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ICT - Trading Plan Development 5.srt

Last modified by Drunk Monkey on 2021-06-11 13:57
1 00:01:42,630 --> 00:01:51,870 ICT: Okay folks, we are looking at the intermediate term trading plan example. Now what we're going to cover that in this module is going to be just an example
2 00:01:51,870 --> 00:02:04,680 like it states here, there's going to be certain aspects of this particular example of a plan where I can suggest that you could use other tools or
3 00:02:04,680 --> 00:02:17,100 applications and where I note those obviously, you can use the suggested mediums and tools at that time. It's not meant for you to use this as a specific trading
4 00:02:17,100 --> 00:02:26,220 plan. I'm not advocating that you take this and run with it, jot invest real money with it, it's meant to stimulate prudent decision making on your part,
5 00:02:27,720 --> 00:02:38,460 determine whether or not you have the patience and faculties really to be trader and follow a plan of this nature. And obviously, if we're talking about
6 00:02:38,460 --> 00:02:48,000 intermediate term trading, the duration of the trade is absolutely absolutely different than what most folks are doing in terms of forex. But that means that
7 00:02:48,000 --> 00:02:58,440 I'm referring to intraday and scalp trading. This is not very short term trading, it's it's higher timeframe premise, predominantly, and your trades are
8 00:02:58,440 --> 00:03:11,100 going to take a whole lot of time to set up. And also equally more time to unfold to its completion. So this module will, more or less demand a level of
9 00:03:11,100 --> 00:03:18,030 patience that probably the majority of traders will not have it at the early stages of their development.
10 00:03:24,870 --> 00:03:33,600 Alright, we're gonna talk about the general market and the overall trading plan outline for trading intermediate term. Obviously, the timeframe that we're gonna
11 00:03:33,600 --> 00:03:42,360 be trading is the daily chart. Okay, the trading plan outline. Now the timeframe that we are trading in this specific example is going to be referred to
12 00:03:43,230 --> 00:03:53,250 predominantly the daily chart. And its primary focus in this plan is to trade the intermediate term price swings found on daily chart. Typically, trade
13 00:03:53,250 --> 00:04:03,960 durations will last anywhere between several weeks, to as many as months. Now, in this plan, we're gonna classify bullish conditions and bearish conditions.
14 00:04:04,200 --> 00:04:14,850 Okay, and this is more or less the, the market environment that will facilitate buys and sells. First, we're obviously going to look at the bullish conditions.
15 00:04:15,360 --> 00:04:25,860 And typically when you enter a seasonal tendency when you would expect a bullish market, obviously, that sets you one on where to look for terms or buying
16 00:04:25,860 --> 00:04:36,570 conditions in the marketplace that will facilitate long positions. We're going to be watching the interest rates, okay. And we wouldn't be expecting interest
17 00:04:36,570 --> 00:04:47,520 rates to be moving higher and or looking for divergence, okay in the yields to possibly indicate that we're battling out in the yield and we may be going
18 00:04:47,520 --> 00:04:57,930 higher because markets basically seek higher yields that is going to create the risk on effect that we're looking for for a bullish condition. Obviously, it
19 00:04:57,930 --> 00:05:05,520 goes without saying if we're looking for a risk One scenario, the US dollar is going to weaken at this timeframe. So we're going to be looking for topping
20 00:05:05,520 --> 00:05:16,830 formations or weakening of the US dollar on the daily chart, the Treasury notes, okay, two year five year and 10 year, we'll be looking for those futures markets
21 00:05:16,830 --> 00:05:26,370 because you're gonna be contrasting forex trading with the insights that we glean from the futures market, the daily charts on to five and 10 year should be
22 00:05:26,370 --> 00:05:37,200 declining. And because there's an inversion of relationship between the yields and the futures markets, tea notes will be going down on your daily charts.
23 00:05:37,440 --> 00:05:51,030 While that indicates that the interest rate itself its yield would be moving higher CBOT, this commodity tool that we use commitment traders, we're only
24 00:05:51,030 --> 00:06:00,450 looking for hopefully, the commercials being a net long position or if they are net short, we want to be looking for an aggressively lessening of their short
25 00:06:00,450 --> 00:06:10,590 positions. Okay, and you can see that in open interest. sentiment, obviously, on the daily chart should be oversold. And the way we're going to determining that
26 00:06:10,590 --> 00:06:19,440 is we're gonna be looking at a daily Williams percent are okay, so that's going to be our tool to more or less indicate to us whether or not if the market
27 00:06:19,440 --> 00:06:30,000 sentiment is oversold or overbought. Okay. In this case, since we're looking for bullish conditions, ideally, the sentiment should be oversold stock indices,
28 00:06:30,060 --> 00:06:41,160 hopefully at this time are affirming and or bullish. Okay. So we're just looking for some kind of failure swing between the major stock indices, and that would
29 00:06:41,160 --> 00:06:51,150 be at hopefully at a key support level commodities should be at this time bullish and we we would reference that would be look at the CRB index and it
30 00:06:51,150 --> 00:07:01,290 should be trading firm to bullish at a key support level and maybe even looking for a buy pattern of some sort. Maybe now optimal trade entry something like
31 00:07:01,290 --> 00:07:14,610 that nature. When I say firm it means indicating an unwillingness to go lower. Okay. And gold and oil obviously good benchmark for the economy, they should be
32 00:07:14,610 --> 00:07:25,650 firm and or too bullish as well. Conversely, obviously for the bearish conditions, seasonally speaking, there should be a bearish market environment.
33 00:07:26,040 --> 00:07:36,120 seasonally speaking, that should set you on on alert to look for sell scenarios. Interest rates at this time should be moving lower, okay, because the market
34 00:07:36,690 --> 00:07:46,590 will shun lower yields. If the interest rates are dropping, that will indicate that there is a risk off scenario. And if there's a risk off scenario, it goes
35 00:07:46,590 --> 00:07:55,350 without saying that the US dollar would be strengthening at that time. Treasury notes on a daily chart should be rising. And again, because there's an inverted
36 00:07:55,350 --> 00:08:05,430 relationship between yield and the futures market. The interest rates yield will be moving lower while the futures daily charts on the two year five year and 10
37 00:08:05,430 --> 00:08:06,900 year should be rising.
38 00:08:08,520 --> 00:08:16,560 Remember, traders report the net position should show commercials net short and or aggressively increasing short positions and you find that with the
39 00:08:16,560 --> 00:08:24,930 referencing of the open interest sentiment should be overbought. And again, it's based on a Williams percent our basis on a daily chart. And we'll talk more
40 00:08:24,930 --> 00:08:37,260 about that when we start going to the actual analysis. And obviously the stock indices should be soft or too bearish on a daily chart. So your NASDAQ dow and
41 00:08:37,260 --> 00:08:48,780 s&p indices should be topping in here. And or trading at key resistance levels respectively. commodities at this point should be bearish and we would be
42 00:08:48,780 --> 00:08:56,970 referencing the CRB index again as well and only looking for some kind of topping formation key resistance levels or some rejections at the highs. And
43 00:08:56,970 --> 00:09:10,080 again, it is now soft and or trading bearishly. And, again, referencing the gold and oil benchmark for the economy should be soft, maybe read resistance in both
44 00:09:10,080 --> 00:09:21,690 those markets as well, seeing softer prices and maybe two as much as bearishness to facilitate a further confidence in a bearish market condition.
45 00:09:32,880 --> 00:09:42,480 Okay, the anticipatory stage for this example plan. Obviously, we always begin with identifying the higher timeframe monthly, weekly and daily key support
46 00:09:42,480 --> 00:09:50,220 resistance levels, because those levels are going to be the catalyst for us looking for signals. So without these levels, okay, we're not going to be taking
47 00:09:50,220 --> 00:09:58,080 a trade. So we must have a higher timeframe monthly, weekly or daily key support resistance level to facilitate a trade. Okay, so we're going to be waiting for
48 00:09:58,080 --> 00:10:07,260 these levels to be traded to Now while we're waiting for a setup, okay, we're not when we're seasonally speaking bullish. Okay, you're gonna be stocking the
49 00:10:07,260 --> 00:10:18,090 yields. Okay, the yield triads, and I'm gonna refer to basically my favorite pairs for this plan, that being the fiber, Euro USD and the cable British Pound
50 00:10:18,660 --> 00:10:28,770 USD pairs, okay, because they are cross with the dollar if we're seasonally speaking bullish, okay, what we're going to be looking for is the yields, okay,
51 00:10:29,190 --> 00:10:43,710 five year 10 year and two year between those three interest rate yields. If one fails to make a lower low, okay, that's going to be a positive divergence
52 00:10:43,740 --> 00:10:54,480 indicating there's a possible turn in yield and that may indicate a possible increase in yields, which would cause a bullishness and a risk on scenario.
