How To Find Trends On A ChartIn this short video, I help you identify a down trend, a sideways market, and an up trend. I also offer a practice I used when starting to build up my proficiency in identifying these trends on a chart.
Trend Analysis
Heatwaves and Wheat: How Temperature Shocks Hit Prices🌾 Section 1: The Wheat–Weather Connection—Or Is It?
If there’s one crop whose success is often tied to the weather forecast, it’s wheat. Or so we thought. For decades, traders and analysts have sounded the alarm at the mere mention of a heatwave in key wheat-producing regions. The logic? Excessive heat during the growing season can impair wheat yields by disrupting pollination, shortening the grain-filling period, or damaging kernel development. A tightening supply should lead to price increases. Simple enough, right?
But here’s where the story takes an unexpected turn.
What happens when we actually analyze the data? Does heat reliably lead to price spikes in the wheat futures market? The short answer: not exactly. In fact, our statistical tests show that temperature may not have the consistent, directional impact on wheat prices that many traders believe it does.
And that insight could change how you think about risk, seasonality, and the role of micro contracts in your wheat trading strategy.
📈 Section 2: The Economics of Wheat—And Its Role in the Futures Market
Wheat isn’t just a breakfast staple—it’s the most widely grown crop in the world. It’s cultivated across North America, Europe, Russia, Ukraine, China, and India, making it a truly global commodity. Because wheat is produced and consumed everywhere, its futures markets reflect a wide array of influences: weather, geopolitics, global demand, and speculative positioning.
The Chicago Board of Trade (CBOT), operated by CME Group, is the main venue for wheat futures trading. It offers two primary wheat contracts:
Standard Wheat Futures (ZW)
Contract Size: 5,000 bushels
Tick Size: 1/4 cent per bushel (0.0025) has a $12.50 per tick impact
Margin Requirement: Approx. $1,700 (subject to change)
Micro Wheat Futures (MZW)
Contract Size: 500 bushels (1/10th the size of the standard contract)
Tick Size: 0.0050 per bushel has a $2.50 per tick impact
Margin Requirement: Approx. $170 (subject to change)
These micro contracts have transformed access to grain futures markets. Retail traders and smaller funds can now gain precise exposure to weather-driven moves in wheat without the capital intensity of the full-size contract.
🌡️ Section 3: Weather Normalization—A Smarter Way to Measure Impact
When analyzing weather, using raw temperature values doesn’t paint the full picture. What’s hot in Canada might be normal in India. To fix this, we calculated temperature percentiles per location over 40+ years of historical weather data.
This gave us three weekly categories:
Below 25th Percentile (Low Temp Weeks)
25th to 75th Percentile (Normal Temp Weeks)
Above 75th Percentile (High Temp Weeks)
Using this approach, we grouped thousands of weeks of wheat futures data and examined how price returns behaved under each condition. This way, we could compare a “hot” week in Ukraine to a “hot” week in the U.S. Midwest—apples to apples.
🔄 Section 4: Data-Driven Temperature Categories and Wheat Returns
To move beyond anecdotes and headlines, we then calculated weekly percent returns for wheat futures (ZW) for each of the three percentile-based categories.
What we found was surprising.
Despite common assumptions that hotter weeks push wheat prices higher, the average returns didn’t significantly increase during high-temperature periods. However, something else did: volatility.
In high-temp weeks, prices swung more violently — up or down — creating wider return distributions. But the direction of these moves lacked consistency. Some heatwaves saw spikes, others fizzled.
This insight matters. It means that extreme heat amplifies risk, even if it doesn't create a reliable directional bias.
Traders should prepare for greater uncertainty during hot weeks — an environment where tools like micro wheat futures (MZW) are especially useful. These contracts let traders scale exposure and control risk in turbulent market conditions tied to unpredictable weather.
🔬 Section 5: Statistical Shock—The t-Test Revelation
To confirm our findings, we ran two-sample t-tests comparing the returns during low vs. high temperature weeks. The goal? To test if the means of the two groups were statistically different.
P-Value (Temp Impact on Wheat Returns): 0.354 (Not Significant)
Conclusion: We cannot reject the hypothesis that average returns during low and high temp weeks are the same.
This result is counterintuitive. It flies in the face of narratives we often hear during weather extremes.
However, our volatility analysis (using boxplots) showed that variance in returns increases significantly during hotter weeks, making them less predictable and more dangerous for leveraged traders.
🧠 Section 6: What Traders Can Learn from This
This analysis highlights a few key lessons:
Narratives aren’t always backed by data. High heat doesn’t always mean high prices.
Volatility increases during weather stress. That’s tradable, but not in the way many assume.
Risk-adjusted exposure matters. Micro wheat futures (MZW) are ideal for navigating weather-driven uncertainty.
Multi-factor analysis is essential. Weather alone doesn’t explain price behavior. Global supply chains, speculative flows, and other crops’ performance all play a role.
This article is part of a growing series where we explore the relationship between weather and agricultural futures. From corn to soybeans to wheat, each crop tells a different story. Watch for the next release—we’ll be digging deeper into more effects and strategies traders can use to capitalize on weather.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
Strong Deviation News Trade MethodBack tested News-Based Trading Strategy | March–early June Results
This strategy trades only on strong deviation surprises in high-impact economic news releases, aiming to capture sharp market moves caused by unexpected data.
What is a Strong Deviation?
A strong deviation occurs when the actual economic data significantly differs from the forecasted number, beyond typical market expectations. This threshold is identified using advanced AI analysis of historical news data to measure how much surprise generally triggers meaningful price movement. Traders can implement these deviation levels as objective filters to enter trades only when the market is likely to react strongly.
Back test Summary (March to early June):
Total net result: +146.3 units (pips/points/%)
Number of trades: 10
Entry logic: Trade triggered when news surprise meets or exceeds strong deviation thresholds
Stop-loss: Set at 1.5 times the 15-minute chart ATR (Average True Range) to allow for normal volatility
Take-profit: Set at 2 times the stop-loss distance to secure favorable risk-reward
Visual signals: Each executed trade is marked on the chart with a blue pin
Highlights:
Focus on strong market-moving surprises only, filtering out noise
Risk management designed to balance protection and opportunity
Trades aligned strictly with news-driven momentum
Back tested with consistent positive returns over three months on key US economic data
How to Use:
Apply the strong deviation thresholds identified via AI-powered analysis as your trigger for news trades. Use the ATR-based stops and doubled take-profit for balanced risk control. This strategy suits traders aiming for clear, data-driven signals around economic events with disciplined trade management.
this text was powered by ai...
feel free to comment and discus the strategy. always open to news things and your thoughts.
and always remember . to learn is to share ...
Reading The Room: Market Sentiment TechnicalsThe Market Sentiment Technicals indicator, created by LuxAlgo , is a powerful tool that blends multiple technical analysis methods into a single, easy-to-read sentiment gauge. It’s designed to help traders quickly assess whether the market is bullish, bearish, or neutral by synthesizing data from trend, momentum, volatility, and price action indicators.
🧠 How We Use It at Xuantify
At @Xuantify , we integrate this indicator into our multi-layered strategy stack. It acts as a market context filter , helping us determine whether to engage in trend-following, mean-reversion, or stay on the sidelines. We use it across multiple timeframes to validate trade setups and avoid false signals during choppy conditions. This example uses MEXC:SOLUSDT.P , symbols like BINANCE:BTCUSDT or BINANCE:ETHUSDT are fine to use as well.
⭐ Key Features
Sentiment Panel: Displays normalized sentiment scores from various indicators.
Market Sentiment Meter: A synthesized score showing overall market bias. (Below image)
Oscillator View: Visualizes trend strength, momentum, and potential reversals.
