[Music] [Music] [Music] [Music] okay folks we are looking at the intermediate term trading plan example and then what we're going to cover them in this module is going to be just an example like it's states here there's gonna be certain aspects of this particular example of a plan where I can suggest that you could use other tools or applications and where I note those obviously you can use two suggested mediums and tools at that time it's not meant for you to use this as a specific trading plan I'm not advocating that you take this and run with it try to invest real money with it it's meant to stimulate prudent decision making on your part 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 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 I'm referring to intraday and scalp trading this is not a very short-term trading it's it's higher timeframe premise predominantly and your trade you're gonna take a whole lot of time to setup and also equally more time to unfold to its completion so this module will more or less demand a level of patience that probably the majority of traders will not have it at the early stages of their development all right we're going to talk with the general market and the overall trading plan outlined for trading enemy a term obviously the timeframe that we're gonna 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 predominantly the daily chart and its primary focus in this plan is to trade the intermediate term price swings found on the daily chart typically trade 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 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 and typically when you enter a seasonal tendency when you would expect a bullish market obviously that sets you on on alert to look for turns or buying conditions in the marketplace that would facilitate long positions we're gonna be watching the interest rates okay and we wouldn't be expecting interest rates to be moving higher and/or looking for divergence okay in the yields to possibly indicate that we're bottling out in the yield and we may be going higher because markets basically seek higher yields that is gonna create the risk on effect that we're looking for for a bullish condition obviously it goes without saying if we're looking for a risk on scenario the US dollars gonna weaken at this timeframe so we're going to be looking for topping formations or weakening of the US dollar on a daily chart the Treasury notes okay two-year five-year and ten year we'll be looking for those futures markets because you're gonna be contrasting forex trading with the insights that we gleaned from the futures market the daily charts on two five and ten-year should be 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 while that indicates that the interest rate itself its yield would be moving higher co tea this a commodity tool that we use commitment of traders we're only looking for hopefully the commercials being a net long position or if they are net short that we want to be looking for an aggressively lessening of their short positions okay and you can see that in open interest sentiment obviously when the daily chart should be oversold and the way we're determining that is we're looking at a daily Williams percent are okay so that's gonna be our tool to more or less indicate to us whether or not if the market sentiment is oversold or overbought okay in this case since we're looking for bullish conditions ideally the sentiment should be oversold stock indices hopefully at this time our firming and or bullish okay so in other words you'll be looking for some kind of failure swing between the major stock indices and that would be at hopefully at a key support level commodities should be at this time bullish and we we would reference that would be to look at the CRB index and it should be trading firm to bullish at a key support level and maybe even looking for a buy pattern of some sort maybe the ultimate rate entry something out nature when I say firm it means indicating unwillingness to go lower okay and gold and oil obviously good benchmarks for the economy they should be firm and or to bullish as well conversely obviously for the bearish conditions seasonally speaking there should be a bearish market environment you know seasonally speaking that should set you on an alert to look for sell scenarios interest rates at this time should be moving lower okay because the market 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 call scenario it goes without saying that US dollar would be strengthening at that time Treasury notes on the daily chart should be rising and again because there's an inverted 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 ten-year should be rising kamilla traders report the net positions should show commercials net short and or aggressively increasing short positions and you find that with the referencing of you of an 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 about that when we start going in to the actual analysis and obviously the stock indices should be soft or too bearish on a daily chart so your Nasdaq Dow and SP and C should be topping in here and/or trading at key resistance levels respectively commodities at this point should be bearish and we would be referencing the CRB index again as well hopefully looking for some kind of topping formation key resistance levels or some rejections it's highs and it came that is now soft and or trading bearishly and again referencing the golden oil benchmarks for the economy should be soft maybe read resistance in both those markets as well seeing software prices and maybe to as much as bearishness to facilitate a further confidence in a bearish market condition you okay the anticipatory stage for this example plan obviously we always begin with identifying the higher time frame monthly weekly and daily key support resistance levels because those levels are gonna be the catalyst for us looking for signals so without these levels okay we're not gonna be taking a trade so we must have a higher time frame monthly weekly your daily key support resistance level to facilitate a trade okay so we're gonna be waiting for these levels to be traded to now while we're waiting for a setup okay when we're seasonally speaking bullish okay you're gonna be stalking the yields okay the yield triads and I'm going to refer to basically