53 00:10:54,750 --> 00:11:11,760 Okay? If we were seasonally speaking, bearish, okay. And we see the yields between the US the German in the UK countries yields failed to make equal highs
54 00:11:11,790 --> 00:11:21,930 and their yields. Okay, that's a yield triad divergence, okay. And you will talk about them also examples, if it's not very clear to you here, but that would
55 00:11:21,930 --> 00:11:35,370 indicate a bearish stage in the marketplace overall. So we're anticipating that to unfold, okay. At the same time, we will obviously be hunting the same
56 00:11:35,370 --> 00:11:46,470 scenario with the US Dollar Index, okay, we will be looking for the lows in the US Dollar Index versus the highs and the cross currencies. Okay. And again,
57 00:11:46,470 --> 00:11:55,110 we're looking at the Euro versus the Dollar and the British Pound versus the Dollar. So if we're making lower lows in the dollar, but failing to make higher
58 00:11:55,110 --> 00:12:12,090 highs in one and or the both fiber and cable, then that is a US dx SMT divergence, okay, and that would be bearish for the euro and or cable. If the
59 00:12:12,090 --> 00:12:24,420 dollar was making lower lows in the Euro or fiber, I'm sorry, Euro or cable was unlikely to go higher deaths weakness, they should be confirmation between the
60 00:12:24,420 --> 00:12:32,400 three. If the dollar makes lower lows bits should be seen with higher highs with the fiber and cable. If there's not, there's a crack and correlation that may
61 00:12:32,400 --> 00:12:42,540 indicate something monitoring highs in the US Dollar Index versus the lows in the cross currency pairs. Okay, fiber and cable. If we see higher highs in the
62 00:12:42,540 --> 00:12:51,870 dollar and a failure to go lower in the fiber or cable again, that's an SMP divergence for the US Dollar Index. And that may be a cracking correlation that
63 00:12:51,870 --> 00:13:03,720 may indicate something. Now, this can also reverse itself. If you see higher highs in the Euro or cable, but a failure to go lower on the lows in the dollar
64 00:13:03,720 --> 00:13:15,180 index. That is the same scenario that is bullish for the dollar, which would indicate bearishness for the Euro or cable. And again, this has to happen at a
65 00:13:15,180 --> 00:13:25,890 key resistance level for to be bearish for the cross currency. Okay, the dollar index may be trading down to a support level and make a higher low when the
66 00:13:25,920 --> 00:13:33,960 cable and fiber maybe need a higher high it looks bullish on their charts. But behind the scenes, you can see that there's actually strengthening going on at a
67 00:13:33,960 --> 00:13:44,610 key support level for the dollar index. And again, same thing happens if you reverse it if the US Dollar Index fails and a higher high while the lower lows
68 00:13:44,640 --> 00:13:56,130 that are seen in the cable or fiber are met equally, then there's lower lows in the cross currency euro or cable. There's a cracking correlation as well. So you
69 00:13:56,130 --> 00:14:07,110 have to compare the highs and lows between the three. Okay, and that also segue into the correlator pair SMT. You're gonna be looking for the lows between the
70 00:14:07,110 --> 00:14:19,830 pound and the euro. Okay, so though, generally they move in tandem. If we see trading at a key support level, and one fails to make a lower low, that's
71 00:14:20,610 --> 00:14:29,340 correlated pair s&p divergence possibly indicating there should be a short term shift in the marketplace for a bounce higher and obviously comparing the highs
72 00:14:29,370 --> 00:14:29,820 at
73 00:14:32,250 --> 00:14:42,180 key resistance levels. If the pound and euro failed to make equal highs. That's a correlative pair s&t, possibly indicating some distribution in the marketplace
74 00:14:42,180 --> 00:14:54,930 and there may be a short term shift in the marketplace lower. We'll be watching the stock market indices okay looking for SMP divergence as well. Looking for
75 00:14:54,960 --> 00:15:04,650 the Dow s&p 500 and NASDAQ Composite Index to compare copper We make higher highs and lower lows if we're bullish, and we're in a bullish environment, and
76 00:15:04,650 --> 00:15:15,330 we see the doubt, s&p 500 and NASDAQ, trading lower in tandem, and eventually one fails to make that lower low at a key support level, at a time frame when
77 00:15:15,330 --> 00:15:25,170 everything else is lining up, that is a stock market s&p divergence. Okay, so we we want to be seeing confirmation, we want to be measuring on a daily basis
78 00:15:25,170 --> 00:15:34,350 monitoring the overall risk on risk off scenario. So using Dow Theory, essentially, we want to be looking for these three averages to confirm our highs
79 00:15:34,380 --> 00:15:44,970 for continuation on upside, and or looking for follow up. continuation and confirmation between the three as they go lower, there should be lower lows
80 00:15:44,970 --> 00:15:54,870 between the three, if one starts to buck that trend at a key resistance or support level, there's an indication that you may have to pay closer attention
81 00:15:54,870 --> 00:16:02,310 to there may be something setting up. Or if you're in a trade, it may be indicating it's time to tighten up some stop losses and take some profits or
82 00:16:02,370 --> 00:16:12,960 even exit the trade. Again, referring to the administrators net position, we're going to be looking for long positions when the commercials are net long. And
83 00:16:12,960 --> 00:16:20,340 obviously looking for shorts when the commercials are net short. Looking at the overall trend of where the commercials are trading on the weekly charts, using
84 00:16:20,340 --> 00:16:29,370 the Commitment of Traders net position, you'll be able to see where they're trading in terms of long term macro trend. And when we getting in sync with
85 00:16:29,370 --> 00:16:42,420 that, using the CRT and par timeframe, key support resistance levels. open interest. We've discussed this in other modules, and obviously we're not going
86 00:16:42,420 --> 00:16:52,320 to beat it to death here. But basically it's when we're in a bullish condition and we're trading at support and we see a 15 to 20%. Drop in open interest. That
87 00:16:52,320 --> 00:17:02,850 is a very, very strong indication that it'd be a buy signal is either forming and or it has formed. And it's bullish and bearish conditions when price is
88 00:17:02,850 --> 00:17:12,630 trading at resistance, and we see a increase in open interest 15 to 20% or more, it doesn't have to be just 20% of may many times be even greater than that in
89 00:17:12,630 --> 00:17:20,580 terms of an increase. But you want to see it rapidly increase and you don't want to see a gradual because you want to see a rapid increase in just as well as you
90 00:17:20,580 --> 00:17:28,800 want to see an increase. When it drops for bullishness, you want to see it rapidly do that, because that's an indication that the commercials are really
91 00:17:28,800 --> 00:17:39,960 really adjusting positions and allocating funds to offset the initial risk or risk on scenario that may impact the market that actually working with them. So
92 00:17:39,960 --> 00:17:50,250 if you see an increase in open interest at a resistance level that's bearish. market sentiment, obviously we would be expecting sell signals when we are at
93 00:17:50,250 --> 00:17:59,040 key resistance levels and overbought basis on the daily chart. And we would be looking for buy signals when we're at key support and oversold on a daily.
94 00:18:09,480 --> 00:18:17,790 Alright, the execution stage obviously, again, referencing the monthly, weekly and daily key support resistance levels. We're gonna be determining before we do
95 00:18:17,790 --> 00:18:27,780 any trades at all, we're going to determine that specific moment, are we on risk or off risk for that particular day or that session that we're trading. If we
96 00:18:27,780 --> 00:18:38,190 are risk on obviously, your your buy scenarios our ago, if we are risk off your sell scenarios, our goal, you want to be referring to the daily buy and sell
97 00:18:38,190 --> 00:18:48,210 programs. Again, that means are we trading off of a key support and of a swing point formation or daily chart, because that's what you need for buys. And if we
98 00:18:48,210 --> 00:18:57,030 are in a sell program, and we see a swing high forming at a key resistance level, okay, that's an indication that we are in fact, a go for risk off
99 00:18:57,030 --> 00:19:09,840 scenario and daily sell program. Okay, so that that has to happen for us to be confident with our trading for this style of trading. When we have that
100 00:19:09,840 --> 00:19:19,110 scenario, in effect, you're going to be transposing those key levels from the higher timeframe monthly, weekly and daily, down to your lower timeframe, 60
101 00:19:19,110 --> 00:19:30,360 minute, 15 minute and five minute charts, you're going to wait for price to trade to those higher timeframe key support resistance levels. You want to only
102 00:19:30,360 --> 00:19:38,160 be trading in the direction of the market structure that you find it's on the daily chart. So your market structure is going to be daily basis. Okay, you're
103 00:19:38,160 --> 00:19:46,410 not looking at market flow one one hour charts for our charts, you're only trading in the direction of the market structure that you find on a daily chart.
