How I Combine Macro With Technicals — The Framework
How I Combine Macro With Technicals — The Framework
It would be simpler to pick a side. Pure technical analysis treats charts as everything; pure macro analysis treats price as noise around the rate cycle and the news flow. But I have found that the technical lens often misses the catalyst that moves price, and the macro lens often misses the level that defines risk.
The interesting moments — the ones worth focusing on and worth writing about — happen at the intersection. A macro catalyst — a central bank decision, an inflation print, a supply shock, an earnings event — that the data is telling you is approaching. A technical level that has been respected for weeks or months. When those two converge, you have a framework with structure on both sides: a reason the move should happen and a level where the market will tell you it is happening.
Over the last several years of writing daily commentary, I have ended up using a five-step framework to read these moments. It is not magic, and it is not always right (more on that later in the series). But it is the structure I keep coming back to, regardless of whether the driver is a central bank, an earnings print, an OPEC headline, or a shift in the rate regime.
This framework is not about being right every time, nor about predicting short-term price moves or making trade decisions. It is about having a consistent way to interpret how macro drivers and price behavior interact, especially as conditions change.
Here is how I work through it.
Step 1: Identify the macro driver
What is actually moving this market right now? Not what should be moving it, not what was moving it last month — what is the catalyst that prices are responding to this week?
Sometimes the answer is obvious (an FOMC meeting on Wednesday). Sometimes it is a slow build (a six-month rate regime change). Sometimes it is a structural shift that the market is only beginning to wake up to (sticky inflation, a regime of volatility breaking).
If I cannot name the driver in one sentence, I usually find that I do not yet have a framework — just a chart that needs more work.
Step 2: Map the macro and positioning context
This step is about identifying where the market is positioned and what would surprise it. Markets do not move on the event itself — they move when expectations are wrong.
The inputs are familiar — rate differentials and term structure, realized versus implied volatility, positioning and flows (gamma, dealer hedging, FX, skew). The reframing is what matters: instead of asking what the news is, focus on what the market believes and what would surprise it.
Step 3: Find the technical structure
Now go to the chart. With the driver and expectations in mind, where does the price actually sit relative to the structure?
The first pass is obvious levels — major support and resistance, the 50- and 200-day moving averages, unfilled gaps, patterns that have been forming (flags, double tops, wedges).
What I am looking for is not just a level, but the level that is likely to matter when the macro backdrop shifts. A bull flag on the chart is interesting. A bull flag breaking out into a dovish central bank meeting is the kind of moment I want to write about — the chart and the macro aligning.
Step 4: Cross-check momentum
This is the step I find is often overlooked — and the one that most often explains why otherwise sound interpretations break down.
I want momentum to confirm the structure. RSI breaking out of its own range, divergences (price making a new high while RSI does not, or vice versa), Bollinger band behavior, and moving average crossovers.
Momentum does not tell me what is going to happen. It tells me whether the current move has fuel or whether it is running on fumes.
Step 5: Define the conditions that confirm or challenge the view
The final step is to define what would confirm the interpretation and what would challenge it.
What would need to happen in price for the market to validate the framework? What would suggest the interpretation is wrong?
This is less about prediction and more about discipline. It forces the analysis to be specific and testable, rather than a general view.
What’s next
The reads I have gotten wrong are not usually bad ideas — they just do not play out as expected, often because something in the framework is missing, either the catalyst or the level. This structure is the discipline I use to force clarity on both.
This is the framework I have used over the last 10 years to break down market dynamics across different regimes.
Below is a list of the pieces in the Advanced Topics series, each applying the framework to a different type of driver. A central bank read is not built the same way as an oil shock, an earnings print, or a macro-driven index move.
Part 2 — Central bank-driven cases: USD/JPY (BOJ, Fed-versus-BOJ rate differential, intervention dynamics)
Part 3 — Geopolitical and supply-driven cases: oil (OPEC, inventory, financial conditions transmission)
Part 4 — Earnings-driven cases: single-name (implied versus realized move, post-earnings technical break)
Part 5 — Macro and rates-driven index cases: NDX with rates, dispersion, and dealer positioning
Part 6 — When the framework breaks: cases from the archive that did not work, and what they teach about regime shifts
—Mike
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