my favorite pairs for this plan that being the fiber eur/usd and the cable British Pound USD pairs okay because they are cross with the dollar if we're seasonally speaking bullish okay what we're gonna be looking for is the yields okay five-year ten-year and two year between there's three interest rate yields if one fails to make a lower low okay that's going to be a positive divergence indicating there's a possible turn in yields and that may indicate it possible increasing yields which would cause a bullishness and a risk on scenario okay if we are seasonally speaking bearish okay and we see the yields between the US the German in the UK countries yields fail to make equal highs in their yields okay that's a yield triad divergence okay and you will talk about that more so examples if it's not very clear to you here but that would indicate a bearish stage in the marketplace overall so we're anticipating that to unfold okay at the same time we would obviously be hunting the same scenario with the US Dollar Index okay we would be looking for the lows in the US dollar index versus the highs and the cross currencies okay and again 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 highs in one and or the both fiber and cable then that is a USD X SMT divergence okay and that would be bearish for the euro and or cable if the dollar was making lower lows in the euro or fiber I'm sorry euro or cable was unwilling to go higher that's weakness they should be conformation between the three if the dollar makes lower lows that should be seen with higher highs with the fiber and cable if there's not there's a cracking correlation that may 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 dollar and a failure to go lower in the fiber or cable again that's an smt divergence for the u.s. dollar index and that may be a cracking correlation that 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 and the dollar 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 any key was just as level for it 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 cable one 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 the key support level for the dollar index and again same thing happens if you reverse it if the US dollar index fails to make a higher high while the lower lows that are seen in the cable or fiber are met equally in other words there's the lower lows in the cross currency euro or cable there's a cracking correlation as well so you have to compare the highs and lows between the three and that'll also segue into the correlator pair SMT you're gonna be looking for the lows between the 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 a correlated pair SMT divergence possibly indicating there should be a short-term shift in the market place for a bounce higher and obviously comparing the highs at key resistance levels if the pound and euro fail to make equal highs that's a correlated pair SMT possibly indicating some distribution in the market place and there may be a short-term shift in the market place lower will be watching the stock market indices okay looking for SMT divergences as well looking for the Dow SP 500 and Nasdaq Composite Index to compare comparably make higher highs and lower lows if we're bullish and we're on a bullish environment and we see the Dow as a 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 everything else is lining up that is a stock market Smt divergence okay so we we want to be seeing confirmation we want to be measuring on a daily basis monitoring the overall risk going to risk all scenario so using Dow Theory essentially we want to be looking for these three averages to confirm our highs for continuation on the upside and or looking for follow a continuation and confirmation between the three as they go lower there should be lower lows 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 because it 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 even exit to trade again referring to the camila traders in that position we're going to be looking for long positions when the commercials are nettle and 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 the commitment of traders net position you'll be able to see where they are trading in terms of a long term macro trend and when we getting in sync with that using the co T and higher timeframe key support resistance levels open interest we've discussed this in other modules and obviously we're not going to beat it to death here but basically it's when we're in a bullish condition and we're trading at support if we see a 15 to 20 percent ink drop in open interest that is a very very strong indication that a buy signal is either forming and or it has formed and it's bullish in bearish conditions when price is trading at resistance and we see a increase in open interest 15 to 20 percent or more it doesn't have to be just 20 percent if it mate many times be even greater than that in terms of an increase but you want to see it rapidly increasing not you don't wanna see a gradual if you want to see a rapid increase and just as well as you wanna 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 really adjusting positions and allocating funds to offset the initial risk or risk on scenario that may impact the market they're actually working within so if you see the increase in open interest at a resistance level that's bearish market sentiment obviously we would be expecting sell signals when we are at 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 you all right the execution stage obviously again referencing the monthly weekly and daily key support resistance levels we're gonna be determining before we do any trades at all we're gonna determine that specific moment are we on risk or off risk for that particular day or that session that we're trading if we are risk on obviously your your buy scenarios are ago if we are risk off your sell scenarios are ago you want to be referring to the daily buy and sell programs okay and that means are we trading off of a key support and off a swing point formation in a daily chart because that's what you need for buys and if we are in a sell program and we see a swing high forming a key resistance level okay that's an indication that we are in fact a go for risk off scenario and daily sell program okay so that that has to happen for us to be confident with our trading