Description
ICT 2022 Mentorship
Contents Elements To A Trade Setup – LINK .............................................................................................. 4 Internal Range Liquidity & Market Structure Shifts – LINK ....................................................... 11 Internal Range Liquidity & Market Structure Shifts – Examples .......................................... 22 Intraday Order Flow & Understanding The Daily Range – LINK ................................................ 25 Market Efficiency Paradigm & Institutional Order Flow – LINK ................................................ 33 How to internalize price delivery .......................................................................................... 33 The ICT Fair Value Gap........................................................................................................... 34 The bearish ICT FVG............................................................................................................... 35 Daily Bias & Consolidation Hurdles – LINK ............................................................................... 42 Applying Institutional Order Flow to Forex Markets – LINK ...................................................... 47 Power Of 3 & New York PM Session Opportunities – LINK ....................................................... 53 Implementing Economic Calendar Events With The Open – LINK ........................................... 61 Market Structure For Precision Technicians – LINK .................................................................. 69 Market Structure For Precision Technicians – continuation – LINK .......................................... 82 Multiple setups inside of the trading sessions – LINK ............................................................... 90 Lesson on forex and how the model can be implied to the FX market – LINK ....................... 105 Continuation – Previous day’s high and low – LINK ................................................................ 112 More Price Action Analysis – LINK ........................................................................................... 119 London Open with Forex – DXY and EURUSD – LINK .............................................................. 142 How to use the New York midnight, 08:30 opening price – LINK ........................................... 146 Tape Reading example. Market Structure & Order Block – LINK ............................................ 155 FOMC & Mentorship Model in HTF Trading – LINK ................................................................. 168 Hardline Psychology Discussion - Responsibility & Model Diagrams - LINK ........................... 174 More details about the model............................................................................................. 179 Daily Rebalance Theory & Model Example – LINK .................................................................. 181 Example Of Tape Reading Practice – LINK............................................................................... 196 Counter trend ideas – LINK...................................................................................................... 200 Trading Bullish Narrow Range Days With ICT’s SMT Concept – LINK...................................... 206 PM Session Trading with Fed Chair Volatility Injection – LINK................................................ 211 E Mini S&P 500 AM Session Example & Sellside Liquidity At Old Lows – LINK ....................... 215 Consolidation Day Explained & Market On Close Profile – LINK ......................................... 219 ES Review & More Insights On FVG & Intraday Market Structure – LINK ............................... 224 Watching and analyzing the opening price on ES – LINK ........................................................ 228 2
EPISODE 35 – LINK ................................................................................................................... 233 EPISODE 36 – LINK ................................................................................................................... 240 EPISODE 37 – LINK ................................................................................................................... 244 EPISODE 38 – Intraday Profile And Daily Range - LINK ............................................................ 251 EPISODE 39 – LINK ................................................................................................................... 262 EPISODE 40 – LINK ................................................................................................................... 277 EPISODE 41 – LINK ................................................................................................................... 290 Rules of risk management and stop loss management....................................................... 294
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Elements To A Trade Setup – LINK The first episode of this 2022 mentorship is the introduction video and this is the reason why the first chapter starts with episode 2. This mentorship will be predominantly concentrated on futures index trading. This will be useful for E-MINI S&P, E-MINI DOW and E-MINI NASDAQ but not limited to those markets only. 1 handle = 4 ticks. For E-MINI S&P 1 handle is from 4450 to 4451. That is a full handle. ICT shows several trades live taken on E-MINI and highlights which of them will be taught in this mentorship. In this case this is about the last trade we see on this chart below.
You will not need any kind of indicator at all, except for the chart itself. You are looking here at E-MINI NASDAQ-100 FUTURES market on the weekly chart. [NQH2022 on Tradingview]. I found it as “NQ1!”. Other platforms have this as US100 or US100 cash.
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Think about each week before the new trading week begins, what do you think the next weekly candle is going to do? You are not trying to predict the close. Before having that last candle printed on the chart, when it opens it is more likely to go higher or lower? Because of the seasonality and the interest rates, ICT specifies that he was expecting lower prices. What is the market more likely to do? Think of the price as being a paper clip and you have this magnetic impulse that specific price levels and seasonality will cause price to gravitate towards certain levels.
On the daily chart you are looking for swing highs and lows to get liquidity. Most of the trading and liquidity is predominantly found on this timeframe – DAILY. Underneath the short-term lows there are going to be sell stops = liquidity. The market is drawing towards one or two things: 1. It is running for stops = liquidity. 2. Or for imbalances. Above old highs there are buy stops and below old lows there are sell stops.
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This is what imbalance means:
The hourly chart.
You have here a framework for looking at the weekly range on an hourly chart. The week starts on Monday at New York midnight. You see a nice sell-off on Thursday and the market went in consolidation overnight. Notice what happens on Friday. This is that old low on the daily chart. That is where you are thinking it is going to draw to as there is liquidity. Large institutional traders will be looking at these old lows and old highs and liquidity providers will be looking to take business in around those same levels. The entire week has been bearish and then you have consolidation on Friday. The market creates those short-term highs and lows where buy stops and sell stops are.
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Watch closely – the market trades down initially and takes out the sell stops. Why would they do that for? This is inducing shorts, so it engineers liquidity. Even if the idea is that they want to take the market lower into that daily level, it has been consolidating, you would like them to see do that type of move where it drops down first. Then the market is being driven higher to attack the buy stop liquidity pool and sends the buy stops into market orders. That is a huge influx of willing buyers at a high price which is the perfect counterparty to smart money that wants to sell at a higher price. Remember that the market wants to go lower. Anytime a significant price lower is expected, always anticipate some measure of a stop hunt on buy stops – short term highs being taken out. Reversed for sell stops hunt. Further on you are going into a lower timeframe. ICT goes on 15m, but my Tradingview is limited at a minimum of 30m timeframe.
ICT’s chart on 15m:
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After the buy stops are taken you will need to go on lower timeframes. 1m, 2m and 3m charts tend to be the best for finding the imbalances for indices. The reason WHY is because the high frequency trading algorithms are operating on nothing higher than 3m. Most of the time are seconds [15s, 30s, 45s, 60 intervals]. They are looking for those tiny imbalances. You have the run on buy stops. Once this occurs on the 15 minutes timeframe, you want to drop down on the lower timeframes, 2m in this case. The chart creates a short term low and then it breaks below that. After the short-term low is created the imbalance appears and the Fair Value Gap is created.
Stop loss
The stop loss must be placed above the last green candle before the FVG or above the high. Looking at this further after the FVG is formed and the price starts to move lower you can still get in and take a short position. BUT once it takes out a low it becomes “price chasing”.
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As for the profit levels in terms of downside objective this is what you need to consider.
This is the range of the day from low to high thus far. You can use the 50% level of a Fibonacci or the Gann Box tool from Tradingview. Anything above the 50% level is referred to as a premium market from an algorithmic stance. Markets can stay in a premium for a while and not go to a discount below the 50% level. If you are bearish and going short, you need to look at the previous range and know where you are inside that range. When the FVG is formed you are thinking that you are in a premium so the algorithm will want to go to a discount. There can be all the buyers in the world to come in; if the algorithm is in a sell program to go lower, it does not matter. It will go lower. The buyers that may come in with a huge influx of volume, they are going to get crushed. There is no bull / bear squeeze. Below the 50% level, what is resting there? Sell stops. Below that low there is also an FVG.
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Right there is the imbalance. Price went down and attacked the sell stops and completely closed in the imbalance. That area is a buyside imbalance. It has to have an equal delivery to be efficiently priced and booked by the algorithms.
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Internal Range Liquidity & Market Structure Shifts – LINK
Take your attention to the left of the chart where there is an old low and to the top right of the chart where you have equal highs. Below the old low there are sell stops and above the equal highs you have buy stops. The high in the middle could have been also used, but ICT specifies that every time he sees equal highs like the ones on the right and higher than the previous one, he is going to use the ones that are to the right. The sellside liquidity is first taken as the market trades through it then it rallies all the way back up clearing the equal highs; the buyside has been taken now. At both of these points here, that is the point at which you will look or anticipate a market structure shift [MSS]. You will not force it.
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For intraday trades think at MSS. It is MSS because it is not necessarily a break in market structure [MSB] that leads to prolonged multiday movement. If you see a market that is bearish and it is broken to the downside INTRADAY, that may just lead to an intraday price leg that may eventually see that high be taken out in the same day. That is why “market structure shift” is used and not the “market structure break”. MSB means a little bit more in context vs. and intraday shift in market structure. That means that there is likely a downside or upside draw intraday by saying the term “shift”. You have those 2 areas highlighted in the previous image where there would be a likelihood of a market structure shift. Dropping down on the 2m timeframe chart this will look like a lot of noise in price action.
On the lower side of the chart, you can see a low being formed. Right before that low was formed, there was a swing high. When that high is taken out on that particular candle, that is significant only when price traded into sell stops like a double bottom, a single low etc. and took liquidity. It has to be trading under some retail idea that would be viewed as support. Then the price will seek liquidity resting above the highs on the left – the green dots. The same happens on the upper side where the swing low is broken. The price is trading above highs. You know that above old highs there are buy stops. When the run above relative equal highs happens, you are anticipating an MSS. You are not forcing it; you are not trying to get ahead of it.
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ICT’s chart with all the “lipstick” on it:
Follow the chart When the marked dives into that liquidity you may or you may not know that is a buy. You do not need to. You anticipate a shift in the market structure. When the market rallies above that is when you are thinking that “now you have a condition in the marketplace that you might see an opportunity intraday. Let’s see if there is further evidence to that”. The short-term high is taken, the price has traded above it and it does not need to close above that. VERY IMPORTANT! Once that candle closes and the next candle opens, you will monitor that candle. As soon as it closes, does it create that FVG? If it creates the FVG, the next candle is where you want to trade at the earliest because now there is a gap. The market trades down into that, BOOM! Insight about orderblocks ICT invented it. Nobody talked about it before him. The orderblock was first mentioned in 2010 on www.babypips.com. Prior to that, in 1996, he was teaching it to people in 101 teaching. You cannot find it in books prior to that. The 3 down candles are one continuous orderblock. It is inside that pool of liquidity – sell stops, the open of the orderblock is at the top of the 3 candles going down. So, inside that FVG, the opening price of the orderblock is the buy with a limit order. Price starts to run above the highs.
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On the upper side of the chart buy stops were taken and a swing low is formed once this candle closes.
You are watching to see if you have a candle that goes beyond that short term low. It does so now you have a shift in market structure that is now bearish. This is considered ONLY because the price has taken out buy stops. An FVG is formed, the market goes back into it and that is when you go short. In terms of profit taking levels, you are looking at the previous lows where the sell stops are and also at the FVG you have below. The FVG here is below the 50% level of the high to low range. You are looking for the “low hanging fruit” – the easiest target to give to. You are not trying to be perfect; and you grow into holding the position to see if it is going to fill that gap. Take partials before reaching into that area. On the 1m chart you have the chart a bit different but with the same characteristics:
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The short term high gets violated. Right when it trades down after that swing break, high frequency algorithms are hammering by throwing orders in. That is not causing the market to go higher. It is just volume that is coming in. The algorithms that offer price constantly in the marketplace, that is what is beginning to spool and go higher. Regardless of where you want to trade at your limit orders, they may not get filled. When you are trying to buy with a market order you may think you are getting in at 14620, but by the time your order is executed and confirmed you are in 14640. That is negative slippage. When price starts to rally this is all default to the algorithm constantly offering price at a higher price. There is no “buying pressure”. Those 2 consecutive up candles are one continuous orderblock. It is a bearish orderblock because it has that gap, it has taken liquidity and there is an MSS.
BSL
OB FVG
The orderblock is a change in the state of delivery. The series of the 2 up candles begins with the open of the first candle’s opening. Once a candle breaks below it, it changes the state of delivery, so you go back to that point of reference. The algorithm remembers it. Inside the orderblock buyside is offered until the opening price of the OB is violated. Then the change in state of delivery occurs. Now the market will offer sellside liquidity, meaning that will match up sell stops and keep going below old lows and into an imbalance until it goes down into a discount. Trading sessions using New York local time when you look for highs and lows to be taken Those are the 3 times of day when you are looking for specific key highs and lows and any intraday forming before the equities open at 9:30AM. 1. London– 2am to 5am. 2. New York– 7am to 10am. 3. Asia– 7am to 9am. The equities open at 9:30. The hours of operation are generally between 8:30am to 11am but it can be extended to New York lunch. You will not take trades after 12pm local time New York as that hour is, usually, problematic, and it is better not to even look for any kind of setups. Wait until 1pm, preferably 1:30pm to 4pm, then you get that afternoon trend. Between 2pm and 3pm typically you 15
will see a setup that usually forms in the afternoon trend that will also offer opportunities, but that is not the scope of this mentorship.
It is important no know the highs and lows of the sessions because it is probable that the market will sweep them and create situations like you see in the image above. You will do this for every session. Internal range liquidity is looking for short-term lows or highs inside a price leg that you are retracing back into. Liquidity is a short-term high or low with stops above or below it or an imbalance in that same range of price action. Market structure shifts are all that you require. The skillset of identifying pools of liquidity is something that you can learn rather quickly just by going through old data and looking at the times of the day specified previously. HOMEWORK Go on the E-MINI chart, intraday, and look for stop hunts that lead to market structure shifts intraday, log the examples with your own annotations for your study journal. Running for stops – the break in the market going higher and lower above old highs or lower below an old low. Look for the MSS on the 3m, 2m, or 1m charts between 08:30AM to noon New York local time. The more you do it and the more you annotate your charts, the more you are going to have pseudo experience. Annotate the buyside and sellside liquidity pools on the 15m timeframe and then go on to the lower timeframes. How much did it move? “To know where you are going to find a deer, you need to know how to track one”.
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A live example of an FVG:
ICT specifies here that he’s expecting the price to drop down into the green area. Below the green area there is a smaller gap. He’s expecting the price to drop into the green box and he does not know if the price will dip down lower into the next FVG. Whenever there are 2 FVGs like this he will let the price trade into the first gap and sacrifice the better entry. If it really trades down into the lower FVG and goes right back up into the green box where the first FVG is, he will enter when it is in there [in the green box] and expect that the lower FVG will not be re-traded to.
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Now the price is in the first FVG:
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And then it reaches into the lower one:
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The long entry was executed here:
Then the price reacted and reached back into the green box. This is when the long entry was executed. The price can go one more time back down into that lower FVG. It is permissible. It does not have to go lower. Notice here how the body of the candle are staying relatively inside the FVG:
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The “low hanging fruit” here is the bottom of the red rectangle. As soon as it touches it, the trade will be collapsed.
The trade was closed at this moment:
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Internal Range Liquidity & Market Structure Shifts – Examples
This is the clean chart of E-MINI [NQ] on the 2m timeframe. The low of the day is placed around 2:30am and the high, as you see it here, is around 10:00am. The low is at 2:30 for the simple fact that the day started at 00:00 New York time and that price is the lowest that has been in that particular day.
This is the same chart with annotations. The horizontal red line is the EQ line from low to high. BSL can also be noticed.
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This is the same chart as seen above but zoomed in a bit more. Notice the previous high at 08:30 in the morning. That starts the hunt. You are looking for an old high to be violated and you can see that on this chart it is happening around 10AM. Now you need that MSS:
FVG
The MSS happens, it prints an FVG and you can short it down to EQ and down to the old low printed around 2:30AM.
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Another example is shared here on E-MINI on 5 minutes:
With “lipstick”:
The targets can be placed on the previous old lows and on the imbalance at 14044.25 and as you can see, it hits all of them. HOMEWORK Go back through old data and check those setups.
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Intraday Order Flow & Understanding The Daily Range – LINK
Whenever you are looking at index futures, these contracts trade with expiration dates. ES stands for E-MINI. H stands for March. Hence, you have ESH2022 in Tradingview for E-MINI futures contract for March 2022. The 3rd Friday of that month, March in this case, is the expiration date and you do not want to trade after expiration. If you have a doubt on what is the next contract, go to www.barchart.com -> Select commodity tab -> go to S&P 500 E-Mini.
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You are interested in the 2nd line, not the first. In this case you have ESU23 for September 2023.
You look at the open interest one week before the expiration, which is 3rd Friday of every month. Usually around the first of the second day of the week prior to the expiration date, you start monitoring the open interest and you want to be in the month that has the largest interest number. If the next month has a higher interest, then you want to trade the next month out as it has more liquidity offered. In this chapter the intraday framework will be taught. You will assume that that this chart is bullish from that low.
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The 15 minutes timeframe is the timeframe on which you are looking for key highs and lows, imbalances and orderblocks. Still, the aim of this teaching is to learn how to use the FVG, not the other concepts. Same chart as previous, but on 15m timeframe.
Place 4 vertical lines at the following hours of the day and make sure that the time on Tradingview is set for New York. 3. 08:30 – News events 4. 12:00 5. 13:00 6. 16:30 12:00 to 13:00 – no trade time period. It is the lunch hour. The middle-highlighted area is the lunch time, 12:00 to 13:00.
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Prior to 08:30 what is the most significant or obvious swing high and low on the 15 minutes timeframe? Mark them and include the wicks. The close of the candles do not matter. The swing points are where the liquidity will be. After this the first lower timeframe that can be used is the 5 minutes timeframe. This is the 15m timeframe.
