:04:19,650 --> 00:04:31,110 simple ways that comes conclusion of what that is. As you know, the dollar index is like the king. Okay, so the greenback is the king. So what the dollar does
25 00:04:31,170 --> 00:04:40,080 set the tone for everything else, especially when it comes to commodities. So if we look for the dollar index to be trading higher, that's going to put pressure
26 00:04:40,110 --> 00:04:50,280 on the commodity prices. If the dollar index is going to be trading lower, that's going to allow an insight, higher commodity prices. So when we look at
27 00:04:50,280 --> 00:05:00,420 this, I want you to think in terms of that scenario. So when we look at institutionally sponsored rallies, what we're actually looking at is a market
28 00:05:00,420 --> 00:05:12,360 that has failed to go lower at a time when the dollar index would be expected to go lower. So in other words, dollars making some important high, or maybe even a
29 00:05:12,360 --> 00:05:23,160 topping formation, that may be a precursor to a bullish commodity market. And the commodities that you'd be looking to belong in are a commodity that fails to
30 00:05:23,160 --> 00:05:33,750 make a lower low, which is basically an SMT divergence. So what we see here is in the graphic diagram on the right hand side, is underlying price strength.
31 00:05:34,080 --> 00:05:42,390 Now, this is what you want to classically see, when you will be buying commodities. What you're seeing is when the market tends to trade higher
32 00:05:42,450 --> 00:05:51,720 energetically as a leader market, it establishes the underlying direction that's opposite to the dollar index. Now, these markets are extremely profitable. And
33 00:05:51,750 --> 00:06:01,170 our aim is to focus on these particular commodities to trade, because they're going to be the strongest upside movers, short term highs are going to be seen
34 00:06:01,170 --> 00:06:11,640 broken, and declines are going to be shallow in nature, every time price makes an upswing, or it makes a up closing candle, typically much larger than those
35 00:06:11,640 --> 00:06:21,900 that closed lower or any short term swings that move lower in price. The key is you're only focusing on the commodities that fail to make a lower low, they're
36 00:06:21,900 --> 00:06:32,010 basically diverging with the dollar index. So if we see that we know that there's a professional accumulation or in this case, institutional sponsorship
37 00:06:32,250 --> 00:06:40,140 for buying if the institutions step in, and because they're going to be buying a whole lot more because their institutional volume is much larger than a
38 00:06:40,170 --> 00:06:52,140 speculator would be like you and I, that will facilitate the market rallying higher and showing unwillingness to go lower, because it's a large degree of
39 00:06:52,140 --> 00:06:59,670 buying coming in. While there's the supply and demand factors that coming into force with the commodity, they're not going to permit price to go lower. So it
40 00:06:59,670 --> 00:07:07,170 will fail to make a lower low. When the dollar index makes that higher high, you have to understand what the dollar index should be doing as a whole, though,
41 00:07:07,170 --> 00:07:18,930 because it may not be so clear, just by looking at higher highs and lower lows and commodities, when one diverge, that doesn't necessarily mean that there's a
42 00:07:18,930 --> 00:07:27,300 trade, you have to have the analysis on your dollar index, because that's going to set the tone for a prolonged move. If the dollar is going to weaken, that is
43 00:07:27,300 --> 00:07:37,410 going to provide a at least a intermediate term basis for the commodity market as a whole to rally. But not every commodity is going to rally. This is what
44 00:07:37,410 --> 00:07:46,860 ferrets out these strong moves, and which is why we say it's relative strength analysis. Relative, relatively speaking, a commodity that fails to make a lower
45 00:07:46,860 --> 00:07:57,030 low like this, it's stronger because it has failed to make a lower low. So when the dollar drops, or shows weakness, this particular commodity whatever
46 00:07:57,060 --> 00:08:10,470 whichever one it would be that creates this news conditioner scenario. That's the one we will be looking for bullish ideas to unfolding. Now, as we just
47 00:08:10,470 --> 00:08:19,350 discussed in the beginning of this teaching, I broken down the agricultural sector, and the financial sector of the commodity markets. So we have a basket
48 00:08:19,410 --> 00:08:30,660 of commodities that we can follow in two divisions. One, the agricultural markets, things that are grown or living, okay. And then we have the synthetics
