How To Catch The Highest Probability Setup (FULL GUIDE)

Summary

This video tutorial offers traders a strategy to identify high-probability setups using relative strength analysis. It highlights the importance of trading the strongest currency pair and introduces four methods to determine relative strength: Candlestick Logic, Smart Money Technique, currency pair analysis with EUR/GBP and AUD/NZD, and currency futures. The presenter illustrates these concepts with visual examples, guiding viewers to make informed trading decisions and improve their win rate.

Takeaways

• 📈 Trade the strongest currency pair to maximize profit and avoid getting caught in weak pairs, which is a common issue faced by traders.
• 🔍 Use relative strength analysis to filter for high-probability setups, focusing on the strongest pair between two closely correlated assets.
• 📊 Four methods are discussed for determining relative strength: Candlestick Logic (CSL), Smart Money Technique (SMT), using currency pairs like EUR/GBP and AUD/NZD, and Currency Futures.
• 🕯️ In Candlestick Logic, 'respect' is shown when a large wick is painted off a key point of interest (POI) with the body closing above it, indicating a higher probability for long trades.
• 📉 Conversely, 'disrespect' is observed when a candle body closes beneath a POI, signaling a higher probability for short trades.
• 📌 Smart Money Technique (SMT) identifies divergences between swing highs or lows on correlated assets, indicating a potential shift in relative strength.
• 🤑 Currency pairs like EUR/GBP and AUD/NZD can be used to gauge the relative strength of the Euro, Pound, Australian Dollar, and New Zealand Dollar against each other.
• 🌐 Currency Futures are used to identify the strongest and weakest currencies, and trading the cross pair of the strongest currency with the weakest (e.g., CHF/JPY) can lead to higher probability trades.
• 📝 Traders should avoid pairing two weak currencies together as it can result in unfavorable and messy price action.
• 📉 The script emphasizes the importance of observing price action on higher time frames to determine respect or disrespect for key levels, which can help in choosing higher probability trades.
• 📝 The video provides a comprehensive guide on how to increase win rates by focusing on the strongest currency pairs and avoiding low-probability trades.

Q & A

What is the main focus of the video?

The video focuses on teaching viewers how to filter for and trade the highest probability setups using relative strength analysis in the context of Forex trading.

Why is it important to trade the strongest pair in Forex?

Trading the strongest pair is important because it helps avoid getting caught in the weak one, which can lead to less profitable trades or losses.

What are the four different methods discussed in the video for determining relative strength?

The four methods are Candlestick Logic (CSL), Smart Money Technique (SMT), using currency pairs like EUR/GBP and AUD/NZD, and trading with Currency Futures.

What does 'respect' mean in the context of Candlestick Logic (CSL)?

In CSL, 'respect' refers to a situation where a candle presents a large wick off a key point of interest (POI) and a body closure above it, indicating a strong intention to push higher and a lack of intention to continue lower.

How does the Smart Money Technique (SMT) work?

SMT identifies a divergence between swing highs or swing lows on two closely correlated assets, which is essentially a 'crack' in correlation. It helps to determine the stronger or weaker asset by observing which asset fails to create a new swing in the expected direction.

What role do currency pairs like EUR/GBP and AUD/NZD play in determining relative strength?

These currency pairs help gauge the relative strength between the Euro, Pound, Australian dollar, and New Zealand dollar. A bullish EUR/GBP indicates a stronger Euro over Pound, while a bearish EUR/GBP indicates a weaker Euro and a stronger Pound.

Why is it recommended to avoid trading the weakest currency with another weak currency?

Pairing two weak currencies can lead to unfavorable and messy price action, which is difficult to trade and often results in lower win rates.

How can currency futures be used to determine the strongest currency pair for trading?

Currency futures can be used by identifying the weakest and strongest currencies from the futures list, then pairing the strongest currency with the weakest currency's pair, which results in the highest probability trade setup.

What is the significance of observing price action on higher time frames when using Candlestick Logic?

Observing higher time frames helps to determine how well the price respects or disrespects key points of interest (POIs), which can indicate the strength or weakness of a currency pair in relation to its correlated assets.

What does the video suggest for a trader's approach when they identify a strong currency using currency futures?

The video suggests that when a strong currency is identified using currency futures, a trader should pair it with a weak currency (like the Yen during a bearish phase) to trade the resulting cross pair with a high probability of success.

How can a trader apply the concepts learned in the video to improve their trading strategy?

A trader can apply these concepts by analyzing currency pairs and futures to identify the strongest and weakest currencies, focusing on high probability trades, and avoiding low probability or messy price actions.

