The discretionary read.

Overview

This is a top-down swing strategy revolving around the US dollar and its most liquid pairs. Each week has an anticipated expansion target for the dollar index, engineered around the economic calendar and perceived liquidity. Swing positions are entered on EURUSD or GBPUSD through confirmation of market structure and displacement, with EURGBP serving as a relative strength tool to determine the most favourable pair for the weekly price expansion.

The methodology in one line

The sequence that produces a trade:

The frame: the week as the unit of work

1. Step 01

   Map the event calendar

   Before anything else, the scheduled catalysts (news events) across the week get noted and ranked by severity, checked on Forex Factory. The sessions carrying the highest-impact drivers are the ones with enough significance to act as manipulation, a run on liquidity, or as the expansion toward the weekly DOL.

   This in turn sets the engagement for the week. Thin, catalyst-light days or weeks typically don’t produce the displacement the strategy depends on, so they’re low-probability by construction.

   It also sets the role of the catalyst itself: manipulation or delivery. News events earlier in the week may act as the weekly manipulation. Once sufficient manipulation has been determined and a swing position is entered, news events later in the week may act as the delivery toward the weekly objective. This is primarily where the discretionary aspect comes into play: determining when the anticipated manipulation has occurred, and when delivery of the weekly DOL will occur.

   More on macroeconomic news events in education.

2. Step 02

   Set the dollar thesis on DXY

   With the timing set, DXY defines where the dollar should trade for the week, off the same market structure and liquidity logic: where the dollar’s own DOL sits, and whether the week’s structure favours strength or weakness into it.

   The dollar thesis gets formed first, rather than backing into a EUR or GBP view directly. That keeps the book coherent and avoids two correlated positions that are secretly the same bet.

   DXY sets the directional bias for both EURUSD and GBPUSD equally, due to its inverse correlation with both pairs. A dollar-weakness read on DXY means both pairs are treated as longs; a dollar-strength read means both are treated as shorts. The DXY thesis doesn’t change between the two pairs, only the choice of which one to express it through, decided in Step 03, does.

3. Step 03

   Select the expression: EU or GU, filtered by EG

   The dollar thesis gets expressed through EURUSD or GBPUSD, trading the inverse of the dollar view. EURGBP decides which one.

   Decomposing the pairs:

   EURUSD

   dollar factor plus EUR-specific flow

   GBPUSD

   dollar factor plus GBP-specific flow

   EURGBP

   EUR-specific flow versus GBP-specific flow, dollar stripped out

   EG shows which currency’s own flow is aligned with the dollar thesis rather than fighting it. A short-dollar thesis paired with EG showing euro as the stronger of the two, independent of the dollar, points to the long in EURUSD: the dollar tailwind stacks with the euro tailwind instead of buying the weaker leg. It’s a cross-sectional filter on relative strength, not simple pair-picking.

4. Step 04

   Execution: wait for the manipulation, then the displacement

   Entry doesn’t happen on the thesis alone. Two conditions need to align in sequence:

   • Liquidity gets cleared on the near side: the manipulation. Price purges the obvious liquidity on the side opposite the intended direction. Most weeks this comes from a scheduled catalyst, but it doesn’t have to. A session kill zone that purges liquidity swiftly and displaces toward the weekly DOL is equally valid manipulation. Judging whether a purge qualifies, catalyst-driven or not, is discretionary.
   • Displacement back toward the weekly DOL: an impulsive, one-sided move signalling the delivery leg has begun and flow is now imbalanced in the intended direction.

   The sequence itself is the confirmation. Manipulation without displacement is a failed probe. Displacement without prior manipulation is a move being chased with no liquidity event underneath it, a different trade to the one this method is built around. The manipulation needs to come first, then the displacement. That’s the framework.

5. Step 05

   Management: scale in, protect risk

   Once filled and the trade is moving toward the DOL, the invalidation point set at the weekly outlook becomes the initial stop. As new market structure forms, new invalidation points form with it.

   • Scale-in positions use the latest invalidation point as their own stop.
   • The original stop shaves in to match it, so each addition increases potential reward while total risk exposure gets maintained or minimised rather than compounding.

   The payoff profile is positive-skew. Downside on any single campaign is capped and well-defined; upside compounds when a week delivers cleanly to target. It’s a lower hit-rate traded for a larger average win.

When not to trade

A week without a high-severity catalyst or a session kill zone, without a clean liquidity map, and without the manipulation-then-displacement sequence, doesn’t get traded. The method is built to sit out weeks that don’t set up. Standing aside on a structureless week is the strategy doing its job.