The 3 drives pattern is, basically, a rising wedge. If you ever see the pattern going into an old high, you do not have to see the 3rd high of the pattern take out the old high. Every time it creates a swing high and starts to go down, bears are trying to sell that and they are putting stops above the previous high in that pattern and they keep getting taken. It is already building liquidity and smart money will be already establishing short positions. If you do not see those higher highs of the 3 drives pattern and it is one steady run up, then you anticipate a high like this to be taken out. It does not need to be taken out by much. It can trade above it and then you look for the energetic movement lower – displacement. This is the 5m timeframe. The 3 drives pattern can be seen better.
3 drives pattern
Displacement
The high
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Think about displacement. That is what you are looking for in price. When price goes above an old high and it trades down below it, you want to see an obvious displacement, not a lethargic move, and then you go in and start looking for the FVG.
FVG
Displacement
See the wick before the displacement. It goes down and it quickly snaps back up. Did it create an FVG? No. Then it goes higher, it matches the previous high and it smashes down and creates the FVG. Short the FVG to the low you identified prior to 08:30.
After the low was taken, look closely at the chart. What do you have on the upper side of the chart? Buyside liquidity = buy stops. Notice that right before the lunch hour the price went slightly above it and then it trades down. During that time of the day you will not trade it as it is not a clean time of day, usually.
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The high of the day was printed right before the lunch hour and there is also the resting liquidity above the equal highs as the stops are resting just a bit above them. The buy stops are going to be a reason for the market to want to reach up for that. You do not have to be a participant on the lower side of the market as a buyer. You just need to know on the other side of lunch, at 13:00, if there is any indication of the market wanting to go higher.
Think about how a trading day is structured: there's a morning move, a break during lunchtime, and an afternoon move. Take a look at your charts and determine the trend during the morning period. Was it bullish (prices rising), bearish (prices falling), or consolidation (prices staying steady)? If it was consolidation, consider the trend in the previous day(s) before the morning period. Were they bullish or bearish? If they were bullish, there's a good chance that the upward movement will continue, especially if you start seeing equal highs forming. This indicates that traders perceive resistance at those levels and expect prices to drop. However, they might actually be placing buy orders above those equal highs as protective stops for their trades. The market will likely gravitate towards those buy orders, especially if you start noticing higher swing lows after the lunch break. Take note of each candlestick on the chart and observe if the low point on the left is higher than the previous one, and if the low point on the right is also higher. If this pattern continues, it indicates a strong presence of accumulation in the market, suggesting a desire for prices to rise. Ultimately, the market wants to break through the equal highs and move higher. The characteristics of the afternoon trend is that there are mechanisms built in that help this market really accelerate into the close. If you study the price action in your lower timeframes, you will see there that there is a repeating phenomenon typically around 15:40 to 16:00. It is based on market on closed orders. The algorithms will start spitting out really aggressive pricing and forcing traders to cover or get out of the trades.
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Stop hunt
At 13:30 you are looking for swing highs and lows for the afternoon session. It is the same context that you use for the morning session when you are looking for swing highs and lows prior to 08:30. You look for the first one. At 13:30 you look for a swing to form because there is an algorithm [MACRO] that starts running at 13:30. In the image above there is a swing low violated. That small little stop hunt is all that is necessary to start the buy program. It is called spooling. Spooling is when the algorithm continues to offer higher prices. It does not matter what the volume is. If you do not get a swing low that trades below it in the form of stop hunt, you will look for a move higher that is sudden [displacement] then you look for an FVG. If it trades back down to an FVG, you buy that. 5m timeframe example on NQH2022
Buyside liquidity
FVG
Notice the FVG formed before 12pm and what happened after 13:30. The price dropped into the FVG and rallied. 31
On the 1m timeframe if you look closely at the price action, you can see the equal lows. The equal lows are seen as support for the retail traders. Below the lows are sell stops. You WANT to buy the sell stops.
Equal lows
July and August can be a little hit or miss on the indices but the rest of the year they tend to be really nice markets. HOMEWORK Outline what the session was in the morning and then what the session did in the afternoon. Sometimes it will be bullish in the morning and reverse in the afternoon OR it will be bullish in the morning and continuation higher in the afternoon and you will get a measured move. Then study what the daily chart was showing days before when it had nice runs like previously shown. It allows you to find these big moves.
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Market Efficiency Paradigm & Institutional Order Flow – LINK How to internalize price delivery • • • • •
Do not trade patterns for pattern’s sake. Do not trade indicator readings or momentum. Look to enter long where retails sells. Look to enter short where retails buys. You anticipate price seeking opposing liquidity.
Smart money do not look at secret trading indicators. They are looking at time and price. Retail does not have any understanding or affinity for time. Time is crucial for smart money because some specific times of day really build the likelihood of volatility to come in and also when short term reversal are likely to occur. Smart money looks to cannibalize the speculative uninformed money. Smart money is not looking at patterns to trade. They are looking at liquidity.
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The ICT Fair Value Gap The bearish ICT FVG • The institutional order flow pattern is based on a three-candle formation. • The optimal formation of the bearish ICT FVG will be found after a run into buyside liquidity. • Typically found above a single price high or multiple price highs in a relative bias – double top. To efficiently balance out the gap, at some future time the market is going to want to trade into that area. The gap area between candle 1 and 3 is where the market offered sellside only. When the market trades back up into the gap and your bias is bearish, that is a short signal. Look for periods when the price goes above an old high, then it breaks down and then you look for this pattern. You are not looking at anything else prior to the first candle except for the fact that it traded above an old high. You are looking at a pool of liquidity of buy stops resting above the highs. The stop loss is above the high of candle 1 or candle 2. For the new traders put the stop loss above the first candle. The best placement is above the swing high as the FVG can be created lower. The Bearish Market Structure Shift You have the market trading higher, short term little retracement and then it trades above an old high OR above the initial short term high and then it breaks down. Once the low is broken that is when the new trade idea is now being birth. You do not know where you are going to get in until you get through the following process: • The market will see a price delivery of a rally above an old high or highs and then quickly shift lower. • Significance is placed on the term quick and with displacement lower. Not a small candle move lower or a wick only. It has to be energetic and preferably close below the short term low.
You know it is displacement based on how it closes down below the short-term low. If it is a short little drop below, be cautious. It might have an FVG, but it also might be likely to go higher and create 34
another high. You need a big candle closing energetically lower. If there is no FVG, you will not trade or you will go to another market. This pattern forms every single trading day but you have to look for it with the process previously described.
The bearish ICT FVG • • •
The institutional order flow pattern is based on a three-candle formation. The optimal formation of the bullish ICT FVG will be found after a run into sellside liquidity. Typically found below a single price high or multiple price lows in a relative bias – double bottom.
The stop loss is below the low of candle 1 or candle 2. For the new traders put the stop loss below the first candle. The best placement is below the swing high as the FVG can be created higher.
The Bullish Market Structure Shift • The market will see a price delivery of a rally below an old low or lows and then quickly shift higher. • Significance is placed on the term quick and with displacement higher. Not a small candle move higher or a wick only. It has to be energetic and preferably close above the short term high.
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EXAMPLES Look at this naked 15m timeframe chart on E-MINI NASDAQ and determine which swing high would you anchor and where is a stop run on buy stops.
Mark the 08:30 New York time with a vertical line on the 15m timeframe and also mark the first swing high you see on the left of 08:30. Draw a line from the top of that swing you found on the left and draw it out in time. The 15 minutes chart
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Once you have the levels drawn on the 15m timeframe, you drop down to your 5m timeframe. Then when you see the price reaching lower after it reached your horizontal line from the 15m, you will go on lower timeframes. The 5 minutes chart You can see the price reaching lower after the 15m level was hit.
The 3 minutes chart
Can you spot the MSS and the FVG in the chart above?
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SL FVG
First notice the swing low being broken – the red dot, and then see the price reaching lower and creating an FVG. The red lines are the 2 options for stop losses. The first one would have been hit if placed above candle 1 that created the FVG. If placed above the swing high, the stop loss would not have been activated. Fine-tuning for better entries On the 2m timeframe there you can see the FVG there and place the stop loss above the swing high.
SL FVG
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On the 1m timeframe you can see a higher FVG where the entry could have been done. And, of course, the stop must be placed above the high or above candle 1
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If you would see the chart live like this with the 15m high on your chart and the price going lower, you would believe that you miss the trade. But be patient! Also notice the volatility that came into the market at 09:30.
EQL
Look at this initial poke above that high. It went above it; it went down but it did not create any FVG. Every candle overlaps. There is also no swing low taken out. Now you have a higher high above the short term high and above the 15m high. Only now you have the likelihood to break lower. If it breaks lower, what is the swing low to be taken? See it on the chart. If the price drops below that and creates an FVG, that is when we consider trading it.
Swing low
EQL
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Now the price has taken out the swing low, there is an FVG and there are also 2 targets for the short. Around the middle of the price action there is an FVG where profits must be taken, partials or full profits. Do not forget about the equal lows for targets. Observe that that FVG gave 3 short opportunities in this case.
When you take your first partial, do not move your stop loss, yet, because you are going to, probably, get stopped out. The stop loss will be trailed ONLY after the EQL was taken BECAUSE it has taken out a significant intermediate term low. The whole swing is between the 2 red dots.
SL moved
EQL
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Daily Bias & Consolidation Hurdles – LINK This is the naked daily chart of NQ1! On Tradingview.
The same chart with annotations looks like this.
From left to right you can see the following: BSL being taken, MSS, price trades back up into an FVG. For targets you will aim for the first FVG below the 50% of the swing, in discount and also for the old low.
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Once the price has taken out the sellside liquidity it is likely to retrace back up inside the range. The price went to a premium market as you can see, above the 50% and then it came down below it, to a discount around, it bounced off of the old low and then it consolidated around equilibrium.
When you have this condition of price hanging around the equilibrium area of a swing it can make it very difficult to determine a bias. You are looking at your daily chart to get a read on where it is likely to go next. Until it gets to that high or low, you stay with that bias. This does not mean no trading at all. It means that you have to rely on the smaller timeframes intraday charts and look for liquidity pools. You are going to trade intraday volatility running old highs or lows being a lot more nimble (quick and light in movement or action; agile). Going into the lower timeframes, ICT’s chart will be used as Tradingview doesn’t allow the 15m timeframes to be accessed so far back in time. This is the 15m timeframe for NQ1!. You have on this chart the 08:30 in the morning and the first low prior to 08:30. The liquidity will be above equal highs and this is the reason why that line is placed on the chart and not where the blue dot is [next chart], is because retail will see it as resistance. That is the first target to reach if you go long. With the benefit of hindsight, you can see the price trading below the low and then it reversed reaching both targets. ICT specifies here that he did trade this setup but did not hold the trade open until the BSL was reached because if you would measure the high to low, the midpoint aka equilibrium is just above the EQH.
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EQH
The 2m chart You can see how the price took out the old low formed just before 07:30, then it rallied, it did not trade above the short term high, it comes back below the old low but not below the most recent low, then it turns and go higher. ICT specifies that he did not see anything in this chart to allow him to go long. It was, in fact, something else presenting on the S&P500 chart.
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S&P500 chart on the 15m timeframe A similar situation as the NQ1! Is presented on this chart. Notice that the market went above a short-term high after 08:30 and then it went lower into sellside liquidity. Look at all the sloppiness and volatility that happened before taking the SSL.
DOL
Looking inside that lower part of the chart on the 2m timeframe, the market trades below the old low printed before 08:30, it rallies above the short term high, it creates an FVG. It means that you have displacement low and displacement high. There is also an MSS. This the reason why ICT took the long on NQ1!. These markets generally move in tandem so he does not need the FVG in the NASDAQ as he uses the S&P as an “indicator”.
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What is the confidence that the S&P500 is turning around at that specific level? The DOW, NASDAQ and S&P.
During that decline in the NASDAQ and S&P, look what the DOW is doing. When you see that AND you anticipated already, this is something that confirms an idea that you have already established BEFORE price does what it is doing in real time. The correlation cracks down right when the NASDAQ and S&P are trading below their old low and DOW does not trade below a low. The SMT divergence by itself means nothing. It has to be confirmed with price action as see on S&P500. The DOW is not going down just because “buyers are coming in”. This is an unwillingness to deliver to that low. This is a MACRO. The MACRO is an algorithm that prevents or enables delivery of price. Just by itself it means nothing. Algorithms run on TIME and PRICE, not “price and time”. You first need to refer at time. Go left and look for liquidity pools. Wait for the low to be taken out, wait for the MSS, find the FVG and then trade it.
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Applying Institutional Order Flow to Forex Markets – LINK You are looking at EURJPY on the daily timeframe. You have an SSL taken out, a rally and 2 FVGs after. The price drops down into the 2nd FVG and rallies back up into the BSL.
Yen pairs tend to have a double return to a specific level. You have a swing high, the market rallies through that, there is no FVG there, it drops back down and then it runs again taking out the next swing high. You have 2 points of market structure that have moved to the upside. Now you want to go through the leg up and see if there is any FVG. As previously specified, there are 2 FVGs. At the top of the chart in the middle there is a swing high that has buy stops above it, hence that is a buyside liquidity. It is likely that the price will be drawn into it, but not mandatory. You are just aiming to it. Further on ICT’s charts will be shared as the timeframe drops to 15 minutes. You are looking at the last candle you see on the chart above. It is the daily candle printed on 10th of February 2022.
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The clean EURJPY chart looks like this and it will be filled with the specific annotations.
This is midnight price and New York session on the 15m timeframe.
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On the 5m timeframe you have the New York session kill zone highlighted from 07:00 to 10:00.
The market is trading down, takes out a swing low and then it punches higher right above a swing high. Inside that price leg is there an FVG? To find out you need to get through the smaller timeframes from 5m to 1m.
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On the 3m timeframe you can see the FVG in that price leg.
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1
On the same timeframe, the 3m in this case, the questions are: 1. Does it take out a swing low? Yes. 2. Does it take out a swing high? Yes.
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Now you have a valid condition to see if there is a trade. Go back through the price leg. Is there an FVG? Yes. There are 2 FVGs. Be mindful that the price can stab down into the lower one but try to get in a trade in the first FVG.
1 2
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Now the question is “How far it can trade up?” The real easy way is to use price. On the left there is a swing low before the run up, then the price consolidated, it dropped down, created discount, then it retraced in the FVGs and rallied again. How can you know how much it can run? You can use Fibonacci extensions for a measured move. As you see here, the price reached into it.
NEW YORK KILL ZONE – 07:00 to 10:00 LONDON KILL ZONE – 02:00 to 05:00 There is an approach that you can use the London Session and that is by marking up the vertical lines at 2am and 5am. During those hours you are hunting the setup.
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Power Of 3 & New York PM Session Opportunities – LINK Power of 3 will later be remembered as PO3 is: - Accumulation - Manipulation - Distribution
Inside this range there is a swing high and a swing low. Those reference points were picked because this is the most recent low after taking out the short term low of the market as sellside liquidity. The price retraced back up inside the range of this high and this low.
The range between the swing high and low marked on the chart is marked with a Fibonacci tool to find the premium and discount of the range. Notice that the market traded down on Monday into a deep discount but did not take out the lows. Monday closed as a Doji – indecisive candle. If the market is trading down into a discount even though there might have a low to target, the Doji candle may require a retracement, but not because it is a Doji. At the close of Monday’s trading, 16:30, the market created an imbalance. On Tuesday’s trading overnight, the equities markets have run up into the imbalance.
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Looking on the 15m timeframe, on the NQ1! chart you have the area of the daily FVG between the red lines below.
Take your attention to Monday’s trading.
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PO3 is accumulation, distribution and manipulation. Follow the chart as you read. It will be a bit difficult, but just try. If you are bullish, you are expecting the opening price to be near the low of the day or near the low of the session. Then it trades lower making some important low and then it rallies, it creates a high and then it closes near the high of the day. It is not important for you to try and predict the closing price. You are trying to anticipate the likelihood of the market making some kind of a fake moves like a Judas Swing [the false move]. That is the bottom of this bar candle here. Typically, in London and in New York sessions there are fake runs that start off a move. You do not need to try to predict the closing price with PO3. Manipulation When you think it is going to go higher, it is going to be a small little move lower. THAT is the move you want to try and hunt a long entry. If you miss it you can try and get long real close to where the opening price is.
4 EQH
1
6
3 5 2
1. 2. 3. 4.
On Monday the price dropped overnight. It consolidated. And then it had a bit of a rally ahead of the equity open at 08:30 and left an imbalance behind. If you look at 08:30 and then left, you have some relative equal highs there that are suspect. Ahead of 08:30 there is a huge imbalance left behind. If the market runs out the relative equal highs after the open at 09:30, it is likely to trade down and rebalance. If it does trade down and reaches the imbalance, that is a good candidate to go long. The line of the FVG where #4 is, is not there on Monday. It was formed on Monday morning. 5. To the left of the imbalance there is a bullish orderblock and the market hits it. 6. The market starts to rally and it consolidates into close – 16:30 New York.
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Rules to consider - The open price is 08:30 – draw it out in time. - Did the price go below it? - Did it go inside the imbalance? - Did it take out a short term low? - Did it hit an orderblock? - Was it in the optimal trade entry? 5m chart The imbalance with all the down close candles are anchored to the daily bullish orderblock. The 4 down close candles are complete orderblock. Consecutive down close candles right before price surge that has an imbalance defines an orderblock. A high probability bullish orderblock would be that your bias is bullish, you have displacement and down close candles before that and you anticipate a return into that. Remember that the top seen on this chart below does not exist until Monday’s close. 16:30 New York time is the close of the day. Technically it closes at 16:00 but the market trades a bit more up to 16:30.
