The more I realize that I don’t know the future, the more correctly I trade and the better I manage my position sizes and risk control rules.

As soon as I think I ‘know’ what is coming next, it’s a sure sign that I’m ready to allow larger losses than I should.

At the same time, there are patterns that I’ve been observing, and I’m always keen to map out what happens next - as one of those big patterns shows up. The chart above is the US Dollar Index with an Indicator that I had a coder create for me.

I’d been watching Bollinger Bands for years. Every day I’d map out the bands on the 12 hour, 4 hour and 1 hour time frames, and I’d keep an eye on how price behaved within the bands as we progressed through the 1-2-3 bottom and 1-2-3 top formations.

One of the members of our Crypto Discord Group had been around for years, and he chatted about pinescript coding stuff that was way over my head. Out of the blue one day, I got the idea to ask him to code a new BBand indicator that let me SEE when different timeframe bollinger bands were overlapping and crossing over.

Recently, the chart for US Dollar Index is flashing a signal that I have never seen it flash before.

Of course, I don’t know the future - so I’m very keen to watch and see if this is an extreme break and bearish continuation for Dollar here, or if this is an extreme reversal signal.

Extreme Break of Dollar

Gold, Silver, Bitcoin, Crypto will pump? Um. On what money? This part I don’t get, but I’m sure it will become clear after the fact for me. ;-)

Extreme Bounce of Dollar

SPX, Gold, and Silver will begin to trend down for months… bigger drops in October and bottoms in November/December.

Bitcoin and Crypto will DUMP into an extreme - then perhaps sideways bottom for a short while.

Daily US Dollar RSI

As I reflect on the set of four charts, each indicator provides context. In the next days and weeks, the forces displayed here in these charts will play out and the patterns will look obvious in hindsight.

Yet as we look to the right of the chart and can’t know the future, we can only speculate, position, and manage risk. The market will do what these forces are already telling it to do.

To my eye, the Ichimoku has bearish leanings, yet the MACD suggests a bullish reversal from here in the medium term. The RSI isn’t clear to me.

And as I return to consider the custom Bollinger Band indicator at the top, I want to prepare for Dollar Index doing a reversal higher from here.

I’ve ignored this custom indicator.

And I lost money.

Ok - What To Do When I’m Wrong

Odd are, I’m wrong. Because there really is no way for me know all the incoming variables that may affect price.

So I start off my trade small, assuming I might be wrong. This way my losses will be smaller if I am wrong.

What About Market Chop?

Killer isn’t it. The market acts like it knows my stops. I have to trade small enough that I can leave my stops behind the SECOND technical level away from price. This way, I can leave that little bit of money to watch the price while I do something else.

Price could go sideways for months so I don’t want to trap myself into watching price - I want to task that job to my money. My money is my worker that will toil on my behalf 24×7, day and night.

I’ll talk more about Shark Feeding Zone and Whale Feeding Zone in another post - super important zones where bband signals shape up just happens to match where 25x and 10x traders get liquidated.