Divergence Detection: Highlights when price action and sentiment diverge.
Market Sentiment Meter: A synthesized score showing overall market bias.
💡 Benefits Compared to Other Indicators
All-in-One : Combines multiple indicators into one cohesive tool.
Noise Reduction : Filters out conflicting signals by averaging sentiment.
Visual Clarity : Histogram and oscillator formats make interpretation intuitive.
Adaptability : Works across assets and timeframes.
⚙️ Settings That Matter
Smoothing Length: Adjusts how reactive the sentiment is to price changes.
Indicator Weighting: Customize which indicators influence the sentiment more.
Oscillator Sensitivity: Fine-tune for scalping vs. swing trading.
📊 Enhancing Signal Accuracy
We pair this indicator with:
Volume Profile: To confirm sentiment with institutional activity.
VWAP: For intraday mean-reversion setups.
Breakout Tools: To validate momentum during sentiment spikes.
🧩 Best Combinations with This Indicator
LuxAlgo Premium Signals: For entry/exit confirmation.
Relative Volume (RVOL): To gauge conviction behind sentiment shifts.
ADX/DMI: To confirm trend strength when sentiment is extreme.
⚠️ What to Watch Out For
Lag in Consolidation: Sentiment may flatten during sideways markets.
Overfitting Settings: Avoid tweaking too much—stick to tested configurations.
False Divergences: Always confirm with price structure or volume.
🚀 Final Thoughts
The Market Sentiment Technicals indicator is a game-changer for traders who want a 360° view of market psychology . At Xuantify, it’s become a cornerstone of our decision-making process—especially in volatile conditions where clarity is key.
🔔 Follow us for more educational insights and strategy breakdowns!
We break down tools like this weekly—follow @Xuantify to stay ahead of the curve.
Stop Hunting for Perfection - Start Managing Risk.Stop Hunting for Perfection — Start Managing Risk.
Hard truth:
Your obsession with perfect setups costs you money.
Markets don't reward perfectionists; they reward effective risk managers.
Here's why your perfect entry is killing your results:
You ignore good trades waiting for ideal setups — they rarely come.
You double-down on losing trades, convinced your entry was flawless.
You're blindsided by normal market moves because you didn’t plan for imperfection.
🎯 Solution?
Shift your focus from entry perfection to risk management. Define your maximum acceptable loss, stick to it, and scale into trades strategically.
TrendGo wasn't built to promise perfect entries. It was built to clarify probabilities and structure risk.
🔍 Stop chasing unicorns. Focus on managing the horses you actually ride.
The SECRET is Compounding Tiny Objectives & Finding SatisfactionIn this video I talk about what I don't really find people talking about, which is how important it is to find satisfaction in your trading. When I say 'satisfaction', I am talking about the monetary kind. What do I mean by this?
A problem I used to have in my earlier days was over-trading, revenge trading, blowing accounts, the usual story. I even had a decently high win-rate and I was good at understanding price. What I discovered was that I was not finding satisfaction because I was not risking enough on my trades. You see.. my strategy had a high win-rate with a positive R average, but the setups did not appear that often. Not as rare as a unicorn, but still, I'd have to sit around and wait and wait and wait. By the time my setup came, I put on a small risk, and I won small. Subconsciously, I found that quite frustrating, even though I was actually winning most of my trades. You can imagine how I felt when I lost a trade. I felt like I invested all that time for nothing. One could argue that I was being careful, but the problem was I was being too careful. I age the same as everyone else, and everyone else ages the same as me. I am investing my time into this strategy, time I will never get back. If I am not utilizing my time in relation to the earning potential, then that is a bad investment. Being a psychologically prone person, I made it a serious rule that all my criteria for my setup must be hit before I take that trade, no exceptions. I kept myself on the higher timeframes so that my mental state can safely process what I needed to process, whether it was analytical or just psychological.
Another point was getting over what others were showcasing or doing. Material luxuries and large wins are all subjective things. It was frustrating seeing people trade every single day, most of them with green days. I felt like I had to do the same too to be a good trader. I was WRONG. What I actually need to do was make my system work for me, and that included how I implemented risk and what was satisfying enough for me to pursue. Like I said in the video, if what you want to do is not interesting or attractive to you, you won't want to do it. As long as what you want to do makes sense and isn't you trying to go from zero to a hundred in 2.5 seconds. As the title says, compound tiny objectives but make it satisfying in terms of risk and your time invested.
- R2F Trading
How to read market sentiment like a pro?
1️⃣ What Is Consumer Sentiment?
Consumer sentiment reflects how optimistic or pessimistic people feel about their financial situation and the overall economy. It’s a measure of people’s willingness to spend money. When confidence is high, consumers tend to spend more. When it's low, they hold back.
✅ It helps anticipate shifts in market behavior
✅ Used as a macroeconomic signal for traders and investors
✅ Often treated like a leading indicator for the S&P 500 and other indices
2️⃣ Why Is Consumer Sentiment Important?
The economy is largely driven by consumer spending. When people feel good about the economy, they:
- Buy more products
- Take on more debt
- Invest in assets
This behavior fuels business growth and market momentum. When sentiment drops, the opposite happens.
Sentiment is not always perfect or predictive, but it increases the probability of price moves — and in trading, we always aim for higher probabilities, not certainties.
3️⃣ Types of Sentiment Indicators
There are several forms of sentiment tracking:
✔️ Consumer Sentiment Index (e.g. University of Michigan)
✔️ News Sentiment (based on headline tone)
✔️ Market Sentiment Indicators (e.g. VIX, bond spreads)
✔️ Social/Headline Aggregators (e.g. AI-driven data that tracks public mood)
✔️ XLY/XLP what we have here
Each has strengths and limitations. For example, consumer sentiment is slower to change but more reliable long-term. News sentiment can be noisy and volatile but responsive.
4️⃣ How to Use Consumer Sentiment
Treat sentiment like a range or zone:
- High sentiment = potential market tops (overconfidence)
- Low sentiment = potential bottoms (fear and contraction)
Look for divergences:
- When sentiment is improving but markets are falling 👉 could signal a reversal
- When sentiment is declining while markets are rising 👉 could suggest caution
🧠 Think in probabilities, not possibilities. Just because sentiment is high doesn’t guarantee a rally but it does increase the odds, especially when combined with other data.
5️⃣ Example Ratios: XLY vs XLP
To break down consumer sentiment further, traders sometimes compare two:
XLY (Consumer Discretionary): Companies people spend money on when they feel confident (e.g. Amazon, Tesla)
XLP (Consumer Staples): Essential goods people buy regardless of economy (e.g. Walmart, Procter & Gamble)
If XLY/XLP is rising: consumer confidence is likely improving
If XLY/XLP is falling: sentiment is likely weakening
This ratio helps gauge spending behavior and risk appetite in a more visual, trackable way.
6️⃣ Limitations of Consumer Sentiment
⚠️ Not always aligned with price action in short-term
⚠️ Lagging data depending on source
⚠️ Can be influenced by temporary events (e.g. political shifts, news headlines)
⚠️ Doesn’t work well alone should be used with technical and fundamental analysis
7️⃣ Final Thoughts
Consumer sentiment is one of the most powerful but often overlooked indicators. It doesn’t tell you exactly what will happen, but it gives important context:
✅ Where we are in the economic cycle
✅ How confident people are in spending
✅ When the market may be out of sync with the real world
Use sentiment tools to build a higher-probability picture of what’s next. Combine them with price action, macro analysis, and volume-based tools for a more complete view.
Unfiltered Analysis: Understanding Daily Bias Less Than 10 minsThis is the quickest way to understand daily bias using swing points, FVA, FVG and order flow.