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1m chart
Here you can see the dropping down inside the orderblock, inside the FVG, inside a retracement of the FVG that sets the stage of a market run up into a higher retracement. It is an afternoon trade at 14:00 New York local time. We do not know if this is going to be the closing parameter for a daily FVG. We do not need to know that, yet. This is a likely scenario to go long. Zooming in that area, you can see the price creating an FVG and a swing high that is broken, then you have the retracement into the FVG. That is the long entry.
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FVG
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The overnight runs [02:00 to 05:00] – applicable on forex and equities On 15th of February 2022 there was an overnight run on NASDAQ. When you have those big runs overnight before the session begins in New York, do not chase the price. When the market opens up at 08:30 you will not start buying just because it went up overnight. You will wait. You do not chase it. Usually, when those moves come into the market, there is a consolidation that comes shortly after, but not always. When the market opens at 08:30, look left. What do you have? In this case you have a high and a low. You are using that low because below it there is an FVG and it is likely to trade down into it. 5m chart BSL
SSL
Only for equities – if there is a big run overnight avoid trading the New York session. Wait until the other side of lunch after 13:00 and then anticipate the New York lunch lows to be taken out OR the New York morning session’s lows to be taken out. The general idea is that: it runs up overnight, consolidates, creates a low, starts to rally and everybody is thinking “I do not want to lose my profits” and then the stop losses are placed where the SSL is highlighted on the chart above.
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When the price hits that FVG on the 5m, you will go on the lower timeframes to find the FVG. In this case there was no FVG printed on the smaller timeframes. Post New York lunch hour you have those lows. They take out the sell stops below the first lows – equal lows, and then it rallies, it drops back down as it just created a swing high, it breaks that high and it creates an FVG.
If you miss your first entry on the top of the FVG, you can use that swing low [red arrow] created inside the FVG as an entry. The stop loss is placed below the short term low. If you miss that one also, there can be another setup. Here you have a bullish orderblock.
OB SSL
SL
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Implementing Economic Calendar Events With The Open – LINK The economic calendar can be found on www.forexfactory.com/calendar. The news embargo lifts at 08:30. The calendar below is from 9th to 15th if July 2023.
Some of these reports or speeches or data points may be used as a smoke screen / catalyst to have price go up or down at the time of the release. Other instances are going to be a buildup or dropping down in price right before the report comes out and then the real move starts. When considering the PO3, you are specifically dealing with the daily timeframe. For a bearish day, the expectation is that the market opens, has a bit of a rally and then comes down and closes near the daily low. Reversed for bullish candles. The daily bias will get easier if you start implementing this mindset. If you are bearish you are going to anticipate the market doing the PO3 – open, rally, push down, close near the low. Not every single candle in the series of the entire price swing are going to be up close candles when you are bullish or only down close candles when you are bearish. The PO3 is accumulation, manipulation and distribution.
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The opening range The opening range refers to the price range between the opening and the high of a trading day. On a bearish day, when the price is expected to go down, smart money may accumulate short positions at the open and at prices above the open. This means that they are selling short with the expectation that they can buy them back at a lower price later. The range for potential shorting opportunities is not limited to just the open and above but it is also projected below the opening price. This is where you will look for favorable trade setups such as stop raids, optimal trade entries (OTEs), FVG and other shorting opportunities. These setups may form in the range between the open and its high, projected below the opening price
Having the opening range, project that down below the opening price [for a bearish bias]. The sell setups are going to form in that range. That is accumulation of shorts. The manipulation is the initial rally up. Then it goes lower, creates the low of the day and closes near the low of the day. The distribution is between the low of the day and where it closes. Smart money short positions have been distributed.
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How do you know what the bias is going to be most likely? Not everyday bias, but most likely. Here is an example: The market creates a swing low. That means a low with a higher low to the right of it and a higher low to the left of it. You have 3 candles that make out a swing low. Those are the candles 1, 2 and 3. The very next candle trades down and it comes back up and closes right near the highs. It has a lot of movement below the opening price. This means that something took place down there after the swing low was formed. That 4th candle did not go lower than the 2nd one. That rallying up of the 4th candle supports the idea of the swing low being formed as it did not take out the low of the 2nd candle. The 5th candle goes into the FVG you see on the left and then the market retraces back down into the equilibrium area to offer a discount. The market continues to go higher until it takes out this high. Then it can go in retracement lower or consolidation. You get both in this case here.
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This FVG…
…is the same you see here on the 1h timeframe.
drop FVG rally
Watch what happens -> the market drops down, finds some support at the low end of the daily FVG and then rallies all the way back up to the high end of the daily FVG. It breaks down right before midnight on the 17th of February 2022, it consolidates trading up into the newly formed FVG as it rebalances it. This happens overnight in the London session.
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On the 15m timeframe there is an imbalance and the price went up into it rebalancing the movement down. The same thing happens in the morning session of New York where it has a rally up into an FVG and then starts going lower.
Remember the PO3 where you have the open, rally to create the high of the day, selloff and close near the low. That is what you are looking for. WHY would this bias be expected on this day? Because the upper end of that daily FVG was tested and then there were multiple bearish shifts in market structure. It gives you a high probability that this day is going to be a down close day. It may not close on the low; it may just be a big down move and that is all you need. You need movement.
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When referring to the PO3, look at the midnight NY opening price. The opening of the day starts at 00:00 New York Midnight and that is the first line of the bar candle. It opens, it trades above the opening and you want to be selling short when that happens if your bias is bearish. You are looking at the opening price and you are expecting a sell to form. Well, you have that FVG and the price rallies into it. That is a sell above the opening price.
From the opening price to that high, take that range and subtract it from the opening price. What is occurring? You have the sell in London, you have the sell in New York and then you have this imbalance in here made during London kill zone. The projection of that range is the expectation on how low the price can go. [You can use a Fibonacci extension from opening to high]. Where the blue eye is, there is sellside liquidity – relative equal lows. If the price starts to pump up higher ahead of the 08:30 news release, this tells you that they, the market makers, are pricing in a premium market ahead of the news to sync it lower because the bearish bias is going to come to fruition, they are going to expand the price lower and they have already established their shorts because they accumulated above the opening price.
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That can be seen in the price action of each little short-term rally up. At 07:00 it rallies above the relative equal highs and cleans out the imbalance. Remember when said that the price can touch the most distant FVG? It did it here. This is why your risk must be managed accordingly. But try to place the trade in the first FVG.
2nd FVG 1st FVG
The structure of the trade / the framework There is the BSL that is taken and then the price goes lower fast and sudden. That is how you know you have a shift in market structure. In the area highlighted here there is no FVG. [being honest, I do see an FVG]. It is a 5m charts and this is where you start doing a top down strip of 4m, 3m, 2m and 1m. The first FVG you find, let’s say on the 4m timeframe, you do not need to go down to 3m, 2m or 1m. If you do not find the FVG on 4m, you will use the 3m and so on until you find the FVG and you stop there. No FVG, no trade!
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The same chart above is switched from 5m to 4m timeframe and the price action becomes a bit clearer and cleaner. You have the BSL after rebalancing the gap on the left, it goes above and it breaks down. You want to trade this FVG, but the money management has to permit you a run up into the higher FVG.
There is a breaker block highlighted on the chart above. The foundation of the breaker block is that the market will mostly stay in the lower half of the breaker candle. The stop loss for the entry in the 4m FVG can be placed above the breaker block. To learn the breaker block, watch the 2016 mentorship.
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Market Structure For Precision Technicians – LINK “How do I know the price is not going to go higher if I am going to sell above an old high?”. That is the underlying market structure and the trust in the factors that will be thought in this chapter. The area inside the FVG will be further presented.
The timeframe of the chart below is 1h. The notations are to outline the market structure in the idea of long term high, long term low, short term high and short term low. In between those 2 swing points there is an intermediate term high and intermediate term low.
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When you look at price, you are not looking for just the simple “higher high – higher low, therefore is a bullish market”, you are looking at: • Does the market have a reason to go up for buyside liquidity or buy stops? • Or is it likely to go up to rebalance an imbalance? • Or it likely to go lower to sweep out short term lows for sellside liquidity or sell stops? • Or it likely to go down to rebalance an old imbalance? That is the #1 question you need to have before sitting down in front of your charts. That is what you are looking for is the current market narrative. What is it likely to be doing right now? You do not care about patterns and price action, you do not care about anything harmonic, Elliot Waves and nothing that you can attribute to a retail mindset except for the following 2 questions: • Is it likely to go up or down for stops? • Is it going to go higher or lower to rebalance? The daily range will not always submit to that bullish or bearish right from the opening “go higher or lower”. Sometimes you will have consolidation intraday and you may have tried to take a trade that was based on an idea that you came to that would be bullish. And maybe it did give you an opportunity to be in a trade that was profitable but you held on to it thinking that the daily range was going to keep on going higher and it turned on you. These ideas from this lecture will help you identify the likelihood that your idea has probably been proven inaccurate, but you have to be receptive to the clues that price has given you. That is the number one reason why ICT abandoned indicators. Continuing the lecture, we are looking at this hourly chart of NQ1!.
Right away we know that the price has traded up to the high end of the daily FVG. When the market traded up into and just above that FVG high, once it started to break down and trade lower, it traded back into this candlestick’s high – the red dot, which is the low end of the daily FVG. The price 70
is trading back inside the FVG range. Since you are expecting the daily chart to be the parent of this price structure, all the minor lower timeframe swings are going to be subordinate to it. What does this mean? You do not expect the LTH to be broken to the upside. If broken to the upside it means that the daily analysis, which is the expectation that the LTH will hold the price down and be a factor in the algorithm repricing and go lower at a later time and in fact the price goes above it, it means that you are probably wrong in your analysis. Therefore, you will need more information by studying more price action and sitting on your hands. OR if you have a trade on it means that you have to admit that you are wrong and the stop out that may occur is just you managing the risk. It is a losing transaction and does not mean that your model is flawed. As long as the price remains below the swing high, your idea is that it is an LTH because it is framed on a higher timeframe resistance level. The LTH should remain intact and the price should not go higher than that. From the LTH the price starts trading towards the low end of the daily FVG and starts to find support, it rallies back up and trades near the high but it does not take it out. Once it starts to break down and consolidate, in this area the retail ideas will see a lot of trust in the idea that it is a potential bull flag. That is a false bull flag.
And when you see the price break down and then rally back up, every single time you need to have in mind the idea that the price will rebalance an imbalance. Every rebalance of an old imbalance, that swing that is created at that moment, you immediately label it as an ITH. Also, the drop down to fill the imbalance will be noted as ITL. The ITL has a higher STL to the left of it and a higher STL to the right of it. The ITL forms by rebalancing, forms the 2nd ITH but then the market trades off of the STL, it rallies up but it fails in the red rectangle. You are going to anticipate that failure. If you are looking closely with a retail mindset, the chart above looks like it is forming a pennant or a triangle pattern. How do you know which way it is going to break out? You do not do “technical analysis”, you do “technical science”.
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The market has traded higher and then consolidated. It failed to go above the LTH and then it made an ITH. Why is that an ITH? Because there is a STH to the left and a STH to the right of it. Between 2 STHs the highest high between them is an ITH. Anytime an imbalance is rebalanced, that becomes an ITL. It is important to understand the understand the higher timeframe which is what those purple lines are. The hierarchy in parent to child price swing is that the smaller timeframe price swings [child] adhere to from the higher timeframe is directly linked to the order flow on those higher timeframe charts. In other words, the daily chart has the bulk of the volume that is coming into that marketplace. There is not a lot of volume coming in on the 1m chart. That is not to reduce the importance of a 1m chart within the proper context and market structure that is underway. You can use the 1m chart to navigate because there is a smaller retail trader, which is who we all are, but you do not trade with retail logic.
The ideal scenario of an ITH is to be higher than the STH to the left and higher than the STH to the right – that is how Larry Williams teaches it in his “Long-term secrets to short-term trading” book. But is not. So, what is the price doing? It is only rebalancing. In the red shaded area there are the 2 green candles going up right before the move down. This is important because the red shaded area will be analyzed and see how you can use highly precise ideas withing that orderblock. You are anticipating that run up with the candles forming an orderblock where everyone else is teaching the idea of the last up-close candle before the down move. That is not an ICT orderblock. Those 2 green candles you are watching them as the form live with the expectation that that ITH will not be taken out because the imbalance has been rebalanced here. You are anticipating and forecasting a failed swing. Every time the green candles are forming you are looking at that as a bearish orderblock. From the beginning of that candle’s low you are looking in time on lower timeframe charts. As this is the 1h timeframe, the next lower timeframe will be the 15m timeframe.
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Dropping down on the 15m timeframe – this is ICT’s chart
Before we get any further, just know that that range from the LTH and the LTL will be used for targeting purposes. The up-close candles from the red shaded area on the right is the range for the hourly orderblock. Inside that range you can be hunting FVGs. You do not need to see the market trade down below the last highest up-close candle. Before zooming in the chart above, look closely and write down or highlight what you see.
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In the red shaded area there is an imbalance. That is the same thing that occurred in the move from STH to ITL on the hourly chart that gets rebalanced.
On the 15m timeframe there is a smaller version of it. That is a fractal; something that repeats on the smaller or higher timeframe that is similar in its formation. It will not be identical, but it is closely related to the general idea.
IMBALANCE
Once you established the market structure on the hourly chart you will not go on lower timeframes below it and mark out all the swing highs and lows. That is overkill. You just need to know what you are looking for on the timeframe you are trading on. The logic is based on the daily chart going up into that imbalance to go lower. The hourly chart frames the trade; it gives you what you are looking for to start hunting entry techniques. 74
The 15m timeframe is the bellwether. This is what it will give you the actual “get in and get out”. You might not like the risk parameters that are required on this timeframe so you can get down into lower timeframes. Should price go lower and break lower, you are looking at that STH and at the ITL. If you have a STL taken out and an ITL taken out or just an ITL taken out then you can go back to the previous LTH and LTL. LTH and LTL are generally going to be linked to a higher timeframe daily chart. It might be a price range, a high to a short term low. In this case you are framing the idea and logic around that daily FVG in the idea of rebalancing and then go lower to take out the old daily low. Therea are lots of ways to frame your trade but you have to have something directly linked to that daily chart as the institutions and banks are working with it. The majority of your time and study should be on determining where that daily chart is going over the next day or two or a week. Try not to forecast longer than a week, not that you cannot, but as a developing student you want to keep your perspective limited to a 5 day time horizon. Do not be upset if you do not the entire weekly range forecasted correctly. It is highly technical, no one gets it overnight. It took ICT 6 years. If you have a break below an ITL, then you have a significant break in market structure. This tells you that you can use the LTH and LTL and start getting projections down. Those are generic price targets. If you do not want to use that targeting method, you can use your Fibonacci retracement tool, anchor it from ITH to LTL after the LTL is broken and this is what you get. You are using this method because the LOW to HIGH is your framework. The retracement that fails to take out the LTH and starts to decline begins at that ITH.
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Those are the Fib retracement settings I use. You first click the high and then the low to have bearish targets extended below.
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The zoomed in chart on the same 15m timeframe shows an aggressive entry for going short. The hourly chart had only 2 candles going up in the red shaded area, as on the 15m timeframe there are more candles. In this up-close candles if you get an FVG formed with a breakdown like this below, notice you do not need a swing low broken.
In the model lectured by ICT you have to look for the short term low being broken [MSS], then you see the price going up into that imbalance and you can go short or long depending on the market direction you have. If you understand the market structure, this perception by looking at it by a higher timeframe and anticipating a breakdown and then starting to classify each imbalance, swing high and swing low, the ITHs and ITLs are formed at rebalancing of an imbalance. If the ITH is not higher than the 2 STHs, that is telling you that the market is very weak and the algorithm is tipping its hand. Smart money are looking at imbalance, rebalance and liquidity. That is it! On this aggressive entry presented in the previous chart, you do not need a low to be broken because you have the idea based on the market structure that this is extremely weak. You do not know if THAT is going to be the next STH. You are studying the up-close candles because that is going to be an orderblock later on. Everybody else knows how to look at these candles. After it goes below it and comes back and bumps the bottom of the red rectangle, that is the classic ICT bearish orderblock.
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The advanced interpretation of an orderblock would be using market structure like this, which is unconventional, but you start seeing the imbalances inside the orderblock when you are already expecting it to sell off. You already know that the ITH has rebalanced the gap on its left and that classifies it as an ITH and price should not trade above it.
1 2 GAP
ITHs has two classifications: 1. It is a STH that has a STH to the left of it and a STH to the right of it. 2. It trades back up to rebalance an imbalance. That immediately becomes an ITH. The usefulness of that is if you are bearish and it rebalances like this, the next STH should be lower than that ITH. If it trades higher than that, then your trade idea is probably flawed. Do not force that trade again. Wait for market structure to get back in sync with what you are expecting. That is how you keep from blowing your account or forcing your will in the marketplace.
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Getting back to that orderblock…
Inside these candles, the green ones going up inside the red shaded area, as they are going up, you are looking at lower timeframes charts and this is a 15m timeframe; you see it break down. It does not take any short term low out but is inside these up-close candles which is an hourly orderblock of two candles. You have the imbalance; that is your aggressive short entry and the SL can be placed right above the STH. The classic low risk high confirmation short entry is the classic return back to an orderblock after it traded down below it. The stop will be placed above this candle’s high. You can go into your charts deeper with your 5m, 4m, 3m, 2m and 1m narrowing down to a smaller timeframe. You can see on this 5m timeframe that the last 2 candles inside the hourly orderblock with the gap, that low is exactly to the quarter point as that candle’s high. That candle is highlighted because the orderblock is one consecutive series of up-close candles. It is not the last candle before the down move.