Outlines

00:00

📈 Trading the Strongest Currency Pairs Using Relative Strength Analysis

The video introduces the concept of identifying and trading the strongest currency pairs by using relative strength analysis. The speaker emphasizes the importance of trading the strongest pair to avoid getting caught in weak ones and presents a graphic to show correlated assets. The video promises to cover four methods to determine relative strength: Candlestick Logic (CSL), Smart Money Technique (SMT), using currency pairs like EUR/GBP and AUD/NZD, and Currency Futures. The speaker suggests choosing the method that resonates best with the viewer and starts with an explanation of Candlestick Logic, discussing how to interpret candlestick wicks and bodies to discern respect or disrespect for key price levels.

05:00

🔍 Analyzing Price Action Respect and Disrespect with Candlestick Logic

This paragraph delves deeper into Candlestick Logic (CSL), explaining how to use candlestick patterns to determine a pair's strength. It describes 'respect' as large wicks off key points of interest (POI) with body closures above these levels, indicating a likely push higher. Conversely, 'disrespect' is shown when candle bodies close beneath POI, suggesting weakness. The speaker uses CHF/JPY and CAD/JPY as examples to illustrate how to apply CSL to choose higher probability trades, focusing on the asset showing stronger respect to POIs in higher time frames.

10:02

📊 Smart Money Technique (SMT) for Identifying Relative Strength

The speaker introduces the Smart Money Technique (SMT), which involves looking for divergences between swing highs or lows in closely correlated assets. When one asset fails to create a new swing low or high while the other does, it indicates a potential shift in relative strength. The video uses Euro/USD and GBP/USD as examples, demonstrating how to identify failure swings and apply this information to determine which currency pair is the stronger or weaker asset, thus guiding the decision on which pair to trade.

15:05

🌐 Currency Correlation and Divergence for Trading Decisions

The paragraph continues the discussion on using currency correlations and divergences for trading decisions. It provides an example using Euro/CHF and GBP/CHF to illustrate how to identify a failure swing and apply it to trading. The speaker explains how to use the information from the higher time frame charts to determine the stronger or weaker currency and how to use this to decide which currency pair to trade for potential long or short positions.

20:06

🤑 Gauging Currency Strength with Euro GBP and AUD NZD Pairs

The speaker explains how to use the Euro GBP and AUD NZD currency pairs to gauge the relative strength of the Euro, Pound, Australian Dollar, and New Zealand Dollar. A bullish Euro GBP indicates a stronger Euro, while a bearish Euro GBP suggests a weaker Euro. The same principle applies to AUD NZD. The video provides examples of how to interpret these currency pairs' trends to determine which currency is likely to be stronger or weaker, affecting the choice of trades.

25:08

🚀 Leveraging Currency Futures for High Probability Trades

The final method discussed is using Currency Futures to determine which currency is likely to move the most, and thus, which cross-pair will have the highest probability of being a successful trade. The speaker lists the major currency futures and explains how to identify the strongest and weakest currencies from these futures. The strategy involves pairing the strongest currency with the weakest currency for trades, exemplified by comparing different JPY cross-pairs and highlighting why certain pairs are stronger based on the underlying currency futures' performance.

30:09

📚 Summary of Strategies for Increasing Trading Win Rates

The video concludes with a summary of the strategies discussed for increasing win rates in trading. The speaker encourages viewers to rewatch the video, take notes, and practice the techniques to better understand the concepts. They stress the importance of trading the strongest and weakest currencies and provide a final example of how to apply these strategies using currency futures. The speaker also invites viewers to join a free Discord community for further insights and interaction.

Keywords

💡Relative Strength Analysis

Relative Strength Analysis (RSA) is a method used to evaluate the performance of a currency pair in comparison to another. In the context of the video, RSA is essential for identifying the strongest currency pair to trade, which can potentially yield higher probability setups. The script emphasizes the importance of trading the strongest pair to avoid getting caught in weaker ones, as the presenter used to face issues with this in the past.

💡Candlestick Logic (CSL)

Candlestick Logic, abbreviated as CSL, is a technique within technical analysis that involves reading candlestick charts to determine market sentiment and potential price movements. The video explains how to use CSL to pick high probability trades by observing candle bodies and wicks in relation to key points of interest (POIs), indicating respect or disrespect for certain price levels.

💡Smart Money Technique (SMT)

Smart Money Technique, or SMT, is identified as a method to find divergences between swing highs or lows on two closely correlated assets. The script describes SMT as a crack in correlation, where if one asset is expected to make a new low, the other should follow suit. Failure to do so indicates a potential trade setup, as it suggests relative strength or weakness between the assets.