for this style trading when we have that scenario in effect you're gonna be transposing those key levels from the higher time frame monthly weekly and daily down to your lower timeframe 60-minute fifteen minute and five minutes charts you're gonna wait for price to trade to those higher timeframe key support resistance levels you want to only be trading in the direction of the market structure that you find that's on the daily chart so your market structure is gonna be daily basis okay you're not looking at market flow on one hour charts for hours are so you're only trading in the direction of the market structure that you find on a daily chart you're using optimal trade entry now this point here you can use any trading pattern of your choice if you like the reflection pattern you can trade that if you like MACD divergence this is what you would use here if you are type 1 bearish divergence for stochastics that's it that's the pattern you would use here if you like turtle soup patterns that's the pattern you would use here okay but you have to trade it at a lower timeframe at a key support resistance level in the direction of the market structure on the daily chart okay so the plug-and-play aspect here is you can any entry pattern that you 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 obviously I don't have it here Asia could be one London and New York opens are good because they're they're just good times to be trading our time frame setups for the fibre and cable but if you're a yen pair trader or if you're an Aussie trader or a QE trader or something like that you could trade your positions in the Asian session opening ok because those those currencies have a lot of activities during those times a day so if you are a Aussie Kiwi or yen trader obviously the Asian session would be in a session that you could be utilizing for a higher time frame enemy eternal trades as well for entry our entry orders are going to be based on limit orders and we'll be keying off of the sixty to seventy point five and seventy nine percent retracement levels on the fibs to arrive at our entry points and every one of our trades will always have a maximum risk of two percent never more and ideally you know less if we take a loss we reduce the risk as we go through if you don't know the referring to go to our video for handling losses and it gives you a program how to apply risk reduction procedures in terms of how to preserve your equity and it's always good to have that not always walking in the market place looking for exponential growth of your equity you always have to have a shield and you're going to have losses you're never going to losses so this this example is not 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 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 a whole lot of trait okay but it teaches you the concept and the and in the processes that's needed because if you can understand how to do this all the aspects are 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 understand this higher time frame premise where you had that major tide in your favor okay it's kinda like a fish okay if you're efficient in the 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 to swim downstream there's a fish it's a salmon very some one of the strongest fish in nature it actually swims up current okay and leaps up out of the water and 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 current and you know I could prove how strong I am and I'll be a contrary and trader every single time and never try to worry about getting in sync with the overall tide and and that's fine okay granite you you'll probably get to where you're going but if you're using the salmon as an example you might 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 you're exhausted you croak you know what good is that so you want to be having things majority in your favor and trading with the tide okay that's what you want that's what your focus should be okay and trading on the higher time frame premise your intermediate term time frame your short term day trades and your 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 get that last days ago price action you usually get when you're trading counter trend stop-loss orders obviously always are going to originate at a 30 pip stop from our entry point and obviously whatever your entry price is just to take 30 pips from that above for shorts and below for Long's first profit is always going to be taken at 50 percent of our position at 30 pips profit so in other words once that position goes to 30 pips profit we take 50% of session off and once we get that our stop-loss moves to a break-even status so now we're in a risk-free scenario okay we've already profited we got half the position off so basically we're making 1% on the trade we're locked at breakeven we cannot lose anything we've already made and booked one percent profit the remaining balance of the trade you would look for targets based on seven achi extensions 127 extension and 162 extension or I don't have it listed here but you could have 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 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 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 didn't see if it goes to the two-run extension okay but really the 127 I want City to you want to have at least 70 to 80 percent of your trade already in profit and then if you have a small portion obviously you can leave that to ride to 200 cent or even greater okay but you want to be taking profits and book them at 127 and 162 of the swing that your trading okay let's look at the ten-year tea 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 this year and 2012 going into spring and we have a weekly swing low formed at the 128 big figure for the 10-year Tino's the US 10-year tea note note also that 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 at 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 our swing low form at a big figure like this 128 we also see open interest declining okay you can see it's about here the purple level here how open is just was declining we would expect prices to rally up now the tea notes rallying up that means that the yield is going to be dropping if they'll if again this is what happened 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 March low was formed and we rallied