49 00:08:30,690 --> 00:08:41,790 that things that are made made or created or manufactured or drawn from the earth that don't breathe, okay, like oil and energies. So by having these two
50 00:08:42,240 --> 00:08:46,380 divisions in the commodity markets, we have a nice basket of
51 00:08:47,760 --> 00:08:55,350 choice to make. If there's a bias to the market as a whole for the commodity market to go higher, that means that the dollar index should be going lower or
52 00:08:55,350 --> 00:09:05,010 expected to go lower. Not every commodities gonna go higher. The ones that fail to make that lower low, that's the one we're really focusing on. Okay, so that's
53 00:09:05,010 --> 00:09:15,240 really the heart of this teaching. But as we saw, there's different groups of commodities like the livestock and then there's the grains as currencies. When
54 00:09:15,240 --> 00:09:26,610 we see those little groups of types of markets like, again, all the meats, like feeder cattle, live cattle and lean hogs. Those three make up the livestock
55 00:09:26,640 --> 00:09:38,790 group. One of those meats may fail to make a lower low and the dollar starting to go lower. And when it does that, it's shown leadership. For instance, it
56 00:09:38,790 --> 00:09:49,380 could be the live cattle market and feeder cattle may not have that higher low form, it may make a lower low like it's being described here graphically on this
57 00:09:49,500 --> 00:09:59,970 in the discharge and maybe lean hogs makes a lower low as well. But live cattle makes that higher low we just showed in the previous slide, institutional
58 00:10:00,000 --> 00:10:12,780 sponsorship behind that particular commodity would send live cattle much higher and lot more magnitude and speed. Because you can see that they're buying that
59 00:10:12,780 --> 00:10:26,730 one up the other meats or other commodities, and other groups that may not show those evidences of a higher low when dollar is weakening, that would be seen as
60 00:10:26,730 --> 00:10:36,270 this and you'd be seeing a sympathetic rally, okay. And what we're seeing is you typically a commodity that makes a lower low, but starts to trade higher
61 00:10:36,270 --> 00:10:44,130 sympathetically. So we have sympathetic Price Strength. Now, this is going to be a market that tends to trade higher and sympathy to the leader market that
62 00:10:44,130 --> 00:10:51,750 establishes the underlying direction. While these markets are potentially profitable, again, our aim is to focus on the leadership markets for the
63 00:10:51,750 --> 00:11:00,660 strongest rallies. Now, short term highs are seen broken and declines are shallow in nature, and the up swings and up closing candles must like we saw
64 00:11:00,660 --> 00:11:10,920 with the institutionally sponsored rally, that typically would be larger than those that closed lower or move lower. So if you're trading a commodity that has
65 00:11:10,920 --> 00:11:20,340 the characteristics of being described here, you're not actually buying the relative strength leader. On the buy side, you're actually buying a sympathetic
66 00:11:21,180 --> 00:11:33,180 rally or a the six sister of the group, okay, and not to do you can't make money doing that, because you can see that many times those moves will be moving in
67 00:11:33,180 --> 00:11:43,380 sympathy and moving in tandem, but at a lesser degree in terms of speed, magnitude, and it will be more lethargic. It may get to objectives that you
68 00:11:43,380 --> 00:11:57,810 trade and reach for, but not as strong and as quick and efficiently that you would be seeing with the leadership. Obviously, the opposite is seen here.
69 00:11:58,740 --> 00:12:06,900 Institutionally sponsored decline. It's a market that tends to trade lower energetically as a leader market and establishes the underlying direction
70 00:12:06,930 --> 00:12:15,030 opposite to the dollar index. These markets are extremely profitable. And our aim is to focus on these markets as they'll be the strongest downside movers.
71 00:12:15,840 --> 00:12:25,530 Short term lows are going to be seen broken and rally is going to be shallow in nature, down swings in price, and or the down closing candles are typically much
72 00:12:25,530 --> 00:12:36,870 larger than those that show with closing higher or upswing in price. The key on this, again, much like we saw with the institutional sponsored rally is the
73 00:12:36,870 --> 00:12:46,050 focal point of the failure swing to make a higher high when that dollar index is bullish. And it's about the rally that's going to put underlying pressure on
74 00:12:46,050 --> 00:12:55,410 commodities as a whole, not all the commodities are going to drop. The ones that fail to make a higher high, they're going to be leadership on the downside. So
75 00:12:55,410 --> 00:12:57,960 they're going to be showing underlying price weakness.
