Order Flow or RSI and Ichimoku?

Bloomberg usually does a pretty good job of reporting on the market sentiment and what is moving the markets.  But every so often they do like to throw in a few technical analysis articles for any readers out there who enjoy those.

There is a Bloomberg article on their currency page which talks about the “oversold” nature of the USD/CHF currency pair.

Dollar May Advance From Record Low Versus Swiss Franc:  Technical Analysis

What is the reason for them believing that:

“The dollar appears to be oversold. With the RSI set to break 30, there seems to be a chance of a rebound for the short term.”

They cite “technical indicators.”  And for technical indicators they are referring to a Relative Strength Index (RSI).  The analyst from a bank in Japan which was interviewed also cites “ichimoku” factors as another reason the downtrend in USD/CHF may be coming to an end.

Junk Analysis

They are talking about things which do not generate order flow.  They are talking about technical indicators which do not move the market.  They spend all their time wondering about the RSI reading and ichimoku readings.

They spend all the their time on the things which do not make the markets move.

Better Analysis

Instead they should be spending their time explaining real order flow generators and market sentiment.  Not some hocus pocus, mumbo jumbo bullshit which doesn’t move the market.

Instead of talking about RSI and Ichimoku, they should be talking about the exotic option barrier that exists at 0.8000.  They should be talking about the option defence bids.  They should be talking about potential for the option hunters to knock out those barriers.  They should be talking about the stop losses placed beneath the 0.8000 level.

They should be talking about the bearish comments from President Obama that caused another wave of USD selling.

They should be talking about different bullish and bearish scenarios that can play out.

Because if the sentiment deteriorates further.  If the option hunters push the market lower, if the stops get hit, then the market will go from being “over sold” according to the analyst in the article, to being even more “over sold.”

I do not know if they will succeed in taking out the barrier.  It is entirely possible there is some short covering that could happen.  But what I am entirely convinced of is that if there is a 50 pip, 100 pip or 200 pip bounce in USD/CHF, it will not be because the “RSI and Ichimoku” signaled it.  That hocus pocus.

If the RSI and ichimoku are going to cause a decent or huge bounce, then why isn’t it happened right now?  Where are the massive bids from the RSI and ichimoku players?  Why isn’t there short covering right now?  I am writing this as of 2:15 AM EST, with USD/CHF trading at 0.8010

Order Flow Trading Success

Order flow trading success involves purging yourself from the things that do not generate order flow such as RSI, and ichimoku, and replacing them with knowledge about order flow generators, market sentiment, scenarios, stops, option barriers, that can actually cause the market to move.

Click Here To Get The Free Report