up into May June time period that was gonna be mirrored in the yield okay dropping so if the tea notes rallying up the yield itself is gonna be declining okay so that's gonna be bearish it's gonna drag risk out of the market okay in other words the the risk off scenario will unfold okay there'll be a flight to quality during this timeframe we would see the dollar index rally and obviously risky assets in foreign currencies and such they would be declining okay so we have seasonal tendency we see the support and concepts that we utilize in all of our trading awful trade entry trading at a key support level we would expect a rally up in this time frame okay April May time period going into the June months okay let's see what happens in the five-year Tina same scenario we see a weekly optimal trade entry trading down into one twenty two big figure we see a 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 early June okay and even higher in the case this September this year but we saw the shift that takes place with a bullish move going higher in the Treasuries and tea notes now if the futures contracts going higher again I remember their inverse relationship that means it's going to see a decline in the yield so we see dollar up because dollars gonna be trading in pretty much the same direction that the Treasuries are gonna lead it many times the dollar will lead Treasuries okay it's vice-versa it's kind of like you know it one follows the other okay but you want to add the seasonal influences in the time of year like we only trade intraday we have time of day theory we have time of year theory where we see a spring decline or risk off scenario okay and you'll see the dollar increase in bonds rally so what does that look like in the yields okay what we're looking at is a bond yield triad and what 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 I got this chart I went to bloomberg.com and if you go actually and do Google do Google on 5-year US Treasury government bond yield okay and click on that and you'll see the Bloomberg link do the same thing with a UK five-year bond yield Bloomberg put that in your google search and obviously do the same thing with the German five-year bond yield Bloomberg and when you google that you'll get the link for it click on it and when you get the chart to opens up similar to this you'll just simply add the symbols you if you see here for a five-year US Treasury or T note yield its us Gigi number five yr : IND for a UK five-year bond yield it's g UK g5 : IND and for a German five-year bond yield it's gddr5 : IND now what I'll draw your attention here real quick is if you look at the the darker orange color and oh I can't pick the colors it just does it by default but if you look at how in march/april okay the US Treasury was able to make a higher high and yield okay I know was it would have went lower on the Tina the green level mom yield that's the UK it was able to make a modestly lower in comparison in terms of highs made in the US then we see the German was also weaker as well okay so it wasn't able to go lower in its futures contract but the yields you can see the disparity the shifting in place that takes place where the US Treasury five-year went higher so we have a smt divergence okay there is a confirmation that there is a weakness underway going into April so we see that weakness translated in the form of these overlays if you take the UK off okay so now we're just looking at the German five year in aus five year you can see a little bit clearer now that the green level green is the German and the orange color is the u.s. u.s. was able to make a higher high in yield while the German was unable to make that higher high in going into March and 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 Treasury so there's this symmetry between the two you want to be watching the yields you want to be watching the teenage you want to be watching the German yield with the the German futures contract again you can trade the not tray but you can track it with it's futures contract and the UK as well seem least eight died divergent okay adds confidence to your expectant expectancy that we should be seeing weaker British Pound and fiber prices and a rally in the dollar april/may timeframe when the spring seasonal influence should be coming underway now looking at the US and the UK you can see that same thing happening the oranger level that's the US and the green is the UK five-year yield we were unable to make that comparable higher high in the yield in the UK so we see the SMT divergence that we would expect to see going into April so we saw further evidence by removing one you can see a little clearer you can see it divergence between the two yields and by looking at just simply the UK and German yields you can see that the 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 German was weaker okay and was unable to make a higher high and yield and you seen that also going into the actual price levels that the fiber itself was trading because that's what the Germans going to be measuring the yield for that specific country the UK is for the cable well if you look at the the 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 45 or so there was really no participation whatsoever or interest in chasing any higher yield there they were actually selling into that and you could see the the weakness really accelerate going into June and the middle of July okay folks we're looking at bar chart dot-com okay this is a free website absolutely zero fees whatsoever it so give you access to commodities and commitment of traders reports and open interest when you go to a home page this is what pops up you go over here to this little tab here says select the commodity tap that and we'll start with the US Dollar Index okay when the window opens up you'll get on the top a list to place the cash you don't want that your is the nearby contract December next month house March following by June and September just click the top contract here the one that has a month again not using cash click 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 won't choose the top one cuz gonna be the nearby contract think over to this area here which has customized chart click that tab and then will open up a window that gives you a chart like this ok and what you're going to do is you're going to