104 00:19:47,370 --> 00:19:57,780 You're using optimal trade entry. Now, this point here, you can use any trading pattern of your choice. If you'd like the reflection pattern, you can trade that
105 00:19:58,080 --> 00:20:05,430 if you'd like MACD divergence, this Here's what you would use here. If you are type one bearish divergence for stochastics. That's, that's the pattern you
106 00:20:05,430 --> 00:20:15,210 would use here. If you'd like turtle soup patterns, that's the pattern you will use here. Okay, but you have to trade it at a lower timeframe at a key support
107 00:20:15,210 --> 00:20:23,910 resistance level in the direction of the market structure on a daily chart. Okay, so the plug and play aspect here is you can use any entry pattern that you
108 00:20:23,910 --> 00:20:34,140 want. But it has to be in conjunction with the things that we've already discussed so far. Okay, entry ideally, should be traded in a major session open.
109 00:20:34,350 --> 00:20:44,700 Obviously, I don't have it here, Asia could be one. London and New York open are good, because they're, they're just good times to be trading our timeframe
110 00:20:44,790 --> 00:20:57,270 setups for the fiber and cable. But if you're a yen pair trader, or if you're an Aussie trader, or Kiwi trader or something like that, you could trade the Euro
111 00:20:57,270 --> 00:21:07,890 positions in the asian session opening, okay, because those, those currencies have a lot of activity during those times a day. So, if you are a Aussie kiwi,
112 00:21:07,920 --> 00:21:19,500 or yen trader, obviously the asian session would be in session that you could be utilizing for higher timeframe, intermediate term trades as well for entry. Our
113 00:21:19,500 --> 00:21:29,280 entry orders are going to be based on limit orders. And we'll be keying off of the 60 to 70.5 and 79% retracement levels on the fibs to arrive at our entry
114 00:21:29,280 --> 00:21:41,430 points. And every one of our trades will always have a maximum risk of 2%, Nevermore And ideally, less if we take a loss, we reduce the risk as we go
115 00:21:41,430 --> 00:21:49,710 through if you don't know how to return to go to our video for handling losses, and it gives you a program how to apply
116 00:21:51,780 --> 00:22:00,630 risk reduction procedures in terms of how to preserve your equity. And it's always good to have that not always walking in the marketplace looking for it.
117 00:22:00,990 --> 00:22:10,710 Exponential growth of your equity, you always have to have a shield and you're going to have losses you have string of losses. So this this example is not
118 00:22:11,250 --> 00:22:20,280 exempt from that you will have losses if you use this, okay. And again, I'm stressing this, use this in a demo account, okay, you determine if you have the
119 00:22:20,580 --> 00:22:31,560 capabilities to be a trader using this as a model, okay? It will help develop patience, it'll help develop anticipatory skills as a trader, but you won't have
120 00:22:31,560 --> 00:22:42,480 a whole lot of trade, okay, but it teaches you the concepts and processes as needed. Because if you can understand how to do this, all of the aspects of
121 00:22:42,480 --> 00:22:51,750 trading on a short term basis short term trading, day trading, scalping, if that's what you want to do. those facets of trading will be far easier if you
122 00:22:51,750 --> 00:23:01,260 understand this higher timeframe premise where you have that major tide in your favor, okay? It's kind of like a fish. Okay, if you're a fish in this in the
123 00:23:01,260 --> 00:23:08,820 stream, okay, what's easier if you stream if you swim downstream with the current or if you swim upstream? Okay, obviously goes without saying it's easy
124 00:23:08,820 --> 00:23:19,440 to swim downstream. There's a fish, the salmon, very small, the strongest fish in nature, it actually swims up current, okay, and leaps up out of the water, in
125 00:23:19,440 --> 00:23:26,760 scales over rocks and everything. And a lot of folks that know that will say, you know, I can be like that salmon. Okay, I'm going to swim against the
126 00:23:26,760 --> 00:23:34,590 current. And, you know, I can prove how strong I am. And I'll be a contrarian trader every single time and never had to worry about getting in sync with the
127 00:23:34,590 --> 00:23:42,150 overall tide. And and that's fine, okay, you grant it you, you'll probably get to where you're going. But if you're using the salmon as an example, you might
128 00:23:42,150 --> 00:23:51,300 want to recall also when the salmon gets to where it's got to go to fertilize those eggs, it dies. So, I mean, it's good that you get there. But you know, if
129 00:23:51,300 --> 00:23:59,640 you're exhausted you croak, you were good is that so you want to be having things majority in your favor and trading with the tide. Okay, that's your
130 00:23:59,670 --> 00:24:09,300 that's what your focus should be. Okay, and trading on the higher timeframe premise using intermediate term timeframe. Your short term day trades and your
131 00:24:09,300 --> 00:24:17,430 scalps in that direction also will have very, very immediate feedback. You'll know right away if you're you're going to be profitable in the trades. You don't
132 00:24:17,430 --> 00:24:25,920 get that lackadaisical price action you usually get when you're trading counter trend. Stop Loss orders obviously always going to originate at a 30 PIP stop
133 00:24:26,670 --> 00:24:37,380 from our entry point. And obviously whatever your entry price is just to make 30 pips from that above for shorts and below for Long's first profit is always
134 00:24:37,380 --> 00:24:46,650 going to be taken at 50% of our position at 30 pips profits and almost once that position goes to 30 pips profit, we take 50% a position off, and once we get
135 00:24:46,650 --> 00:24:55,710 that our stop loss moves to a breakeven status, okay, so now we're in a risk free scenario. Okay, we've already profited. We got half the position off. So
136 00:24:55,710 --> 00:25:05,130 basically, we're making 1% on the trade. We're locked at breakeven. We cannot lose any thing we've already made and booked 1% profit, the remaining balance of
137 00:25:05,130 --> 00:25:13,860 the trade, you would look for targets based on Fibonacci extensions, 127, extension, and 162 extension, or I don't have it listed here, but you can have
138 00:25:13,860 --> 00:25:22,920 the 200 extension as well. Now you have 50% of your remaining position, there's a couple ways you can handle that. If you are uncomfortable, and you're still
139 00:25:22,920 --> 00:25:33,840 learning, my advice would be to take 30% off when it gets to 127 extension, and then take 10 more off at 162. And maybe even another final 10% off at the 200
140 00:25:33,840 --> 00:25:44,160 extension, or take 30 off at 127. Take 20 off at 162. And just paper trade the remaining portion, you don't have any open position, but then see if it goes to
141 00:25:44,160 --> 00:25:53,070 the 200 extension, okay. But really the 127 wants you to you want to have at least 70 to 80% of your trade already in profit. And then if you have a small
142 00:25:53,070 --> 00:26:02,820 portion, obviously, you can leave that to ride to 200% or even greater, okay, but you want to be taking profits and book them at 127 and 162 of the swing that
143 00:26:02,820 --> 00:26:03,420 you're trading.