Building Liquidity: What It Really Means🔵 Building Liquidity: What it really means
Professional traders often need liquidity (buyers and sellers) to enter/exit large positions without moving the market too much.
This means manipulating the market within a pre-determined range, which serves as the operating center for everything that follows.
🔹 How is liquidity built
Price Ranging: Sideways consolidation before big moves attracts both buyers and sellers.
False Breakouts (Stop hunts): Price may briefly break support/resistance to trigger retail stop-losses and fill institutional orders.
News Timing: Pro traders often execute during or just before major news when volatility brings liquidity.
🔹 How can you spot a Liquidity-building zone
🔸 Volume
Unusual spikes in volume: Often indicate institutional activity.
Volume clusters at ranges or breakouts: Suggest accumulation/distribution zones.
Volume with price divergence: Price rises but volume falls = possible exhaustion. Volume rises and price consolidates = potential accumulation.
🔸 Price Action
Order Blocks / Imbalance zones: Sharp moves followed by consolidations are often pro trader footprints.
Break of Structure (BoS): Institutions often reverse trends by breaking previous highs/lows.
Liquidity sweeps: Price moves aggressively above resistance or below support then reverses = stop-loss hunting.
🔸 News Reaction
Watch pre-news volume spikes.
Look for contrarian moves after news — when price moves opposite to expected direction, it often reveals smart money traps.
Analyze price stability post-news — slow movement shows absorption by pros.
Wick traps and reversals around news events = stop hunting.
🔸 Narrative is Everything
Higher timeframe trends show intent.
Lower timeframes show execution zones.
Look for alignment between timeframes in a specific direction.
🔹 Why do whales move the market in an orderly manner
To fill large positions at optimal prices.
To create liquidity where there is none.
To trap retail on the wrong side of the move.
To trap other whales on the wrong side of this move.
To rebalance portfolios around economic cycles/news.
🔹 Professionals never forget what they've built
When you track price, volume, and news, you’ll find specific bars that form areas that are the foundation for the short-term direction.
This is pure VPA/VSA logic, the interplay of Price Analysis ,Volume Analysis and News, where each bar is not just a bar , but a clue in the story that professionals are writing.
When you monitor volume, price, and news together and perform multi-timeframe analysis, it becomes clear what the whales are doing, and why.
🔹 From the chart above
The market reached a weekly resistance level and then pulled back slightly after whales triggered the stop-losses of breakout traders.
Prior to the breakout, whales had accumulated positions by creating a series of liquidity-rich buying zones on the daily timeframe.
It's essential to understand the broader context before choosing to participate alongside them—whether you're planning to buy or sell.
🔴 Tips
Use volume and price analysis together, not separately.
Monitor any unusual volume bars before economic market news.
Monitor news and volatility spikes to detect traps and entries.
Combine this with liquidity zones (support/resistance clusters).
Build a "narrative" per week: What is smart money trying to do?
A smart trader understands the tactics whales use, and knows how to navigate around them.
Why Higher Timeframe Analysis Increases Your WIN-RATE!Many traders focus too heavily on lower timeframes, chasing setups without any real context. But what if the secret to improving your consistency was as simple as zooming out?
In this video, we break down why analyzing higher timeframes—and trading in their direction—can significantly increase your win rate across Forex, crypto, stocks, and futures. This isn’t just a theory. It’s a principle used by institutional traders, prop firms, and consistently profitable independent traders.
✅ Here’s what you’ll learn in this deep-dive:
The real purpose of higher timeframe analysis and how it acts like a GPS for your trading decisions.
How to identify structure, liquidity, and key levels on the daily, 4H, and weekly charts
Why trading against the higher timeframe flow often leads to premature stop-outs or fakeouts
The power of multi-timeframe alignment: how to sync HTF bias with LTF entries
How trading with higher timeframe momentum helps filter noise, reduce overtrading, and increase conviction
A walkthrough example showing how to use HTF context to validate a lower timeframe setup
Whether you're trading ICT concepts, Fibs, RSI, VWAP, or your own system—this principle applies. Trading in alignment with the higher timeframe doesn’t just increase your odds, it adds structure, patience, and confidence to your process.
📌 Key takeaway: When you understand what the market is doing on the higher timeframe, you stop guessing and start positioning yourself with the move—not against it.
🛠️ Helpful for traders using:
Smart money concepts (SMC)
ICT-based models (like AMD, OTE, and NDOG)
Supply and demand strategies
Price action or indicator-based systems
PRACTICALLY ANY TYPE OF STRATEGY OR METHODOLOGY
So, I hope the video was insightful for you. Let me know if you apply higher timeframe analysis, and how it has helped you.
- R2F Trading
What Is the Hanging Man Candlestick Pattern: Meaning & Trading?What Is the Hanging Man Candlestick Pattern, and How Can You Trade It?
In the world of technical analysis, candlestick patterns play a vital role in helping traders decipher market trends and potential reversals. Among the many setups, the hanging man holds particular significance. This distinctive formation captures traders' attention as it often serves as a warning sign of a possible trend reversal. This article will go through the technical analysis of the hanging man formation and explain how traders can trade with it.
What Is a Hanging Man Pattern?
The hanging man candlestick pattern is characterised by a small body near the top of the candlestick, a long lower shadow, and little to no upper shadow. It resembles a figure hanging from its head, hence the name "Hanging Man."
Psychology Behind the Hanging Man
The psychology behind the hanging man candlestick pattern reflects a shift in market sentiment. After a sustained uptrend, the appearance of this pattern indicates that buyers are losing momentum. The long lower shadow shows that sellers were able to push prices down significantly during the trading session. Although buyers managed to drive prices back up, the close near the open price suggests weakening bullish sentiment. This pattern signals that selling pressure is increasing, potentially leading to a bearish reversal as confidence among buyers diminishes.
The hanging man is a versatile formation that can be applied across a wide range of financial instruments, including stocks, cryptocurrencies*, ETFs, indices, and forex, on different timeframes.
Identifying a Hanging Man Candlestick on Trading Charts
To spot a hanging man pattern in stocks and other financial instruments, you may follow these key steps:
Look for an existing uptrend: Start by identifying a prevailing upward price movement on the chart.
Locate a candlestick with specific characteristics: Search for a candlestick with a small body near the top, a long lower shadow, and little to no upper shadow. This formation resembles a figure hanging from its head. The colour of the candle doesn’t matter, but if it’s bearish, the signal is stronger.
Consider supporting indicators: Utilise other technical indicators or oscillators to further validate the potential reversal. These can include trendlines, moving averages, or momentum indicators that align with the bearish interpretation.
Note that there is no such thing as an inverted hanging man candlestick or a bullish hanging man candlestick pattern.
Trading the Hanging Man Pattern
Those trading the hanging man reversal pattern need to apply a systematic approach in order to increase the likelihood of successful trades. Here are a few steps traders usually follow to trade this pattern:
- Identification: Identify the setup by using the steps mentioned above.
- Look for confirmation signals: The setup alone is not sufficient for making trading decisions. Seek additional confirmation through subsequent candlestick patterns or technical indicators. This can include bearish candlestick patterns (e.g. bearish engulfing or shooting star), a breach of support levels, or the convergence of other indicators signalling a potential reversal.
- Define your entry point: An entry point can be either when the next candlestick confirms the bearish sentiment or when the price breaches a significant support level.
- Consider risk management: Assess the risk-reward ratio of the trade and ensure it aligns with your risk tolerance. For efficient risk management, you may adjust your position size accordingly. Risk management tools like position sizing, setting stop-loss orders, and diversification may help protect your capital. You may set a stop-loss order above the hanging man pattern to limit potential losses if the trade goes against you.
- Identify profit targets: The candlestick itself doesn't provide specific targets. Traders can identify profit targets by looking at previous support levels, Fibonacci retracement levels, or other technical analysis tools like moving averages or pivot points.