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Orderblock theory is much more than just simply “the last up-close candle before the down move” or “the last down-close candle before the up move”. You have the up-close candles together here with the imbalance inside of a larger orderblock within a bearish market structure because there is an ITH to the left and that run up is going to fail to go above it.
The imbalance here has the price going just a bit higher, but that is OK. Your short entry would be on the bottom of the hourly orderblock with the SL placed above the previous high on this timeframe.
SL
ENTRY
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On the 4m timeframe you have the same orderblock seen from the 5m perspective.
This candle acts as real resistance
The idea is the following. When you see an imbalance get rebalanced, the high formed as it rebalances, that high should not be violated by price going higher than that if you are bearish. When you are bearish, all of your up-close candles should keep price from going higher than them. What does that mean? You have an imbalance here, the market trades up into the bullish candles that are on the 5m chart, then it trades lower, it pushes back up, but does not go above this high. That is institutional order flow. While the market is moving in your favor, you are going to continue to trust that move and hold on to your trade because if you are bearish, the up-close candles should keep price below them.
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Market Structure For Precision Technicians – continuation – LINK The price reached below that low but you do not want to sell short even though you are bearish. What is it likely to reach into? It can trade up into that up-close candle, the low or open of that candle. That is like a magnet or the draw of liquidity [DOL]. It also can reach into the FVG and resume going lower. Daily NASDAQ chart
1h chart After a run up the price retraced and went down inside the gap on the left. Above the highs on the left there is the draw of liquidity. Above equal highs there are buy stops. You are thinking that the algorithm does not let price to go lower so it wants to go after everyone that has been profitable going short. Where are their stops? Above the highs. After the market hit the gap, it started to rally and leave that down close candle. You will watch if the market wants to trade back down into it. If it does, you are going to treat it as a bullish orderblock. Remember that if the move has been bullish, down-close candles should not be violated.
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***I have checked both charts, mine and ICT’s and the price did not went into that FVG. This is ICT’s chart zoomed in. I added the line so you can see that the gap was not filled.
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Time of day is important, so you are watching that candle coming back into the OB. That retracement might be trading into an imbalance. Also notice that there are relatively equal highs formed that are seen as resistance by the retail traders.
15m timeframe
The upper red line is the same Buyside Liquidity drawn on the 1h. You have the hourly downclose candle which is a bullish orderblock. Price goes above it AND creates an imbalance. It must have the imbalance coupled with the down-close candle and with the underlying narrative that it is likely to go higher to reach for buyside liquidity. That is how you determine your high probability bullish orderblock. Then the price trades down into the imbalance after the 09:30 equities open. It retraces down into the 09:30 opening. That is the fake move. Do not chase it and also do not chase it going higher right after the equities open, either. 84
5m timeframe
It hits the orderblock and then rallies. Notice the FVG formed after the orderblock was hit. You can take that trade if you know what you are looking for. That candle that fills the gap, once that happens, it becomes an ITL. That low should not be taken out. Once it starts rallying it should not come back down below it. If price is going higher, the down close candles should support price. Price trades above it, goes higher and then the price starts to go back down into the down candle. It rallies again, gets down again very close to a down-close candle, but it does not touch it. It rallies again and goes into the buyside liquidity. The price does not like to go all the way back to rebalance when it is that close to the profit objective. As you see, the algorithm retraces the price just a little inside the FVG. 1m chart
ICT shows here a potential long on NQM22 inside that FVG on an FOMC day. You can trade the FOMC, but before the news release. Being the opening at 09:30, he is expecting a potential run below 85
that low. If the price comes back into the FVG after and it if takes out the low, he will be longing it as his bias is bullish. You can take a long at the opening, but you do not know ho much he price is going to whip down below that low. People are trying to buy right now as an FVG is already formed on this 1m chart, but their stop losses will be below the low.
Now the stop losses are taken. He seems to wait and see if this candle will close inside the FVG.
It closed inside the FVG and took the long entry on the next candle. 86
At this moment he is expecting an energetic move above the swing high formed to the left of where the price is at right now.
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There is an FVG formed below. He is expecting the price to be supported by that if it comes back down.
The target was 13680, tagged and bagged.
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The target he highlighted before taking the trade.
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Multiple setups inside of the trading sessions – LINK There is a morning sessions and there is a pm sessions when you are working with the New York index futures. The morning session is between 08:30 and 12:00. There can be multiple setups inside of that. E-MINI S&P 500 FUTURES daily timeframe [US500]
In the chart above the market traded above equal highs. Buy stops and buyside liquidity were resting above those highs. As the market went above that, it always has the likelihood of seeing it continue higher. But whenever it goes above relative equal highs and then you get a swing high like that, meaning a high that is lower than the highest candle’s high and the next candle after that has a lower high as well. That is a swing high. That daily bullish orderblock is a discount array. As soon as the first bearish candle closes after the equal highs were taken, the next day you are looking for something to create an opportunity to go short. Looking lower you have a bullish orderblock. The idea of trading into that downclose candle once the price goes above the highs is favorable. The candle that touches the bullish orderblock in the chart above is on Friday and that area will be analyzed further.
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E-MINI S&P 500 FUTURES 1h timeframe [US500] This is the hourly chart on US500, ES MINI contracts for June 2022.
You are looking for an expansion move lower, in this case, because there is that daily bullish orderblock level. What else do you see? To the left you have relative equal lows [the SSL and REQL are seen as being the same by ICT here]. Not exactly the same, they are relatively equal. The idea of liquidity resting below those lows, by itself without the orderblock, is likely. And it is further likely if there is that discount array, which is that bullish orderblock on the daily timeframe. Initially, in the morning, you see here the market trading higher and higher and then it broke lower attacking the SSL and then aggressively running into the daily bullish orderblock. Look at the high created in contrast with the low and think how far it can go down. Think about the opening price. There are 2 openings: - 00:00. - 08:30. If you are bearish, ideally you want to see the market trading above the opening price. That is going to be manipulation. The manipulation is the running above a key level when you are bearish. It is a Judas swing. The market is going in the opposing direction that is likely to go later into the day. Where is it going to go? Below the low. If it accelerates below that low, where could it go further? Below the SSL into the daily bullish orderblock.
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But how much further can it go below that level? Zooming in on the 15m timeframe there is a swing low decisively broken [MSS], it trades back up into the FVG and at this point you anticipate the new forming candles to trade lower.
Using the body of the candles, anchor a Fibonacci retracement to the highest candle’s open/close price down to the open/close in the swing low. Use the settings shown here and ignore the wicks.
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Applying the Fibonacci, you will have this result below. The lowest price projection, which is in this case the minus 1, reaches just below the daily bullish orderblock.
As you can see, the prices on my chart are different. Might be the different exchanges, brokers, platforms.
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Taking it a bit further, on the same 15m timeframe, the opening price is this candle here highlighted with the red arrows; that is midnight, New York time.
After midnight the price went up into a premium, it breaks aggressively, it took out a swing low, it creates an FVG, it trades into the FVG and above the opening price on the 09:30 opening and then it drops into the projected targets and into the bullish daily orderblock. When you look at this type of price action you might not see that FVG as an entry, but it is taught to you into this mentorship. That is the lesson right there.
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More setup examples in the same day 5m chart My Tradingview account does not permit me to go on 5m, hence I will use ICT’s charts. Here you can see the same chart as above, but on a smaller timeframe; the 5m timeframe. You can see the midnight opening price and the 15m FVG on the right. Observe how the market trades back up into it and above the opening price. Notice that it does not look as clean as it does on the 15m timeframe. The run up into the FVG and above midnight at 09:30 coupled with the 15m timeframe, you might not see that as a sell. But you must look at the higher timeframe. In this case the 15m timeframe is providing you the framework, it is giving you context. If you look closely, you can see an FVG on this 5m timeframe. The price does not have to go up and fill that in. That is your entry at the opening.
In the morning session you typically have 2-3 setups because you have volatility coming in at the opening at 09:30 New York time. That can be very tricky if you are not really sure of what you are doing. You can be caught in the initial volatility and in offside real quick and it can run aggressively against you and hurt you. Look for the initial move to kind of qualify what you are expecting, lower prices in this case. So how can you participate in something like that and still have the bias behind you and have multiple setups that you can take? Let us step further on the lower timeframes.
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1m chart You have here the return into the 15m FVG that was not so clear with the 5m timeframe.
Look carefully on what the chart presents. It is a small imbalance right above a short term high, it trades up into it. You would see that as a setup for the 1m chart.
FVG
Remember that you do not have to have the absolute perfect entry at the opening.
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Before getting further look at this chart again and find the setups that you would see as a shorting opportunity.
The 1st FVG is here has a short term low [STL] broken with the run lower; this means that there is displacement there, the market returns back up into it, you go short and look for the first objective which is the sellside liquidity highlighted on the 15m chart a few pages behind. On the chart above the sellside liquidity is the red line on the left. If you would go short with 2 contracts, you can close 1 at the first objective, move the stop loss on break even and let the rest of the position close with a limit exit on the top of the daily orderblock that was previously discussed.
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The 2nd FVG is presented in a similar manner. A short term low is taken, it formed an FVG, the market trades back up into it. That is a short with the first objective being the same sellside liquidity as said previously. The objective was met. Same rules can be applied here. If you would have shorted 2 contracts, 1 could have been closed at the objective and the stop loss placed on break even. In this case, the breakeven would have taken you out with profit as the price came back just a bit above of where the entry was.
The 3rd FVG is here. If you shorted the 2nd FVG you should not be concerned about this move. The price got close to that stop loss, but it did not touch it. Remember where the stop losses are placed when trading an FVG. Above the swing high or above the 1st candle that created the FVG.
As you see, if you miss your entry you can get back in line with the marketplace and still participate in those moves.
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The PM session buyside The pink rectangle is the PM session buyside liquidity pool. What does that mean? It means that THAT high was the most energetic one in the morning session. It took the price all the way down to the daily bullish orderblock. Because it is Friday, because it hit the daily timeframe objective, because it is in a discount market, it really traded lower, at the end of the week there will usually be a retracement back into the weekly range. What can it aim for? It can aim for the liquidity resting above that PM session buyside. Retail will say “this is where my stop loss should be at because I want to hold on to this thing over the weekend”. It is not recommended to hold over the weekend. Too many things can go wrong.
This area here is where you would anticipate on Fridays where liquidity can be a draw because it is likely going to pull back up into a premium market. The range of the day is set here between the opening at 08:30 and the low that was created around lunchtime when it hit the daily orderblock. ICT uses the 09:30 in this case as he is framing the logic on this day being bearish. There is no difference between 08:30 and 09:30. You can take 08:30 or 09:30. So the high in the morning down to the target, if you put a Fibonacci from the low to the high to find the 50% level, the pink rectangle is above the 50%. This means that above that the market is in a premium. It means that the market is going to move from a discount to a premium. That is what the algorithm does. It seeks discount to premium and premium to discount. Within that logic the market is reaching for liquidity in the form of buy stops and sell stops and/or imbalances or the creation of an imbalance or returning back to an imbalance. That is all these algorithms do and they do it on the basis of time and then price. So, we have a PM session buyside liquidity pool that the market could likely reach up into and, again, the logic is - the moves from a high down to a target, it is Friday, there is probably going to be position squaring. They are going to want to take the market back higher, so, what are they going to reach for as an opposing move? The daily orderblock was the target, there is going to be short covering. 99
Who is short covering? The smart money that sold around the areas of the FVGs that were previously presented. So, if they're covering a short, are the bearish still? No. If they are not bearish, what are they? Bullish. If they are going to buy it, what are they going to target? The buy stops above the high created in where the red rectangle is. And selling it to these waiting buyers on their buy stops. Notice the relative equal lows. They take it into the orderblock right below the relative equal lows. It sells to the retail crowd that this was support broken. What the retail is going to do with a broken support line? They are going to sell short and that creates more liquidity for buying. That drop below the equal lows is engineering buyside liquidity on the basis of sellside flow.
Relative equal lows
The premium is going to be where the draws to for the afternoon session buyside liquidity.
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The afternoons session On the left far side there is a mitigation block, the market structure breaking, it comes back down into the mitigation block, there is an imbalance formed as an FVG. You can be a buyer in that area. Remember the price ranges highlighted in the previous chart as the “PM session buyside” between 4532 and 4540 level. That high is traded up into it in the chart below. You are buying and aiming for the liquidity.
This is the morning session chart. Notice the high that was formed between 11:45 and 12:00.
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The discount array In the afternoon, that old high from the left is broken and it becomes a discount array. If the price trades above an old high, that high becomes a discount array. This is where old highs being broken becomes support. That is why sometimes the books have it right. That is why your analysis will be right about specific key highs and lows. Notice that they are not always consistent. That is the problem. What makes an old high or low a real support and resistance? When you have the logic that is framed here because we know that the likelihood of the market is to draw up into that PM session buyside liquidity pool AFTER it hit the daily orderblock. In the chart below the price trades above the old high, it comes back below and touches it and it also fills in an imbalance. When you have that, old broken highs will act as support.
4522 level from the previous chart
Once the price gets into that shaded area, the market fulfilled its buyside liquidity. Then you see a run lower in the form of an MSS [Market Structure Shift], an FVG is formed, the market retraces into it and you can be a seller there and aim for the first low and/or the bullish orderblock. OR you can wait for a confirmation entry which is the next break below the last low, it creates an imbalance, you go short in the first FVG and aim for the orderblock.
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There are 2 setups here. Study them both.
FVG
MSS MSS
This is something that you can feed your family with. If you need your expenses to be reduced and you don't want to give up your job or you take a pay cut maybe, or a job loss or whatever; this skill can fortify any weak links in your financial chain. You want to build strength in your ability to make income and build legacy wealth. It is worthwhile for you to spend time learning this, and that means going back through old charts and literally going in and annotating the moves like this and mapping them out and seeing the logic that is there. Do not be afraid that you are going to do it wrong. Everyone is going to do it wrong in the beginning. This is a skillset in backtesting that you are trying to discover. You are not trying to things correctly in backtesting. Backtesting is you in a mode of discovery mode that proves efficacy. If you cannot see things repeating, then you got to go back to the Core Content Series and figure it out. Then, once you understand better, then you go back into the old data and look for those very things occurring and highlight the things in your chart that makes the most sense to you. You need to do this at least a minimum of a year. Make it a practice of doing that. Even when you start trading with live funds, your trade journal should have annotations, charts saved and constantly referring to what you witnessed in price and record it like you saw it happening and knew what is going to happen in advance. That is called self-talk. You are literally tricking your brain into seeing your annotations as something that you have foreseen coming. And that way when you go back and you read your journal and study on the weekends or whenever you are in a period of drawdown and you need encouragement, you go back to you charts in your journal and you will see annotations that you wrote out yourself and it tricks your brain believing that you have seen that all along. What happens by doing that over time? As you have created creases in your brain where that knowledge and pseudo experience has been retained, but your brain remembers it as a real experience that you endured. But you are recording it with positive reinforcement in your commentary. Never put negative comments in your annotations. All you are looking at is liquidity, imbalance and time of day. The algorithm is not going to try to follow some retail logic stuff. It is based on “where is the money?”, “who is the easiest prey right now?” and “where is the majority of the money?”. 103
The price is all algorithmic. It has absolutely nothing to do with ratios, harmonics, supply and demand, Elliot Waves, Wyckoff, Gann or anything else. The “buying and selling pressure” is a myth. These markets are going to get higher regardless of how many contracts come in.
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Lesson on forex and how the model can be implied to the FX market – LINK If you are looking at the EURUSD on this daily chart below, take a look at how the price moved above the relative equal highs. Once it did that it took the buyside out of the marketplace and then started to go lower. What is it reaching now for most likely next? Well, it took the buyside out and now it is reaching for the sell stops; that is in this case that last swing low before it took the buyside liquidity. And to the left there are relative equal lows. You have 2 areas of sellside liquidity. Notice that the last daily candle on this chart, which is Monday trading, did not take the last low, yet. There is unfinished business. WHAT IS THE BIAS? HOW THE NEXT CANDLE WILL TRADE? Bearish. You are anticipating bearishness. Daily chart
The very next day, Tuesday, you have a bearish candle reaching into both sellsides.
Try an annotate your charts like this. You will be training your brain to see it.
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1h chart You can see the swing trading idea thought previously. You have an old low on the left. If the price goes beyond that old low, how much more can it go below it? The 1.09 big figure level is an institutional level and the standard deviation closest to it is the 3.5 if you are using Fibonacci. Those Fibonacci levels are true only if the old low is broken. How do you know which levels you are going to aim for? Well, you have the relative equal lows at the at 1.09 big figure level and a Fib level, the 3.5 in this case that is the closest to that price.
Back on the hourly chart with the buyside liquidity level, the market trades up into that area absorbing all the liquidity and then breaking down, takes out the short term lows, it retraces up in and trades lower. Then it goes into that day’s trading, on the 5th of April 2022. Prior to the day starting, you know that it is likely to draw below the SSL and potentially into the 1.09 big figure.
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At the beginning of the day, at midnight New York local time, if you see the market rallying up, a protraction that is going against the expected direction of the move intraday, that is what you want to see. That is the Judas Swing. That market protraction is what you are looking for in terms of manipulation and PO3. Once the day begins at midnight, you are anticipating a move up. What is it going to trade up into? Into the imbalance on the left. Once it does that, it kind of forms the daily high and the rest of the day you are going to look for distribution throughout the day looking for lower prices. 15m chart On the 15m timeframe you find the midnight opening price and draw a line in time. You want to trade above the opening price. That is where the smart money is accumulating short positions. Here the algorithm is constantly offering price above the opening price. Every single time it rallies up, it does not mean that is necessarily the time for you to get in, but when you couple that with time of day and price it becomes a lot better. Notice there is an imbalance and price runs up into it during the New York open kill zone specific for forex which is 7 to 10 New York local time. It overshoots it a little, but where is it really going to? To the last up-closed candle, which is a bearish orderblock. How do you know that is a bearish orderblock? Because you have the imbalance, and it has traded back up into it after a displacement that created an FVG. That is your bearish orderblock.