💡Correlated Assets

Correlated assets are financial instruments that tend to move in relation to each other. In the video, the concept is used to determine which asset to trade based on their relative strength. The script provides a graphic to illustrate which currency pairs are correlated and advises trading the stronger asset when bullish and the weaker asset when bearish.

💡Fair Value Gap

A Fair Value Gap in the script refers to a price area that the market considers to be a neutral or fair value for a currency pair. The video discusses how the respect or disrespect shown to these gaps by candlestick patterns can signal the strength or weakness of a currency pair. For example, a large wick off a key point of interest followed by a body closure above it shows strong respect, indicating a higher probability trade setup.

💡Points of Interest (POI)

Points of Interest, or POIs, are specific price levels on a chart that are significant for traders, such as support and resistance levels or previous highs and lows. The script explains that observing how price action interacts with these POIs through candlestick patterns can help determine the strength of a currency pair in relation to its correlated assets.

💡Currency Futures

Currency Futures are financial contracts that lock in the exchange rate for a currency on a future date. In the video, the presenter's favorite method for determining relative strength involves using currency futures. The script suggests that by identifying the strongest and weakest currency futures, one can predict which currency pairs are likely to have the highest probability trades.

💡Bullish

Bullish is a term used to describe a market condition where prices are expected to rise. In the context of the video, when the market is bullish, the presenter advises trading the stronger asset, as it is expected to perform better than its correlated counterparts.

💡Bearish

Bearish is the opposite of bullish and indicates a market condition where prices are expected to fall. The script explains that when trading in a bearish market, one should focus on the weaker asset, as it is anticipated to underperform compared to its correlated assets.

💡Displacement

Displacement in the script refers to the movement of price away from a certain level or gap. It is used to assess the strength of a currency pair by observing how aggressively the price moves away from key points of interest or fair value gaps, indicating the potential for higher or lower trades.

💡Trade Setups

Trade setups are specific conditions or patterns in the market that suggest a potential opportunity for a trade. The video focuses on how to filter for and trade the highest probability setups using various techniques like CSL, SMT, and currency futures analysis. The presenter illustrates how to identify these setups by analyzing price action and market context.

Highlights

Introduction to a video on trading high probability setups using relative strength analysis.

Importance of trading the strongest pair to avoid getting caught in a weak one.

Graphic provided to show correlated assets for better trading decisions.

Four different methods to determine relative strength: Candlestick Logic (CSL), Smart Money Technique (SMT), using currency pairs (EURGBP and AUDNZD), and Currency Futures.

Explanation of Candlestick Logic (CSL) for choosing high probability pairs for long trades.

How to identify 'respect' and 'disrespect' in candlestick patterns to gauge strength.

Using higher timeframes to determine which asset shows better respect to price arrays.

Examples of comparing CHFJPY and CADJPY to illustrate the concept of relative strength.

Introduction to the Smart Money Technique (SMT) for identifying divergences between correlated assets.

How to use swing highs and lows to identify SMT and determine relative strength.

Examples using Euro pairs to demonstrate the application of SMT in trading decisions.

Using currency pairs EURGBP and AUDNZD to gauge the relative strength of the Euro, Pound, Australian Dollar, and New Zealand Dollar.

The impact of the direction of the base currency on determining strength or weakness relative to the quote currency.

Examples illustrating shifts in expectations for AUD and NZD pairs based on market changes.

Personal favorite method: using Currency Futures to identify the strongest and weakest currencies for high probability trades.

List of major Currency Futures and how to add them to a watch list for trading analysis.

The concept of pairing the strongest currency with the weakest for the highest probability trades.

Avoiding pairing two weak currencies to prevent unfavorable price action.

Final summary emphasizing the importance of trading the strongest and weakest currency pairs for increased win rates.

Invitation to join a free Discord community for further interaction and learning.