144 00:26:16,140 --> 00:26:27,090 Okay, let's look at the 10 year t notes and how we can use these in conjunction with yield analysis. And what we're looking at here is this is March April of
145 00:26:27,090 --> 00:26:42,390 this year, and 2012 going into spring. And we have a weekly swing low formed at the 128. Big figure for the 10 year Tinos, the US 10 year Tina. Note also that
146 00:26:42,390 --> 00:26:57,840 we have a old low here just above the 127 figure. And we have a rally up to the 132 figure. And then we saw a decline down into March where we had support found
147 00:26:57,840 --> 00:27:09,570 that 128 big figure now that's an optimal trade entry. Okay, so if we see a swing low on a weekly chart on a 10 year, and we see a pivot or swing low form
148 00:27:09,600 --> 00:27:23,610 at a big figure like this 128 we also see open interest declining, okay, you can see at the bar here, the purple level here, how open interest was declining, we
149 00:27:23,610 --> 00:27:36,030 would expect prices to rally up. Now, the teenage rallying up that means that the yield is going to be dropping. if they'll if, again, this is what happened
150 00:27:36,810 --> 00:27:50,730 later on going into the year, we saw that spring rally up seasonally speaking, that is an inverse relationship between the bonds. Okay, bond yields. So as the
151 00:27:50,730 --> 00:28:04,710 march low was formed, and we rallied up into May, June time period, that was going to be mirrored in the yield. Okay, dropping. So if the tea notes rallying
152 00:28:04,710 --> 00:28:17,730 up, the yield itself is going to be declining, okay? So that's going to be bearish, it's going to drag risk out of the market, okay. In other words, the
153 00:28:18,180 --> 00:28:31,920 risk off scenario will unfold. Okay, there'll be a flight to quality and during this timeframe, we would see the dollar index rally and obviously, risky assets
154 00:28:32,010 --> 00:28:42,390 in foreign currencies and such, they would be declining. Okay, so we have seen our tenancy, we see the support and concepts that we utilize in all of our
155 00:28:42,390 --> 00:28:51,300 trading, optimal trade entry trading at a key support level, we would expect a rally up in this timeframe. Okay, April May time period going into the June
156 00:28:51,300 --> 00:29:04,440 months. Okay, let's see what happens in the five year t note. same scenario, we see a weekly optimal trade entry trading down into 122. Big figure, we see a
157 00:29:04,440 --> 00:29:18,060 swing point low. Okay, going into April. What unfolds obviously much in the same capacity we saw in the tenure, the five year rallies up into the end of May,
158 00:29:18,090 --> 00:29:29,310 early June. Okay, and even higher in the case of this September of this year, but we saw the shift that takes place with a bullish move going higher in the
159 00:29:29,310 --> 00:29:36,630 treasuries and tea notes. Now, if the futures contracts going higher, again, you gotta remember their inverse relationship. That means it's going to see a
160 00:29:36,630 --> 00:29:47,400 decline in the yield so we see dollar up because dollar is gonna be trading in pretty much the same direction that the treasuries are gonna lead it. Many times
161 00:29:47,400 --> 00:29:56,520 the dollar will lead treasuries, okay, it's vice versa. It's, it's kind of like you know, if one follows the other, okay, but you want to add the seasonal
162 00:29:57,000 --> 00:30:07,080 influences and the time of year like me willing to trade intraday we have time and day theory, we have time of year theory, where we see a spring decline or
163 00:30:07,080 --> 00:30:20,460 risk off scenario. Okay, and you'll see the dollar increase in bonds rally. So what does that look like in the yield? Okay, what we're looking at is a bond
164 00:30:20,460 --> 00:30:21,270 yield triad.
165 00:30:22,829 --> 00:30:36,269 And we're looking at specifically is the five year US Treasury. T note. The UK five year bond yield and the German five year bond yield. And how I got this
166 00:30:36,269 --> 00:30:48,479 chart went to bloomberg.com. And if you go actually in do with Google, do a google on five year US Treasury, government bond yield, okay, and click on that
167 00:30:48,479 --> 00:30:58,919 and you'll see the Bloomberg link. Do the same thing with a UK five year bond erupt? Bloomberg, put that in your Google search and obviously do the same thing
168 00:30:58,919 --> 00:31:09,329 with the German five year bond yield Bloomberg. And when you Google that, you'll get the link for a click on it. And when you get the chart that opens up similar
169 00:31:09,329 --> 00:31:28,259 to this, you'll just simply add the symbols you see here for a five year US Treasury or T note. yield. It's us GG. Number five, why our colon ind. For a UK
170 00:31:29,459 --> 00:31:47,459 five year bond yield is G UK, g five colon ind. And for a German five year bond yield. It's g d, b r five colon ind. Now I want to draw your attention here real
171 00:31:47,459 --> 00:31:57,119 quick is if you look at the the darker orange color, and I don't I can't pick the colors. It just does it by default. But if you look at how, in March, April,
172 00:31:57,449 --> 00:32:13,769 okay, the US Treasury was able to make a higher high in yield, okay, no, it would have went lower on the Tina, the green level, long yield, that's the UK,
173 00:32:14,639 --> 00:32:32,099 it was able to make a modestly lower in comparison terms, the highs made in the US then we see the German was also weaker as well. Okay, so it wasn't able to go
174 00:32:32,099 --> 00:32:46,019 lower in its futures contract. But the yields you can see the disparity that's shifting in place, that takes place where the US Treasury five year went higher.
175 00:32:46,199 --> 00:32:58,949 So we have SMT divergence, okay. There is confirmation to there is a weakness underway going into April. So we see that weakness translated in the form of
176 00:32:58,949 --> 00:33:16,229 these overlays. If you take the UK off, okay, so now we're just looking at the German five year in the US five year, you can see a little bit clear now that
177 00:33:16,229 --> 00:33:31,049 the green level green is the German and the orange color is the US us was able to make a higher high in yield, while the German was unable to make the higher
178 00:33:31,049 --> 00:33:41,219 high in going into March going into April. So we see a slide lower in yield and that was translated in the rally up in the T note that we saw in the US
179 00:33:41,219 --> 00:33:48,239 Treasury. So there's this symmetry between the two you want to be watching the yield you want to be watching the T note you want to be watching the German
180 00:33:48,239 --> 00:34:04,499 yield. With the German futures contract you can you can trade the trade but you can track it with its futures contract and the UK as well. Seeing these the
181 00:34:04,529 --> 00:34:18,449 divergence, okay. Adds confidence to your expectation expectancy, that we should be seeing weaker British pound and fiber prices and a rally in the dollar, April
182 00:34:18,449 --> 00:34:34,679 May timeframe when the spring seasonal influence should be coming on the way. Now looking at the US and the UK, you can see that same thing happening. The
183 00:34:34,679 --> 00:34:49,349 orange level it's the US and the green is the UK five year yield. We were unable to make that comparable higher high in the yield on the UK. So we see the s&p
184 00:34:49,349 --> 00:34:59,999 divergence that we would expect to see going into April so we saw further evidence by removing one you can slip a little clearer you can see it dive
185 00:34:59,999 --> 00:35:10,199 vergence between the two yields. And by looking at just simply the UK and German yields, you can see that the
186 00:35:11,610 --> 00:35:27,240 German and UK yields were not able to make comparable highs between December and the middle of March, the UK was able to trade higher. At the same time, the
187 00:35:27,240 --> 00:35:40,320 German was weaker, okay, and was unable to make a higher high yield. And you seen that also going into the actual price levels, that the fiber itself was
188 00:35:40,320 --> 00:35:49,500 trading because that's the German is going to be measuring the yield for that specific specific country. The UK is for the cable. Well, if you look at the the
189 00:35:49,500 --> 00:36:00,180 underlying weakness that was in the yield for the German, you can see how we were really really weak really soft. In the march april time period for for the
190 00:36:00,360 --> 00:36:08,970 for the five or so there was really no participation whatsoever our interest in chasing any higher yield there, they were actually selling into that and you
191 00:36:08,970 --> 00:36:16,320 could see the the weakness really accelerate going into June and the middle of July.
192 00:36:21,270 --> 00:36:33,660 Okay, folks, we're looking at bar chart.com. Okay, this is a free website, absolutely zero fees whatsoever. So give you access to commodities, and
193 00:36:33,690 --> 00:36:44,130 commodity traders reports and open interest. When you go to the homepage, this is what pops up over here to this little tab here says select the commodity. Tap
194 00:36:44,130 --> 00:36:55,950 that and we'll start with the US Dollar Index. Okay, when one opens up, you'll get onto top of lists to please the cash you don't want that your is the nearby
195 00:36:55,950 --> 00:37:08,490 contract December next month, Al's March following by June and September. This click the top contract here to one that has a month again not using cache. Click
196 00:37:08,490 --> 00:37:18,180 on December it'll obviously depend upon what time of the year you're trading. And looking at the resource. It'll be a different month, obviously, but you just
197 00:37:18,180 --> 00:37:27,300 want choose the top one that's gonna be the nearby contract, then go to this area here where says customized chart, click that tab. And that'll open up a
198 00:37:27,300 --> 00:37:36,810 window to get you a chart like this. Okay, and what you're gonna do is you're gonna scroll down to this little area down here, we can set the parameters, you
199 00:37:36,810 --> 00:37:47,550 want to set the frequency to weekly nearest, what that's going to do is going to give you a chart based on weekly ranges using the nearby contract always. Okay,
200 00:37:48,210 --> 00:37:59,910 I'm gonna change it to candlesticks. I'm gonna change it to one year. And make sure this is saying total volume. Okay, total volume. And reason why you won't
201 00:37:59,910 --> 00:38:05,040 get the open interest and volume as you see down here. Otherwise, click draw.
