Money Flow Theory

Theory:

Pairs Traded:
Euro
Eyen
Dllryen

Situation:

Euro 4h is Overextended to the downside, and 30m is consolidated but near upper key level.

Action:
As you want to buy Euro and sell Usd, you begin to check what pairs are doing what. You start with Dllryen. If the Usd is losing strength, then Dllryen will initially drop based on Euro going higher (selling of USD). Note the lower key level of Dllryen as if it breaks it will trigger a drop in Euro. Also the Lower key level is a good place to set a bid order.

You next look at Eyen to see whether or not Euro is infulencing the Yen selloff. As Eyen is getting dragged higher by Euro, Dllryen will follow as the Yen begins to selloff. Hence why it is a good idea to place a bid by lower key Dllryen level. Note upper and lower key levels of Eyen as it can spark Yen to drag down Dllryen and Euro, giving the Usd strength.