As you’ve probably gathered by now… I try to trade with patterns and a whole market view. Things repeat in the market…
And after all, Gang. If it “ain’t broke, why try to fix it?”
So yesterday in the Futures Live Trading Room, we focused on the Yen… then I looked to do the same thing this morning as well.
Here’s why you should listen to the Yen (especially right now)…
STEP ONE: The Power of the Forex Market
Now to start, I know a ton of traders are nervous about Forex. I hear it all the time… but you shouldn’t have to be. It’s the largest market in the world, and there are tons of opportunities within it because of that. And the big wins are all around you — just don’t be afraid to take them.
I’ve never had a losing year. Yes — my entire career. (P.S. if you didn’t know, I’ve been trading since I was 15.)
So on January 14th, I’ll be hosting a webinar called “No Fears Forex.” I want to share with you why the Forex market is crucial if you want to be a successful trader. You can join me here.
But I’m not telling you to just dive in head first into Forex. Follow along with me, and I’ll show you a great place to start until the webinar…
The Japanese Yen.
STEP TWO: Validating Our Premonition at Market Open
Below is a quick video I recorded to go along with this issue, so you can see my exact morning routine from yesterday in the Room.
First things first, yesterday morning around 8 AM Central we looked up the one day relative performance for the individual currencies to the Dollar. I’ve found many traders are more comfortable talking about Forex in relation to the Dollar (maybe because many of the traders I interact with are American, or because it’s a widely accepted form of currency, either way). When we’re looking at this so early in the morning, we’re only trying to get an understanding of one thing…
So in the video above, you’ll notice yesterday morning that the Yen (25 minutes before the bell) was already weak.
What’s this mean?
Well it gave us a pretty clear sign from the currency markets that we could see strength in stocks. THIS is exactly what I mean when I say “currency is the gateway to other markets,” Gang.
So what does this mean for us going into the open then?
Well despite it looking pretty bullish since early morning, if the Yen’s already weak, we had a strong signal that regardless of the kind of volatility we see at the open… we should look to stronger stocks. Naturally this made us more hesitant to be too ambitiously bearish at the open yesterday.
So then what happened at the open?
Now as I move on, I need to let you in on a little secret, Gang.
If you’ve followed me for awhile, you’ve probably heard me mention the Hourly Price Movement Range (HPRM). I developed a nifty little technique years ago with the HPPM that helps me discern market direction. Now there’s also something I love that helps me use this even more effectively. It’s called Autochartist (you may have also heard me mention this a few times). Since I love it SO MUCH, we actually make it totally free to members. If you want in on this deal, you can snag it here.
Now in using both the HPRM and Autochartist, we saw right as the bell rang that the HPRM was low.
An important note — I’m not saying this creates an automatic buy. I don’t want anyone thinking that the standalone HPMR is enough to just “buy here, sell here, buy here, sell here.” You CAN choose to use it like that, several Futures Members do, but that’s just exhaustion, fade, buying, and selling. There’s nothing wrong with using it that way, BUT for what I’m looking for I need some other indications.
That’s where I turn to some of my favorite tools.
As the video shows, as we progress through the morning, we see that we end up with some fairly bullish Propulsion Dots. Plus, we have the pullback to the Wave, and the pullback to the VWAP.
What’s this mean?
This was a morning indicating strength from the get-go.
STEP THREE: Listen to the Yen
But not everyone indicated strength, and this is where it was crucial to pay attention to the Yen.
Bonds didn’t indicate this strength… Gold didn’t indicate this… but Yen did.
We clearly saw within minutes the behavior that the Yen had warned us about prior to market open. Right as the market opened, it went straight into the HPMR projected low and then the green GRaB Candles.
And we never looked back, Gang.
This is just one example of the way the currency can help you immensely when looking at other markets, and I plan on showing you several other examples in the webinar as well as issues to come.