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The Basic Top Down Analysis Checklist

The document outlines a basic top-down analysis checklist for determining trade direction in the currency market. It involves analyzing the US Dollar Index, COT report, Treasury note yields, and currency pair charts at monthly, weekly, daily, 4-hour and 1-hour timeframes to identify overall market flow and directional bias in order to take high probability, directionally aligned trades. The checklist recommends remaining flat if the direction is unclear.

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Sekhar Reddy
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846 views1 page

The Basic Top Down Analysis Checklist

The document outlines a basic top-down analysis checklist for determining trade direction in the currency market. It involves analyzing the US Dollar Index, COT report, Treasury note yields, and currency pair charts at monthly, weekly, daily, 4-hour and 1-hour timeframes to identify overall market flow and directional bias in order to take high probability, directionally aligned trades. The checklist recommends remaining flat if the direction is unclear.

Uploaded by

Sekhar Reddy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

3.

Top Down Analysis - Determining Trade Direction

The Basic Top Down Analysis Checklist:

1. Study US Dollar Index for general market direction

2. Refer to the COT report and note the Commercial Trader's net position

3. Consider the Commercial Traders as the "Smart Money" - thus try to position like trades

4. Refer to and monitor daily the 2, 5, 10, and 30 year note line chart overlay

5. On the Treasury Note overlay, look for failure swings to provide clues to the future direction of the US Dollar

6. If the yields are dropping and one of the three yields fail to make a lower low, look for US Dollar to bounce

7. If yields are rising and one of the three yields fails to make a higher high, look for US Dollar to slide lower

8. A bullish US Dollar translates to lower foreign currencies

9. A bearish US Dollar translates to higher foreign currencies

10. Look at the monthly, weekly, and daily charts of the currency pairs traded, noting key support and resistance levels

11. Determine the market flow on the daily, 4-hour, and 1-hour charts via swing highs and lows

12. Try to trade in line with the long term (top down) directional bias and when the 4-hour market flow is in sync. This will filter many false
signals and assist us in high probability trade setups

13. When there is no clear definable direction, remain flat and sidelined until there is a clear bias

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