Building a Top-Down Bias
The synthesis — combining everything into one usable view
- Execute a step-by-step top-down process for forming a view
- Combine inputs from every previous briefing into one structured view
- Stress-test the view against what the market has already priced
You've made it. Every briefing has been one piece. This is the synthesis — the actual process I use to build a defensible view on any pair, using every tool in the Field Manual and every panel in the terminal.
Step 1: Macro regime
What's the global regime? Risk-on or risk-off? Check S&P, US 10y, gold, credit spreads. One sentence to describe it. Example: 'Risk-on grinding; credit tight; equities at highs; yields range-bound.' Every pair's bias lives inside this regime.
Step 2: Which currencies are diverging?
Look at the three pillars for each currency in the pair. Rate: is the CB hiking, holding, or cutting vs the other CB? Growth: which surprise index is higher and trending up? Risk: which is the safe haven, which the high-beta in this regime? Build a side-by-side comparison.
Step 3: Check what is already priced
A view is only worth holding if the market does not already hold it. Open the central-bank pages and read the implied path for both legs off the futures curve, then the surprise picture on the calendar. Compare to your own view. If the market already prices what you expect, the move has largely happened and the trade is about the *next* revision. If it does not, ask why — either you have found something, or you have missed something. Both answers are worth the ten minutes.
Step 4: Position and CoT
What's the speculator positioning? At extreme percentile, the trade is contrarian by default. Mid-range positioning, the trade is with the trend. Pair detail page shows the CoT 52-week percentile — that's your check.
Step 5: Technical entry + risk
You now have direction, a stated set of reasons, and positioning context. Open the chart. Wait for a technical entry in your direction. Size by how strong the case is, not by how strongly you feel it. Your real risk is the invalidation: the observable event that would prove one of your reasons wrong. Write it down before you enter. Hold until it fires, or until the thesis plays out.
You complete the 5-step process for GBP/USD. Conclusion: long GBP. The BoE path has repriced hawkish while the Fed path has not moved. CoT: GBP speculator longs at the 45th percentile (mid-range). Technical entry: pullback to the 50-day MA. Best action?
- Step 1: Macro regime in one sentence
- Step 2: Rates, growth and risk for each currency in the pair
- Step 3: Check the implied path — what is already priced?
- Step 4: Check CoT positioning
- Step 5: Technical entry, with a written invalidation
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