76 00:13:03,540 --> 00:13:10,980 Okay, much like we saw with the sympathetic rally, we have a sympathetic decline. This is a market that tends to trade lower in sympathy to the leader
77 00:13:10,980 --> 00:13:19,530 market that establish the underlying downside direction. While these markets are potentially profitable again, our aim is to focus on the leadership market for
78 00:13:19,530 --> 00:13:31,380 the weakest declines. Just like we saw with the sympathetic rally, we can see short term lows are being broken. And rallies are shallow in nature. The
79 00:13:31,380 --> 00:13:39,990 downside swings and down close candles are typically much larger than those the close higher or the moves higher. Just everything reversed when we saw for the
80 00:13:39,990 --> 00:13:51,000 slide for the sympathetic rally, basically what we're seeing is price weakness in a sympathetic nature to the leadership. Again, I'll use the analogy, say the
81 00:13:51,120 --> 00:14:03,720 soybean market was the leadership issue. On the downside it failed to make a higher high while the grain complex should be moving lower as a whole, say wheat
82 00:14:03,750 --> 00:14:14,670 makes a higher high in corn makes a higher high, but soybean makes that lower high. While soybeans is going to be the outperform on the downside doesn't mean
83 00:14:14,670 --> 00:14:24,540 that wheat and corn won't decline but it will be doing so in a sympathetic fashion like we're describing here. Again, we'll be focusing on the weakest of
84 00:14:24,810 --> 00:14:30,930 the commodities to sell short and the way you determine that is by looking at their highs
85 00:14:39,030 --> 00:14:48,570 Alright, so actually, let's go through the commodities as a basket and we'll start ferreting out what we see generally when the dollar index is giving us
86 00:14:48,750 --> 00:15:03,090 indications that it wants to move higher or lower. First area of business is the the middle of 2006 teens summer we saw the die Dollar rallying up into January
87 00:15:03,090 --> 00:15:16,410 2017, making a high. And then we saw post January 2017, we've been seeing continued weakness on the dollar. So, from the middle of the summer of 2016, to
88 00:15:16,410 --> 00:15:27,750 the beginning of this year in 2017, we would expect to see commodities going lower, while the dollar has been moving higher, and then obviously commodities
89 00:15:27,780 --> 00:15:38,970 from January to the present time of this recording June 2017, we should be expecting commodities to rally or look for leadership issues, to fail to make
90 00:15:38,970 --> 00:15:48,180 lower lows, and then look for opportunities to be a buyer as a paper trader, in those particular commodities, and that way, you'll learn how the commodity
91 00:15:48,180 --> 00:15:58,500 markets work. First I'm gonna looking at here's corn, we're gonna go through the agricultural is first, and corn is our first grain. And you can see that, from
92 00:15:58,530 --> 00:16:13,770 the middle of 2016. We saw the decline in corn as we would expect, with a higher dollar. And down below the August and September lows, you can see corn kept
93 00:16:13,770 --> 00:16:30,600 making a lower low, which was underlying weakness. While the dollar index was making higher highs, the corn market showed a willingness to go higher, off of a
94 00:16:30,600 --> 00:16:45,480 higher low. So we had a failure swing going into the latter portions of December 2016. But we had extreme weakness shown in the move down. But December into
95 00:16:45,480 --> 00:16:59,400 January, we saw that higher low form. And the market what relatively sideways, small little modest move from 360 up to 390, which is only a 30 cent move. In
96 00:16:59,400 --> 00:17:13,440 this case, it would be about $1,500 per contract. So that's actually a very weak market, the grain market for this specific commodity, corn was weak, we didn't