202 00:38:10,950 --> 00:38:22,140 Okay, and you'll get a window pops up with a new chart here. And what it says is is a weekly chart using weekly range highs and lows derived from the nearest
203 00:38:22,140 --> 00:38:34,110 contract month of the US Dollar Index, okay. And if you look at the bottom here, this purple line here, it's moving along here sneaking up and down. Okay, that
204 00:38:34,140 --> 00:38:45,000 delineates the total open interest for the dollar index. And obviously, it goes without saying these vertical red and green lines are volume. Okay, we're not
205 00:38:45,000 --> 00:38:52,320 going to like pay attention to the volume, but there's just no way for me to take the volume off and just leave the open interest. So we have to kind of look
206 00:38:52,320 --> 00:39:05,910 past these vertical lines and pay attention to the purple line in here. Okay. So let's go and scroll down a little bit. Notice how we rode up in price here on
207 00:39:05,910 --> 00:39:14,820 the dollar and then we went into a consolidation after small retracement, okay, see this consolidation here, we have a range high here. And we have a range low
208 00:39:14,820 --> 00:39:26,760 in here. Note the time of the year, okay, March, April, May, March, April May, because that's springtime of this year. Note the low here and the high here in
209 00:39:26,760 --> 00:39:34,110 this low. This is optimal trade entry. pull that up on your platform, both of across that and you'll see that we did trade right back down to this level here.
210 00:39:34,650 --> 00:39:50,190 Now utilizing this this concept of weekly ranges and seasonal tendencies, okay. Typically in the springtime, we see a weakness come into the marketplace in the
211 00:39:50,190 --> 00:39:59,220 form of British Pound usually making a seasonal high April May and trading down into the summer months. Well, that's going to be a mirror image or reverse.
212 00:39:59,550 --> 00:40:09,660 Okay. In the dollar, the dollar should rally up at that same time frame and you see that unfolding here. Okay, now we're gonna introduce the concept of open
213 00:40:09,660 --> 00:40:19,980 interest. Okay? And I want you to take a look at this drop, okay, rather sharp drop in open interest right here, during a timeframe when we're in a
214 00:40:19,980 --> 00:40:31,350 consolidation. This is the commercials tipping their hand that this is now no longer going to be staying within this small little timeframe of trading range,
215 00:40:31,380 --> 00:40:41,580 okay? They expect higher prices. Why? Because open interest is declining. We've learned that open interest decline in a consolidation is commercials doing what
216 00:40:41,670 --> 00:40:51,870 lessening their shorts, if they're lessening their short positions. They expect what higher prices and you can see that unfolding here. Okay, now, by itself,
217 00:40:52,170 --> 00:41:02,310 that's wonderful. But how do you confirm that? How do you see the X ray view so to speak of this open interest indicator giving you the insight that we're
218 00:41:02,310 --> 00:41:13,830 supposing it's doing here? Well, you scroll down to this little area on your page, it says add study, click on this tab here. And you want to go to
219 00:41:13,860 --> 00:41:29,910 Commitment of Traders line chart, tap that then draw chart. Okay, now watch. See the open interest declining here? That's lessening of shorts. The red line down
220 00:41:29,910 --> 00:41:39,300 here is the commercials. Okay, they are below the zero line here, because they are net short. But look what they're doing the same time here. middle of March
221 00:41:39,300 --> 00:41:48,930 going into April, they're really reducing their shorts, see how they're covering their shorts at the same timeframe. open interest is declining, while prices in
222 00:41:48,930 --> 00:41:59,310 a consolidation. While price is trading at a key support level 79. See that level over here 79. So we can expect reasonably seasonally, we're looking for
223 00:41:59,310 --> 00:42:11,160 higher prices in the dollar weaker in the fiber and cable. Okay, so there should be a risk off scenario, risk off is going to draw participants into buying safe
224 00:42:11,160 --> 00:42:21,150 haven assets. Now one can argue that the dollar may or may not be a safe asset to most, but for instance, you can see that still unfolding here with a higher
225 00:42:21,150 --> 00:42:33,780 dollar rallying up from the April May timeframe into the summer months. So then we have this mindset that we're looking for bullish prices in here. Okay, we
226 00:42:33,780 --> 00:42:43,590 would be in a buy program all through here. Okay. So now, let's look and see if we have that same thing occurring in the British Pound at the same timeframe in
227 00:42:43,590 --> 00:43:01,140 this year in the spring. So let's go back over to the commodity tab. And we're going to the British Pound when you use the nearby contract, and click on your
228 00:43:01,140 --> 00:43:08,730 customized chart tab, and we're going to do the same thing we did with the dollar, we're going to make sure we are on candlesticks.
229 00:43:10,110 --> 00:43:23,010 We're going to look at weekly nearest I'm going to scroll to a one year chart, making sure total volume is clicked. And we're going to draw the chart. Okay.
230 00:43:23,790 --> 00:43:39,630 Now we have a weekly chart on the British pound. Okay. And you can see that April May high unfold here. So we saw price drop down. Okay, so let's add a
231 00:43:39,630 --> 00:43:54,480 little bit of time to this because it is a little This is that area right here. Okay. Now, if one takes this high here, down to this low, you can see that this
232 00:43:54,480 --> 00:44:04,320 is an optimal trade entry. Okay, this is an area where we would expect implied resistance. Also noting that we did take out this old high as well. So price was
233 00:44:04,890 --> 00:44:16,530 really in it was free to find lower prices because we're seeing higher prices poised in the dollar at the same timeframe. April May. Now also note that we
234 00:44:16,530 --> 00:44:29,610 were in a range between this, this low, okay, and this old high in here. Okay, now we did break out. Okay, we did break out there, but we saw a rapid increase
235 00:44:29,850 --> 00:44:38,550 in open interest. Okay, so what does that mean? That the open interest is increasing while within our larger trading range. Okay. And one could argue
236 00:44:38,550 --> 00:44:47,610 really, this is a large trading range here. We had a rapid increase of the open interest here gave up just a little bit before this run off. But ultimately
237 00:44:47,610 --> 00:44:56,190 we're at a rate back and above the previous open interest here with shorts. So they quickly added all those shorts back while we round rallied up into a new
238 00:44:56,190 --> 00:45:04,260 high higher than this one. But we did not get back to this old high as well. So we repack into this range. Okay, so think about what we covered in the webinar
239 00:45:04,290 --> 00:45:14,940 inside the range. And that concept is unfolding here. So now watch, we're going to be looking for this open interest or increase in shorts, okay to be confirmed
240 00:45:14,940 --> 00:45:24,000 with what and and that traders position? Well, if we pull that chart off, we should be seeing what we should be seeing commodity, I'm sorry, commercial
241 00:45:24,000 --> 00:45:35,100 traders. Going net short, or adding to net short positions. Okay. And we're going to do this by adding a chart here.
242 00:45:42,510 --> 00:45:52,860 Okay, so now if we see the open interest in client increase like this, okay, we would expect to see what in the net traders decision chart, we want to see an
243 00:45:52,860 --> 00:46:04,380 increase of net short selling or net short position or rapid reduction in their net long position that would confirm this, okay, as commercials themselves,
244 00:46:04,590 --> 00:46:16,920 doing what? expecting lower prices. So we go down here to this add study tab, click on that go to commercial Commitment of Traders line chart, add that and
245 00:46:16,920 --> 00:46:17,340 draw.
246 00:46:22,980 --> 00:46:35,100 Okay, and you can see here we have the chart noted. We see here and you can see the red line here. And we're gonna we're gonna change it to a one year so we can
247 00:46:35,100 --> 00:46:45,360 see a little bit clear. And if by clicking on the one year, we'll see that this red line here delineates the commercial activity, okay, and you see how they
248 00:46:45,360 --> 00:46:54,450 rapidly dropped down from net long and net short while the open interest was increasing. So that was a confirmation that we were seeing net short, commercial
249 00:46:54,480 --> 00:47:04,110 short selling, okay, so if we see both open interest increasing like this, and the red line here, delineating commercial traders, okay, they went from net long
250 00:47:04,500 --> 00:47:17,040 to net short going into May. Okay, so we saw this rally as a suspect, false fake out type of move here. And we just ran out this old high, and then obviously
251 00:47:17,040 --> 00:47:26,940 rejected it very harshly. Now, this was the net short position, okay, held by the commercial traders expecting the top performing that British Pound at a
252 00:47:26,940 --> 00:47:36,690 seasonal time frame when the dollar was poised to rally, okay, and seasonally when the British Pound was expected to go lower. Okay, so now we've confirmed
253 00:47:36,690 --> 00:47:49,380 two sides of the market, the dollar and the British pound. So let's see if we can see some support also in the euro. So I'm gonna go over to this tab here.