Transcripts

what's up guys welcome to another video

if you're new here please go ahead and

hit that subscribe button down below and

if you find this video insightful I'd

really appreciate it if you shared it

with your friends now in this video I'm

going to be showing you guys how we can

filter for and trade the highest

probability setups using relative

strength analysis we always want to

trade the strongest pair and make sure

we aren't caught in the weak one this is

a huge issue I used to face always

finding myself in the weaker pair now

being aware that the highest probable

trade setups come from Trading the

strongest pair between two closely

correlated assets so here is a handy

graphic I made showing you guys the

correlated

assets so if you're bullish you want to

trade the stronger asset if you're

bearish you want to trade the weaker

asset so I'm going to show you guys a

few different ways of determining

relative strength you can choose

whichever no way is better than the

other really just pick whatever you

understand best and what you just tend

to naturally gravitate towards so I'll

be going over four different ways first

one is Candlestick logic or CSL for

short then we have smt stands for smart

money technique then we got eurogbp and

AUD nzd we can use those two currencies

to determine relative strength and

lastly my personal favorite is the

currency Futures which I will go over

towards the end of the

video so let's begin with candlestick

logic or CSL if you're trying to trade

between two pairs with the same setup

how can you pick the high probability

pair for Longs we can simply look at

Candle bodies and Wicks and no do we

show respect or are we disrespecting

important higher time frame levels but

what does respect look like in the first

place let's say we are bullish for

example we can observe respect to a

level when a candle presents a large

Wick off of a key point of Interest or

POI for short and a body closure above

it so for example we have a fair Valley

Gap and when a candle trades into it it

paints a lower Wick and a body closes

above that Gap that's a signal of strong

respect or for example let's say we

sweep a swing low in bullish order flow

and we paint a large Wick below it and

the candle body closes above the swing

low so these wigs show that price failed

to close and displace below a certain

level so they show intention to push

higher and a lack of intention to

continue lower always remember this

Wicks do the damage the bodies tell the

story so now that we know what respect

is what is disrespect let's again say we

are bullish we can observe disrespect to

a level when a candle body closes

beneath a POI so for example we have a

bullish fair value Gap a candle trades

into it and closes below the fair value

Gap indicating a disrespect of that

level same goes for a swing low if we

are having candle bodies close

aggressively below it we are likely

disrespecting That Swing Low and running

it rather than sweeping it to then

continue High

so what do we do when we see two closely

correlated assets with similar setups

how do we choose a higher probability

trade well we observe on the higher time

frames which chart's price action is

showing the best respect to PD arrays in

line with our current order flow so

let's look at some examples to visually

help see what I'm talking about here so

here we have CHF JPY on the left and CAD

JPY on the right if we look at these

weekly charts and our higher time frame

points of interest on these weekly

charts those would be first off this

weekly fair value Gap right here and

this weekly fair value Gap right here so

remember what we learned about respect

and disrespect respect is when we're

showing large lower Wicks off a POI

should be this weekly Gap and body

closures above the fair Valley gap or at

the very least high on it right we don't

want to see deep closes down here or

below the 50% level even which is the

consequent encroachment that is what we

call the midpoint of a fair value Gap

whereas if you look at over here on CAD

JPY we are showing more of a disrespect

towards this weekly Fair Valley Gap

right here with a smaller lower Wick and

a full body closure below that Weekly

Gap so what this indicates right here

already on the weekly chart is CAD JPY

is weaker than CHF JPY solely because

the way we're respecting this weekly for

Valley Gap we are closing below it here

and we are showing a large rejection off

of it with a high body closure on that

Gap and then what we could also observe

over here is large expansion to the

upside creating a new weekly fair value

Gap while over here we have no weekly

fair value gaps created right and that

is coming as a result of what we

observed right here initially the fact

that we respected this weekly Gap to a

greater degree than this weekly gap

which we disrespected so naturally our

expectation here if we just move back in

time off of this let's say this is

current price action we would want to

focus for weekly IRL to EO from this

weekly Gap to this weekly swing high

right here we want to focus on the left

right here on chfjpy because it is

showing the stronger respect to that

Weekly array so this is what we want to

focus on trades and we can remove CAD

JPY from our watch lists so here we are

on the daily chart of those same two

assets we were just watching on the

weekly chart we can very clearly see why

CHF JPY was the better choice to Long

right if we look at this daily F value

Gap right here we saw a very shallow

sting into this daily Gap whereas if we

look at CAD we saw a very deep sting

into that fair value Gap right and after

this daily fair value Gap we started

creating new daily fair value gaps to

the upside displacing higher and

respecting those gaps right here we see

new Fair Valley Gap created respecting

it and then pushing higher ultimately