97 00:17:13,440 --> 00:17:27,480 see any kind of leadership buying in here at all. The wheat market, much like corn, we saw this slide down from the summer months, making lower lows and then
98 00:17:27,480 --> 00:17:39,450 making a lower low even in December going into January. So we had continued weakness on wheat, this grain stayed in a consolidation as well failed to make
99 00:17:39,690 --> 00:17:55,290 any kind of real significant rally higher, and its underlying weakness was seen in price action. Soybeans, we saw the summer decline going into August, but then
100 00:17:55,290 --> 00:18:03,750 August and September and October, we started seeing the soybean market failed to make lower lows, while we saw the dollar, making higher highs. So there was
101 00:18:03,750 --> 00:18:15,630 already indications that their soybean market was under accumulation, because it was failing to go lower. In the second week of November, going into January
102 00:18:15,630 --> 00:18:27,150 2017. We saw soybean market trade down with a higher low and actually talked about this during the mentorship. If you go back in the January, January kind of
103 00:18:27,150 --> 00:18:36,630 our time together, you'll actually see me talk about that and mentioned those equal highs that were around that 1080 level on this chart. And price rallied
104 00:18:36,630 --> 00:18:51,810 up. And we saw relative strength in being complex. So soybeans across the grains group was the leadership issue. So soybeans were strong. So if you were looking
105 00:18:51,810 --> 00:19:02,400 to be a buyer in January when the dollar index was making significant reasons to look for a lower move in the dollar that's going to allow commodities to rally
106 00:19:03,060 --> 00:19:19,650 soybeans in this case rallies about $4,500 per contract in terms of a move. The next one, we're going into the livestock group now. Just like we saw in the
107 00:19:19,650 --> 00:19:24,390 previous commodities, we saw the decline from the summer months going down into the fall into the year.
108 00:19:25,680 --> 00:19:34,710 But then we started seeing some accumulation seen in the middle of October going into the first week of December. So while the dollar index was making higher
109 00:19:34,710 --> 00:19:43,440 highs, the feeder cattle market was failing to go lower. So it was already showing signs of accumulation. If it's not going lower, there's only one reason
110 00:19:43,440 --> 00:19:53,550 for that. It means that they are under accumulation and they're buying it who is institutions are large traders, big players. So they're buying up feeder cattle.
111 00:19:57,630 --> 00:20:10,650 And notice that we're seeing short term high is being broken and more short term highs being broken. And then at a later time, in March, when the dollar creates
112 00:20:10,650 --> 00:20:19,200 another intermediate term high and starts to sell off, we had that February March time period where the feeder cattle market trades right back down into a
113 00:20:19,200 --> 00:20:30,630 bullish order block. So we have the accumulation pattern seen here. Early signs were already shown that they were accumulating the feeder cattle market. Feeder
114 00:20:30,630 --> 00:20:42,840 cattle actually developed a premium, which will start teaching later on in this week. But the price of feeder cattle actually went, in this case parabolic. And
115 00:20:42,840 --> 00:20:51,780 it was very strong as a result of that, because we saw price show signs is wanting to not go lower. It was breaking short term highs, it was under
116 00:20:51,780 --> 00:21:01,050 accumulation. And then at a later time when Dollar Index was ready to sell off again in March 2017. That provided another buying opportunity for feeder cattle.