254 00:47:50,730 --> 00:48:06,090 We're gonna go into the Euro FX tab. And we're gonna use the first contract month over to customize, scroll down. And what we're gonna do is, make sure
255 00:48:06,090 --> 00:48:20,670 we're on candlesticks, we're going to use the weekly nearest one year, making sure our total volume is clicked. And we're going to draw the chart and we will
256 00:48:20,670 --> 00:48:34,770 arrive at the euro. Okay, and we have the march april timeframe in here. Notice that the fiber was unwilling to make a higher high here. Okay, so we have that
257 00:48:34,800 --> 00:48:46,470 divergence, okay, between the pairs. So we have SMP divergence during a seasonal time when we expect the fiber and cable to decline. We also expect to see the
258 00:48:46,470 --> 00:48:59,490 dollar to rally. Okay, so by seeing that, we also note that we have a trading range in here. Okay, the price is trading in the trading range. Okay, that's it.
259 00:48:59,490 --> 00:49:07,290 Same thing, just inverse relationship between the dollar and the euro. Remember, we had the same thing happening in the dollar. During the spring of this year in
260 00:49:07,290 --> 00:49:18,150 2012. We saw the dollar ranging and then expected to see higher prices because open interest declined. And commercial short selling was rapidly reduced. Okay,
261 00:49:18,270 --> 00:49:27,870 in the dollar. So that's bullish. So we we seen the same thing, hopefully in a mirror image on the fiber. We're in consolidation. Okay, April May time period.
262 00:49:27,870 --> 00:49:37,500 So between this vertical line and this vertical line right in here, okay, we're in a range. Notice we saw open interest increasing. Okay, that's a nice increase
263 00:49:37,500 --> 00:49:46,320 of open interest during a timeframe in the year when we would expect to see weaker prices. Also, we have optimal trade entry from this high to this low
264 00:49:46,320 --> 00:49:53,790 trade right up into that the beginning of April. Okay, so we now have optimal trade entry during a time when we're seasonally weak, and we're expecting
265 00:49:54,150 --> 00:50:10,110 firmness in the dollar. Okay, and now let's go and add the commercials By co T, and the Commitment of Traders line chart, add that quick draw. Okay, and you can
266 00:50:10,110 --> 00:50:29,580 see here we had the reduction. Okay, now once we had open issues increasing here, wow, we also saw the commercials. In this case actually adding a little
267 00:50:29,580 --> 00:50:42,600 bit of their net longs in here. Okay, they were already net long above the zero line here. So they were all along here, basically trying to catch this low here.
268 00:50:42,600 --> 00:50:54,360 So they're buying all this decline from this high down lower. So when price started to whip lower below this low here, at that very moment, between April
269 00:50:54,360 --> 00:51:06,120 and May, there was really no increase of selling. In fact, they were actually buying more of it in here. Okay, so it's in this example, it acts much like the
270 00:51:06,210 --> 00:51:18,300 SMT, where we have the confirmation in the cable and the dollar. But on a CRT, we don't really see it here. Okay, we've been maintaining a very large,
271 00:51:19,590 --> 00:51:24,840 net long position on the commercials, let's go and pull up three years of that, and you'll see what I mean.
272 00:51:30,389 --> 00:51:42,389 You can see that we've had a net long position by the commercials for a very long time. And while we did drop down in here, there was no real indication that
273 00:51:42,389 --> 00:51:53,969 there was additional short selling here, okay, they were lessening their Long's here going into April. So that's the insight eagerly not necessarily this one
274 00:51:53,969 --> 00:52:03,749 here. So we did lose some net longs here. So we have confirmation in that regard. But between April and May, there was nothing to indicate the movement
275 00:52:04,589 --> 00:52:15,659 was confirmed between commercials and open interest at that particular moment. But if you look at this scale, that we have here, on the three year, you see how
276 00:52:17,309 --> 00:52:27,449 we had open interest increasing. And here, we had open interest increasing in here. While we saw a reduction of the long sets more or less essentially the
277 00:52:27,449 --> 00:52:37,979 same thing. They're lessening their Long's. Okay, which is increasing their short positions, while open interest increased in here while we're in this
278 00:52:38,039 --> 00:52:49,109 range. Okay, so that was the catalyst for confirmation on the higher timeframe. So while they didn't exactly line up between cable and fiber, the both of them
279 00:52:49,109 --> 00:52:58,499 more or less had the indication going in. So fiber was giving it up here early. And as you can see, it's also supported with the fact that they were unable to
280 00:52:58,499 --> 00:53:10,499 make a higher high here in April when the cable was able to do that. Alright. So that's one way of applying open interest, looking for the reduction and
281 00:53:10,499 --> 00:53:22,079 increasing of open interest for measuring smart money in the form of commercial traders and using the co2 graph. And now, we had this stage set for weaker
282 00:53:22,079 --> 00:53:35,939 prices in the spring of 2012. So now we have more or less the large macro view. Okay, couple that with the interest rate market now, because now we have the
283 00:53:35,939 --> 00:53:50,849 CBOT open interest, supporting the notion that the seasonal tendency for weaker Cabling and Fiber and higher dollar in the spring, we see that also supporting
284 00:53:50,849 --> 00:54:03,539 the interest rate insights that we've already looked at. And now we have a sell program. Okay in place, now we can look for shorts, we can start selling, okay,
285 00:54:04,319 --> 00:54:18,539 for short position going into the summer months. Okay, we're looking at the Dollar Index. This is a daily chart, and we're zoomed in to the April month of
286 00:54:18,539 --> 00:54:32,609 2012. And we're looking at this. Again, seasonal tendency for the market to decline on the British pound and usually be a risk off scenario. And obviously,
287 00:54:32,609 --> 00:54:45,479 we'll be looking for a reverse scenario which would be bullish for the US dollar. And we noted already this swing here. This is optimal trade entry in
288 00:54:45,479 --> 00:54:57,449 here where price would have been rallying from or we would expect to see a rally from and sweetspot comes in at 178 85. So this would be a catalyst for upside,
289 00:54:57,929 --> 00:55:12,629 momentum for the dollar. Looking for this old high and this old high as upside objectives. At the same time that this is occurring, we expect to see weakness
290 00:55:12,779 --> 00:55:26,219 in the stock indices to participate a risk off scenario. We saw the Dow this year in April make a very modestly higher high here and this little rectangles
291 00:55:26,219 --> 00:55:37,589 delineating the month of April as well. So we see a modestly higher high here, but let's look at the daily on the s&p the same timeframe. We have a lower high
292 00:55:37,859 --> 00:55:47,609 okay see that now we already have an SMP divergence between the stock indices. And obviously the NASDAQ Composite Index also That same month was a built to
293 00:55:48,239 --> 00:55:59,459 post a lower high Okay, so we have SMP divergence indicating that we have underlying weakness. Okay, you know, what is this rally up into April May time
294 00:55:59,459 --> 00:56:10,379 period, stock averages were not able to confirm one another. So Dow theory suggests that there's probably waning momentum. And don't be so aggressive in
295 00:56:10,379 --> 00:56:21,719 terms of buying because you may be seeing a withdraw or retracement lower. Let's go back to the dollar. Okay, and let's look at what happened from that point.
296 00:56:24,359 --> 00:56:32,639 Okay, you see, obviously, the dollar itself rallied on up from this high
297 00:56:34,620 --> 00:56:49,650 in this low here, this range. Okay, if we look at just that, we can get some upside objectives for the dollar. Okay, and what we're doing is we're looking
298 00:56:49,650 --> 00:57:02,400 for obviously, objectives, looking for potential areas where price may shoot to, here's the 162 extension, and a 200 extension here. Okay, now once price broke
299 00:57:02,400 --> 00:57:11,310 above this high, this swing, okay, is fine, you can still use those targets, but we got to go to the left side of the chart and look at the larger magnitude
300 00:57:11,310 --> 00:57:22,860 price swing that we're working with instead, it's this high to this low. So we will use our fib tool from that high and pull it down to the lowest low in that
301 00:57:23,490 --> 00:57:35,310 fractal. Okay, so we have this high down to this low. And we will be looking for the 127 extension for upside objectives here. And 162 extension which nails the
302 00:57:35,310 --> 00:57:45,510 high here. And moving forward, you can see the dollar had slipped off precipitously from that point. Now we can see hopefully here the value of using
303 00:57:45,510 --> 00:57:55,560 a higher macro view analysis approach to your trading. And if you see this type of event unfolding in the dollar, the same thing should be happening in the
304 00:57:55,560 --> 00:58:07,830 reverse, okay, on the downside on your other asset classes, and let's look at the daily on the Dow Jones. We saw price obviously slipped lower as well. Okay,
305 00:58:07,830 --> 00:58:20,850 confirming that upward momentum in the dollar. The s&p 500 also broke down and slipped lower. And the NASDAQ composite, not surprising, slipped lower as well.