taking that Weekly external Range High

whereas at the same time if we look at

when we took that high we are now

displacing lower and kind of in this

chop right here on CAD JPY just overall

not creating new daily fair value gaps

out of this daily Gap right here and we

knew this already way down here based on

how we respected this weekly fair value

Gap and disrespected this weekly fair

value Gap just reading the candle bodies

reading the candle wicks we could

already come to a conclusion as to which

is going to be the stronger pair and the

higher probability Longs so one more

example here we have Euro CHF on the

left and we have GBP CHF on the right

one thing I want to mention about CSL is

that it's not only all about disrespect

and respect candles you can also tell by

the amount of displacement you can

observe between two correlated assets as

well as how close are we to relative

lows between each other and relative

pois so what I mean by that is well if

we look at this displacement all the way

down here we see that these per Valley

gaps are sending price much lower

relative to this low right here so if we

compare where price is right now to this

low we see that this is likely going to

hit it first signaling more weakness

compared to its counterpart right here

as well as we are respecting this daily

for Value Gap to a greater degree than

we are over here where we are

disrespecting it on gpp CHF with this

candle close above and just overall not

really respecting that Gap whereas if we

look at Euro which has been weaker we

are not closing above it we are showing

Wicks and a lack of intention to

continue pushing higher once we start

trading above it and then as you can see

this has been followed by large

displacement lower and even going down

to the 1 hour time frame you will see a

1hour entry present itself over here

with a 1H hour for Valley Gap displacing

lower off of a daily array whereas you

don't see that entry pattern formed on

GBP as it is a stronger asset you don't

even want to be looking at this for

shorts you would be focusing on euroc

CHF for shorts and right here is a very

textbook entry off a daily array 1 hour

fair value Gap displacing lower entry at

the opening of that fair value Gap stop

loss at the swing high that created that

Gap and then you just Target a simple 2R

and and this is a gorgeous gorgeous

trade so now let's go over smt also

known as smart money technique simply

put it's a Divergence between swing

highs or swing lows on two closely

correlated Assets in other words a crack

in correlation so naturally when looking

at two closely correlated assets if we

expect one to make a lower low we would

expect the other to make a new low as

well when one fails to do so we have smt

I look for this specifically on the

higher time frame charts at Key PD

arrays so we're talking fair value gaps

swing High swing lows previous month's

highs and lows previous week's highs and

lows and previous daily highs and lows

to make it clear S&T is just a

Confluence to a reversal it is not the

entire basis for a trade idea your trade

idea must stem from a higher time frame

point of interest and if we happen to

see smt then great that's awesome we can

now use it to determine which CL closely

correlated asset we want to trade this

is how we find relative strength so what

we want to do now is long or short the

pair that has created the failure swing

as it is the relatively stronger or

weaker asset so if we're bullish we want

to trade the stronger asset we want to

trade the one that made the failure

swings on the lows if we're bearish we

want to trade the weaker asset and we

want to short the one who had the

failure swing on the highs so here we

have Euro USD on the left we have GBP

USD on the right we are short right here

because we have daily context to the

downside we have daily IRL to erl and

daily IRL to erl right here now if you

remember what we just learned about CSL

just the candlesticks essentially how

hard are we displacing compared to our

counterpart well it's a very obvious

choice here which is the higher

probability shorts right so that's just

just a note on that they all kind of

just work within each other it's kind of

like a cycle you're likely going to see

smt here based on how aggressive this

displacement is we might retrace into

this Gap whereas since GBP right here is

stronger we might even just take this

high and then continue lower right so

they all work within each other which is

why I say just pick whatever you

naturally gravitate towards so back to

this we are on Euro so let's move ahead

price and see what happens once we

retrace into that gap on both of these

pairs right so there's the Euro

retracement and over here is that GBP

retracement right we took the high right

here so this High let's mark that out

swept it compare it to Euro's High which

is this same high right here we didn't

take it so on Euro we have a failure

swing right here whereas on GBP we have

a new swing High formed so there is a

Divergence on the swing highs now

remember we are bearish because we

already had a pre-existing trade idea

right we're not going short here because

of the S&T it's only a Confluence to

lead us to which is the higher

probability shorts in this scenario

since this candle right here failed to

take the high just showing overall

weakness we want to trade the pair that

presented the failure swing so Euro

right here is going to be the higher

probability shorts so let's just go to

current price action and see how this

ended up working out we see here we see

very nice aggressive displacement right

off of that daily Gap whereas on gu we

did see some displacement but ultimately

it's just not as aggressive and deep as

we see right here on Euro right so

that's just perfect example of using smt

to determine the weaker pair and higher