scroll down to this little area down here we can set the parameters you 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 I'm going to change it to candlesticks I'm going to change the to one year and make sure this is saying total volume ok total volume and the reason why you won't get the open interest and volume as you see down here otherwise click draw okay and you'll get a window pops up with a new chart here and what this is this is a weekly chart using weekly range highs and lows derived from the nearest 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 dylaney eights 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 gonna 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 past these vertical lines and pay attention to the Purple Line in here okay so let's go and scroll down just a little bit notice how we rode up in price here on the dollar then we went into a consolidation after a small retracement okay see this consolidation in here we have a range high here and we have a range low in here note the time of the year okay March April May March April May because that's spring time of this year note to the low here and the high here in this low this is optimal trade entry pull that up on your platform pull the FIB across that and you'll see that we did trades right back down to this level here now utilizing this this concept of weekly ranges and seasonal tendencies okay typically in the spring time we see a weakness coming to the marketplace in the form of British Pound usually making a seasonal hi April May and trading down into the summer months well that's going to be a mirror image or reverse okay in the dollar the dollar should rally up at that same timeframe and you see that unfolding here okay now we're going to introduce the concept of open interest okay and I want you to take a look at this drop okay rather sharp drop in open interest right here during a time frame when we're in a consolidation this is the commercials tipping their hand that this is now no longer gonna be staying within this small little timeframe of a trading range 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 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 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 supposing that's doing here will you scroll down to this little area on your page and says add study click on this tab here and you're going to go to commitment a traitor's line chart tap that then draw chart okay now watch see the open interest declining here that's the lessening of shorts the red line down here is the commercials okay they are below the zero line here because they are net short but look what they're doing at the same time here middle of March 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 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 higher prices in the dollar weaker in the fiber and cable okay so there should be a risk off scenario risk off is gonna draw participants into buying safe haven assets now one can argue that the dollar may not be a safe asset to most but for instance you can see that still unfolding here with a higher dollar rallying up from the April May time frame into the summer months so that we have this mindset that we're looking for bullish prices in here okay we would be in a buy program all here okay so now let's look and see if we have that same thing occurring in the British Pound at the same time frame in this year in the spring just go back over to your commodity tab and we'll go down to the British Pound when you use the nearby contract and to click on your customized chart tab now we're gonna do the same thing we did with the dollar we're gonna make sure we are on candlesticks we're gonna look at weekly nearest I'm gonna scroll to a one-year chart making sure total volume is clicked and we're gonna draw the chart okay now we have a weekly chart on the British Pound okay and you can see that April May hi unfold here so we saw a price drop down okay so let's add a little bit of time to this because there 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 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 really in it was free to find lower prices because we're seeing higher prices poised in the dollar at the same time frame April may now also note that we were in a range between this just 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 in open interest okay so what does that mean if the open interest is increasing while within a larger trading range okay and one could argue 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 up but ultimately we're added rate back in went above the previous open interest here was short so they quickly added all those shorts back while we ran or rallied up into a new high higher than this one but we did not get back to this old high as well so we traded right back in to this range okay so think about what we covered in the webinar inside the range and that concept is unfolding here so now watch we're going to be looking for this open interest or increasing shorts okay to be confirmed with what and in that traders position well if we pull that chart off we should be seeing what we should be seeing commodity I'm sorry commercial traders going net short or adding to net short positions okay and we're going to do this by adding a chart here 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 increase of net short selling or a net short position or a rapid reduction in their net long position that would confirm this okay as commercials themselves doing what expecting lower prices so we go down here to this ad study tab click on that go to commercial commitment of traders line chart add that and draw okay and you can see here we have the chart noted so we see here and you can see the red line here and we're gonna change it to a one-year so we can see a little bit clearer and if by clicking on the one year we'll see that this red line here delineates the commercial activity okay you can see how they rapidly drop down from net long and net short while the open interest was increasing so that was a confirmation that we were seeing that short commercial short selling okay so if we see both open interest increasing like this and the red line here don't commercial traders okay they went from net long to net short going into May okay so we saw this rally as a suspect sauce fake out type of