- Monitor the trade: Keep a close eye on your position as it progresses. Pay attention to any changes in market conditions or additional signals that may invalidate the trade.
- Learn from outcomes: Regardless of the outcome of the trade, analyse it afterwards to identify areas for improvement. Assess whether the setup provided accurate signals and identify any factors that may have affected its success. This analysis will help refine your trading strategy over time.
Live Market Example
Consider the example of a hanging man on the forex USDJPY pair. An entry is placed on the next bearish candlestick with a stop loss just above the hanging man. The take profit order is at the next level of support marked by the orange line.
Limitations of the Hanging Man Candlestick
The hanging man candlestick pattern, while useful, has certain limitations that traders need to consider:
- False Signals: The hanging man can produce false signals, especially in volatile markets where price movements are erratic.
- Market Context: The effectiveness of the pattern varies depending on the broader market context and prevailing trends.
- Timeframe Sensitivity: Its reliability can differ across various timeframes; what works on a daily chart may not be as effective on an intraday chart.
- Not Standalone: It should not be used in isolation but as part of a comprehensive trading strategy that includes other indicators and risk management tools.
Comparing the Hanging Man to Similar Candles
Understanding how the hanging man pattern differs from similar candlestick patterns helps in accurate technical analysis. Here's a brief comparison of the hanging man with related patterns.
What Is the Difference Between a Hanging Man and a Hammer?
Both have the same candle structure. However, the hanging man candlestick occurs in an uptrend and signals a potential bearish reversal, while the hammer occurs in a downtrend, indicating a potential bullish reversal. Interestingly, it is possible to see a hanging man candlestick in a downtrend, often as part of a bullish retracement. Both candles require confirmation from subsequent price movements. They should be analysed within the context of the overall market trend and other technical indicators.
What Is the Difference Between a Pin Bar and a Hanging Man?
A pin bar and a hanging man are both single-candlestick patterns with small bodies and long shadows, but they serve different purposes in technical analysis. The pin bar has a small body and a long tail, indicating a reversal, but it can appear in any market condition. Its long tail shows a strong rejection of a certain price level, with the body pointing in the direction of the anticipated reversal.
The hanging man, however, specifically occurs after an uptrend and signals a potential bearish reversal, characterised by a small body at the top and a long lower shadow, indicating selling pressure.
What Is the Difference Between a Shooting Star and a Hanging Man Candlestick?
The shooting star and the hanging man are both bearish reversal patterns, but they differ in their appearance and context. A shooting star occurs after an uptrend and features a small body at the bottom with a long upper shadow, indicating that the price was pushed up significantly but fell back down, showing strong selling pressure.
The hanging man also appears after an uptrend but has a small body at the top with a long lower shadow, suggesting that sellers dominated the session despite an initial push by buyers. Both require confirmation from subsequent candlesticks to validate the reversal.
Final Thoughts
While the hanging man alone is insufficient for making trading decisions, it serves as a warning signal that buyers may be losing control and that selling pressure could increase. Traders seek additional confirmation through subsequent candlestick patterns, support and resistance levels, and other technical indicators to validate the potential reversal.
By understanding the implications of the setup within the broader market context and employing proper risk management strategies, traders can enhance their decision-making process and improve their chances of identifying different trading opportunities.
FAQ
What Does the Hanging Man Pattern Indicate?
The hanging man trading pattern in technical analysis typically indicates a potential trend reversal in an uptrend. It suggests that the buyers, who have been driving the market higher, are losing control, and the selling pressure may increase.
The hanging man is represented by a small body near the top of the candlestick, a long lower shadow, and little to no upper shadow. It resembles a figure hanging by the neck. This visual representation conveys the potential bearish sentiment.
Can a Hanging Man Candle Be Bullish?
No, there is no such thing as a bullish hanging man candlestick pattern. The bearish hanging man pattern indicates a potential trend reversal from an uptrend to a downtrend.
Is the Hanging Man Pattern Reliable?
The reliability of the formation, like any candlestick pattern, can vary depending on several factors. While the setup is widely recognised and considered a potential bearish reversal signal, it should not be relied upon as the sole basis for trading decisions. It is crucial to consider other factors and confirmation signals to increase its reliability.
What Is the Confirmation Candle for the Hanging Man?
A confirmation candle for the hanging man is a bearish candlestick that follows the pattern, confirming the reversal. This can include a bearish engulfing candle or a candlestick closing well below the hanging man's body, indicating increased selling pressure.
Is the Hanging Man Pattern Bearish?
Yes, it is generally considered a bearish pattern in technical analysis. It is formed when the price’s open or close is near or at its high, there is a significant decline during the trading session, and it closes not far from the opening price. The pattern resembles a hanging man with his legs dangling.
*Important: At FXOpen UK, Cryptocurrency trading via CFDs is only available to our Professional clients. They are not available for trading by Retail clients. To find out more information about how this may affect you, please get in touch with our team.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Stock market cycles & liquidity, understand it all in 3 minutesLiquidity is a key factor in market finance. Without it, risky assets in the stock market, equities and cryptocurrencies lose their fuel. Over the cycles, one thing has become clear: the direction of financial markets is strongly correlated with that of global liquidity. But liquidity is not a single indicator: it is organized into three complementary layers. Understanding these layers enables us to better anticipate major trends. Level 1 is global monetary liquidity (M2). Level 2 concerns net liquidity within the financial system, and level 3 encompasses overall macro-liquidity, through activity and credit indicators. Together, these three dimensions form the markets' “bloodstream”.
The chart below compares the S&P 500 trend with the global money supply M2
Level 1: Global monetary liquidity (global M2)
The first stage of the rocket: global M2. This monetary aggregate measures the sum of the money supply (M2) of the major economies - USA, China, Eurozone - converted into US dollars. It includes sight deposits, savings accounts and certain short-term instruments, representing the gross liquidity immediately available in the global economy.
This level of liquidity is directly influenced by monetary (key rates, QE/QT), fiscal and wage policies. The evolution of the US dollar plays a crucial role: a strong dollar mechanically reduces global M2 in USD, while a weak dollar increases it. In this respect, Chinese and American dynamics are often divergent, as they are driven by different credit logics (centralized planning on the Chinese side, rate-based adjustment on the US side).
But beyond the absolute level, it is above all the momentum of M2, its first derivative (annual variation), that serves as a compass. An uptrend coupled with positive momentum strongly favours risky assets. Conversely, stagnation or a negative divergence between trend and momentum (as at the end of 2021) anticipates a contraction in valuations. Over this cycle, there is even a correlation coefficient of 0.80 between global M2 and Bitcoin, projected 12 weeks into the future: liquidity leads, markets follow.
Level 2: Net liquidity of the financial system
The second level is more subtle, but just as decisive: net liquidity within the financial system. This is the effective credit capacity, i.e. the funds actually available to irrigate the real economy after withdrawals, excess reserves and regulatory mechanisms. Unlike M2, this measure does not reflect gross liquidity, but rather the liquidity “actionable” by financial institutions.
In the United States, this net liquidity depends, among other things, on FED mechanisms such as the reverse repo program (RRP), which temporarily sucks in or releases liquidity, and on the level of banks' excess reserves. Its evolution is strongly linked to the central bank's restrictive or accommodating monetary policy, QE cycles and QT cycles.
The correlation of this net liquidity with the S&P 500 and Bitcoin, although slightly lower than that of global M2, remains significant. It acts as a filter for gross liquidity: even if M2 is high, if credit capacity is blocked by excessively high rates or constrained reserves, the impact on markets can be neutralized.