probability shorts so here we are on the

4our chart and just to show an entry

right here we have this 4our fair value

Gap right here on EU we also had this

4-Hour fair value gap on gu but remember

we always want to short the weaker pair

so your swing trade right here would go

at that 4-Hour swing low you can put at

the body highs right here and you can

Target a 2R which would land around

right there and if you want to hold

Runners something that I do is you can

scale 80% and then hold 20% for your

Runners so you can scale 80% at 2 R and

then have some Runners for this swing

low right here or potentially even

beyond that if you have a high

confidence in this continuing lower but

as you can see see compared to gu we are

showing further displacement down below

the swing low whereas on gu right here

we are not showing more displacement

lower and we are actually entering a

weekly fair value Gap so a little area

of resistance right here may cause an

issue for continued shorts on gu whereas

if we look at EU and go back up to the

weekly chart what we'll notice is there

is no area of resistance right here on

EU see we don't have any weekly fair

value Gap in the way whereas on gu we do

have weekly fair value Gap right here so

we have S&T on these previous week's

highs here and ultimately this is why we

are displacing much more aggressively on

Euro than we are on

gu so here's one last example and I

think this is a really great one showing

how we can use it for shorts and

potentially upcoming Longs so if we look

at Euro CHF on the left we see that this

High did not sweep these highs whereas

on GBP CHF on the right we did sweep

these relative highs as seen on Euro

right so right here we have some smt so

if we are looking short for a potential

external range liquidity move to

internal range liquidity move like such

ultimately drawing towards that monthly

fair value Gap we want to focus on the

weaker asset so we want to trade the one

who made the failure swing which in this

case was Euro CHF so from this monthly

idea let's dive into the daily chart and

see if we can find a daily PDR Too Short

from and essentially this is where we'll

find our daily Market maker models and

what we'll see here is that ultimately

Euro CHF was the weaker pair as a result

of the S&T now remember how we went over

CSL earlier in this video and I was

showing how we can basically just

eyeball this seeing that this is showing

the more aggressive displacement already

trading lower towards this low and this

monthly Fair Valley Gap compared to gpp

CHF which wasn't showing as an

aggressive as a displacement this is why

keep repeating that all of this stuff

really bounces off of each other if this

is weaker it's probably because there's

smt or as we'll later find out it's

because the euro currency future is

weaker than the GBP currency future so

it all works within each other which is

why I say just pick the one that you

just naturally tend to gravitate towards

and enjoy seeing so we saw the S&T on

the highs and understood that euro is

weaker we want to look at this for

shorts now if we go back to the monthly

chart we have new context on this

monthly sobody went from erl to IRL on

the monthly now we can flip this and

potentially start looking for Longs so

think IRL to EO same thing over here IRL

to EO but what are we seeing what are we

seeing on the lows over here with this

candles we're seeing smt right if we go

to the daily chart now we'll see that

price has now entered this monthly Gap

whereas price has not entered this

monthly Gap over here on GBP so we have

smt potentially inside the higher time

frame PD array which is that monthly

fair value Gap meaning if we start to

see this shift to the upside seeing

daily fair value gaps display higher

let's say something like this and we do

that over here on GBP as well well we

don't need price to come down into this

monthly Gap to make this valid we're

already showing intention to push higher

and this is going to act as the stronger

asset because of that smt where we have

a Divergence on the lows we want a long

the failure swing which would be gpp CHF

so we would want to focus on this for

Longs should we get our entry pattern

which is simply a daily F value Gap

displacing higher moving on to the third

way we can determine relative strength

is by using the pairs Euro GBP and AUD

NCD so we can use EG for sure and AZ to

gauge relative strength between all Euro

GBP AUD and nzd currencies so simply

said a bullish Euro GBP means Euro will

act as the stronger currency over pound

a bearish Euro GBP means Euro will act

as the weaker currency and pound will

act as the stronger currency you see the

direction of the base currency which is

the currency that's listed first in a

Forex pair determines if that currency

will be stronger or weaker relative to

the quote currency which is the currency

that's listed last in a Forex pair same

thing goes for AUD nzd a bullish AUD nzd

means AUD will act as the stronger

currency over nzd a bearish AUD nzd

means AUD will act as the weaker

currency and nzd will act as the

stronger currency so let's dive into

some

examples so here we are on the Euro GBP

weekly chart as we can notice we've

overall been bearish in bearish order

flow respecting bearish pdas so

naturally we can form the expectation

that EU is going to be the weaker pair

and gu is going to be the stronger pair

we can see that same story being told on

this daily chart with again bullish

order flow off this weekly Gap just

continuing to displace lower leading us

to understand weak EU strong gu so again

if we look at EU and gu we'll notice

that because of our understanding that

EU is going to be weaker and we can

already frame a short idea for EU off of

this daily context remember same thing

for GU we know that EU is weaker because

EG is weak so now we can choose the

