Market Analysis and Trading Strategies

Jul 10, 2024

Lecture Notes on Market Analysis and Trading Strategies

Introduction

  • Review of previous topics: PD arrays and model building.
  • Focus: US Dollar Index, Euro Dollar, Pound Dollar, S&P Futures, NASDAQ.

US Dollar Index Analysis

  • Higher Time Frame Analysis: Current bullish trend.
  • Key Points:
    • Potential target: Buy liquidity pool.
    • Volume imbalance to watch next week.
    • Sell-side liquidity taken below relative equal lows.
    • Long-term pressure on Euro and Pound Dollar.

Euro Dollar (Fiber) Analysis

  • Daily Chart Insights:
    • Inversion fair value gap observed.
    • Market respecting the midpoint of the gap.
    • Aggressive move towards sell side, expecting lower prices.

Pound Dollar (Cable) Analysis

  • Market Trends:
    • Inversion fair value gap and continued bearish trend.
    • Institutional entry and sell-off observed.
    • Sell-side liquidity targets identified.
    • Maintaining a bearish stance.

Trading Approach

  • Downplaying smaller time frames; focus on higher time frame biases for Forex.
  • Encouragement to use own analysis for smaller time frames.

S&P Futures Analysis

  • Current Scenario:
    • Close to discount fair value gap but not quite there.
    • Various imbalances and efficiency levels marked by blue and red lines.
  • Short-Term Trading Advice:
    • Trading difficulties observed in recent days (Wed-Fri).
    • Importance of strong definitive movement outside the current range for intraday trades.
    • Key levels and inefficiencies to watch.

NASDAQ Analysis

  • Daily Chart Observations:
    • Similar imbalances and efficiency issues as S&P Futures.
    • Potential to reach specific price points such as 15,126.5.
    • Emphasis on waiting for definitive moves before trading.
    • Awareness of market 'rigging' for political reasons.
  • Hourly Chart Insights:
    • Various bearish order blocks and breakdowns noted.
    • Utilization of specific levels for entry and exit points.
  • Risk Mitigation:
    • Importance of being precise in short-term trading during conflicted higher time frames.
    • Recommendation to stay out if market remains within specific ranges.

Concept of Inversion Fair Value Gap

  • Clarification: It's an inefficiency, not simply a support/resistance level.
  • Application:
    • Price behavior around inefficiencies in higher time frames.
    • Time and price as influencing factors.
    • Importance of understanding market structure beyond basic patterns.

M.A.D.U.S Model

  • Definition: Utilization of an inversion fair value gap within a model setup.
  • How It Works:
    • Identifies inefficiencies and expects certain price behaviors (e.g. bearish breakdowns).
    • Alignment with institutional structures and market behaviors.
    • Predictive nature based on established price levels and times (news events).

Practical Examples

  • Scenarios Played Out:
    • Use of inversion fair value gaps to predict movements in NASDAQ during specific times (8:30 AM news examples).
    • Real-time application and prediction accuracy noted.
  • Importance of Visualization:
    • Detailed chart patterns and specific price action behaviors explained.

Conclusion

  • Encouragement to study the material multiple times for better understanding.
  • Emphasis on combining theory with practical chart observations.
  • Reminder: Market behaviors are not random; learn the specific price levels and market structures.