Level 3: Global macro liquidity
Finally, the third level: global macro liquidity. It includes barometers of economic conditions that directly influence risk perception and investor appetite: PMI indices (manufacturing and services), credit conditions, employment levels, default rates, etc. It is less monetary, more conjunctural. It is less monetary, more cyclical, but its impact is real, as it shapes the context in which financial liquidity is expressed.
It is this level that contextualizes the first two: a rising M2 in a deteriorating economic environment (PMI below 50, falling employment) may have a limited effect. Conversely, signs of economic recovery may reinforce the transmission of liquidity to the markets. In this sense, the timing of the FED's rate cuts becomes a key macro catalyst. As long as US policy remains restrictive, M2 will plateau and net liquidity will remain constrained, even if the ECB or PBoC relax their conditions.
Conclusion: Global liquidity cannot be summed up in a single indicator. It's an ecosystem structured on three levels: global gross liquidity (M2), effective credit capacity (ECC) and net liquidity.
DISCLAIMER:
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How to use VWAP the right-way on TradingView
1️⃣ What Is VWAP (Volume Weighted Average Price)?
VWAP stands for Volume Weighted Average Price. It's a tool that shows the average price an asset has traded at throughout the day, adjusted for volume. That means it gives more weight to prices with high trading volume.
✅ It helps traders and investors see if the current price is above or below the average price paid.
✅ It’s often used by institutional traders, such as mutual funds and pension funds, to enter and exit positions without causing major price moves.
VWAP = (Sum of Price * Volume) / Total Volume
2️⃣ Why VWAP Matters
I (Traders) often use VWAP as a dynamic support or resistance zone.
- Price below VWAP: considered undervalued by some 👉 may act as support
- Price above VWAP: considered overvalued 👉 may act as resistance
It acts like a magnet for price, especially in trending markets.
VWAP is also used as a benchmark for large players want to buy below VWAP or sell above it.
3️⃣ Anchored VWAP (AVWAP)
Anchored VWAP is a more advanced version of VWAP. Instead of starting at the market open, you anchor it to a specific candle (pivot high or low).
🔍 Why use it:
- Lets you analyze the average price from key market turning points
- Helps spot institutional interest near pivots
- More accurate for swing trading
When you anchor VWAP to a major high or low, it gives you clean zones where smart money might enter or exit.
4️⃣ How I Use Anchored VWAP
I personally anchor VWAP from:
- Major pivot highs/lows
- Breakout points
- Strong reversal candles
Then I watch how price interacts with it.
✅ Works well on 30m and 4H charts for intraday or swing setups
✅ Can be combined with fixed range volume profile for extra confluence
If you haven’t read my guide on fixed range volume profile, scroll below — it’s linked there.
5️⃣ Common Uses
✔️ Support and resistance zone in trending markets
✔️ Institutional entry/exit level benchmark
✔️ Reversion-to-mean setups
VWAP is used across timeframes. I use higher timeframes like 4H to spot trend zones, then zoom into 30m or 15m for entries.
Setting and more information
VWAP Explained by TradingView: www.tradingview.com
Anchored VWAP Explained by TradingView: www.tradingview.com
6️⃣ VWAP Limitations
⚠️ VWAP doesn’t work well in all cases:
- In sideways/choppy markets, it can lose value
- It is not an exact entry/exit signal, but rather a dynamic zone
- In FX markets, it’s unreliable due to lack of centralized volume data
Also, treat VWAP as a zone, not a line. Large players fill big orders in that area, expect false moves or liquidity grabs.
7️⃣ Mistakes to Avoid
❌ Entering blindly on VWAP touches
❌ Using VWAP without confirmation from price action or volume
❌ Assuming it always gives perfect levels
It works best when combined with other tools, such as market structure, support/resistance, and volume profile.
8️⃣ Final Thoughts
VWAP is a powerful tool to see where price is relative to volume-based value. Anchoring VWAP to key levels adds precision and insight.
Used properly, it helps:
- Spot where institutions might be active
- Confirm high-probability zones
- Improve entries/exits when paired with other tools
Examples are provided below to show how VWAP works in real-time setups. This guide is educational and for learning purposes only.
VWAP Zone and a Example trade CRYPTOCAP:BTC
Example Stock Market NASDAQ:AAPL
Example Resistance NASDAQ:MSTR
VWAP (Volume Weighted Average Price) helps traders see the average price weighted by volume. It's commonly used by institutions to identify good entry/exit zones. Anchored VWAP takes this further by starting from key points like pivot highs/lows for more accuracy. It's most useful in trending markets and works best when combined with tools like fixed range volume profile or support/resistance. While powerful, VWAP isn’t perfect it should be used as a dynamic zone, not a fixed level, and always with other confirmations.
Disclaimer: This is not financial advice. Always do your own research. This content may include enhancements made using AI.
Volume Droughts and False Breakouts: Your Summer Trading TrapsThe market’s heating up — but is your breakout about to dry up? Here’s a word about the importance of summer trading success (helped by volume — the main character).
☀️ Welcome to the Liquidity Desert
Summer’s getting ready to slap the market with a whole flurry of different setups. Picture this — the beaches are full, your trading desk is half-abandoned, and the only thing more elusive than a decent breakout is your intention to actually read that big fat technical analysis book you bought last year.
And yet, here you are — eyes glued to the chart — watching a clean breakout above resistance that’s just begging for you to hit “buy.” Everything looks perfect. Price rips through the level like it’s made of butter. But there’s just one tiny problem: no volume. None. Nada. Niente.
Congratulations. You’ve just bought the world’s most attractive false breakout.
🏝️ Summer Markets: Where Good Setups Go to Die
Let’s set the scene.
It’s June. The big dogs on Wall Street are golfing in the Hamptons and sipping mezcal espresso martinis, interns are running the order flow, and every chart you love is doing just enough to get your hopes up before crushing them like a half-melted snow cone.
This isn’t your usual high-volatility playground. Summer markets — especially between June and August — are notorious for thin liquidity . That means fewer participants, smaller volume, and a much higher likelihood of being tricked by price action that looks strong… until it’s not.
And it’s not just stocks. Forex, crypto, commodities — even the bond boys — all face the same issue: when fewer people are trading, price becomes more fragile. And fragile price = bad decisions.
🚨 Why False Breakouts Love Quiet Markets
False breakouts happen when price appears to break above resistance (or below support), only to reverse sharply — often trapping late traders and triggering stop hunts.
But in summer? It’s a whole different beast. Here’s why:
No liquidity cushion : In normal markets, you need strong volume to fuel a breakout. Without that, the breakout doesn’t necessarily have the gas to keep going.
Market makers get bored : Thin markets mean it’s easier for a few big orders to push prices where they want. Welcome to manipulation season (there, we said what we said!).
Algos go wild : With fewer humans around, algorithms dominate. And they love playing games around key levels.
🧊 The Mirage Setup: A Cautionary Tale
Let’s say you’re watching GameStop NYSE:GME stock. Resistance at $30. Price hovers there for days, teasing a breakout. Then — boom — a sudden 6% pop above.
You buy. Everyone buys. The trading community goes nuts. “This is it bois!”
But there’s a problem. Look at the volume: a trickle. Not even half the average daily volume. Ten minutes later, NYSE:GME is back below $30, your stop loss is hit, and you’re left explaining to your cat why you’re emotionally invested in a ticker.
Moral of the story? Don’t trust breakouts when no one’s trading.
📉 Volume: Your Summer Lie Detector
Volume is more than just a histogram under your chart. It’s your truth serum. Your smoke alarm. Your buddy who tells you to think twice before jumping in that trade.
Here’s how to read it right when everyone else is checking out:
Confirm the move : If price breaks out, but volume doesn’t spike at least 20–30% above the average — be suspicious.
Look for acceleration : Healthy moves gather steam. You want to see volume growing into the breakout, not fizzling.