move here and we just ran out this old high and then obviously rejected it very harshly now this was the net short position okay held by the commercial traders expecting the top to form in that British Pound at a 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 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 going to go over to this tab here we're going on to the Euro FX tab and we're going to use the first contract month go over to customize scroll down and what we're gonna do is make sure we're on candlesticks we're going to use the weekly nearest one year making sure our total volume is clicked and we're gonna draw the chart and we will arrive at the Euro okay 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 divergence okay between the pair's so we have smt divergence during a seasonal time when we would expect the fiber and cable to decline we also expect to see the 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 a trading range okay so same thing just inverse relationship between the dollar and the euro because remember we had the same thing happening in the dollar during the spring of this year in 2012 we saw the dollar ranging and then expected to see higher prices because open interest declined and commercials short-selling was rapidly reduced okay in the dollar that's bullish so we've seen the same thing hopefully in a mirror image on the fiber we're gonna consolidation okay April May time period so between this vertical line and this vertical line right in here okay we are in a range notice we saw open interest increasing okay that's a nice increase of open interest during a time frame in the euro and we would expect to see weaker prices also we have an optimal trade entry from this high to this low traded right up into that at the beginning of April okay so we now have optimal trade entry during a time when we're seasonally week when we're expecting firmness in a dollar okay and now let's go and add the commercials by Co T and commitment of traders and line chart add that click draw okay and you can see here we had the reduction okay in other words we had open interest increasing here while we also saw the commercials in this case actually adding a little bit of their net longs in here okay they were already net long above the zero line here say they were all along here basically trying to catch this low here so they're buying all this decline from this high down lower so when prices are the WIPP lower below this low here at that very moment between April 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 SMT where we have the confirmation in the cable and the dollar but on a co T we don't really see it here okay we've been maintaining a very large net long position on the commercials let's go and pull up three years of that and you'll see what I mean 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 there was additional short-selling here okay they were lessening their Long's here going into April so that's the insight you can lean not necessarily this one here so we did lose some that Long's here so we have confirmation in that regard but between April and May there was nothing to indicate the movement was confirmed between commercials and open interests at that particular moment but if you look at this scale that we have here on the three-year you see how we had open inches increasing in here we had open interest increasing in here while we saw a reduction of the long says more or less essentially the same thing they're lessening their lungs okay which is increasing their short positions while open interest increased in here while we're in this range okay so that was the catalyst for confirmation on the higher time frame so while they didn't exactly line up between cable and fiber both of them 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 make a higher high here in April when the cable was able to do that all right so that's one way of applying open interest looking for the reduction and 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 prices in the spring of 2012 so now we have more or less than large macro view okay couple that with the interest rate market now okay so now we have the co T open interest supporting the nose at the seasonal tendency for weaker cabling and fiber and the higher dollar in the spring we see that also supporting the interest rate insights that we've already looked at and now we have a cell program okay in place now we can look for shorts we can start selling okay for a 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 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 we would be looking for a reverse scenario which would be bullish for the US dollar and we noted it already this swing here this is Ethel trade entry in here where a price would have been rallying from or we would expect to see it rally from and sweet spot comes in at 178 85 so this would be a catalyst for upside momentum for the dollar looking for this old high and this old high as upside objectives at the same time that this isn't occurring we expect to see weakness in the stock indices to anticipate a risk off scenario we saw the Dow this year in April make a very modestly higher high here and this little rectangle is 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 at the same time frame we have a lower high okay see that now we already have a SMT diversions between the stock indices and obviously the Nasdaq Composite Index also that same month was a bill to post a lower high okay so we have SMT divergence in the key that we have underlying weakness okay you know what is this rally up into April May time period stock averages we're not able to confirm one I know there's a Dow Theory suggest that there's probably waning momentum and don't be so aggressive in terms of mine because you may be seeing a withdrawal or a retracement lower let's go back to the dollar okay and let's look at what happened from that point okay you can see obviously the dollar itself rallied on up from this high 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 for obviously objectives looking for potential areas where price may shoot - here's the 160 - extension and a 200 extension here okay now once price broke 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 price swing that we're working within so that's this high - this low so we would use our fib tool from