07:00
00:00
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5m chart This is ICT’s chart. The New York open kill zone is highlighted and the 15m annotations are the same here. You are hunting your setup for forex pairs withing that block of time, 7am to 10am. You are looking at a price that is at or above the midnight opening price.
If you are a New York session trader you want to refer to the opening price at midnight but then you want to recalibrate at 08:30. This will be detailed a bit later. On this particular day there was a high impact news driver at 10am. You do not care about the data that is released, the expectation, forecast etc. Ignore it. What you are expecting is the volatility in the marketplace at or around these specific times because the algorithm will use that injection of volatility to facilitate trades. It is not trying to give YOU good trades. It is trying to move and re-book and re-price to levels to allow those in the know to participate. It is a rigged game and you are not supposed to be in it consistently profitable, BUT for those that are in the know, they are looking for these types of signature in terms of price action of when they are going to operate. They are looking for a specific a specific element o time, 07:00 to 10:00. You are hunting the setup on the 5m timeframe. The threshold that makes it high probability is that you want to be above the midnight opening price.
Once the price hits the orderblock presented above, that was during the early stages of the New York open around the 7am. The market drops and then it retraces back into that news driver at 10am.
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Look closely at this swing low. It went below the previous low and then it rallied back up once more above the opening price at midnight. Did it take out the previous high? No. Why did it not? Because it has an imbalance and that imbalance and that tells you that the previous swing high is an intermediate swing high. If the price is bearish, it should not take that high out. Imbalance
Swing low
An imbalance or FVG associated with a swing high or low, in this case with an intermediate swing high, not because it simply has an imbalance, but because the narrative is that you are expecting lower prices and it went above the opening price at midnight, that fake run ahead of the news driver at 10am above midnight opening price is just a run back up into the bearish orderblock. Use the body of the candle, not the wicks. Forex kill zone 07:00 to 10:00 is the New York open kill zone specifically for FOREX pairs. Having a high impact news driver at 10:00 as in the previous example, this extends the New York session kill zone into 11:00 to 11:30 time window because of the volatility that it brings. Index kill zone 08:30 to 11:00 is the New York open kill zone specifically for indices.
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You have 3 candles making a swing high when hitting the bearish orderblock and then you start looking for displacement lower. Looking closer, after you had that shift in market structure, it retraces back up, you have an FVG, bearish orderblock and news – this is the wild card. When you have high impact news, those kind of moves would scare you out of the trade if you entered earlier or stop you out if you trailed your stop loss.
FVG
MSS
Inside the red shaded area you are going to see how this model is applicable in forex. Can you see the FVG on this 4m chart? ***on this timeframe Tradingview does not seem to show the price reaching into the bearish orderblock. It was not even tested with a wick here. From my personal experience, this happens often.
The price objective is reached in terms of the Fibonacci -3.5 standard deviation. 110
If you are going to trade forex you will use the 08:30 for the New York session trades but refer to the New York midnight open as well. If the opening price is lower at 08:30 than the midnight opening price, use the lower one. The reason why is that you want to set the minimum threshold for a Judas Swing [market protraction] to the upside when you are bearish. It is reversed if you are bullish. You will look for a move below the opening at 08:30 to go long after it moves below it. This is the same chart as above on 5m but it presents the trade opportunity with the 08:30. You have the market trading above the opening price of 08:30, there is a market protraction as it rallies up and then it breaks down. Do you see an FVG above the opening price? No.
The 4m chart has the FVG. Then it reaches the standard deviation previously projected. 08:30
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Continuation – Previous day’s high and low – LINK This is the EURUSD chart and this is how ICT has his charts on Tradingview.
Upper lefthand corner – Daily chart. You start you analysis from the daily timeframe. Lower lefthand corner – 1h chart. Right side – 15m chart. The daily chart Showing Thursday’s trading day hitting the FVG.
The daily FVG area being hit on 15m
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How is it possible for you to responsibly handle daily bias? Work with the daily timeframe and then frame out a setup using the logic of this model. Determine the bias. The bias is bearish in this case. You are looking at the daily chart and you start your analysis on this timeframe. You also have an FVG. Your bias will not be perfect. A bias is just an idea that you are going to work within and employ your shorts or longs. Unless you are proving that you are absolutely wrong you just simply wait for the setups to form with that bias in mind. As soon as the daily FVG forms you already know it is likely to reach into it. That occurring and trading back to previous candle’s high is enough to set the stage for a new round of selling. You highlight the area on your daily chart as previously shown and then look at what you have in terms of targets. The ideal scenario is that low marked as SSL, but it is not likely to do that in one day. The SSL is not your target for intraday trading. Mark the low and high of the daily candle that created the FVG. That touch of the FVG is all you need to justify the framework.
Because the price hit the daily FVG you can target the daily low if your bias is bearish. The algorithms seeks it. Thursday opens, goes into the FVG and it drops.
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1h chart Here you have the imbalance from the daily chart and it also exists on the hourly chart. There are 2 highs as relative equal highs. The day high becomes buyside liquidity and the day low becomes sellside liquidity. This is all you need to do on the hourly chart.
15m chart On this timeframe you will mark the New York midnight to delineate the new day and also draw a line from the opening of that specific candle into the 11:00 New York time.
You have the relative equal highs on the left and the price rallies above them. Once it does this, is there any displacement? There is a swing low broken after the highs were taken and there is also an FVG created.
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You are looking at the market wanting to go higher first so it to go lower. The price rallied above midnight once and the it dropped, but the forex trading kill zone starts at 07:00. From 07:00 to 10:00 in the New York morning you are hunting the setup that would be formed within that timeframe. At 10 o’clock you can place your limit entry with a SL above the candle #1. You can also place the SL above candle #2 if the imbalance is really big like in this case below.
5m chart Think about the minimum threshold shown on the 15m for at least reaching into the bottom of the 15m FVG. So the price needs to get up into that. The higher timeframe imbalance are going to be parent to the subordinate smaller timeframes. The parent is the 15m imbalance, so it need to get above that. When it does that you have to look at the lower timeframes below the 15m. The 15 timeframes is the beginning stage of the fine-tuned entries for 5m, 4m, 3m, 2m and 1m.
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Refined, the previous chart looks like this highlighting the imbalance seen on the 5m. The bottom of the 15m gap is the most likely to be hit, so the refinement comes like this. Any price withing that gap can be used for entries. Notice it trades in the gap above, but here it is presented the most likely level the price can hit. You do not necessarily need that. Also, if you did not see it already, the last 3 up closing candles are acting as an orderblock and the gap is in that orderblock.
Daily FVG OB
The logic is that the price ran up into that daily FVG. The 3 candles closing higher and higher into the daily FVG and above the relative equal highs are the components of the bearish orderblock. It is the consecutive run on this 5m timeframe. The price does not need to go into the last up closing candle before the downward move. Everybody says that the last candle before a move is the orderblock. It is not that! The 15m imbalance stops lower than the last up move candle before the down move. What makes an orderblock valid: - It has to have an imbalance. Without the imbalance there is no orderblock. The orderblock in this example is the 3 up close candles. The reason that the last up candle is not even traded to is because the higher timeframe parent imbalance, that 15m timeframe imbalance stops there, below that last up close candle. It does not reach it. If the price trades up into the first candle of the orderblock, that is enough. Couple that with the 5m imbalance.
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REMEMBER!!! You have a market structure shift that is bearish, you SL have the imbalance that has been refined down into the 5m chart in concert with the bearish orderblock as being the lowest down close candle, you know why “the last up close candle before the down move” is not being traded into, and it runs into that 5m imbalance level. If you spot an FVG and another one above it, expect it to trade up there. This means that you will incorporate this into your risk. The stop loss could be here. You might think that this SL is a bit too wide because you might want to trade with a 1-2 pips stop loss. It is not doable for long term. Plus, having a wider stop loss it permits you to walk away from the chart and not be chained to it. If you have a small ultra short stop loss, you are going to sweat it. You might pull that off every once in a while, but when you put size on these trades, you will sweat it. Look at the chart again. You have an early run at around 5am, it swept the previous day’s low and then it rallied up into the level that the bias called for. You are looking at that level to be traded to before you go short. You are not taking anything in London because London did not give you the initial rally higher into that daily FVG area. Notice that the price hit that level at 09:30, the price is at a really rich premium and you know your discount level you are looking for in terms of targets. You have the MSS, you disqualified all the up candles, you are aiming to enter in the bottom of the first up candle from the series of the 3 candles going up and there is also an imbalance in that candle’s area on 5m.
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What is an orderblock? The orderblock is a change in the state of delivery. The algorithm changes its state of delivery. As soon as the price gets below this candle’s opening price, the market starts delivering sellside and then it breaks the swing low. Now it has changed gears and any rally after that is just setting up another run to go lower. In other words that rally is suspect.
Opening price
You will set the order and go away. If the order is not filled until 11:30, cancel the order. You want to enter in a trade in the day the gap was formed. If it does not drop off, it might come at a time of day when you do not really want to be there. That is why it is important to know why the kill zones are there. What is a kill zone? A kill zone is when you determine your entry, place the order and walk away. You do not need to have your entry filled inside that kill zone window. Your order idea and order placement needs to be considered at that time. If you cannot derive an order placement or for setup or trade entry by that time, you have nothing to do. Wait for the next trading opportunity or for the next day. These concepts are applicable in forex, bonds, gold. Gold [XAUUSD] is an event driven market. That means that it usually requires a geopolitical or something crazy causing it to move. Otherwise is highly manipulated. It is not for short term trading. Those signatures in price action are generally very close to one another in terms of repeating the same type of way but they are not going to be so identical. You will be able to see that is a different day of trading, but you will still recognize these repeating phenomena that is so telling in the marketplace and you cannot fully appreciate it right now because you are just becoming introduced to it.
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More Price Action Analysis – LINK Weekly chart – DXY This is the weekly chart on DXY showing the reason why the red line is on the daily chart.
The daily chart – DXY The daily DXY chart is presented with a few lines on it as shown by ICT. The 101 level is highlighted here as being an institutional round number and the same for the 100 level. As he was bullish on the dollar index, the 100 level was expected to be hit back as a retracement after the 101 was hit. The red line at the top, 101.947 was also expected to be hit.
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1h chart – DXY
You see how the price moved up in the 101 level. Observe what they left above that level. It is very clean and even if it had a market drop, it took out a swing low, created an FVG and came back to fill it in and then moved even lower, the expectation is for DXY to move above and beyond 101. If you look at the whole parent price swing from low to high and put a Fibonacci on it to find the 50% level, you will find the equilibrium area. That is algorithmic. You have a break in structure, an FVG, the volume of the move is in the body of the candles going into the FVG. Always allow for some inherent price action with the wicks and the tails of the candles to go beyond the FVG, but you are looking for the underlying narrative. It is likely to go back into the FVG and fill that one single candle that created the imbalance. The price goes up into the FVG, it spends some time there and then it breaks aggressively attacking all the stops market with the blue dots because equilibrium exists between the high and the low.
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Why did the price drop like that? Because it hit the 2nd target of 101 and it is 100 points or pips above the 100 level. This kind of price action looks like they are trying to produce the sentimental idea that the dollar has topped. It could, but it is less likely. a The retail traders are now looking at the 101 as a resistance level with a break in market structure, break and retest logic… but it is not that simple. Above 101 there is unfinished business and it is likely to go above it. Do not try to pick tops and bottoms. You do not need that. There are a lot of opportunities between intermediate term highs and lows. Do not mind missing the long term high or low. You do not need that. You can be wrong in trades trying to be bullish on dollar, essentially meaning that you are bearish on the USD forex pairs. This can be used on any market. It is applicable to forex, bonds, futures. Some say it is also working on the crypto market, but ICT does not trade crypto as he is not good in that market. 15m chart – DXY You can see the sellside liquidity resting below these lows. The top area seems too clean and makes the retail believe it is resistance. From this level it might get a bit deeper to the 100 level. ICT specifies here that if he would be the market maker he would push it below 100, around 99.95 or 99.92 and then start to push it back up above the 100. The drop would convince everybody that the dollar has topped.
You can also see the hourly FVG through the lens of the 15m timeframe. Before the drop that created the FVG, there are two 15m up closing candles that represent a bearish orderblock. You can use the low of the lowest up closed candle and its opening price. Drawing the lines up in time you will have an entry for shorts.
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Why is this an orderblock? Because it is where price was delivering on the upside. That up close right before the displacement to the downside it had a change it the state of delivery where it is already dropping and then it goes higher. The algorithm is putting a “bookmark”. The “bookmark” is where it will want to refer back to in the future. Consider you are reading a book, maybe this one, and you are in this chapter and all of a sudden you have to go back to work. So you have to stop reading, you put a bookmark on this page and then you come back to it later. When you stop reading that is essentially where this candle closes. The drop and retest happens as you are away from the book. When you start reading again you pick up the storyline from where you left the bookmark at. What was the storyline? It was dropping, it had a little pause and then it goes back to the storyline. This orderblock is a change in the state of delivery. It has been going lower, it is likely to go lower, the displacement qualifies it as an orderblock because it creates an FVG and the narrative is likely to go lower. This lower movement you see here is short term in nature. It is counter long term bias. You can and you will absolutely lose money trading this style of trading because you are going against the higher timeframe order flow.
The algorithm does not know where your stop loss is. Your broker does. But the algorithm does not. The traders are also moving their stop loss from a high to a lower high trailing it, which means that there is liquidity. As a new trader you may not have the skillset to see these type of retracement and short it.
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Daily chart – EURUSD On this chart of EURUSD ICT specifies that the forex market is sloppy on its delivery as the lows were taken but it had that consolidation before reaching into the sellside liquidity. He is not trading forex because of this type of movement. The reason why currencies are not moving well is because trade is being hindered. There is a supply chain congestion that causes the currencies not to move. It should not stay this way forever but right now it is a slow market and it is hard for a new trader to learn in this environment. That consolidation might have changed your opinion about the market going lower. But you know that there is liquidity below the old low as sellside liquidity and that is where the market is going to go; and it did. These up close candles are just opportunities to go short.
1h chart – EURUSD The market traded down aggressively and swept the daily low. Look at the whole price action after reaching into the sellside area. That was printed in a week of trading. The price eventually goes above the sellside, it rallies, it creates an FVG and runs back up once again to the last high and into the OTE zone. The market went into a short term premium. Remember that this is a countertrend move. As the price looks like now on this chart, it is difficult to have a bias. The price is in a sideways consolidation / congestion area and you have to wait for displacement. It means that you need a move like this. Up or down, it does not matter. From the high to the low the price went below the daily SSL and then it created a short term break in market structure – the MSS, it created an FVG, came back down, spent some time there and then it pops back up into the EQ to OTE levels. Above 50% the market is in a premium. 62% to 79% retracement levels are your objectives.
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The direction of the next displacement at this moment does not matter as the daily objective, the SSL, was hit. 15m chart – EURUSD You can see a nice and clean FVG, the same as from the 1h timeframe. “Clean” FVG means that the price had displacement. That is algorithmic. When it creates that gap there, you do not care if it stretches up. As a new trader it will feel like an impossibility to say “I will wait until it gets back in the FVG and then buy”. What will happens is that once it trades down like that you might say “what happens if it goes below those equal lows”? What is the narrative here? You are short term oversold on the daily timeframe. Why? Because it took out that old daily low. It went below it and it has taken out the sell stops from the marketplace. What is the market going to look for now? Buyside liquidity. That means it has to go higher to get that. That energetic move off of that daily low with displacement, when it trades back into the FVG, you are thinking “it created that short term high, it is going to run back up into that. But even if it does not and just gets above the bodies of the candles and reach up into that 62% retracement level from the hourly chart, that would be an opportunity to be a buyer from the FVG and take profits on the top of the candle’s bodies”
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This is not a style of trade recommended for a new developing student because it is going against the order flow. Do not look for this setup here and expect to work every single day between 08:30 and 11:00. If something resembles an FVG, your judgment about the daily candle might be off, especially if you're in a rush, leading to potential mistakes. It takes a lot of time and a lot of fumbling that you are going to do to figure out what you are looking for. If you are just starting, you have no idea what you want to do and you are probably not realizing what you are going to evolve into. The end results of a speculator, as a trading mode and how you are trading he markets… you do not even know what that is yet. That is a gradual thing that becomes obvious to someone who has taken this on as a business and not as a college degree.
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Daily chart – GBPUSD As the DXY has a bullish bias, the “cable” [GBPUSD] should be bearish and the expectation is that the GBP to go lower. The bias will be incorrect if the price trades above the FVG. As long as the price stays below the FVG highlighted in the chart below, the bias remains bearish.
1h chart – GBPUSD There is nothing on this chart to trade on. There is nothing on this chart that is noteworthy. The price action is sloppy going back and forth. When it looks like this, you roll along.
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15m chart – GBPUSD The 15m timeframe is similar to the 1h. Sloppy. Nothing here. When you go through your and the marketplace you are looking at creates these scenarios where it is just really messy, close the charts. Do something else.