306 00:58:22,410 --> 00:58:31,950 Now let's look at the fiber. Okay, and what I have here is the April monthly linear between the two red vertical lines, okay, and we're looking at the fact
307 00:58:31,950 --> 00:58:40,470 that we were unable to make a higher high here. Okay, and just for a second, let's just shoot over to the cable. And you can see how in that same time frame
308 00:58:40,470 --> 00:58:51,060 in the month of April, the cable was willing and able to make a higher high. Okay, so let's go back to the fiber for a second. This, this market absolutely
309 00:58:51,210 --> 00:58:59,850 posted weaker technicals across the board. In other words, between the two pairs, fiber and cable because they're so closely correlated, they usually trade
310 00:58:59,850 --> 00:59:10,500 in sympathy. But as you can see here, the s&p divergence correlated pair s&p divergence was showing that there was absolutely no interest whatsoever going
311 00:59:10,500 --> 00:59:20,790 long in the fiber. And if you recall back in when I was doing reviews, we were talking about this market being the weaker of the sisters all during this
312 00:59:20,790 --> 00:59:31,080 particular timeframe. And this is really the catalyst for my my viewpoints while saying it real time in advance for the markets were trading. We were looking for
313 00:59:32,070 --> 00:59:43,470 this old low to be traded to back in here. Okay, so and also back here as well. Now, this high and this high here, notice that we were lower here. Okay, so we
314 00:59:43,470 --> 00:59:55,590 have February's high and April's high lower in the fiber. Let's go over to the cable. Notice we were going higher in the cable, just February's high and
315 00:59:55,590 --> 01:00:03,600 April's high so we were posting higher highs in the cable. This was the relatively slow Longer of the two pairs. So when there was a buying opportunity,
316 01:00:03,750 --> 01:00:13,470 we could be buying in here, okay, and be more confident that the market is going to be more favorable for us as a bull if we're short term trader, but we're
317 01:00:13,470 --> 01:00:23,850 focusing on the higher timeframe, intermediate term basis. So we're looking for what the sell scenario. And that being the case with the fiber, okay, so you
318 01:00:23,850 --> 01:00:37,830 could look to sell this market here, going into the seasonal timeframe from this high and the low, you can see we have optimal trade entry in here. And price did
319 01:00:37,830 --> 01:00:59,430 slide off the cable at that same time frame. We had a larger price swing from this high down to this low that the cable was retracing in. Okay, so let's pull
320 01:00:59,430 --> 01:01:10,350 that up. You can see here's the sweet spot. Okay, here's a 70.5 fib level, price went right to that level exactly to that level.
321 01:01:10,530 --> 01:01:24,150 Okay. And I posted market review, and a daily review suggesting that I would be shorting at 163 a break above 163. Figure. Okay, so if you go back to that
322 01:01:24,150 --> 01:01:33,240 timeframe, and look at the videos, you'll actually see me talk about being short here. And this is the reason why we're within that April time period for
323 01:01:33,240 --> 01:01:45,240 seasonally expecting a decline. Okay, we went up into a higher time frame, implied resistance level, we're at a figure 163. Okay, so even though we were
324 01:01:45,240 --> 01:01:54,870 bullish compared to the fiber comparably, we are still within a timeframe when the price itself should be running out of steam. And when we get to these levels
325 01:01:54,870 --> 01:02:03,420 like this, so far deep into a retracement of these price swings, you got to expect some weakness. So now let's look at what's happening here. Also, we have
326 01:02:03,420 --> 01:02:20,670 the high end April and the high end may higher in the cable. Let's go back to the dollar. Look what's happening here. We have lower, albeit not by much, we
327 01:02:20,670 --> 01:02:40,410 have a lower low here than here. Okay, so the dollar was lower. The cable confirms it higher. Let's go back to fiber. See this? There's a USDA USDA SMT
328 01:02:40,410 --> 01:02:51,180 diversions. Okay. So this tells you that you have a very, very large price swing, possibly unfolding. Going forward, this tells you that it's going to be
329 01:02:51,390 --> 01:03:02,160 bearish for the fiber. Okay. And since tandem, trading occurs in cable and fiber generally, and you're looking for higher prices in the dollar, you can get
330 01:03:02,160 --> 01:03:15,540 yourself in sync with a very, very handsome intermediate term short. And looking at this high here, down to this low in here is a sweet spot and price went right
331 01:03:15,540 --> 01:03:25,590 up to that point by the PIP and then fell out of bed. And let's look at what happened here. Price does in fact, trade down below this low in fact, smaller
332 01:03:25,590 --> 01:03:39,090 minor bounce in here and then finally broke through. Okay, and eventually even traded even lower than that. If you use the Fibonacci concept we talked about
333 01:03:39,120 --> 01:03:55,290 for this plan, we look for 127 extensions, 162 extensions and the 200 extension, this price swing is what we're going to use going lower. Okay, so if you use
334 01:03:55,290 --> 01:04:04,290 this low, up to this high once price structure, I'm sorry, market structure breaks this low here, you're gonna be looking for the 127 extension which it
335 01:04:04,290 --> 01:04:11,730 finds here and some lamp bounces and looking even gives you another optimal trade entry to get short. Okay, this is a way of jumping ahead really is the
336 01:04:11,730 --> 01:04:23,310 short term trading part of the series. But price let's give it a correction here trades right up into old support broken now resistance falls out of bed and goes
337 01:04:23,310 --> 01:04:34,980 what 162 extension. And obviously, price had snapped away from that rather handsomely. So getting short here on the notion that we are entering into the
338 01:04:34,980 --> 01:04:44,430 seasonal time period and looking for s&p divergence is one avenue here that you could have got short. If you missed this one. This was the other opportunity to
339 01:04:44,430 --> 01:04:57,750 get short. Okay and ride it lower. And that rather handsome price swing if you look at what transpired just from the original high here in April down to the
340 01:04:57,780 --> 01:05:18,360 162 extension That's 12 130 pips. Okay? And if you got this second entry in here, using the first of May area, it's 11 51,150 pips. Okay, so not bad in
341 01:05:18,360 --> 01:05:26,430 terms of, you know, Pip hauls takes a little bit of time to get these guys, it doesn't happen overnight, but you got to really hold on to it and just have a
342 01:05:26,430 --> 01:05:40,500 lot of patience with them unfolding. If you look at the cable, once price gets up into this, inside the range concept, the sweet spot 163 is a big figure as
343 01:05:40,500 --> 01:05:51,510 well. We are still within the April seasonal decline time period. We have USD x SMT we have correlated pair SMT weaker highs comparable to the higher high in
344 01:05:51,510 --> 01:06:01,860 the cable here. So now what's what's going on in the lower timeframe? Okay, let's, let's just use a hourly chart.
345 01:06:03,480 --> 01:06:19,140 Okay, here's what's happening price trades up into that 163 figure trades off, okay? Now as price trades lower like that, okay, it comes down into that 160 2%
346 01:06:19,800 --> 01:06:30,750 level here on a higher timeframe, Priceline finds a little bit short term support level wnc breaks down below and looking comes right back up to that same
347 01:06:30,750 --> 01:06:51,150 level here again, see what it does here. runs into it as resistance and in slides away. Again, aggressive move lower. Okay. Now let's add to this the day
348 01:06:51,150 --> 01:07:05,130 separators. Okay. Now, if you've missed the shorting straight up into the 163, figure, okay, you have a short term, high here, we have a higher high here,
349 01:07:05,640 --> 01:07:14,700 lower high here, and a lower high here. So this is a daily swing point, this high, this lower low, I'm sorry, lower high and lower high here. Okay, so we do
350 01:07:14,700 --> 01:07:27,210 have swing point here. So now we could be looking to get short beyond that point in here. Okay, you can use optimal trade entries, you can use reflections,
351 01:07:27,240 --> 01:07:41,070 anything that you use to trade on your pattern, that's you start hunting, okay, and we also have a higher price swing point on a weekly basis. Okay, see these
352 01:07:41,070 --> 01:07:55,830 double lines here. And here. And here. We have the high of that week. So between this double set and this double set the highest here, then we have the high here
353 01:07:56,370 --> 01:08:08,790 between these two, and then we have the high here between this set and this set. So what is that that is a weekly swing high. So we have the high, lower high and
354 01:08:08,790 --> 01:08:21,210 lower high. pull that up on your own weekly chart, you'll see what I'm referring to. Now when you have that also, okay, that's when you have the acceleration in
355 01:08:21,210 --> 01:08:33,510 the price movement much much more aggressively. Moving lower, okay. And when we see the high, low, lower high here on the new week, okay, going into Monday and
356 01:08:33,510 --> 01:08:46,680 Tuesday, using the how to capture explosive profits in the Forex concept we used in that video. You're looking for Monday to Tuesday's London open to a different
357 01:08:46,800 --> 01:08:57,090 job presenting you the highs of the week. This is where this takes place we have Sunday trading Monday runs up okay and makes the high on Monday. Then trades off
358 01:08:57,120 --> 01:09:07,080 now if you missed that, that's fine. Don't Don't chase price you don't need you don't need to worry about rushing into it. Once you have now a daily and or
359 01:09:07,110 --> 01:09:19,860 weekly swing high, you can use the high down to this low here. And look what you have. You have the 79 seven treatment level laying directly on top of this
360 01:09:19,860 --> 01:09:32,940 higher timeframe fib level that we just drew off the daily Okay, that's the 62% retracement level on the daily and now we have overlapping fibs.