higher probability shorts which would be

Euro and the low probability shorts

would be on gu right here which is

relatively stronger and if we zoom out

even more to the weekly we'll see that

because EG has been weak gu has been

strong so we see a weekly for Value Gap

right here where we don't see that on

Euro just again showing us this is

weaker and if you want to take it one

step further fur going to the monthly

chart we'll see that gu is holding a

monthly fair value Gap right here

respecting it with this large lower Wick

and this body closure above it whereas

on EU we also had a monthly fair value

Gap but we are currently disrespecting

it see right here with this body candle

closure below the Gap and a smaller

lower Wick compared to gu which again

goes back to Candlestick logic where

we're looking at disrespect and

respective candles I keep repeating it

this all works off of each other right

we had smt which signaled okay euro is

going to be weaker okay then we had EG

signaling to us that euro is going to be

the weaker pair and gu is going to be

the stronger pair okay great so you see

how all these things work off of each

other the candlesticks the smt the EG

and we'll go over an a example next but

they all work off of each other so again

just really pick the one that suits you

best because you're going to come to the

same conclusion using which concept so

here we are on the AUD nzd weekly chart

remember what we went over if we have a

bullish a we have strong Australian

dollar and weak New Zealand dollar if

bearish we have a weak Australian dollar

and strong New Zealand so over here

let's analyze what happened and how we

could have shifted our expectations for

certain AUD Pairs and nzd Pairs and

change our expectation in terms of

relative strength right because at this

point right now if we were to rewind

right here we would see that a has been

quite bullish meaning Australian pairs

are going to be stronger and preferable

for Longs but things change here right

because we had a weekly fair value Gap

with an overlapping old swing high so

let's move along and see what happens

and if we respect that Weekly gap which

we already know it does not and we start

closing beneath it and closing within

this area of fair value so what's

happening here is for fail to offer fair

value while we're likely to go seek

liquidity so we're starting to shift

bearish here on AZ meaning there might

be a change in relative strength now

where you might see AUD pairs start to

weaken and nzd pairs start to strengthen

and you want to shift your expectation

and start trading nzd pairs for Longs as

those are going to act as the higher

probability trades for bullish setups so

we play along here we'll see that yes

AUD nzd starts shifting bearishly

creating weekly bearish for Value gaps

which currently go to the daily chart

again has established that daily order

flow so we can observe that shift and

relative strength right here where we

have AJ with weekly iro to EO meaning we

have

context but on NJ we have that same iro

to ero but currently seeing that price

has not retraced into it showing

relative strength here this is also smt

which we showed in previous examples but

we can also just remember use AZ

understanding that AZ is weaker now

meaning nzd pairs in the base currency

are going to act as the stronger asset

so if we want to be longing we would be

looking over here moving down into the

daily we'll see how that shift occurred

remember we were very strong on AUD

pairs until we had that shift on the

weekly chart to the downside where we

failed to offer fair value so if we look

at this displacement all the way here

you'll see that we retraced not as deep

as we retraced on NJ but then we had

that shift and NJ quickly caught up and

overtook AJ as the stronger pair

eventually taking this external Range

High much before AJ did well AJ hasn't

even taken that high yet and even

displacing above it and continuing to

displace above forming more and more

daily for Value gaps which right here

potentially we got daily IRL to the erl

to the upside just continued bullishness

on and J as it has been the stronger

asset because a has been just so

weak now lastly my personal favorite

currency Futures if you've stuck around

until the end I'm about to reward you

because this right here is real sauce

that will absolutely Skyrocket your win

rate before I explain how to use

currency Futures though let's list them

all here so you can add them to your

watch list and start seeing this play

out for yourself so we have 6 E1

exclamation point which is the Euro

Futures followed by 6B which is British

pound Futures 6A Australian dollar

Futures 6n New Zealand dollar Futures 6

C Canadian dollar Futures 6s Swiss frank

Futures and 6j Japanese Yen Futures

these are the majors as we can see this

letter right here is the first letter of

the currency we're working

with we can use currency Futures to

determine which pair is the one that's

most likely to move so basically we are

using these features to identify the

weaker and stronger currencies and then

pairing them we want to pair a strong

currency with a weak currency for

example right here we have a very weak

Japanese Yen and we have clear weekly

context to the downside this is great

because now we have a clear draw in

liquidity and we are working with an

extremely weak pair so now what we want

to do is pair this with a strong

currency so we want to go through this

list pair it with Yen giving us our

cross pair and we want to trade that

expecting the highest probability long

because remember when we have a bearish

Yen you can expect any XXX JPY pair to

be bullish so let's look at the daily

real quick also very bearish showing

daily bearish order flow and right here

we're just expecting price to continue

drawing towards this external range