You do not need to trade every single day. Despite what you are thinking and feeling, you do not. What you need to do is to understand WHY today or tomorrow is a day that is highly probable that your bias will deliver to a target that is likely to be traded to. You have to have an expectation to where it is going to go, higher or lower. If you cannot reasonably outline that, then you are gambling. Index futures will have this type of price action soon. It does not mean that index futures trading is dead, it does not mean that the algorithm stops working. It just means that it is being heavily manipulated. Do not touch it when the price action is sloppy.
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Daily chart – E-MINI S&P FUTURES The market traded down into a very deep discount. The range of the swing starts from the right side swing – see the red dots for the whole swing. The 2 lows, the first red dot and the wick just to the left of it, are relative equal lows, hence the starting point is from the most recent swing low. Why is that a swing low? Because the candle to the left of it has a higher low than the lowest one and the candle to the right of it has a higher low than the lowest one.
For me to have the same lows as on ICT’s chart, I needed to switch on the B-ADJ button on Tradingview, but the price will be very different and the annotations will not be the same. You can see the difference in the images below where the low is not swept for B-ADJ. That low is the start of the range you saw in the previous chart. The unadjusted chart was used there. The B-ADJ button can be found in the lower right corner of the Tradingview platform for ES-MINI futures contracts. ***Back-adjustment is the ability to adjust the data of previous contracts in a continuous in order to remove the roll gap due to price differences for different contracts.
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Getting back on the same chart, but cleaned out from the extra annotations, this is the daily dealing range from low to high. The market has recently retraced back down in the equilibrium zone and, also, because of that the market is likely to create a bit of a retracement.
Think about how the market created that low and then the reaction and price delivery on the penultimate candle from the chart above. Because this daily chart has retraced down into the half of the move from low to high – below equilibrium – there is a likelihood that the daily bias is going to be bullish in the next days. Now, if you look closely you will see a candle that has a 0.5 on it. Its midpoint – the mean threshold – is the half point of an orderblock. This is the same chart as above, but zoomed in.
Further on when we switch to the hourly timeframe. Just remember that 0.5 level from here. The Fibonacci tool was used from its open to close price. The wicks are not considered.
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Why is that specific candle used? Because from the high that was formed and down into the 50% retracement level of the whole swing, that means the bias has a likelihood to be bullish. The price went down into the equilibrium price point. The very next day we can expect it to go higher. If the next day goes even lower, then you will be expecting that the day after that to go higher. If it is likely to go higher the next day or the day after that, look at the midpoint of the orderblock mentioned earlier. The midpoint of that specific candle is a premium array and the price has a likelihood to draw into that level. You are concerned about that candle because in this move down, right before the displacement, that is the last up close candle. You will see the same red line on the next charts on the hourly timeframe.
STL
The targets for a long entry are the low of that candle, the opening price, the mean threshold and its high. It is less likely to hit the high. The easiest target is the lowest price of that candle. As you may have probably observed, the price hits the first 3 targets. This is called “purge and revert”. The price went down, it took out a short term low aka sellside liquidity. This means that it purged the sell stops and it is going to revert back to the high in the last 3 days whatever is the highest price in the last 3 days. In this case you are referring to this candle’s high, which is the 2nd day. Let’s consider that you bought here below the opening price just for the sake of this example. You can find profitability reaching just up into the OB’s low. There is also the midpoint of the OB as presented in the previous chart. You, as a developing student, you want to pick the easiest one, which is the low of that OB. Blend that in with the “purge and revert”. It can be found on ICT’s YouTube channel. The highlighted candle where it drops down it has the idea that it has a high above which buy stops are resting. Why would there be buy stops? Because traders that are short are going to trail their stop loss right above that candle’s high. I know you did it. I did it myself. It will be easily understood when the lower timeframes will be presented. This is just the framework that is presented here.
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1h – E-MINI S&P FUTURES As you can see the market ran down into that STL, it ran out the sell stops, meaning that it purged the liquidity. Then it had a sloppy start of the week. It dropped down and rallied up. It does not look too clean, but because there is a bias that you have, this is about to change when the timeframe will be switched lower.
STL
ICT mentions here that he’s going to present an analysis of the E-MINI futures about where it is most likely to go and why he felt what was going to happen. Some guys from Goldman Sachs like to say that “the intraday price action is just noise and some say that they try really hard to make it work and if anybody tells you that intraday trading is profitable and you can do it consistently, run away from them because they are a con artist”. In regard to the analysis mentioned a bit earlier, ICT said he mentioned the opening price on the midnight candle and the opening price at 08:30. First of all, look at the hourly chart here and see the between the red dots. In the area before the rally up there is no reference point inside the hourly chart that is okay. Look closely. Before the sellside liquidity was taken, the price formed two highs – relative equal highs. That is buyside liquidity. It is not marked on the chart as this is a homework for you to find it. That area engineers buy stops. For anyone that chases the drop into the sellside liquidity going lower, they are going to think that there is an area of resistance, hence their stop losses will be placed above that level. Easy, right? Also, in the lowest area of the hourly chart there is a pattern that is depicting a bear flag. So they are going to look at that pattern and project the target of a bear flag. You know what I mean. But the price rallies and goes into the opposite direction. They do not understand how the markets move from discount to premium and from premium to discount and what PD arrays withing that current market structure and what is the narrative.
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Without having the whole price action to the right of chart, can you see the bearish flag? This is on the 30m timeframe, but it is the same chart as previous.
This is the expectation of the retail trader. I took the image from dailyfx.com. It is the same pattern as above and you cannot deny it.
Overlapping the two images you will have this. It blends in perfectly. It is the perfect setup for a short entry.
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But what is the narrative here? Follow the chart as you read. You have the market trading into that short term low, below old lows and around the 50% of its daily range mentioned on the daily timeframe. The price purged the sell stops. Where is it going to go? Higher. Why? It needs to go to buyside because it has now collected sell stops and the smart money is going to offset those buy orders that they used to pair up with the sell stops bellow the lows. They bought the sell stops below the sellside liquidity and now they are net long. How will they get out? They have to sell them to willing buyers. Who is going to be buying from them at a higher price? The buy stops that are resting above the equal highs.
The logic is that you are looking for a run in the relative equal highs. Consider that the price is in the lower side of the chart before reaching the EQH. Think about what does your daily candle look like if it is going up there. What is it going to happen? It will create a little bit of a movement down, make the low of the day, then it will rally up to clean the EQH. You are not trying to predict the closing price of the daily candle. You are just trying to participate in a move in the morning session that gets you long and allows you to run up into the EQH. That is the target. You are not trying to get in the “moon boy” mood. You have to pick these periods of the marketplace where it makes sense for you to anticipate and expect a certain move to begin and originate in and where it ends or where it finds its terminus.
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The retail buys where the smart money sells and the retail sells where smart money buys.
You need to think algorithmically. How do you pair your orders? If you do not have this mindset going on before you click the button you are gambling and have no idea of what you are doing. You are trying to guess. You are dabbling with a demo account and you are not learning anything. You are conditioning yourself to believe that these sensations that you feel when it is right, it is skill. And when it is not, well… it was just you playing around and you were not really doing anything serious about that. And that creates toxic thinking and it builds a false sense of security and, in certain instances, some individuals literally go out and say “I am going to put money in there because, you know, I got lucky a couple of times and I could afford a couple thousand dollars and I could do that if I made that”. That is what everybody does and fall victim to that. You need a reason why you are doing something even with a demo account. Change your thought process about what you are looking at in the charts and that is narrative.
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Looking for the daily delivery on that candle, Judas swing, buy below the opening price, expect displacement to the upside and run into liquidity.
For the lower timeframes I will be using ICT’s charts. 15m – E-MINI S&P FUTURES Look at the price action and describe what you see before moving on with the details.
Describe below what you see. The chart will be copied again, so do not worry. __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ 135
The annotated chart Look at the price action and describe what you see before moving on with the details.
#1 is the most recent swing low. The price rallied at it created a higher high at #2 above the relative equal high from the left. The dealing range is now set between #1 and #2. You are using that because that is the most energetic and most recent low and high. The buyside from the upper left is where you believe the market will go because the movement down into the daily STL is just an accumulation of sell stops. Just have in mind that below old lows there are sell stops and above old highs there are buy stops. It is that simple. Knowing that by itself is not enough. You need to know what is likely to occur. The first vertical line is the midnight candle in New York. Draw a line in time from the opening price of that candle on the 15m timeframe to the right. Remember to set your Tradingview account for New York time zone. That is the price you want to be buying, preferably below it if your bias is bullish. There are instances where the opening price will be lower and then the market is trading higher but does not get back below the midnight opening price. This is why you will also have on your chart the 08:30 opening price. That is the second vertical line here. 08:30 is when the news embargo lifts and a lot of news comes in around this time of day and this is the main reason you will use it. In this instance, when the price is delivering like this, it is almost like it is presenting it to you on a silverplate. If you are looking for a setup that is going to just be real nice in terms of price delivery, is this one right here.
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The confusion you are getting about the opening price at midnight and the opening prices at 08:30 is the following: If you arere bullish and the opening price at midnight is lower than the price around or after 08:30, then the midnight opening price might not be influential. In this case, consider using the 08:30 opening price, as it reflects a potential increase by that time. If the opening price at midnight is higher, but the price remains below it by around 08:30, then you're in a discount zone, meaning that the prices are relatively lower compared to the midnight opening price. This is to be considered when your bias is bullish. Everything discussed is crucial for you to understand why this is occurring. These are the things that are going to repeat. Do not trust this statement as it is. Start backtesting and log your charts like this and you will see these events repeating for the simple fact that it is algorithmic. It will not occur every single day, but every day it will present in something. It is every week, every day and it will not stop. This does not meant for every individual market. You have to be able to navigate. Some days you may not have it in the futures market and it can happen in forex or bonds. Be flexible in that regard. There is a setup like this every single week.
NY midnight open 08:30 am NY session open Micro Judas Swing
The Judas swing Inside this range from #1 to #2 the price retracing down after midnight. Notice that. All that drop down is a Judas Swing. This swing is the move that is opposite to what you expect the daily range to be. If you are bullish and you think that the price is going up into BSL, you want this movement going down. You might not be comfortable buying the London or overnight lows. That is fine. Wait for 08:30. If the price drops below 08:30 opening price and it is also below the midnight opening price, it is really oversold. See? You did not need indicators to see that, no divergence or a Fibonacci.
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Visually see what has been shown here. Below the opening price at midnight, you want to be a buyer. If you get an 08:30 candle that opens below the midnight candle and the price moves below that, that smaller move is like a micro Judas Swing for the session of New York. That move is creating the low of the New York session. What happens after NY midnight opening price and until 08:30 is the Judas swing for the daily range or daily candle. Both Judas swings are using the PO3 concept, which is accumulation, manipulation and distribution. 5m – E-MINI S&P FUTURES
Describe below what you see. The chart will be copied again, so do not worry. __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________
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At 08:30 when the drop down happens, you want to be looking left and see where are the short term swing lows because you want the price to absorb sell stops and also look for an imbalance and orderblocks. Here the price comes down, hits the FVG and rallies. It comes back where 08:30 opening price is, it finds it as support and it springs aggressively above the short term highs from the left.
Zoomed in area of 08:30 for a clearer view of the FVG, STLs and orderblock.
OB
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1m – E-MINI S&P FUTURES
Find the setup that would occur out of this model taught so far. Add notes. The chart will be copied again, so do not worry. __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________
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1m – E-MINI S&P FUTURES with annotations
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1. The market has a run above a short term high. That means you have a shift in market structure – MSS, that is bullish, there is also an FVG, the price trades down into it, to the left of the FVG there is the orderblock formed out of the 3 consecutive candles. That is where you buy! 2. When the price reaches the midnight opening price, you have another opportunity again. The price trades up into the midnight candle, it trades down into another gap, it rallies, consolidates and then expands up into the outlined objective from the 15m timeframe. This gap here is called IOFED. It stands for Institutional Order Flow Entry Drill. It is a high-frequency trading entry technique used to enter a trade just by touching the candle that creates a fair value gap or imbalance in the market. This technique is often used by high-frequency algorithms in the marketplace. The main thing to remember it that you are looking for an opportunity to anticipate the expansion of that daily candle, higher or lower. And in that direction, whichever that is, where is it likely to go? The easiest way taught is old highs and old lows and relative equal highs and lows. Those two ways of looking for pools of liquidity are the easiest most visual representations of targeting there is. It is simple because it is based on sound logic that the algorithm will never be changed because of. Above old highs there are going to be buy stops and below old lows there are going to be sell stops. It is always going to be that way. They cannot change the algorithm because that is the way these markets book. That is the way it is. The sky is blue, not all the time, but the sky is blue. The grass is green, not all the time, but the grass is green. So these are rules we live by. Sometimes there are going to be these outliers, these things that creep in that cause your interpretation of price to be incorrect. That means that you did something wrong. And that does not mean that you are a failed trader. It just means that you made a mistake, that you are human.
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London Open with Forex – DXY and EURUSD – LINK If you remember from a few pages behind, specifically the 119 page here ICT specified that he would push the DXY into 99.92, this lesson is more like a continuation of that. Why did the 99.92 level was mentioned? If you look at the price action here, there is a run up in price. At the top of this candle, draw a line up in time. Being a setup going into London, that was expected. Notice that the price went above relative equal highs. The high of the day that was set, initially, around the midnight, it dropped down creating the entire run lower and creating the London low. Then the market starts to rally and takes out the initial high of the day printed at midnight - BSL. Remember that the market does not like to leave clean levels. Those levels are not efficient. Only the retail sees it at resistance. DXY – 1h timeframe
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DXY – 15m timeframe The London kill zone is between 2am and 5am NY local time. On this timeframe you can fine tune this a bit more. 1. The price drops down creating the low of the day in London open. 2. Runs back up. 3. And then into an orderblock + OTE and the market starts to create a run up into the relative equal highs sweeping that as a daily objective. I cannot go under 15m timeframes to find the 5m OB.
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EURUSD – 1h timeframe At the same time EUR runs all the way back up to the previous week’s high. How is this likely to be a false breakout? You have to use intermarket relationships like shown above with the DXY. If you are trading forex it is important to relate your analysis in the trading market. EUR is your trading market in this case.
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EURUSD – 15m timeframe Observe the fact the EU hit that BSL during the London open, 2am to 5am New York local time. That is when it created the high of the day.
EURUSD – 2m timeframe – I will be using ICT’s chart here
The 2m has the very clean FVG. After it ran above that old weekly high the market trades lower and takes out the short term low. This low was not used because of where the FVG was formed. Once that green candle closes, the very next candle opens right at that low. It has not really moved away, it did not show displacement. The market creates, now, the MSS, it comes higher but it does not touch the FVG. It goes lower and then rallies up to the FVG. That is the entry point when the market hits the FVG. Where would you place the stop loss if you would take this trade from the bottom of the FVG? 144
This is the zoomed in version of the previous chart – 2m timeframe The FVG is clearer now. This is where the limit entry would be placed. You will not place a market entry any time in here. The price must move away from the FVG. You will wait! You will not chase it! As you see you are still in the London open between 2am and 5am; that is what that red line represents here. Allow for that retracement for a limit entry. The stop loss will be placed above the high.
For the risk never think in money. Think in percentage risk on equity. Look at how much money you have in your account and calculate 1% of it. 1% is the maximum but preferably you should be doing 0.5% or 0.25% as you are still learning. Remember that the EURO will be the opposite of the dollar index.
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How to use the New York midnight, 08:30 opening price – LINK …and how to deal with missing setups or price moves, intermarket relationships and intermarket analysis. You are looking at the hourly chart of the dollar index. This will be about the relationships between risk on and risk off market.
If the dollar index is useful when you look at the forex market. If the dollar index is going higher, then obviously that is going to put pressure on the foreign currencies and it will be less likely for them to have sustained rallies. They will be more likely to have sustained declines.
The reason why this is occurring is it is a risk on risk off scenario. If the dollar is going up that means it is a risk off scenario. This implies, generally, that every other market or asset class will start to decline. This is treated like a “safe heaven”. Money pours into the dollar and it pours out of risk assets; that is foreign currency. This also applies to stock market and index market.
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DXY vs E-MINI S&P
This is the dollar index printed on the upper side of the chart and the June contract for the EMINI S&P futures market printed at the bottom of the chart. As DXY was going higher, the ES was declining. It is an inverted relationship. ES – daily timeframe – B-ADJ chart
The high of the orderblock should not be tested. The price rallied into the orderblock without testing its high and then it demonstrated the expected weakness as it goes into the month of May. The next draw of liquidity is below the equal lows you can see on the chart above. If you closely look at the daily range, there is a little bit of movement above the previous day; so the price rallied above Monday’s high and then failed and accelerated to the downside.
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ES – 1h timeframe – B-ADJ chart
On the hourly chart you can see a little bit of consolidation and a drop, then a rally. Here ICT was expecting to go a little bit higher and “flirt” with that 4320 level, something like a spike higher and then to drop lower. ES – 15m timeframe – B-ADJ chart Midnight OB
Displacement
00:00
Notice it had 2 little moves above the midnight opening price. That is a really anemic movement for what you could expect for as a more pronounced rally higher. You want to see a Judas swing of 15 – 20 handles and then break down and create a displacement like this. You might say that the PO3 was not in effect here. What happens is that when you enter the London session at 3am New York local time, you see that the price breaks down - displacement. 148
Now follow the chart. The price had that displacement at 3am, it created the imbalance and it retraced back in, it hit a bearish orderblock and rolled over right before the 09:30 opening. Ultimately the price moved into the lunch hour, it had a retracement, broke down once more and then aggressive selling into the PM sessions – the close of the day. The midnight opening price is useful for trading the London session between 2am and 5am and it helps you frame the PO3 for the daily range. If you are bearish you will be looking for something to rally above the midnight opening price in London. That is the ideal scenario. As you can see in the previous chart, the price did not poke above the midnight opening price during London. Use the opening price a 00:00 for the daily range PO3. At 00:00, the beginning of the day, this is where you look for daily range PO3 setup and/or for the ideal scenario for price to go above the midnight opening price if you are bearish. If you are bullish you want to see the price going below the midnight opening price.
