Why Traders Get Left Behind: The Macro Flow Factor
Most traders who focus on price charts and technical analysis often find themselves one step behind. They concentrate on what has happened but rarely consider why it occurred, which can be a major oversight.
Price action and technical analysis are valuable tools for traders, but they only answer the question of when to buy or sell. However, understanding the underlying macro flows is essential to making informed decisions. Traders who ignore these flows are essentially trading with one eye closed.
To gain a better understanding of market movements, one expert recommends monitoring four key macro flow indicators: Commitment of Traders (CoT), intermarket flows, seasonals, and sentiment. By analyzing these indicators, traders can develop a more comprehensive view of the market and make more informed decisions.
The focus of this article is on the Japanese Yen, specifically its relationship with Japanese Government Bonds (JGBs) and Crude Oil. The chart at the top of the source shows Japanese yen futures on a weekly timeframe, while the indicator below is a composite intermarket model built from JGBs and Crude Oil.
The expert notes that higher JGB yields often strengthen the Yen, while higher crude oil prices tend to weaken it. When JGBs outperform crude oil, the indicator rises, and the Yen often follows. Since 2020, this indicator has remained below zero, signaling a persistently negative backdrop, interrupted only by brief rallies when momentum turns positive.