Watch for volume cliffs : A sudden volume drop right after a breakout often signals that the move is running on fumes.
Add Volume Profile Indicators : Just to be safe, you can always add Volume Profile Indicators to your chart — they analyze both price and volume and can highlight what your keen eye might miss.
Remember what happened last summer? And how we all learned the downside of something called "carry trade"? Those who were short the Japanese yen remember .
🧠 Context Over Candles: Be a Liquidity Detective
Let’s say you see a double top pattern — your favorite. Clean lines. Tight price action. Perfect setup.
But now zoom out.
It’s July 3. Pre-holiday half-day. No volume. And the S&P 500 SP:SPX has moved 0.04% all day. Still want in?
Technical analysis doesn’t work in a vacuum. Chart patterns lose their predictive power when the environment they live in is compromised. And thin liquidity is a compromised environment.
🐍 Snakes in the Sand: How Market Makers Bait Traps
Market makers (and large players) are like desert snakes — quiet, patient, and very good at making you move when you shouldn’t.
Here’s how they bait traders in illiquid markets:
Run stops above resistance to trigger breakout buyers.
Dump shares immediately after breakout to trap retail.
Ride the reversal as trapped longs scramble to exit.
They’re so powerful some say they run the game — and can stop it anytime it’s not going their way (remember the GameStop freeze? ) It’s a psychological game — and in the summer, it’s easier to do shenanigans because most players aren’t watching.
Don’t be the one jumping at shadows. Be the trader who expects the trap.
🛠️ How to Survive (and Thrive) in the Summer Slump
Not all is lost. You can still trade — smartly.
Here’s your Summer Survival Toolkit :
Wait for volume confirmation on every breakout.
Lower your position size . Less liquidity = more slippage risk.
Set wider stops , or better yet, sit out the chop.
Focus on trending names with relative strength and solid weight (think: tech titans, oil plays, or financials).
Use alerts instead of staring at charts . Don’t mistake boredom for opportunity.
And most importantly: Know when not to trade . Discipline is a position too.
🔚 Final Word: This Isn’t the Off-Season. It’s the Setup Season.
Summer might feel slow, but it’s not dead.
Smart traders know that the best trades of Q3 and Q4 often begin in July — as early trendlines form, consolidation patterns develop, and institutional footprints quietly appear in the tape.
So use this time wisely. Don’t force trades. Watch volume like a hawk. And never forget: the best breakouts don’t need hype — they bring their own thunder.
Stay cool, stay patient, and trade smart. The mirage may be tempting, but the oasis always belongs to the ones who go far enough and don’t give up.
Off to you : How are you navigating trading during the summer months? Staying poolside with one eye on the charts or actively seeking out opportunities while folks catch a break? Share your insights in the comments!
Time to Demand Accountability from the Swiss National Bank (SNB)For far too long, the Swiss National Bank (SNB) have operated behind closed doors, shaping global financial realities in ways that disproportionately benefit a few and burden many. Their repeated currency interventions, most notably the artificial caps on EUR/CHF and USD/CHF exchange rates, reflect a deeper issue: a system where monetary sovereignty is manipulated to protect domestic interests at the expense of global fairness. The Swiss National Bank (SNB) has used its monetary tools not just to stabilize its domestic economy, but to quietly exercise power over others. Through aggressive currency interventions, low interest rates, and strategic positioning of the Swiss franc as a "safe haven," the SNB has contributed to a financial system where many countries are locked into debt arrangements they can never realistically escape.
This didn’t start yesterday. Here’s the history they don’t talk about:
🔹 Post–World War II Era:
Switzerland remained neutral during the war and emerged with a strong financial system. It quickly became a key player in the Eurodollar market, which allowed banks (including Swiss ones) to lend US dollars offshore, outside of U.S. regulation. Many developing countries, desperate for post-war reconstruction funds, turned to these offshore lenders — often at terms that later proved unsustainable when the global interest rate environment shifted.
🔹 1970s–1980s Debt Crisis:
Swiss banks (along with others in the West) extended massive loans to developing countries — Latin America, Africa, parts of Asia — often encouraged by global institutions like the IMF and World Bank. These loans were typically denominated in Swiss francs or U.S. dollars, making repayment dependent on stable exchange rates.
But when the Swiss franc appreciated sharply in the 1980s and 1990s, many of these countries suddenly found their debts unpayable. The result: structural adjustment programs, austerity, privatization, and decades of dependency.
🔹 Eastern Europe, 2000s–2010s:
Swiss franc–denominated mortgages were pushed heavily in countries like Poland, Hungary, and Croatia, offering lower interest rates than local currencies. When the franc soared after the 2008 financial crisis and the SNB abandoned its EUR/CHF floor in 2015, borrowers saw their payments skyrocket overnight. Entire generations were trapped in personal debt — because of monetary decisions made in a country they had no vote in.
🔹 Modern Times – SNB as “Safe Haven” Weaponizer:
The SNB’s current cap on EUR/CHF (around 0.93) and its suppression of USD/CHF below 0.82 reflect the same pattern: Switzerland manipulating its currency to protect its export sector and keep foreign capital flowing in. Meanwhile, countries that borrowed in francs or depend on euro/franc parity for stability are squeezed.
Why This Matters Today
These practices aren’t just economic strategies — they are levers of control.
Countries that fall into this debt trap often lose control of monetary policy, domestic budgets, and even sovereign decision-making.
The SNB, unlike elected governments, answers to almost no one internationally. Yet its decisions affect millions beyond Swiss borders.
Let’s not stay silent just because it's Switzerland — a country with a reputation for neutrality and peace. Behind the banking halls and pristine image lies a long pattern of quiet domination through debt.
An example of a new way to interpret the OBV indicator
Hello, traders.
If you "follow", you can always get new information quickly.
Have a nice day today.
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I think the reason why there are difficulties in using auxiliary indicators and why they say not to use indicators is because they do not properly reflect the price flow.
Therefore, I think many people use indicators added to the price part because they reflect the price flow.
However, I think auxiliary indicators are not used that much.
Among them, indicators related to trading volume are ambiguous to use and interpret.
To compensate for this, the OBV indicator has been modified and added.
-
The ambiguous part in interpreting the OBV indicator is that the price flow is not reflected.
Therefore, even if it performs its role well as an auxiliary indicator, it can be difficult to interpret.
To compensate for this, the High Line and Low Line of the OBV auxiliary indicator have been made to be displayed in the price section.
That is, High Line = OBV High, Low Line = OBV Low
-
Then, let's interpret the OBV at the current price position.
The OBV of the auxiliary indicator is currently located near the OBV EMA.
That is, the current OBV is located within the Low Line ~ High Line section.
However, if you look at the OBV High and OBV Low indicators displayed in the price section, you can see that it has fallen below the OBV Low indicator.
In other words, you can see that the price has fallen below the Low Line of the OBV indicator.
You can see that the OBV position of the auxiliary indicator and the OBV position displayed in the price section are different.
Therefore, in order to normally interpret the OBV of the auxiliary indicator, the price must have risen above the OBV Low indicator in the price section.
If not, you should consider that the interpretation of the OBV of the auxiliary indicator may be incorrect information.
In other words, if it fails to rise above the OBV Low indicator, you should interpret it as a high possibility of eventually falling and think about a countermeasure for that.
Since time frame charts below the 1D chart show too fast volatility, it is recommended to use it on a 1D chart or larger if possible.
-
It is not good to analyze a chart with just one indicator.
Therefore, you should comprehensively evaluate by adding different indicators or indicators that you understand.
The indicators that I use are mainly StochRSI indicator, OBV indicator, and MACD indicator.