117 00:21:01,530 --> 00:21:13,260 Notice also the last half of February going into March, the dollar index was making higher highs around that one or two level. But that last portion of
118 00:21:13,320 --> 00:21:21,750 February going into March on feeder cattle was making a higher low. Again, that same accumulation pattern it's being seen there but it's also occurring in a
119 00:21:21,750 --> 00:21:31,320 previous bullish order block. So we're blending PD raise discount with the context that we should be seeing higher commodity prices. This one fit the bill
120 00:21:31,320 --> 00:21:44,340 because I had everything in favor for it. What does it translate into this move here from the buy all the way to the high is over $19,000 per contract of a
121 00:21:44,340 --> 00:21:56,880 move. Not too shabby. Alright, the next one in the livestock complexes lean hogs. We saw the decline from the summer months going down into September and
122 00:21:56,880 --> 00:22:05,520 October. And then October November December we started seeing accumulation patterns again. Mark was failing go lower. While the dollar index was making
123 00:22:05,520 --> 00:22:20,160 higher highs we seen clear accumulation patterns in the lean hogs market. Later on, in 2017, we had another opportunity for the dollar index to sell off trade
124 00:22:20,160 --> 00:22:33,000 up into a premium array filled in a liquidity void price trades lower on the dollar index which is going to allow bullishness for commodities again, we can
125 00:22:33,000 --> 00:22:47,610 see in the lean hogs market the market trades back down into a bullish order block. And we have a subsequent parabolic rally from the 68 to 81 and a half
126 00:22:47,670 --> 00:23:05,460 cents for Lean hogs and that means about $5,600 per contract. Last one in the livestock group is live cattle. Price trades down from the summer months into
127 00:23:05,460 --> 00:23:14,430 October making a low and then from October going into November in December we see accumulation occurring again and here. While the dollar is rallying the live
128 00:23:14,430 --> 00:23:23,490 cattle market is failing to go lower. So they're under massive accumulation. Same scenario we said earlier with the march high in the dollar index, creating
129 00:23:23,490 --> 00:23:35,700 a sell off there's a buying opportunity in the live cattle market trades down into a bullish order block rallies away. And again, much like we saw with the
130 00:23:35,700 --> 00:23:49,170 feeder cattle market, live cattle futures were very very strong. It translates to a move of $12,000 per contract. Alright, now we're going into the foods and
131 00:23:49,170 --> 00:24:04,320 the first thing on our list is cocoa. Cocoa is clearly under a lot of distribution, they had a bumper crop there was no real shortage of cocoa and
132 00:24:04,320 --> 00:24:17,130 there was no impulse for the supply and demand factor to be swung to a shortage. So there was lots of supply of cocoa which provided this consistent decline on
133 00:24:17,190 --> 00:24:27,120 the price of the cocoa futures. So we have no real indication that this is under any accumulation whatsoever and our
134 00:24:28,170 --> 00:24:39,660 analysis comes away with cocoa is very weak it's not under accumulation. So this would never meet the criteria as a buy while the dollar is is dropping. Coffee
135 00:24:39,750 --> 00:24:50,520 same scenario. We saw weakness market making lower lows in December going into January as well. We had a nice little pop up which is a nice little retracement
136 00:24:50,520 --> 00:25:07,590 but it overall kept in sync with the the weakness that was seen. To coffee here was weak as well. And sugar is our next one. Again, we see in November going
137 00:25:07,590 --> 00:25:18,750 into the middle of December, we see sugar, making lower lows, we have a small little divergence at the lows that saw rally up. But when we got back up into
138 00:25:18,750 --> 00:25:32,670 February March, that that found its weakness after coming up into a premium array, or bullish order block around that 2050 level, and just could not find
139 00:25:32,670 --> 00:25:42,570 any more bullishness. So in this case, we can see kind of like a mixed signal. So you could have looked at it as weakness. And then the last little portion of
140 00:25:42,600 --> 00:25:52,110 December going into January, that higher low, while the dollar index actually made a higher high, that's a, it's a divergence, that would be a failure swing.
