The Dollar Yield Confluence Strategy

Eight months ago I started this mentoring adventure. It has been an immensely rewarding and meaningful journey. Over the coming 4 to 6 weeks I'll be saying goodbye to quite a few of you. And know: every ending is a new beginning. Ultimately, how you respond to external circumstances always makes the difference—wherever you are, whoever you're with, and whatever happens. Always. It's the only thing you truly have control over. Whoever handles loss, change and uncertainty best, wins the game in the end.

"The only thing standing between you and your goal is the bullshit story you keep telling yourself as to why you can't achieve it."
— Jordan Belfort, The Wolf of Wall Street

Over the past while I've been busy developing a strategy that fits my full schedule as a new father. A useful side effect is that along the way I stumbled onto a related, promising method that's relatively easy to follow and doesn't differ much from everything I've already taught you or am still teaching you. Think of it as a supporting framework.

In the recording below I walk you through this past week from start to finish, where with this approach I generated 7R across 4 trades. It's an objective and mechanical way of trading, ideal for people who struggle with FOMO, doubt or fear.

What I find particularly interesting is that this method made me realize once again that the biggest gains often aren't in better entries, but in a better understanding of the market. Many traders look for certainty in support and resistance. There's nothing wrong with that in itself. In fact, support, resistance, supply, demand and protected highs and lows remain important building blocks.

The real shift comes once you learn to look beyond the line on your screen. The market does not simply move from support to resistance.

The market moves from one pool of liquidity to another, with support and resistance forming part of that picture. Once you start seeing that, the question changes from "Where's support?" to "What is the market trying to achieve here?"

That same principle plays an important role in this strategy. In my recordings, for example, you won't come across a single Yesterday High or Yesterday Low, just a channel for some general guidance. All you need is patience, focus, and following the Dollar Index (DXY on TradingView). From there you recognize the moments when the dollar builds up a solid extension relative to the VWAP, or has the VWAP wind at its back, and starts showing clear signs of a reversal. Then you look for a currency pair, like EUR/USD, or gold, that's doing exactly the same thing.

I don't necessarily wait for the classic pullback into the 9EMA on the 5-minute chart after the trend break. My stop loss sits (almost always) above the highest high, which means that extra confirmation often isn't needed. The reversal must already be unmistakable at that point, partly because other correlated assets are telling the same story. The likelihood of the trend fully resuming from there is small, unless unexpected news comes in (a Trump tweet).

The biggest remaining risk is a liquidity sweep above the highest high. That's why I first wait for a clear lower high or higher low, depending on trade direction. Then I look for a significant protected level on the 5- or 15-minute chart that I want to see broken. There also needs to be a break of the trend structure or neckline.

I also keep a close eye on how imbalances get taken out during short pullbacks. Those pullbacks often further confirm the reversal.

By also checking this process on the 15-minute chart, you filter out a lot of noise from the market.

It takes a bit of extra focus and attention, but it's a robust approach, mainly because multiple directly correlated assets confirm the move. Because the stop loss sits above the highest high, the risk also feels contained and manageable.

I only got out early once due to doubt, and never let a single trade run past 2R, even though in hindsight it sometimes looked like there was more to take. 2R is enough given the solid extension toward the VWAP. Consistency is key.

Although the examples mainly focus on reversals, the same principle also works equally well for break-and-retest setups. I'll demonstrate that in the first recording as well.

Indices and individual stocks also often react to moves in the dollar, but less directly. That's exactly why currency pairs with the dollar are so interesting. The correlation is often surprisingly strong, and the moves are regularly remarkably clean.

Put it to good use. I've been working with this for a while now and am still surprised at how well it works. I've since discussed it with a number of advanced students who reached similar conclusions. Sometimes something does not have to be complicated to be effective.

My suggestion: take this method seriously and ask your questions as they arise. I'll collect questions and address them collectively where possible, so other students can also learn from and benefit from it.

One important caveat: the DXY largely moved within a clear range this past week. That generally makes reversal trading easier. The question is how this develops over the coming week, now that both the DXY and US10Y have printed a bullish CHoCH. The US10Y refers to the yield on the US 10-year Treasury note. Many market participants consider the bond market a key driver of broader financial markets.

Moves in this yield often flow through to the Dollar Index, stock markets, gold and currency pairs.

Personally I find the analysis more fascinating than the trading itself. The more I dive into the underlying forces behind market moves, the more I start to understand it. Last Friday's move in the US indices and gold, for example, wasn't something that came completely out of nowhere if you were also watching the bond market.

For me there's an important lesson in that. Ultimately you don't just want to be a trader. You also want to learn to think like an analyst. Not to predict the future, but to better understand which forces move the market. That makes you calmer, more objective, and less dependent on random entries. And as far as I'm concerned, that's exactly where the next level of mastery begins.

"The goal is not to predict the market. The goal is to understand it."
— Howard S. Marks, Co-founder of Oaktree Capital Management

I'll keep you updated in real time this coming week on promising setups based on the method above.

Below are the recordings. Unfortunately I haven't been able to cover all the setups (yet) due to lack of time.
1. Overview video - DXY, gold, EUR/USD - Reversals
2. Gold - Setup #1
3. EUR/USD - Setup #4
4. Gold - Setup #5
5. EUR/USD - Setup #6

Link to US10Y on TradingView. Calculating position size and entering a forex trade: see video. Explanation of CHoCH, BOS and protected highs/lows here.