I use these indicators to create and use M-Signal indicator, StochRSI(20, 50, 80) indicator, and OBV(High, Low) indicator.
DOM(60, -60) indicator is an indicator that comprehensively evaluates DMI, OBV, and Momentum indicators to display high and low points.
And, there are HA-Low, HA-High indicators, which are my basic trading strategy indicators that I created for trading on Heikin-Ashi charts.
Among these indicators, the most important indicators are HA-Low, HA-High indicators.
The remaining indicators are auxiliary indicators that are necessary when creating trading strategies or detailed response strategies from HA-Low, HA-High indicators.
-
Thank you for reading to the end.
I hope you have a successful trade.
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When and How to Use Weekly Time Frame in Gold Forex Trading
Ignoring weekly time frame chart analysis could cost you big losses in Forex, Gold trading!
Discover 3 specific cases when weekly time frame beats daily time frame analysis.
Learn the situations when weekly timeframe exposes what daily charts can’t, how to analyze it properly and when to check it.
1. Long-term historic levels
When the market trades in a strong bullish or bearish trend and goes beyond recent historic levels, quite often the daily time frame will not be sufficient for the identification of significant supports and resistances.
The proven way to identify the next meaningful levels will be to analyze a weekly time frame.
Examine a price action on EURAUD forex pair on a daily time frame chart. The market is trading in a strong bullish trend and just updated the high.
Checking the historic price action, we don't see any historic resistance on the left.
Switching to a weekly time frame chart, we can easily recognize a historic resistance that the price respected 5 years ago.
That's a perfect example when weekly t.f revealed a historic price action that a daily didn't.
2. Trend-lines
Weekly time frame analysis is important not only for a search of historic levels. It can help you find significant vertical structures - the trend lines.
We can easily find several meaningful historic resistances on EURUSD pair on a daily time frame.
Though, there are a lot of historic structures there, let's check if there are some hidden structures on a weekly.
Weekly time frame reveals 2 important trend lines, one being a vertical support and another being a vertical resistance.
With a daily time frame analysis, these trend lines would be missed .
3. More accurate breakout confirmations
Some false support and resistance breakouts that you see on a daily could be easily avoided with a weekly time frame analysis.
Quite regularly, a daily time frame support or resistance is in fact a weekly structure. And for its breakout, a weekly candle close will provide more accurate confirmation.
From a daily time frame perspective, we see a confirmed breakout - a daily candle close above a solid resistance zone.
It provides a strong bullish signal on AUDUSD forex pair.
However, the violation turned out to be false and dropped.
Such a false breakout , could be easily avoided, checking a weekly time frame chart.
The underlined resistance is in fact a weekly structure.
The price did not manage to close above, and perfectly respected that, starting to fall after its test.
Such a deeper analysis would completely change our bias from strong bullish (based solely on a daily) to strongly bearish (based on a daily AND weekly)
Remember This
Do not ignore and always check a weekly time frame.
It shows a unique perspective on the market and reveals a lot of hidden elements that you would not notice.
No matter whether you are a scalper, day trader or swing trader,
remember that weekly time frame structures are very impactful and accumulate large trading volumes.
❤️Please, support my work with like, thank you!❤️
I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
The Plaza Accord of 1985 The Plaza Accord of 1985 was a coordinated effort by the G5 nations (U.S., Japan, West Germany, France, and the UK) to address the U.S. dollar's extreme strength, which had reached an all-time high of 164.720 on the U.S. Dollar Index (DXY) in February 1985. The dollar's overvaluation—up nearly 50% against major currencies since 1980—hurt U.S. exports, widened trade deficits (especially with Japan), and raised fears of protectionism. Here's what the G5 did to weaken the dollar:
Agreement to Intervene in Currency Markets:
On September 22, 1985, finance ministers and central bank governors of the G5 met at the Plaza Hotel in New York and agreed to a joint intervention strategy. They committed to selling dollars and buying other currencies, primarily the Japanese yen and German Deutsche Mark, to drive down the dollar's value.
The U.S. Federal Reserve, Bank of Japan, Bundesbank, and other central banks executed these interventions in the foreign exchange markets. Over the following months, they sold an estimated $10 billion worth of dollars, a significant amount at the time.
Policy Commitments to Support the Intervention:
The U.S. agreed to reduce its fiscal deficit and lower interest rates, which had been high (around 8–10% for the federal funds rate) due to the Volcker-era tight monetary policy. High rates had attracted foreign capital, strengthening the dollar. By signaling a shift toward looser policy, the U.S. aimed to reduce this capital inflow.
Japan and West Germany committed to stimulating their economies through measures like lowering interest rates and increasing domestic demand. This made their currencies more attractive relative to the dollar, supporting the depreciation effort.
Market Signaling and Expectations:
The public announcement of the Plaza Accord sent a strong signal to markets that the G5 were unified in their goal to weaken the dollar. This shifted market expectations, encouraging speculators and investors to sell dollars, which amplified the intervention’s impact.
The accord also included a target to reduce the dollar’s value by 10–12% against the yen and Deutsche Mark, giving markets a clear benchmark.
Outcome:
The dollar began to decline immediately after the accord. By the end of 1985, the DXY had fallen to around 140, and by 1987, it dropped to 90—a 45% decline from its peak.
The yen appreciated significantly, rising from 240 yen per dollar in 1985 to 150 yen per dollar by 1987. The Deutsche Mark also strengthened, moving from 3.2 to 1.8 marks per dollar over the same period.
The intervention succeeded in reducing the U.S. trade deficit with Japan and Europe in the short term, but it also led to challenges, such as Japan’s economic overheating (contributing to its asset bubble in the late 1980s) and the need for further coordination via the 1987 Louvre Accord to stabilize the dollar after it fell too far.
The Plaza Accord remains a landmark example of coordinated international policy to manage currency imbalances, driven by direct market intervention, policy adjustments, and clear signaling to shift market dynamics.
Multi-Time Frame Analysis (MTF) — Explained SimplyWant to level up your trading decisions? Mastering Multi-Time Frame Analysis helps you see the market more clearly and align your trades with the bigger picture.
Here’s how to break it down:
🔹 What is MTF Analysis?
It’s the process of analyzing a chart using different time frames to understand market direction and behavior more clearly.
👉 Example: You spot a trade setup on the 15m chart, but you confirm trend and structure using the 1H and Daily charts.
🔹 Why Use It?
✅ Avoids tunnel vision
✅ Aligns your trades with the larger trend
✅ Confirms or filters out weak setups
✅ Helps you find strong support/resistance zones across time frames
🔹 The 3-Level MTF Framework
Use this to structure your chart analysis effectively:
Higher Time Frame (HTF) → Trend Direction & Key Levels
📅 (e.g., Daily or Weekly)
Mid Time Frame (MTF) → Structure & Confirmation
🕐 (e.g., 4H or 1H)
Lower Time Frame (LTF) → Entry Timing
⏱ (e.g., 15m or 5m)
🚀 If you’re not using MTF analysis, you might be missing critical market signals. Start implementing it into your strategy and notice the clarity it brings.
💬 Drop a comment if you want to see live trade examples using this method!
What is a Bearish Breakaway and How To Spot One!This Educational Idea consists of:
- What a Bearish Breakaway Candlestick Pattern is
- How its Formed
- Added Confirmations
The example comes to us from EURGBP over the evening hours!
Since I was late to turn it into a Trade Idea, perfect opportunity for a Learning Curve!
Hope you enjoy and find value!
Explanation of indicators indicating high points
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(BTCUSDT 1D chart)
If it falls below the finger point indicated by the OBV indicator, it can be interpreted that the channel consisting of the High Line ~ Low Line is likely to turn into a downward channel.
And, if it falls to the point indicated by the arrow, it is expected that the channel consisting of the High Line ~ Low Line will turn into a downward channel.