141 00:25:52,590 --> 00:26:02,310 So that's why you see that move higher up in sugar, but then ultimately falls over and can't find any more continuation. So I want to provide you
142 00:26:02,340 --> 00:26:10,770 opportunities where in realistic terms, you're gonna be able to see these things. But then you're also going to see things that start off like a good
143 00:26:10,770 --> 00:26:23,640 move, and then fail. And that's what real you know, what real environments are going to be like for you. So in this case, here, Sugar was weak Kaymer in the
144 00:26:23,640 --> 00:26:34,290 fibers group. And we only have cotton in our basket of commodities to be worrying about the slide from August down in September, after our initial rally,
145 00:26:34,680 --> 00:26:46,110 trades back down into a bullish order block at September, dollars, rallying, cotton's not going lower and you start seeing successive higher highs, higher
146 00:26:46,110 --> 00:26:54,990 lows every short term highs finding its way broken with no problem at all. And bullish shorter blocks are supporting price that we can see clearly to this
147 00:26:55,290 --> 00:27:05,310 commodities under accumulation. So in this case, here, cotton was a very strong commodity at the time when the dollar is weak. As a result, the move to
148 00:27:05,310 --> 00:27:17,130 transpires is over $8,000 per contract. Okay, now we're in the financials, we're looking at the 30 year treasury bond. And I'm actually going to talk a lot more
149 00:27:17,130 --> 00:27:24,840 about bonds in the bond trading week. So you're going to see something in this chart that if you're a student of mine, obviously, you're going to know right
150 00:27:24,840 --> 00:27:35,430 away what it looks like and what we should be talking about. But we're going to keep in general terms just for the commodity portion of this, this month. So we
151 00:27:35,430 --> 00:27:45,000 see the market making lower lows here, underlying weakness. And the bond market has been weak, we've only really traded it in a consolidation haven't really
152 00:27:45,000 --> 00:27:56,430 made any significant moves higher, which has been the catalyst I believe that why the markets are so fickle. Right now, we've had so many issues with finding
153 00:27:56,430 --> 00:28:06,120 sustained moves in foreign exchange market. And it's going to be translated. By looking at the chart here, you can see clearly that the market for the bonds
154 00:28:06,120 --> 00:28:18,090 have been range bound, and they haven't really moved much at all. And then we have the 10 year note, same thing we see underlying weakness. 10 years is weak
155 00:28:18,090 --> 00:28:29,040 as well. And we only saw a consolidation transpired since then. And five year notes, we actually saw weakness and then further weakness in March. And we've
156 00:28:29,040 --> 00:28:36,450 consolidated since then. So nothing's really happening to debt instruments. And again, interest rates are what makes the markets go around. So if you're a
157 00:28:36,450 --> 00:28:49,950 currency trader, that's going to put a damper, if you will, on how we see sustained moves in the currency markets. Taking the currencies, okay, the first
158 00:28:49,950 --> 00:29:01,980 in our list is the Australian dollar. Looking closely, look at the highs on the dollar index going into January, we made a higher high and in the dollar index,
159 00:29:02,010 --> 00:29:10,710 we made that failure swing to go lower on the Australian dollar. If you go back in the January month, you'll actually see me talk about that very particular
160 00:29:10,710 --> 00:29:24,960 thing. There was weakness seen in the dollar index at those highs, and we saw accumulation come in on the Australian dollar at those lows. Incidentally,
161 00:29:24,990 --> 00:29:25,980 Australian Dollar
162 00:29:27,720 --> 00:29:39,090 was strong with a differential so the interest rate differential was a bonus for this one. So that's why we saw this nice extrapolated move to the upside. The
163 00:29:39,090 --> 00:29:49,290 next one on our list is Canadian dollar. And this one here had basically an equal low and it started off with basically a modest bullishness to it, but
164 00:29:49,320 --> 00:29:59,250 finally gave up the ghost in February and rolled right back over and followed suit with the dollar index, which again, is kind of weird because the dollar
165 00:29:59,250 --> 00:30:10,410 index and Canadian dollar moving together makes it difficult. Alright, so we have the Japanese yen next, again, look very closely at the dollar index, we
166 00:30:10,410 --> 00:30:21,270 made the higher high going into January, but we have the higher low in the Japanese yen. That's the accumulation that's seen by way of institutional
167 00:30:21,270 --> 00:30:30,510 sponsored rally. So we can see the market was making short term highs, breaking those short term highs and order blocks that were bullish, were being supporting
168 00:30:30,510 --> 00:30:44,670 in price. So yen in this case was very strong. So this was our leadership issue as well, for the currency market. So it's Australian dollar and yen so far. Can
169 00:30:44,670 --> 00:30:54,840 we have the British pound here, this one has been lethargic, we have a slightly lower low going into January from October. No real accumulation in this period
170 00:30:54,840 --> 00:31:03,480 all until we got around the March time period when March creates the high in the dollar index, then we saw the opportunity for the cable to start rallying from
171 00:31:03,480 --> 00:31:16,470 that 122 level. But overall, the power market has been weak. Okay, the next one here is the Swiss franc. And look closely again, you'll see that failure swing.
