A quick overview of what happened in the markets yesterday and my thoughts for today, Thursday’s markets. We start our analysis by viewing the Bonds & Bullion markets to determine dollar denominated sentiment. Yesterday, we saw demand for both the dollar and gold which is a bit unusual. We also saw US bonds selling off. The bond sell off created demand for the dollar. But there was also demand for Gold. See charts below:
If bonds keep selling off, we expect demand for dollar to increase and also gold to reverse its gains of yesterday and sell off. To confirm a sell off in gold, let us see if there is indeed demand for paper or fiat currencies versus gold. See charts of Gold vs Paper below:
From the 2 charts below, if US bonds keep selling and USDJPY keeps buying, I expect Gold and/or EURUSD to start selling. So I am a Gold bear today.
Other markets we look at below:
AUSSIE VALUE FLOW, GLOBAL EQUITY FLOWS, CRUDE OIL VALUE FLOW AND THE IMF SDR CURRENCY BASKET VALUE FLOW.
These models simple help us do a thorough intermarket and intracurrency analysis to determine what we should be trading and what direction we should be trading it in. Like I always say, there are three activities involved in professional trading:
1. RESEARCH AND ANALYSIS to determine bias and asset to trade. Our value flow models help us determine this.
2. TRADE EXECUTION this involves entering trades at the best possible price, with momentum on our side, when support becomes resistance and vice versa. We never enter until we have confirmed using our 7 step technical analysis approach.
3. RISK MANAGEMENT this involves getting the best exits, at maximum profit or at minimum loss. We use intelligent trailing stop and pyramiding to achieve this.
Trading is not easy, but it can be straightforward. We keep refining our approach at ValueFlowTrading.com to train aspiring traders become more professional and consistently profitable.