that high and pull it down to the lowest low in that 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 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 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 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 slip lower as well okay confirming that upward momentum and the dollar to S&P 500 also broke down and slipped lower and the Nasdaq Composite not surprising slip lower as well now let's look at the fiber okay and what I have here is the April month delineate between the two red vertical lines okay and we're looking at the fact 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 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 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 in sympathy but as you can see here the SMT divergence correlated pair SMT the virgin's was showing that there was absolutely no interest whatsoever going along 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 particular time frame and this is really the catalyst for my my view points while I was saying it real time in advance before the markets were trading we were looking for this old load 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 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 here's February's high in April's high so we were posting higher highs in the cable this was the relatively stronger of the two pairs so when there was a buying opportunity we could be buying in here okay and be more confident that the markets gonna be more favorable for us as a bull if we're a short-term trader but we're focusing on the higher time frame intermediate term basis so we're looking for what the sell scenario and that being the case with the fiber okay so you could look to sell this market here going into the your seasonal time frame from this high and little low you can see we have optimal trade entry in here and price did 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 that up you can see here's the sweet spot okay here's that 70.5 fib level price went right to that level exactly to that level 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 the time frame 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 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 bullish compared to the fiber comparably we are still within a time frame when the price itself should be running out of steam and when we get to these levels 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 the high at April and a Hyatt in 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 have a lower low here than here okay so the dollar was lower the cable confirms it higher let's go back to the fiber see this there's a u.s. DX to us DX SMT 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 gonna be bearish for the fiber okay and since the tandem trading occurs in cable and fiber generally and you're looking for higher prices in the dollar you you can get yourself in sync with on very very handsome enemy it turns short and looking at this high here down to this low in here it is a sweet spot and price went right up to that point by the pip and then fell out of bed let's look at what happened here price does in fact trade down flat below this low in fact small little minor bounce in here and then finally broke through okay and eventually even traded even lower than it if you use the fibonacci concept we talked about for this plan we look for 127 extensions 162 extensions and the 200 extension this price swing is what we're gonna use going lower okay so if you use 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 finds here and some land balances and looking even gives you another optimal trade entry to get short okay this is we're jumping ahead really to the 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 what 162 extension and then obviously price had snapped away from that rather handsomely so getting short here on the notion that we are entering into the seasonal time period and looking for SMT divergence is one avenue here that you could have got short if you missed this one this was the other opportunity to get short okay and ride it lower that rather handsome price Ling if you look at what transpired just from the original high here in April down to the 162 extension that's twelve hundred and thirty pips okay and if you got this second entry in here using the first of May area it's a eleven fifty one thousand one hundred and fifty pips okay so not bad in terms of you know pip hauls takes a little bit of time to get these guys it doesn't happen overnight but you got it really hold on to it and just have a 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 it's a big figure as well we are still within the April seasonal decline time period we have USD excess Mt we have correlative pair SMT weaker highs comparable to the higher high in 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 okay here's what's happening price trades up into that 163 figure trades off okay now as price trades the lower like that okay comes down into that one that sixty-two percent level here on the higher time frame price wing finds a little bit short-term support level eventually breaks down below and look and comes right back up to that same level here again see what it does here runs into it as resistance and then slides away again aggressive moves lower okay now let's add to this the day separators okay now if you miss this shorting straight up ended at 163 figure okay you have a short-term hi here we have a higher high here lower high here and a lower high here so this is a daily swing point as high this lower low I'm sorry lower high and lower high here okay so we do 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 anything that you use to trade on your pattern that's as you start hunting okay and we also have a higher price swing point on the weekly basis okay see these double lines here and here and here we have the high of that week so between this double set and this double set the high is here then we have the higher here 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 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 and 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 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 took four different I'll present you the high of the week this is where this takes place we have Sundays to trading