Therefore, if it is maintained above the point indicated by the finger, I think it is likely to show a movement to rise above the High Line.
In this situation, the price is located near the M-Signal indicator on the 1D chart, so its importance increases.
To say that it has turned into a short-term uptrend, the price must be maintained above the M-Signal indicator on the 1D chart.
In that sense, the 106133.74 point is an important support and resistance point.
(1W chart)
The HA-High indicator is showing signs of being created at the 99705.62 point.
The fact that the HA-High indicator has been created means that it has fallen from the high point range.
However, since the HA-High indicator receives the value of the Heikin-Ashi chart, it indicates the middle point.
In other words, the value of Heikin-Ashi's Close = (Open + High + Low + Close) / 4 is received.
Since the HA-High indicator has not been created yet, we will be able to know for sure whether it has been created next week.
In any case, it seems to be about to be created, and if it maintains the downward candle, the HA-High indicator will eventually be created anew.
Therefore, I think it is important to be able to maintain the price by rising above the right Fibonacci ratio 2 (106178.85).
Indicators that indicate high points include DOM (60), StochRSI 80, OBV High, and HA-High indicators.
Indicators that indicate these high points are likely to eventually play the role of resistance points.
Therefore,
1st high point range: 104463.99-104984.57
2nd high point range: 99705.62-100732.01
You should consider a response plan depending on whether there is support near the 1st and 2nd above.
The basic trading strategy is to buy at the HA-Low indicator and sell at the HA-High indicator.
However, if it is supported and rises in the HA-High indicator, it is likely to show a stepwise rise, and if it is resisted and falls in the HA-Low indicator, it is likely to show a stepwise decline.
Therefore, the basic trading method should utilize the split trading method.
Other indicators besides the HA-Low and HA-High indicators are auxiliary indicators.
Therefore, the trading strategy in the big picture should be created around the HA-Low and HA-High indicators, and the detailed response strategy can be carried out by referring to other indicators according to the price movement.
In that sense, if we interpret the current chart, it should be interpreted that it is likely to show a stepwise rise since it has risen above the HA-High indicator.
However, you can choose whether to respond depending on whether there is support from other indicators that indicate the high point.
On the other hand, indicators that indicate the low point include the DOM (-60), StochRSI 20, OBV Low, and HA-Low indicators.
These indicators pointing to lows are likely to eventually serve as support points.
I will explain this again when the point pointing to the lows has fallen.
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Thank you for reading to the end.
I hope you have a successful trade.
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- Here is an explanation of the big picture.
(3-year bull market, 1-year bear market pattern)
I will explain the details again when the bear market starts.
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HOW TO: The right way to use the MACDMany people mistakenly use the MACD histogram to enter trades without taking price action into context. In this video I'm going to show you how to interoperate the MACD Histogram, what it means and when its warning you.
Weather and Corn: A Deep Dive into Temperature Impact1. Introduction: Corn and Climate – An Inseparable Relationship
For traders navigating the corn futures market, weather isn't just a background noise—it's a market mover. Few agricultural commodities are as sensitive to environmental variables as corn, especially temperature. Corn is grown across vast regions, and its development is directly tied to how hot or cold the season plays out. This makes weather not just a topic of interest but a core input in any corn trader’s playbook.
In this article, we go beyond conventional wisdom. Instead of simply assuming “hotter equals bullish,” we bring data into the equation—weather data normalized by percentile, matched with price returns on CME Group's corn futures. The results? Useful for anyone trading ZC or MZC contracts.
2. How Temperature Affects Corn Physiology and Yields
At the biological level, corn thrives best in temperatures between 77°F (25°C) and 91°F (33°C) during its growth stages. During pollination—a critical yield-defining window—extreme heat (especially above 95°F / 35°C) can cause irreversible damage. When hot weather coincides with drought, the impact on yields can be catastrophic.
Historical drought years like 2012 and 1988 serve as powerful examples. In 2012, persistent heat and dryness across the US Midwest led to a national yield drop of over 25%, sending futures skyrocketing. But heat doesn't always spell disaster. Timing matters. A heat wave in early June may have little impact. That same wave during tasseling in July? Major consequences.
3. The Market Mechanism: How Traders Respond to Temperature Surprises
Markets are forward-looking. Futures prices don’t just reflect today’s weather—they reflect expectations. A dry June may already be priced in by the time USDA issues its report. This dynamic creates an interesting challenge for traders: separating noise from signal.
During July and August—the critical reproductive phase—temperature updates from NOAA and private forecasters often trigger major moves. Rumors of an incoming heat dome? Corn futures might gap up overnight. But if it fizzles out, retracements can be just as dramatic. Traders who rely on headlines without considering what’s already priced in are often late to the move.
4. Our Analysis: What the Data Reveals About Corn and Temperature
To cut through the fog, we performed a percentile-based analysis using decades of weather and price data. Rather than looking at raw temperatures, we classified each week into temperature “categories”:
Low Temperature Weeks: Bottom 25% of the historical distribution
Normal Temperature Weeks: Middle 50%
High Temperature Weeks: Top 25%
We then analyzed weekly percentage returns for the corn futures contract (ZC) in each category. The outcome? On average, high-temperature weeks showed higher volatility—but not always higher returns. In fact, the data revealed that some extreme heat periods were already fully priced in, limiting upside.
5. Statistically Significant or Not? T-Tests and Interpretation
To test whether the temperature categories had statistically significant impacts on weekly returns, we ran a t-test comparing the “Low” vs. “High” temperature groups. The result: highly significant. Corn returns during high-temperature weeks were, on average, notably different than those during cooler weeks, with a p-value far below 0.01 (4.10854357245787E-13).
This tells us that traders can't ignore temperature anomalies. Extreme heat does more than influence the narrative—it materially shifts price behavior. That said, the direction of this shift isn't always bullish. Sometimes, high heat correlates with selling, especially if it’s viewed as destructive beyond repair.
6. Strategic Takeaways for Corn Traders
Traders can use this information in several ways:
Anticipatory Positioning: Use temperature forecasts to adjust exposure ahead of key USDA reports.
Risk Management: Understand that volatility spikes in extreme temperature conditions and plan stops accordingly.
Calendar Sensitivity: Prioritize weather signals more heavily in July than in May, when crops are less vulnerable.
Combining weather percentile models with weekly return expectations can elevate a trader’s edge beyond gut feel.
7. CME Group Corn Futures and Micro Corn Contracts
Corn traders have options when it comes to accessing this market. The flagship ZC futures contract from CME Group represents 5,000 bushels of corn and is widely used by commercial hedgers and speculators alike. For those seeking more precision or lower capital requirements, the recently launched Micro Corn Futures (MZC) represent just 1/10th the size.
This fractional sizing makes temperature-driven strategies more accessible to retail traders, allowing them to deploy seasonal or event-based trades without excessive risk exposure.
Here are some quick key points to remember:
Tick size for ZC is ¼ cent (0.0025) per bushel, equating to $12.50 per tick.
For MZC, each tick is 0.0050 equating to $2.50 per tick.
Standard ZC initial margin is approximately $1,000 and MZC margins are around $100 per contract, though this can vary by broker.
8. Wrapping Up: Temperature's Role in a Complex Equation
While temperature is a key driver in corn futures, it doesn't act in isolation. Precipitation, global demand, currency fluctuations, and government policies also play crucial roles. However, by quantifying the impact of extreme temperatures, traders gain a potential edge in anticipating market behavior.
Future articles will expand this framework to include precipitation, international weather events, and multi-variable models.
This article is part of a broader series exploring how weather impacts the corn, wheat, and soybean futures markets. Stay tuned for the next release, which builds directly on these insights.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