00:00
08:30
At 08:30 you will be looking for the same thing, those types of scenarios, meaning weaker price. Does it rally above the 08:30 here? No. It just keeps going lower. Use the opening price at 08:30 for the New York session PO3. The same thought process used for the opening price at midnight. You want to see the price above 08:30 to take shorts if you are bearish. Remember that the same element of trying to look for a short above the midnight opening price is applied the same at 08:30.
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Look at the chart again: - Did the price rally above midnight opening price? No. - Did it rally above the opening price at 08:30? No. What does this indicate? With the benefit of hindsight this is extremely bearish as it cannot even rally to a short term premium above the opening price at key levels and time. This is an extremely heavy bearish market so it is not going to give those little short term rallies that can be faded. These types of movements are going to be very frustrating in the early stages of your development because you are going to feel like they are changing something [the algo]. It is not. This stuff goes on a lot. It happens in the futures market, commodities like corn, soybeans, gold, oil, stocks etc. Sometimes the market is just very heavy and it is not going to rally for you. It does not mean that they have changed anything, it does not mean that the concepts do not work. It is just extremely bearish. When it is extremely bearish you have to trade it differently. What is “differently”? FVG MSS
OB
It is the same chart as previously shown. During the London open the market has a price displacement, it has a bearish orderblock and that would have been the only real sound entry. Remember that as you have the FVG above, the price can spike up into it, hence your stop loss must be placed above the high.
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The opening at 08:30 – 5m chart
08:30 12:00
This is the 08:30 opening price and the imbalance created AFTER 08:30. The model teaches you to look for something to the left prior to 08:30, something like a short term high. Using the opening price at 08:30 you want to see the price rallying above it, run some stops and then break down and create this type of scenario – displacement. This model does not exist in this the chart presented here. It is not recommended to hold positions over the weekend or overnight. You should be 100% in a session or a day and out before the close. The 5m chart here has the imbalance and the model you want to see above the opening price at 08:30. Again, this push above is not present here. You see here only the imbalance. The opening price at 08:30 is the New York session opening price. Do not confuse it with the midnight opening candle. New York session is the 08:30 to 11:00. You are looking for this framework to offer the PO3, which is a fractal element of accumulation, manipulation and distribution. What is it accumulating? Short positions. Why? Because it is bearish. Then anticipate manipulation above the opening price 0f 08:30. They will assume MORE short positions there. Then the price starts to go the other direction and they distribute their short positions at some important low that they were able to forecast and, obviously, it is relative to those daily equal lows and old daily lows and projections with the Fibonacci, all those ideas that come to mind, in concert and agreement, as well, with time of day. Look at the price action from the previous chart. The price starts dropping at 08:30 until 12:00 pm, which is the lunch hour. There is a retracement during the lunch hour, the created high is poked and then the price drops below the last swing low on this timeframe. And from here you can expect continuation in the afternoon session. Just remember that whatever the price is at 08:30, extend that with a line in time and you want to see that rally above. The opening at 09:30 – 4m chart – It is the same chart as presented previously Now… when you have this expectation, the other aspect of time is the 09:30 opening. That is when the equity market, or stocks themselves, start trading their New York session. 151
What happens at 09:30? This is just when the opening occurs and there is initial volatility. It can be a whipsaw where it can go up and down, real short term and go both directions in a small range. Sometimes it can be a large range and clear both sides of the buy and sell and then, whatever the real move is going to be for the day, you will wait for that to unfold. In this case here the price just starts to run lower and does not give a rally at all. It speeds up what is already in motion from 03:00 am in the morning during the London open session.
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The same idea is presented on a 3m chart. You can see here that first imbalance after 08:30 being filled, it breaks down and then there is another imbalance being filled plus a bearish orderblock. This last one in here is one that is useful because you have a little bit more insight as to what it is doing, It is too heavy and not likely to rally. There is no reason to look to go long. Look for reasons to get short anytime you get an imbalance above the relative equal lows from the daily chart. The relative equal lows from the daily chart are the objective. The price keeps going lower and lower because it is gravitating towards that level. ES – 3m timeframe
ES – daily timeframe – B-ADJ chart – this chart was placed a few pages ago and I put it here again to remember where the EQL are and where the SSL is.
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RECAP The midnight opening price serves as a reference point for trading during the London open session, which spans from 2:00 AM to 5:00 AM in the early morning. If you don't actively participate in the London trading due to being asleep or occupied with work, an alternative strategy is to examine the charts at 7:00 AM New York local time. This allows you to assess the developments that occurred overnight. Take a moment to consider whether the market conditions have shaped a favorable scenario that aligns with what you would have potentially traded if you would have been actively monitoring the charts throughout the London session. If it happens, then you know that you are really built in with an advantage from the daily bias. If you are bearish and it creates a rally above the opening price at midnight and the price starts to decline and at around 7am in the morning the price is below midnight opening price, you know that the price is likely to create another little short term rally, but in this case it will be above the opening price at 08:30. Remember that the price may not do that and the price it just remains heavy below both opening prices, midnight and 08:30. Everything was extremely bearish on this day and it could not mount any meaningful rallies.
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Tape Reading example. Market Structure & Order Block – LINK This lecture is linked with one of the previous lessons on E-MINI S&P FUTURES. You can see here that that relative equal lows were hit. That was the draw on liquidity, further named as DOL. [Refer to page 126]. The relative equal lows were already highlighted as a DOL. You may use an icon to outline it in Tradingview. Daily timeframe – E-MINI S&P FUTURES
Here the last 5 daily candles will be “stripped down” on the hourly timeframe. 1h timeframe – E-MINI S&P FUTURES
There was a run that kept pumping higher and higher just about short of the previous high from the left side of the chart and then it had a decline and a normal pause, it gapped down and rallied back up. 155
Look at how the price went just above that area. This is permissible price action and you will have to get used to it. Look at the bodies of the candles on how they are staying inside of the imbalance. It reaches for liquidity and stops. The bulk of the volume is being held inside of the imbalance. 15m timeframe – E-MINI S&P FUTURES – ICT’s chart will be used here
Entry area
Target
Here you can see the 09:30 opening price. At 09:30 the equities / stock market starts trading. This what is occurring here. It is opening. Now follow the chart starting from the 09:30 opening The price is running a short term high right after the 09:30 opening and then it breaks lower, and it creates an imbalance. So what do you see? - Did it take a high out? Yes. - Did break below the previous low? Yes. - Did it create displacement? Yes. - Did it trade back up into the FVG? Yes. There you can be a seller. The blue line from the bottom of the chart represents the two equal lows previously highlighted on the daily chart. That is the TARGET.
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At 08:30 you are using the opening price. Did the price trade above the opening price of 08:30? Yes. It means that the price is in a premium as it is above an old high. How can the market be in a premium if it is above an old high? Anytime the market trades above an old high, that is a short term premium because it is going into liquidity. And anytime the market trades below an old low, that is a short term discount.
Just like the purposes of what people use in terms of overbought / oversold indicators, things can be overbought and still go higher or oversold or in a discount and still go lower. This is why it is suggested that when you are studying price you cannot just assume that if an indicator is overbought, therefore it is a good sell or a good shorting opportunity if you understand the narrative within market structure. Market structure is not the answer; it helps you frame the idea, but the idea must be in alignment with the present narrative. The narrative is why should the market go where you think it is going to go on that particular day based on the climate, the economic calendar events and the volatility that is being offered for that particular trading session or day. The PO3 here is the open at 08:30, rally up or manipulation into 09:30 creating a high and then the movement lower to distribute their shorts below an area where there would be stops. Smart money would be selling short the buy stops in the 09:30 high and then riding it and offloading their shorts to sell stops below the relative equal lows. Remember that when you see these relative equal lows on the daily chart, traders will look at it as a breakout. There are lots of traders out there that have long-term trend following systems and models and if the price breaks below these areas, they want to be short; and that will flood the market with market orders to sell at the market. Smart money want to buy at a lower price and while they are in the 09:30 swing area, they are aiming for the relative equal lows created on the daily timeframe.
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We have visibility and the ability to forecast certain things that should repeat. If the algorithm is, in fact, in control and we understand what the algorithm is doing, you are taking the logic and certain principles and concepts and blend them with market structure, you are looking for lower prices and it should reach for a specific low. 5m timeframe – E-MINI S&P FUTURES If you are looking at the chart like this, not having the rest of the price action, what do you think is resting above the 2 equal highs? Buy stops. The blue line on the right is the opening price at midnight. To the left of it you can see 2 highs real close to one another, too, so the price might also take that if it runs up. This is a little too much or too rich for the expectation to get that high. The 2 highs are reasonable and are right above the opening price.
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Later on the price punches up through the opening price, it takes out the 2 highs, it breaks down, it comes one more time back above the opening price [wick] and then “gives up the ghost” and aggressively runs for the sellside below.
For some of you this might be enough, but a closer look at area above the opening price will be discussed next. That is the blue shaded area on the right.
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1m timeframe – E-MINI S&P FUTURES The blue line is the midnight opening price marked on the 15m timeframe. The market runs up above it, it breaks down and creates an FVG, there is a swing low to the left of it and it breaks below it. The stop loss must be above the candle that creates the FVG. For a conservative SL you can place it above the last high in price. SL
SL
-
Was there displacement? Yes. Does the market come back into the the FVG? Yes. Is it above the opening price? Yes. Is that enough? Yes.
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FVG
The afternoon session 13:30 is, usually, a good time to get back in. After 13:30 the lunch hour has been smoothed out and then there is usually some kind of a retracement higher when it is bearish or a retracement lower when it is bullish. This can be seen in the next chart. 5m timeframe – E-MINI S&P FUTURES The 13:30 retracement can be seen here. There is an imbalance, relative equal highs and the retracement into the EQH. That is an area where you can get short. A bit lower, after 13:30, on this chart there is an FVG that could have been used for a short position aiming for the relative equal highs marked on the daily timeframe.
Afternoon retracement EQH
Imbalance
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5m timeframe – NASDAQ FUTURES This will be a description of a trade taken by ICT. Look at the chart and observe the price action. Firstly look at the chart and observe the price action. Give reason why the short was taken.
This was the shorting area where the trade was taken
Follow the chart below: There is a high that was taken as the price ran above it and then there was the market shift with the price breaking below the equal lows. You look for the relative equal lows to be broken when the bias is bearish.
SL BSL FVG
MSS
Inside the leg down that made the MSS there is displacement below the EQL. Right above the MSS there is an FVG. Yes, there is another FVG a bit higher and another one even higher. You expect 162
the price to stab up into them, so the SL must be in a position where that expectation is covered. That means that you have to either have deep pockets and allow for your SL to be above this candle OR use the micros. If there is only one FVG, then you just put your entry there and do not expect to go higher and have a deeper retracement. In this case having that higher FVG you will have that expectation of stabbing into it and have the stop loss wider. Do not try and catch the highest price for a short entry or the lowest price for a long entry. Many times you will miss it. If you try and catch that better entry, you are going to miss moves and if it moves like it moved in the charts above, that will be a heart breaker; and if you are not positioned in it you will spend the rest of the day kicking yourself about being greedy about trying to get that entry instead of following the rules with the first FVG. And you will, probably, miss the other moves that take place later in the afternoon. Moving on… follow the chart
EQL
MSS
… there is a shift in market structure, it moved up into the upper FVG and it broke lower, it printed another FVG and then it moved below some other relative equal lows. Now look very close here: - There are relative equal lows. - There is a high that was taken. - It broke down. THAT IS THE SAME THING THAT HAPPENED ON THE PREVIOUS CHART SHARED ABOVE. THIS IS A FRACTAL. THAT WHOLE MOVE THERE IS THE SAME THING HERE, JUST SMALLER. It creates the same thing – an FVG, the market trades back up into it and a bit above it; it is acceptable. Then it breaks aggressively lower BUT it does not take the low, yet, and retraces back in.
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At this moment there are 2 narratives in play. The bigger one and the smaller one. There is a long term high and an intermediate term high. By definition they are both ITHs because they have imbalances. But the ITH is lower than the LTH. When the price is retracing back up, that is going to be a STH inside of a market structure that is predisposed to go lower because there is LTH and ITH above the actual price; and the STH should respect the underlying order flow and go lower.
LTH -OB
ITH
STH
As the price retraces back up, it retraces into a bearish orderblock. Its wick will be further analyzed on the 1m timeframe – that is the blue shaded area.
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1m timeframe – NASDAQ FUTURES The price is inside the blue shaded area from the 5m timeframe and also inside of a bearish orderblock on this timeframe.
-OB
The bearish orderblock will be now recalibrated and refined like this:
The long setup
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The market re-trades back up into the orderblock and once it hits the midpoint of it, you want to get in around that time. You might see a long setup here with a bullish orderblock, an FVG also, that small rally a bit above the refined bearish orderblock. BUT this whole OB move is subordinate to all the previous things outlined previously on the 5m timeframe; hence the market structure is bearish. Here there is no need to consider the long entry setup. The market rallies up, it stabs above the blue shaded orderblock, but it is just a wick. The bulk of the volume in the bodies of the candles are inside that orderblock. Then the market breaks and shows displacement. There is also an orderblock that was formed after the market shift and you can see it highlighted on the mini chart on the right. Remember the bigger fractal of the price action from the left – relative equal lows, it breaks down and then it goes back up to an FVG. The same happens here – relative equal lows, displacement, FVG, the price trades back up into the FVG and into the bottom of the bearish orderblock. The exit from this short position will be made based on the 5m chart presented earlier. This is the bigger image of the price action on the 5m presenting itself with a market maker sell model. The big swing high on the right of this chart is the area that was previously discussed about for the 09:30 opening price, but on the ES MINI. This is NASDAQ on the 5m.
ENTRY
EXIT
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SMT divergence can also be seen between E-MINI NASDAQ-100 FUTURES and ESM2022.
The high created on NASDAQ at 09:30 is higher than the high on the left. The high created on ES-MINI at 09:30 is lower than the high on the left. SMT is showing a willingness to crack the correlation between similar markets. These two markets are closely correlated assets. The S&P 500 and the NASDAQ 100. They generally move together in tandem, but not all the time. If you are bearish and you are expecting lower prices and you see the SMT and the S&P 500 [ES-MINI FUTURES] does not do it, meaning that is not following the NASDAQ high above a previous high, that is showing you that this is a stop run and it tells that the S&P is really weak. This gives you confirmation without using an indicator. When doing this comparison in Tradingview make sure that the price source is set to HIGH as shown below.
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FOMC & Mentorship Model in HTF Trading – LINK This lesson is based on real time price action on MNQM – MICRO E-MINI NASDAQ FUTURES post FOMC. It is tape reading, not trading. There will be more charts here as the analysis continues. I checked the 4th of May 2022 on forexfactory.com and there was an FOMC meeting at 2pm New York time. As you will see in the next charts, the tape reading is made after 2pm.
15m and 1m timeframes – MNQ 2022 – MICRO E-MINI NASDAQ FUTURES This is the MNQN chart with the 15m and 1m timeframes side by side. The focus will be on the 1m chart. The charts are not B-ADJ.
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1m timeframe – MNQ 2022 – MICRO E-MINI NASDAQ FUTURES This is the initial presented chart with no other annotations. The expectation is that the price to reach lower.
Tuesday’s high
At this moment, the price is inside an FVG and you should have in mind the fact that the price can stab into it and a bit higher as it did here, below. Further on the lower FVG is highlighted with a red line with the expectation that it will be reached and maybe swept below it, as there is sellside below it, before it runs Tuesday’s high. Here is Wednesday.
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At this very moment you can be short here with a SL right above that most recent green candle to the left of where the price is right now. The expectation is for price to visit the bottom of the FVG and bump it higher.
SL
Exactly at this moment when the price is bumping up into the FVG, that is a shorting opportunity. The blue line below the “bull’s eye” is an orderblock; the price could bounce a little in that area. The main target remains the checkered flag area. The red line is the Tuesday’s high. And even though the price ran it, it has done it shallow. The used vocabulary here is “running the Tuesday’s high”, not sweeping it. What happened here is a sweep, not a run, It swept the Tuesday’s high and it is coming back down post FOMC.
If we are wrong, the price might just go into the bull’s eye area and run higher from there. We hope it does not do that and trades down into the blue shaded area. That is the end of the race for bears. If they get into that, then it should start the real move higher running Tuesday’s high. Running the high means it runs over the top of it and it just does not look back. Sweeping is where it just goes 170
above a little bit and then it goes down and reverse. If you are saying that is going to run an old high, that means it is going to run through it and continue. This is a bearish orderblock. The price can come back and hit it and resume going lower.
It never does and runs into a sellside liquidity pool.
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As you can see the price did, in fact, trade down. Look at the bodies of the candles respecting that blue shaded area. Fantastic price delivery. Yes, it went a bit down below it, but we are not worried about being that accurate. The main thing is going down into that area, it turns, and then it runs Tuesday’s highs. Look how much more dynamic that is. Once the price starts rallying taking out this high here and after the price trades above the larger FVG, you can use those 2 swing points to project price to a target. This came up to 13.437.