172 00:31:17,310 --> 00:31:27,090 So we have institutional sponsors that rally higher low when the dollar index makes a higher high weakness in the dollar index should see that foreign
173 00:31:27,090 --> 00:31:36,540 currencies rally. They're calm dollars, they should go higher. In this case, here we see the Swiss franc, do that very thing and go higher. And at the March
174 00:31:36,540 --> 00:31:46,590 time period, when we saw the dollar index create a high, we had another intermediate term low on the Swiss franc, and it rallies again. And then in May,
175 00:31:47,490 --> 00:31:59,490 last month, where we saw the dollar index trade up and close its fair value gap. As a premium array, the Swiss franc creates a turtle suit long and closes in its
176 00:31:59,490 --> 00:32:12,240 fair value gap seen in the month of March, and then rallies higher. So we have a very strong Swiss franc as a result. So we have the Australian dollar, the
177 00:32:12,240 --> 00:32:25,830 Japanese yen, and Swiss franc as our leadership issues. And then we have the Euro dollar, we have a higher low also on this currency. So this one here, and
178 00:32:25,830 --> 00:32:36,720 we look and see we have short term highs being broken, and all premium arrays being broken on the upside, and then supporting price at the discount arrays. So
179 00:32:36,720 --> 00:32:47,520 every bullish order block, we see price being more accumulation and more rallying. So euro was very strong here as well. And last in our group of
180 00:32:47,520 --> 00:32:58,290 currencies, for the kondiles, we see one more instance of a currency that had a differential interest rate differential was a plus for this one as well. So in
181 00:32:58,290 --> 00:33:09,180 other words, if you if you buy the New Zealand dollar and 48 page you a interest rate for for holding on to it for carry trade purposes. And those two currencies
182 00:33:09,180 --> 00:33:17,460 are actually the leader of all the interest rate differentials at the time for this beginning of this year. And with this higher low, which is institutional
183 00:33:17,460 --> 00:33:26,430 sponsored rally, at a time when the institutions were looking to sell short on the dollar index in January, made a higher high in dollar did not see that lower
184 00:33:26,430 --> 00:33:38,130 low. And we expect in the New Zealand with a differential as well. So here was kiwi, as an upside leader as well. Okay, moving over to the metals, okay, we
185 00:33:38,130 --> 00:33:46,470 have another similar situation here, where the gold market was failing and we talked about this in January to go was failing to make a lower low. So we have
186 00:33:46,470 --> 00:33:59,010 institutional sponsored rally, when the dollar index was making higher highs. And as a subsequent to that occurrence, we see all the bullish waterblocks
187 00:33:59,010 --> 00:34:15,330 providing support to price and premium rates being broken as price moves higher. Gold in this instance, was a strong commodity to be a buyer. Silver started the
188 00:34:15,330 --> 00:34:16,440 same way gold did
189 00:34:18,210 --> 00:34:27,540 higher low institutional sponsorship rally. And price was reaching through premium arrays, which are blocks were supporting price until we got up around
190 00:34:27,540 --> 00:34:38,790 that 1850 level that fell out a bit came all the way back down but traded do a bullish order block at that 16 level, which I talked about at that time low to
191 00:34:38,790 --> 00:34:50,490 decline that we got down to that level. It'd be an interesting buying opportunity. And we since then rallied 168 points, so almost 7000 plus dollars
192 00:34:50,640 --> 00:35:00,690 per contract if you're looking to trade that 16 level, but it was modestly strong here. And as a side note, I actually was very very bullish. On Silver,
193 00:35:01,110 --> 00:35:12,840 much more than gold. But for whatever reason it failed at 1850 level in this storyline change from them, point one. Okay, the last metal we're going to look
194 00:35:12,840 --> 00:35:21,180 at is high grade copper. And you can see the accumulation that was really underway in September in October, failing to make a lower low, and finally just
195 00:35:21,180 --> 00:35:36,540 exploded on the upside. And copper here was a very strong metal as well. And finally, for the energy complex, in our commodity basket, we have crude oil, and
196 00:35:36,540 --> 00:35:48,960 crude oil was failing to make lower lows as the dollar index was rallying. And this particular energy was under accumulation around the $43 a barrel mark, and
197 00:35:48,960 --> 00:36:02,910 then finally, rally up. And you can see crude oil was a strong commodity as well. So what we've done is we've gone through all the commodities. And we use
198 00:36:02,910 --> 00:36:11,160 relative strength analysis to ferret out the leadership issues when the market should be seeing commodities trade higher. Notice that all of them did not trade
199 00:36:11,160 --> 00:36:20,670 higher. But we were able to go in looking at price action, no indicators, no bells and whistles. This simply understanding what the pattern looks like when
200 00:36:20,670 --> 00:36:30,990 large institutions step in and buy. What does that pattern look like? It's that failure swing. It's the fact that short term highs are being broken. And premium
201 00:36:30,990 --> 00:36:41,430 rates are not respecting anything in terms of offering resistance. It's been broken through and then all of the discount arrays are supporting price.