Monday runs up okay and it makes the high on Monday and then trades off now if you missed that that's fine don't don't chase price you don't you don't need to worry about rushing into it once you have now a daily and own weekly swing high you can use the high down to this low here and look what you have you have the seventy nine seven trade certain level laying directly on top of this higher time frame fit level that we just drew also daily okay that's the sixty two percent retracement level on the daily and now we have overlapping fibs one a one-hour chart conversion right there for a optimal trade entry this is a nice sucker rally and gets everybody excited chasing it but this time of day is New York open so you could be selling in New York open to get in sync with the higher time frame and then ride it lower okay and positioned there you can see 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 opportunity for a seasonal decline in April here and this is that lower high going into the beginning of April if you use the high here and price trades down if you look at the high here pull it down to that low you see how price goes restless said nice penetration level and stays there for a little bit and it finally breaks down okay notice also that we have smaller optimal trade entries in that same area and you have it here as well here this high low and here 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 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 seasonal month that were we're highlighting here is if you look at the high here to this low okay any reason why I'm pulling this because these are the highest high amongst all these candles the lowest low amongst all these candles okay price goes right back up to the sweet spot which is an overlapping of this higher timeframe fit level in here okay so you can see how that converges so you can get short in here one even the 13250 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 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 and we'll just drew that draw that in here real quick just for sake of completion and so I set a tracing level in here and get out to a five-minute chart you can actually see I've told trade entry in here on this small little minor price swing so again another fractal pattern with an higher timeframe fractal that's broken down into a smaller factor which is you know what we're showing here so even even looking at how price breaks down from these larger enemy at certain price swings and then 162 extension look how it doesn't give you much in terms of movement below that before it snaps away okay now if you held on to it and it breaks this high here once price runs above that you have now break or a market structure shift okay so you don't want to just collapse the trade there you want to wait for the try to retest and get back down to these lows and by using another optimal trade entry okay you can see a better place to cover your short instead of getting out here and panicking you can get out down here at the 162 extension and then obviously price starts to 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 if you look at how the tools on a macro view really help you get in sync with these trends you're just gonna use the simple short term analysis concepts to get you 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 in order latest Wednesday's London open and if you're in the bullish environments you would use the weekly Monday Tuesday long and open for the low of the week to form and or the latest Wednesday's learn and open to capture the weekly low and then get in sync with that and try to hold on to these things as long as you possibly can it's very difficult if you're always just looking every minor price swing in the market while you're in these that's why it's it's much better if you're gonna have this concept in trading and still do short term trading you need to have separate accounts obviously but you just put the trade on and let the stops stay outside of you know potential striking distance and by that I mean you know if you get short in here you let it run down for a while before you do anything with trailing stop losses inside of it because price can come back and tag you and then you'll miss all this okay so you want to look for support levels to be broken like it does here and it comes back and retest it and trades the lower then then move your stop into a profitable area where you can you know 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 profits going down at the reasonable predetermined 127 162 and 200 extensions 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 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 to that 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 didn't get to this old low but it did get to 200 so you could have scaled off obviously you know 50% of the position once you get half profit and I'm sorry 30 30 pips moved to break even and then look for you 127 extension now you could take 30% off of the total addition okay or you could take you know 10 20 at 62 and then leave the remaining portion that you reach for 200 or you could just take the remaining 50% dividing you know by 30 of the original position take it off at 127 and 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 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're gonna get out with your remaining half at you know a nice logical area to take profits and if it gets down the 160 to take half of it they're off and then the remaining 25% reached for the 200 and then show your stop just above the 162 abstention okay but there's a lot of different ways and I'm trying not to give you a very clear black and white way of doing 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 hopefully this has just been providing you an example on how to enemy return swing trade and using the higher time frame Mack reviews to to get in sync with it 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 timing and such and there's being the optimal trade entry video high probability price patterns video and obviously you need to be cognizant of the risk and 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 hopefully this has been insightful to you guys and if you have any questions obviously just post them on the forums at baby pips comm and until then I wish you good luck and good trading