361 01:09:38,640 --> 01:09:51,240 One, a one hour chart conversion right here for a optimal trade entry. This is a nice sucker rally. It gets everybody excited chasing it but this time of day is
362 01:09:51,240 --> 01:10:01,140 New York open so you could be selling in New York open to get in sync with the higher timeframe and then ride it lower. Okay and positioned there. You can see
363 01:10:01,830 --> 01:10:16,380 rather handsome declines. And these are the moves that you want to hold on to during intermediate term, price swing for our chart, and this is that
364 01:10:16,410 --> 01:10:26,970 opportunity for seasonal decline in April here. And this is that lower high going into the beginning of April, if you use the high here in price trades
365 01:10:26,970 --> 01:10:38,280 down, if you look at the high here, four down to that low, you see out price because we have this nice retracement level, and stays there for a little bit.
366 01:10:38,430 --> 01:10:50,760 And it finally breaks down. Okay. Notice also that we have smaller optimal trade entries in that same area. And you have a here as well here this high, low in
367 01:10:50,760 --> 01:11:00,990 here and it breaks down. See, this is why you have to understand how price can be fractal. Okay, it's not it's not a hard concept to learn if you spend some
368 01:11:00,990 --> 01:11:10,140 time with it, but you have to definitely go through high timeframe charts and start breaking them down and looking at specific turning points. The absolute
369 01:11:11,160 --> 01:11:22,110 seasonal month that we're we're highlighting here is if we if you look at the high here to this low, okay, and the reason why I'm pulling this because these
370 01:11:22,110 --> 01:11:30,270 are the highest high amongst all these candles, and this is the lowest low amongst all these candles, okay, and price goes right back up to the sweet spot,
371 01:11:30,840 --> 01:11:42,450 which is an overlapping of this higher timeframe fib level one here. Okay, so you can see how that converges. So you can get short in here, one, even the
372 01:11:42,450 --> 01:11:54,300 132 50 level would have been a nice opportunity to get short here. And going much lower. So again, much in the same vein that we shown with the cable, you
373 01:11:54,300 --> 01:12:06,120 can see how price did fall rather handsomely in the fiber. And again, here's that bounce at an old low, came up and gave you the optimal trade entry in here.
374 01:12:07,710 --> 01:12:17,820 And we'll just do that. draw that in here real quick just for sake of completion. And say nice, recent loved one here and you get down to our five
375 01:12:17,820 --> 01:12:26,700 minute chart, you can actually see trade entry in here on this smaller minor price swing. So again, alerts, fractal pattern, within higher timeframe fractal
376 01:12:26,700 --> 01:12:36,600 that's broken down to a smaller factor, which is you know, what we're showing here. So even even looking at how price breaks down from these larger
377 01:12:36,600 --> 01:12:45,930 intermediate term price swings, and then 162 extension look out doesn't give you much in terms of movement below that before it snaps away. Okay, now, if you
378 01:12:45,930 --> 01:12:56,280 held on to it, and it breaks this high here, once price runs above that you have now break or market structure shift. Okay, so you don't want to just collapse
379 01:12:56,280 --> 01:13:05,280 the trade there, you want to wait for the try to retest and get back down to these lows, and Mike using another optimal trade entry. Okay, you can see a
380 01:13:05,280 --> 01:13:15,270 better place to cover your short and set is getting out here and panicking, you can get out down here at the 162 extension. And then obviously, price starts to
381 01:13:15,270 --> 01:13:30,810 move away from that. Okay, so that's what looked at you in April, staring you right in the mug, okay, for for long term, intermediate term price swings. And
382 01:13:30,840 --> 01:13:41,700 if you look at how the tools in a macro view, really help you get in sync with these trends is going to use the simple short term analysis concepts to get you
383 01:13:41,700 --> 01:13:51,900 in the trades Judas swings, intraday optimal trade entries using the weekly concept of looking for the weekly high Monday to Tuesday's long and open and
384 01:13:51,900 --> 01:14:03,210 then order the very latest Wednesday's London open. And if you're in bullish environments, you would use the weekly monday tuesday London open for the low of
385 01:14:03,210 --> 01:14:11,040 the week to form and or the latest Wednesday's on an open to capture the weekly low and then get in sync with that and try to hold on to these things as long as
386 01:14:11,040 --> 01:14:20,220 you possibly can. It's very difficult. If you're always just looking at every minor price swing in the market while you're in these. That's why it's it's much
387 01:14:20,220 --> 01:14:25,260 better if you're going to have this concept in trading and still do short term trading, you need to have separate accounts obviously.
388 01:14:26,880 --> 01:14:39,030 But you just put the trade on and let the stops stay outside of you know, potential striking distance. And by that I mean if you get short in here, you
389 01:14:39,030 --> 01:14:46,860 let it run down for a while before you do anything with trailing stop losses inside of that because price can come back and tag you and then you'll miss all
390 01:14:46,860 --> 01:14:56,490 this. Okay, so you want to look for support levels to be broken like it does here and then comes back and retest it and trades lower. Then Then move your
391 01:14:56,490 --> 01:15:05,580 stop into a profitable area where you can lock in a very small portion of the profit. And then don't chase it, don't trail down too tight, learn to scale out
392 01:15:05,580 --> 01:15:12,480 profits going down at the reasonable predetermined 127 162 and 200 extensions
393 01:15:23,430 --> 01:15:40,890 fib levels for the cable. Again from this high up here, this price swing here, okay, this price swing here is the second leg of this move here. So we have to
394 01:15:40,890 --> 01:15:54,750 use this price swing, before we would ever use this one or this one. Okay. So with that concept, let's take a look at the lowest low candle here. And that
395 01:15:54,750 --> 01:16:10,380 high. Okay, and here is the 127. Extension. And here's the 162 extension. And then here's the 200 extension here. Okay, you can see how price came down,
396 01:16:10,920 --> 01:16:23,610 didn't get to this old low, but they get to 200. So you could have scaled off, obviously 50% of the position. Once you get half profit, I'm sorry, 3030 pips,
397 01:16:23,760 --> 01:16:42,210 move to breakeven, and then look for you 127 extension, now you could take 30% off of the total position, okay, or you could take 1020 at 62. And then leave
398 01:16:42,210 --> 01:16:53,190 the remaining portion that you reach for 200. Or you could just take the remaining 50% divided by 30 of the original position, take it off at 127. And
399 01:16:53,190 --> 01:17:04,650 then the remaining 20% would be off at 162 extension and not reach for the 200. Or you could just you know, go for broke. And once it takes 127 out and starts
400 01:17:04,650 --> 01:17:13,020 reaching for 160 to show your stop down to the 127 for the remaining portion. So you can you know, if it comes back up, at least you can get out with your
401 01:17:13,020 --> 01:17:23,130 remaining half at, you know, a nice logical area to take profits. And if it gets down to 160 to take half of it, they're off and then the remaining 25% reach for
402 01:17:23,490 --> 01:17:33,060 200 and and show your stop just above the 162 extension, okay. But there's a lot of different ways and I'm trying not to give you a very clear black and white
403 01:17:34,050 --> 01:17:42,240 way of doing it because I want you to have some input on your own. There's a lot of freestyling you can do with these using analysis concepts. And again,
404 01:17:42,240 --> 01:17:52,380 hopefully this has just been providing you as an example on how to intermediate term swing trade. And using the higher timeframe macro views to get in sync with
405 01:17:52,440 --> 01:18:01,890 with the market and expect learn to anticipate price moves and in using the smaller time frame concepts we've used in the other videos to help you with your
406 01:18:01,890 --> 01:18:12,780 timing and such and those being the optimal trade entry video. high probability price patterns video and obviously you need to be cognizant of the risk and
407 01:18:12,780 --> 01:18:22,650 equity management so so those videos you know, they're very insightful and applicable obviously for this this tutorial so I'm gonna close it here and
408 01:18:22,650 --> 01:18:30,210 hopefully this has been insightful to you guys. And if you have any questions, obviously just post them on the forums that baby pips calm and until then I wish
409 01:18:30,210 --> 01:18:31,560 you good luck and good trading.