202 00:36:42,510 --> 00:36:52,470 Everything that we've seen here is reversed when the dollar index is bullish, and we would be looking for bearish ideas and commodities. And we would go
203 00:36:52,470 --> 00:37:01,560 through the commodity markets and look, everything we did here, just an opposite terms. But for agricultural is what we've done is we fared it out the leadership
204 00:37:01,560 --> 00:37:11,520 from the grains, it was the soybean market. Out of the livestock, all three of them did well. But feeder cattle was by far, the absolute leader. Feeder cattle
205 00:37:11,520 --> 00:37:19,650 actually developed a premium, which we'll teach later on in this week about and we'll actually use it as an example as well. But the feeder cattle market was
206 00:37:19,650 --> 00:37:29,910 the upside leader on the foods. Notice there was an absence of really anything that lends well for a buying opportunity at all the foods, they were all
207 00:37:29,940 --> 00:37:40,500 relatively weak. The fibers were we again, we have lumber is in that group. But we'll look at lumber because it's kind of too thin. In my opinion. Cotton was an
208 00:37:40,500 --> 00:37:50,790 out performer on the outside as well, because it's underneath professional accumulation. So we figured it out 12345 markets out of all the agricultural
209 00:37:50,790 --> 00:38:01,980 markets, our trading patterns, and price action analysis concept helps us find where the leadership issues are going to be as a buying opportunity. Find
210 00:38:01,980 --> 00:38:10,860 financials, we didn't see anything in the debt instruments. And I've been saying this all year long, which is a reason why the markets have been pretty much next
211 00:38:10,860 --> 00:38:24,300 to untradable. The currencies, we see that Australian dollar, the yen, the franc, the euro, and the Kiwi were all upside leadership. In the metals, all
212 00:38:24,300 --> 00:38:29,130 three of them did very very well here, Silver was the weakest sister of them all, admittedly.
213 00:38:30,660 --> 00:38:39,000 But gold was the outperforming in my opinion, we did have a lot of strength on copper, but you only had one real opportunity to get in that one. So that's why
214 00:38:39,000 --> 00:38:46,560 I'm saying gold was the top performer. Because gold gave me a couple of different ways to get in. And lastly, in our basket of commodities, is crude
215 00:38:46,560 --> 00:38:58,650 oil. And we saw that when also provide a nice opportunity to be a buyer. Nothing really to compare it to. It used to be heating oil in unleaded gas and natural
216 00:38:58,650 --> 00:39:06,330 gas I would look at when I was actually looking at commodities as a major asset class. And that was only thing I was trading at the time. But if you're going to
217 00:39:06,330 --> 00:39:15,540 have a basket of commodities to watch, I think this is a very good one. It's well balanced. And it gives you a nice universe to work within. It gives you an
218 00:39:15,570 --> 00:39:26,610 ability to work within multiple groups to look for leadership issues. And as we indicated and shown here in this teaching, not all commodities are equal,
219 00:39:27,210 --> 00:39:39,060 they're not going to perform the same. You have to have tools and concepts to go through and as a process, eliminate the ones that are not performing as you
220 00:39:39,060 --> 00:39:49,080 would expect in price action and focus on the ones that have given you that fingerprint, Hallmark Signature, that there is huge accumulation underway and or
221 00:39:49,170 --> 00:39:59,910 distribution. So by using this concept, it will help ferret out all the better moving opportunities when the markets are predisposed to go in one direction or
222 00:39:59,910 --> 00:40:03,630 in out there until next lesson I wish you good luck and good trade