All right, everyone. Well, the saga continues with this chest cold, or whatever is going on with me. Fortunately, the family is doing much better. The boys had some fevers. And boy, Sarah was really having a rough time last night, God bless her, chills and the whole nine yards. Fortunately, thank God, I’ve not gone through that. I seem to be at least fighting off some of the worst effects, but it still feels like I’ve got a load of cement in my chest.
The first thing I want to talk about, since it’s about time: we are getting very, very close to the release of our software here. This is Hercules FX. Some of our Plus members were beta testing an early version of this software. I’ve got to tell you, I’m excited about this. Anyway, we’re coming a long way in developing some tools.
Actually, the reason why I’m stuttering and stammering is I didn’t know that the setup hadn’t completed yet. So, let me pause this.
All right. There you go. The setup is done. And as you can see, we can select Bar Chart or MetaTrader four for the data feed.
Anyway, basically, what we have here is a charting application, a way for you to access the membership website, as well as a way to get the Hercules FX software. This will help us to communicate much better. You’ll be able to run this program, get the daily trading videos right away.
In fact, let me go ahead and bring this in. What we’re working on in the last stages is a way that when you log into the software, you’re also logged into the website. But, you can see here, we’ve got the Insider Code website here. Order manager, this, yes, will plug directly into your brokers. That’s something that we’re going to be doing kind of down the road, because there’s a lot of a liability if we’re handling orders for you, and so I want to make sure that that is absolutely pristine and absolutely working correctly. But, this is where our Forex Deal Butler software will come into play.
There’s also, when you pull up charts, we have a pattern recognition module, which I just don’t have it loaded at the moment because I don’t have a chart open. So, yes, the software will be able to scan charts and tell you when it recognizes a pattern. In fact, you even have the ability to draw in a pattern.
As I said before, here’s Hercules. So, this is automatically displayed. And of course, because I just started up the software, it’s not going to run very well.
Anyway, so there’s Hercules, our own platform. We’ve got a lot of functions that will just knock your socks off. I’m really excited about this. Of course, that’s just the basic form for it. I wanted to give you an update on that, since it’s been a while. But, there you go, tantalize you a little bit.
Now, let’s talk about the British pound here. You can see that the British pound has solidly broken down through our prior area of support. Remember last night, I was talking about watching out for the little dipper. You can’t see it on this four hour bar here, so let’s go up to the hourly bar. The little dipper came very, very quickly.
This is the thing about trading on lower time frames that makes it evident why we need to trade on pattern. Because here’s the big question. I was on the phone with Richard not too long ago. We were straightening out some customer service issues. And as we were talking, one of the things that we were discussing was the ability to actually take a trade. So, yeah, it’s great. We’ve got this system. How do we actually take the trade?
Well, one way to do that is by, number one, setting expectations. Remember last night, I said, “OK, I expect the market to push down, and I’m looking for a little dipper.” Which means the market has got to retest this old area of resistance. That may indeed come on an hourly bar, and we’ve got to be prepared for that.
And so, if you recall from the counter trend trading checklist, there are certain patterns that we can use. Let’s just go ahead and look at this 15 minute bar here.
There are some patterns that we can use to help us identify those opportunities. In fact, one of them which worked out very, very nicely in this area here was the three bar reversal. You can see that that’s the bar here, on the hour, where the market pushed up. And so, sure enough, the market pushes up, goes sideways for three bars, and then breaks down very nicely through this bar, giving a signal. There was another signal on the break of this low here.
So, if you want a more in depth study of this, you’re going to want to go back through the one on one support sessions in February. I go through a couple of… And there are only two or three of them, but in each one on one session, I went through a series of explanations, or a series of a break down, really of how to find the pattern, and how to trade the pattern. And so that will enable you to look at the trading opportunity correctly and to be able to capitalize on it.
Also, with the new Hercules FX software, that will be able to spit out all this stuff for you. So, it will be taking off a lot of that judgment from off of your shoulders and putting it on to the software, which in my opinion is where it truly belongs.
So, let’s talk about what’s going on right here. You can see the British pound is forming another spike kind of bottom. What I mean by that is this drop is very, very aggressive.
If you remember, I think it was yesterday, I was talking about… I was giving away sort of some of the information that we talk about in the plus group, where we look at the angle of the moving averages and then the angle of price. And whenever we get this big change, I call this a radical change, whenever we get this, we like to look for opportunities for a reversal.
This is purely on how the professional traders look at the market, and so when I… My challenge actually to you would be go back and look at the hourly bars, and you will find, more often than not, when you see two full sessions where the market just goes down, or three sessions where the market goes down, or two sessions where the market goes up, you tend to get a reversal, or at the very least, a consolidation.
Even over here, where for basically one full session the market started pushing to the upside, went right into a consolidation, a break out, went into, again, two sessions of moving up, then you had the reversal. It’s just this pattern that repeats over and over and over.
We’re seeing that here. What I’m looking for… We’re seeing the possibility of a reversal, rather, because we had literally two full sessions, Europe and New York, where the market was a one way street. What I’m looking for now is either a flag or a pennant pattern. Here’s the pole.
I’m looking for this pattern pushing forward for a couple of reasons. We want to see the pattern to make sure the professional money is actually active and in the market. That is the tell tale sign that professional money is building a position and that the market is about to get active.
Also, what I’m looking for is to see if the market is going to go into another sideways motion, or sideways, sorry, sideways consolidation range like it did over here through the middle of February. Goodness, I’m sorry.
All of that is because of what I see on the daily bars here. We had a massive selling effort coming in to this January 19 and 20 range that was literally just dried up almost instantaneously. The market had two big days, and then went nowhere for four straight sessions, and then finally started moving its way back up. And so we’re back down testing that area. Remember, the reason why this is so important is because we are literally capitalizing on how the market has to work.
Again, as kind of cliché maybe by now as it sounds, there really is an insider code, folks. And part of that code is realizing that in order for the market to break through this area, brand new sellers have got to come into the market, in order to push it down through this area here. And unless and until that new selling comes in, the market simply won’t break down.
So, at this point, we’ve got to wait for a flag pattern to set up, although I do believe trading on the low here, which is going to be 39.54 short, is going to be a really good idea to get for tomorrow’s session, simply because we’re going in that direction anyway. Daily chart is moving down, hourly chart obviously is moving down, as is the four hour.
But, we’ve got to remember, we’re looking at a move from about 40 cents down to maybe 38, 37 cents. Although it’s still a big move, we’ve got to remember that this isn’t going to be thousands of pips. So, keep that in mind.
To the upside now, this market is absolutely going to have to move back through this 41, 39 level. This is where we had the little dipper, remember? But it’s also all of these resistance areas, just like I was saying, in order for the market to move down, new sellers have got to come in, in order for the market to move up, new buyers have got to come in. It’s the way the market absolutely works. All futures markets work this way.
So, keep in mind, if we do form a flag pattern, say coming into Asia and into Europe, if you get a break out around 40 cents, you’re only going up to about 41.30 before you’re running into resistance. So, again, don’t think you’re going to have this huge runner. Make sure that you’re aware of it, and either taking profits if it’s an auto pilot trade, or be willing to let the market make a hefty retrace on you all the way back probably to your break even point.
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