liquidity so let's go through this list

real quick and determine which is the

strongest pair so if we look at Euro we

aren't very strong at all displacing

down we look at GBP we will see that we

are much stronger than Euro because take

a look at this weekly Fair Valley Gap

right here and also take a look at this

monthly fair value gap which we are

holding and expanding higher out of

where if we look at Euro like we showed

in previous examples we're not really

respecting this monthly Gap right here

we're disrespecting closing below it so

overall Euro has been weak for a while

compared to GBP so we want to be

focusing also on GBP in this case so at

the moment GBP is our strongest pair so

let's keep this on the watch list let me

just start fresh here this will be our

strongest pair at the moment so let's

continue on down 6A consolidating right

here not as strong as GBP overall

consolidation on this weekly chart as

well we don't really have a weekly fair

value Gap there either showing

aggressive displacement to the upside

like we see on the pound right here so

GBP Still Remains our strongest currency

let's go to 6n actually looking stronger

than GBP so we see that we have this

weekly Gap and we haven't traded into it

whereas on the pound we did showing we

have more strength on New Zealand right

here just look at the daily real quick

also again we haven't taken this low

compared to GBP where we did take this

low into that Gap so at the moment New

Zealand is our strongest currency so

let's keep that on watch so let's mark

that up like that let's go to Canadian

dollar not strong at all quite weak

actually expecting lower prices here on

a weekly basis also just extremely

bearish no signs of bullish orderflow so

what you never want to do is pair a weak

currency with another weak currency

which would be Cad and Yen that would

lead to very unfavorable nasty price PR

action you want to avoid so never pair a

weak and a weak currency together moving

along we have CHF right here which has

been quite strong actually so I'm going

to mark that green and let's compare

that again to New Zealand which has also

been quite strong so at the moment we

are seeing the most strength on CHF just

based on the displacement leg higher

right here and respect to this daily Gap

let's look at 6n right here which we

don't see that huge display leg higher

like we saw on CHF so ultimately at the

moment I will expect CHF JPY to be the

strongest and highest probability Longs

so let's take a look at that cross pair

and what we'll see is it indeed has been

the strongest cross pair as you will see

once we go through these JPY pairs

showing the highest probability price

action right here to the upside forming

a potential new daily fair value Gap

going into next week so let's look at

the rest and I'll show you why we want

to focus on the strongest and weakest

currencies and pair them together

because if we look at

nzdjpy were not as strong as CHF JPY

because CHF was the stronger pair so

again Focus would be there we look at

GBP JPY even weaker right this is our

third strongest if we look at AUD JPY

even weaker we haven't even taking this

external Range High and we are

consolidating just like AUD was

consolidating on its Futures current

cury chart CAD JPY remember CAD was also

very weak we don't want to pair a weak

currency and a weak currency because

then you get very disgusting price

action like this that you just want to

sit out and then Euro JPY which was also

weak the euro currency was also weak we

see very unfavorable price action

because you pair a weak currency and a

weak currency and you get very nasty

stuff like this you just want to void so

always remember this you want to pair a

strong currency with a weak currency and

the way you determine relative strength

is by always trading the cross pair that

has the strongest Futures currency so

simply put if you want to look for a

high probability cross pair to trade

which would be any of these right here

in this long list all you'd have to do

really is go through the currency

Futures First Look for for the weakest

pair then look for the strongest pair

pair them up and then you have your

highest probability cross pair to trade

for that week if this all is sounding a

bit confusing because I know it could be

a bit tough to understand on the first

listen if you just rewind and watch it

slowly take some notes watch it again

and again I promise it'll start to click

this isn't something I think you guys

should skip over I really do think that

this is a gem of information right here

and we 100% increase your win rates

because just by trading the strongest

and weakest currency You Are by default

trading the highest probability cross

pair for that week right so you're

filtering out so much low probability

price action by doing this you're going

to be trading at the pair to be at for

that week right you're less likely to be

caught in unfavorable price action and

consolidations and likely to see very

nice fluid price movement just by

following these steps I have outlined

right here so that pretty much wraps

this up thank you guys so much for

tuning in if you found this insightful

all I ask is you share with a friend and

hit the like And subscribe button I

would appreciate that so much thank you

and if you're looking to get funded

there are some really nice discounts in

the description click those links use

code pickle and using what you learned

today I hope you get one step closer to

getting funded and receiving those

payouts and lastly go ahead and join my

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day dropping outlooks doing live weekly

forecasts every Sunday and just

interacting with the community and

answering a bunch of your guys questions

so I'll see you there and have a great

one guys peace out

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