Game-changing analysis technique that will elevate your strategyAs many of my loyal followers know, my analysis toolkit goes beyond just the standard fare of CME options data and COT reports. I dive deeper, utilizing additional filters like the average long and short positions of retail traders. These insights are publicly available, and while I won’t name specific sources to avoid any hint of hidden promotion, I’ll give you a clue: look for a website with the word "book" in its title. 📚
For years, I’ve relied on this data, and it has proven to be both reliable and insightful. The average positions of market participants serve as both filters and indicators. But what do I mean by indicators?
Let’s break it down. When the price interacts with these levels, it reveals the market sentiment. For instance, if the price is below the average long position and breaks through easily, it’s a bullish sentiment. Conversely, if it hovers below the level and struggles to break through, that’s still bullish, as it indicates buyers are being drawn into profitable territory.
Now, let’s flip the script for the bears: if the price breaks down from above or struggles below the average short position, that’s a bearish sentiment. The price isn’t responding to sellers, dragging them into a profit land.
There’s more. Often, you’ll notice different behaviors near these key levels, allowing you to enter positions with an incredible risk/reward ratio of 3:1, 5:1, or even better! This clarity gives you insight into the current market mood—who’s being punished and who’s favored at that moment.
Now, let’s take a look at the screenshot of the British Pound futures chart. Here’s what you’ll see:
- A green line representing the average long position of retail traders.
- A red line for the average short position.
- The breakeven point of a put option contract for the June futures expiring on May 22, with 1,320 contracts at a strike of 1.295.
Take a moment to study the chart. What do you observe? 🤓
Ok, breathe in, breathe out. Tomorrow, we’ll dive deeper into this analysis. Don’t forget to subscribe so you won’t miss the continuation of this story! The insights I’ll share are definitely worth your time, as I aim to shift your perspective on the market by demonstrating a clear methodology without relying on indicators or technical patterns.
Stay tuned; it’s going to be incredibly valuable! 🚀✨