What is the question mark from the bottom of the chart? Measuring the 50% of the high formed from 11:30am, where the question mark is, up to 2pm, you will see that the FVG is below the 50%. It is a swing low and you need to find the equilibrium price point between that low and the high that was formed at 14:30. Usually around 2:30pm, after FOMC in this case, it has finished its initial leg where it prices in whatever it is going to do, higher or lower, and then it starts to rally. You can see it is pretty much close to that in terms of algorithmic delivery.
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Drawing the Fibs Usually you need to use the highest open or close and the lowest open or close in the price swing when it is not expected to have a whole lot of volatility. But because here there was FOMC, it is more likely to be much more volatile and the extremes of the ranges shall be considered, hence the wicks will be used to project price. Body to body This is the first form of price projection using the highest open or close and the lowest open or close in the price swing. The Fib extension -1 reaches the upper green dotted line as a first target. This is why that level was expected to be hit.
-1
Wick to wick This is the second form of price projection for expected volatility. At this very moment as the chart shows, the price is running short of that higher -1 projection. That is the extreme price expected to be reached. -1
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Hardline Psychology Discussion - Responsibility & Model Diagrams - LINK Consider your motivations for studying these concepts. Are you here to genuinely learn, or are you seeking to disrupt? Your focus should be on analyzing historical chart data through meticulous backtesting rather than engaging in actual trading, not even in demo mode. It's essential to approach this with responsibility, attentiveness, and a willingness to listen. The lessons, suggestions, and guidance you receive must be applicable to your unique journey. Merely observing and assuming understanding won't suffice. In a recent post on the ICT YouTube community tab, a scenario was presented. ICT encouraged viewers to examine their E-MINI S&P 500 Futures charts. The blue arrow indicates ICT's observation of a specific gap and his anticipation of a "Judas swing" occurring around 09:30. This swing is significant. If the price enters that zone and triggers displacement, followed by the formation of an FVG, and then a trade back into an FVG within the displacement, it presents a potential opportunity to go long and target a move toward the BSL at 4303.
In summary, the message underscores the significance of responsible and attentive learning in trading, emphasizing the importance of backtesting and understanding patterns. It highlights personal responsibility and critical thinking in trading decisions, stressing that trading success depends on individual commitment to learning and applying knowledge rather than seeking shortcuts or blaming others for mistakes.
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Daily timeframe – US100 The expectation on this daily chart was for the price to stab above the equal highs and then to create the run lower. That was prompted and highlighted in the previous chart on the 15m timeframe, but on US500. Study that; because if it happens you can see and study and backtest now that the market has already moved, you can go back and see if the model in fact did what is taught in this mentorship.
This is actually a good lesson because it shows where you are looking for something to form, but it does not form. It does not create a losing trade, it does not get you into something that causes you to buy it when there really is not an entry pattern there. This is the proof, the evidence that the model has a validity. So if you have a valid reasonable sound logic behind the model, whatever the model that is, that should prevent you from taking bad trades; not all the time, but sometimes when there is a really big move going to the other direction that you do not see or expect, it may do its job and keep you from getting into those bad trades. The logic will be shown in this lesson. Be a critical thinker. Think about what was already taught about this model. 1h timeframe – US100 This is the logic with that 1h chart and relative equal high. This is the framework you are looking for a run above here. If it can above that, then it could wash out and go lower. Why would that be possible in terms of a pattern or a setup or the logic? What would be the catalyst for that? What would be the reasoning for you being interested in these relative equal highs? 1. It is Thursday and ahead of non-farm payroll Friday. NFP Friday is usually a volatile day, it can be messy, it can be sloppy. Sometimes it does not really do anything. Other days it could be extremely volatile like the FOMC. But because FOMC has done what it has done, the NFP numbers might not have so much impact.
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I checked the forex calendar from 6th of May 2022 and on that Friday there was an NFP release.
Also there was the FOMC statement released on 4th of May 2022.
You are looking for these relative equal highs to be taken out then drop lower and create the model of this mentorship.
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15m timeframe – US100
What is the catalyst that sets the run up into those relative equal highs? Much like it was suggested in the ICT’s post from the community tab, the price dropped down into a discount. The chart was posted ahead of the 09:30 opening, where equities open, and that volatility that comes around 09:30 can create some kind of manipulation in price. So, if the focus is on the equal highs and the price is dropping down ahead of 09:30, what is most likely to see? To drop down and get traders thinking it is going to go lower and then rally up; not just go down indiscriminately and then go higher. It has to do something specific. You are interested in the area of the FVG. Dropping down into that FVG, that would be a point of interest to go in and look for something that gives you the setup. The FVG is just WHERE the trade might form. It could and it may and it is not absolutely going to form. That is where the pattern should form. By itself it is just price. You have to incorporate the time. At 09:30 you are expecting some volatility and drop down into the FVG. You are looking for price to drop down into that area. If it does, then you are going to look for the model. In the shaded area you can see the price trading down into it, the candle stopped right at the old candle high – the bottom of the FVG, and then the next candle gave up the ghost. Right away you should notice that there was the initial criteria, which is trading below an old low, they go down and run out the sell stops, traders are caught in. The next thing to look for is displacement. The price has to trade back above the old low. It has to have displacement above that and it did not happen here.
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5m timeframe – US100 – ICT’s chart will be used This is the same chart as previous, but on a lower timeframe. If you are looking at this with the same old low here as seen on the 15m timeframe, the price trades below it, but it did not create displacement above the old low. It just went down, it consolidated, it returned back to the old low and melted. Did not do anything above that old low. There was no displacement, no energetic move so you can look for an FVG in price and wait for it to retrace back down into it to take a long position. It did not happen.
Old low
I promise that as long as I am doing this, I am going to endure losses. I am not going to be defeated by those losses. I will endure them because trading is all about managing losing trades. Every trader is a losing trader that finds success out of loss or suffers ruin in it.
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More details about the model Where do setups form? When you are looking for this idea, the FVG, where would you expect them to appear in price? Obviously it was taught about the run above an old high or relative equal highs and, if you are bearish, that would set a scenario where the market goes up, sweeps the highs, breaks back down below the highs, short term low is taken out with displacement and then you go back through that displacement leg looking for an FVG to short into. You will have to visually understand it. In your mind can you draw out with a diagram like if you were at work and you are trying to your friend or co-worker what it is you are looking for in price? They are not going to understand what you are doing, but how would you draw it out in price? What would it look like? 1. 2. 3. 4.
You have a level of relative equal highs and the price is moving towards it. It has a small little correction or so. It runs towards it again. And then it finally runs through those relative equal highs.
At that moment as soon as it goes above it you start panning back through this price run – the red shaded area – and find the nearest short term low because that is going to be your trigger. It is not that it just goes above the relative equal high and then goes down below that. That is not it. You have to see it go below that with displacement and taking out the short term low. That is how you filter out those trades that may not be high probability. Until the price takes out that short term low, there is nothing going on. There is no trade. Then when there is displacement, that displacement leg and price action is the foundation to the setup. Once you have that, then you can go into that area and look for the FVG. The image below depicts a bearish scenario.
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Another approach is the following. If you have an old FVG above you and the market is below it and it is trading up and your bias is bearish, the same logic as for the equal high applies in this case. Once it trades into the FVG, it does not have to completely close it. If it trades up into it anywhere between the low and the high of the FVG is good. You may use the low of the FVG the same way as you would treat the equal highs. Once the price takes out the low of the FVG you can already go back through that leg up and see where the trigger is, which is the shift in the market structure. Then you have the displacement leg. Once you have the displacement you can go back in and look for the FVG.
Those are two entry strategies for this model. There is no other way of worrying about what does it look like. Visually this is what you are doing. It is algorithmic. It repeats. Unfortunately the price did not give the setup to allow a trade. This does not mean that the model is broken. It just means that the market did not provide the structure to allow this model to form. It did not, also, result in a losing trade because the logic was not utilized to actually take a trade. It never formed. For your memory refresh check again the 15m timeframe charts presented initially.
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Daily Rebalance Theory & Model Example – LINK Everything taught here works in forex and is not limited to index futures. Daily timeframe – US500 When you are looking at this daily chart remember what was discussed when the chart looked like this.
That specific orderblock from the red shaded area was a catalyst for setting up a future move that should not see the high of that candle pierced or traded at. That is the most unlikely level to be traded to with a bearish orderblock. Underneath the lows there is sellside liquidity and there is also an FVG where the price can be attracted to.
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What was the framework that lead to this logic saying that there is a bearish orderblock to watch for that could set a run into the month of May seasonal tendency? Seasonal tendencies are times in a year where markets or specific asset classes will move, generally. Not always, not 100% of time, not “absolutely never going to fail”. They historically have produced price swings that follow a seasonal tendency. An analogy would be that during July, for example, you will not expect snow. You will expect sunny hot. That is the seasonal influence. Month of May tents to be a month where the market generally drop. You can go back on your charts on the S&P, NASDAQ, DOW and RUSSEL and check the price action from the last week of April going to the month of May. This group of markets tend to be weak in this period. By itself this does not mean anything but in the hands of someone that is initiated with what is taught in this mentorship, it is a road map to consistency. You can practice and learn a lot about price action by doing this. getting back… What took place was that there were relative equal highs as buyside liquidity that was taken out. But who is doing that? Smart Money! These individuals go in and sell to those buy stops AND at the same time when the market is entering in a period of time when there is a bearish seasonal tendency. The market bumps the buyside and then it breaks down. It retraces into an area where there is a bearish orderblock. From here the expectation is that each day to see lower prices. Trades must be taken with the elements taught in this mentorship so far and taken around specific elements of time.
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The market eventually trades down taking out the sellside liquidity.
Market efficiency paradigm What happened above the relative equal highs? Smart money sold to the buy stops. This means that now they are sitting with a net short position. How do they get out of that position? They have to buy it back? How can they buy it back at a cheaper price guaranteeing them that they are going to be buying from lower priced sellers? Find the sell stops. Why are there sell stops below that level? Because traders have models that want to capture big moves and expect the previous highs to be taken out before they start trailing their stop losses. This is about large funds traders, not “Retail Rick” that trades on the MT4. Historically you are going to find out that retail traders are going to have many times their stop losses in the same area that large funds will. The only difference between the two is that retail Rick or people that are very small speculators, the small traders, liquidity, is so tiny that it is irrelevant. But their argument is used by people that do not understand what they are talking about because they will say that those concepts presented here are nonsense. The market always booked like this. The advantage is that everything is switched to electronic trading. That means it is much more efficient and faster. It will not stop working.
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The FVG Further on we are going to zoom in into the last area of the chart where the price drops below the old low. Notice that there are 2 wicks dropping below the old low; it is a shallow drop. But then there is that last decline made during Monday’s trading. Here we will build on the idea on what the liquidity does once it takes out old lows like that.
In 2010 ICT was teaching this on https://www.babypips.com. He was saying to study the last 3 days – the OHLC. It was more like a laboratory experiment to check if others are seeing the FVG. The 2nd last candle is Friday’s trading and the last candle is Monday’s trading. The last 3 candles expect the Monday’ candles are those 3 candles. The highlighted candles are Wednesday, Thursday and Friday. Is there any FVG in there? No! But look at what Monday’s candle did. It opened, it extended down and near the low of the day.
But what do you do with that information? Go back to the previous day’s low. Mark the low. This is important because if you do so, the next trading day, which will be Tuesday, and if the candle opens up and if because the price is below those relative equal lows on the daily chart and is below this swing low, also, the price is now in a deep discount. You will not try to pick bottoms. Avoid trying to pick tops and bottoms. There is a lot of meat in between the major turning points. You can afford to be wrong at the end because once you are wrong it will be obvious and then you can get in sync and go the other way.
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When you see a big down day like this, all the indicators are going to flash OVERSOLD!!! And indicator followers will try to look for bullish divergence because they think that they are going to catch the ultimate low. Even if they were lucky to buy the low, the chances of holding it long term is not likely. Do not think like that. Then… after Tuesday’s candle is closed we will go into a lower timeframe. This last printed candle looks like an indecisive day and if you are looking at the daily chart it can be a little confusing. Some will say that this is a mixed day. No no no no no! Let’s go into this formation to give you some logic. Daily timeframe – US500, but with Tuesday’s daily price action.
1h timeframe – US500
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In perspective, you want to break the daily ranges up by the day. Midnight starts to cross over to a new day. This is how the algorithm works. At midnight, Tuesday, the price starts opening and if you draw that line up in time, the price goes up, it goes down and then it comes right back up close to the where it opened at midnight.
There is also buyside liquidity and an old low in the form of sellside liquidity. What is resting above relative equal highs or buyside liquidity? Buy stops. What is resting below an old low? Sell stops. The market runs above at 09:30 and it hits that old low marked on the daily timeframe. Then, as the buy stops are purged that means that all of the buy stops have been “dragged into the market by their hair, kicking and screaming”. They have been knocked out of their short position or they are caught long. Either way it does not matter to us. We know that the buyside liquidity is likely to be utilized to set up an idea for smart money to be short. Why? Because the bias is bearish. We did not change gears. We are not trying to pick the bottom. So, if you are doing this like the smart money and you are looking at the market in this way and you want to be short at 09:30, where would you want to offset that short position? There are 2 areas in the chart above. There is a little short term low where partials can be taken and also the previous day’s low, which is the sellside liquidity marked on the 1h chart. Let’s use the logic of this idea of rebalancing Monday’s daily range keying off this level here. Notice that the buyside liquidity is ran first. This is really important. If the price would have gone down and took the sellside liquidity first and then ran out to that Friday’s low, that is not bearish. But this run above the buyside liquidity first at 09:30 without having the low being taken out first, that is bearish because it is within the context of the bias you are looking for.
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Operating in a bearish bias is essentially the market going up into a premium for 1 out of 2 reasons: 1. To run an old high or highs to take out buyside liquidity so that way the smart money can counterparty with them with the short position. They are going to sell to those buy stops then seeking to buy cheaper the sellside liquidity. That would be their pool of liquidity to offset or distribute their shorts below the old low. That is not a random unknown low. It is already in the marketplace. As soon as the day closed, that low is known to everyone, but the liquidity below that is not necessarily a target or utilization for anybody in any retail idea. 2. The 2nd pool of liquidity is the sellside liquidity. It runs the buyside first with the bearish bias, so the market goes up to a premium and then seeks a discount. It goes up to a premium and then seeks the discount. 15m timeframe – US500 Dropping down into a lower timeframe, 15m, to have a bit more detail, you can see the 08:30. What do you look for to happen at the 08:30? The news embargo lift. That means that the algorithm will start seeking liquidity as early as that time. It might wait until 09:30. Notice that the highest candle here is at 09:30.
Notice that the 09:30 candle hits the daily level previously mentioned. It is rebalancing that entire Monday range. It is going back to the previous day prior to Monday. That is an old low, Friday’s low. When you see that you know that it is rebalancing the big drop on Monday, it tricks people into thinking that it has made the low and it is going to keep going up when the only thing it has done is it has gone up to a logical level on that daily timeframe that rebalances all that selloff on Monday. Looking at Monday’s trading on this 15m it does not look like it is an imbalance. But on the daily candle it is a large down day. The price retraces back up into a logical level, which is the Friday’s low and it hits it based on the elements already taught in this mentorship.
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Look for relative equal highs. At 08:30 the algorithm will start looking for a high or highs to run. How far can it go? That is Friday’s low. This is that Judas swing, the fake rally up. Think about what the daily candle looked like before we started to drop down into the lower timeframes. It was a big wick up and a little bit of a wick down, but it was a small body on the candle for Tuesday’s trading. But if you look at it from the lens of PO3, accumulation, manipulation, distribution. There is the accumulation. Then at 08:30 use the opening price, draw it out in time, the rally should take place above that, it hits a logical level, then it creates the pattern that is in this mentorship – FVG, MSS and then it starts to show displacement and distribution to the downside attacking a discount array. The discount array here is the sellside at the bottom. This is the PO3 – it opens, it rallies up creating the high and it trades down into the sellside.
All of this is inside the daily candle that looks indecisive, right? You have to understand what you are looking at relative to time and price. It takes away all that confusion and it provides more clarity.
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5m timeframe – US500 – ICT’s chart will be used We are starting to build this into a very visual representation of what you have been learning so far.
09:30 equity open
NY midnight
News embargo lift Hunt LQ
There were not a lot news in this day, but this is the same logic – relative equal highs, at 08:30 starts the algorithm. What is it going to do? It is going to run for a premium. Why? Because the bias is bearish, it is likely to return into that Friday’s low to rebalance Monday’s trading, it bearish candle is being rebalanced. At 09:30 the equity market opens and that is when you expect this type of move, but it begins at 08:30. In that 1h long interval you are expecting a run higher when you are bearish to set up shorts. The short can form inside that hour or it could just provide the leg that sets up the framework that will eventually provide you the setup like it happened here. All of it is studying what the market is providing to you. When the price starts to spool from 08:30 up into Friday’s low, at 09:30 that is that manipulation time where it creates that little opportunity where it looks like it is going to do something but it is, generally, the opposite of what it looks like on the chart. In other words, the retail is going to see that as it is breaking out going higher and they buy it and chase it and then they just run the daily range against them and take out the sellside as you can see in the chart above.
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The Judas swing This whole range here marked with the yellow rectangle is the Judas swing. That is the fake rally in a down move that will be profitable for shorts. But at the time the retail will not see that, they will not identify it, it will not make any sense to them as they will be caught off guard. 5m timeframe – US500
The displacement Going a bit deeper into the analysis on the same 5m timeframe, the red shaded area is the displacement. This is the leg on the 5m chart you strip back down and you start going from 5m, 4m, 3m, 2m and 1m timeframes until you find the FVG.
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You will put a Fibonacci on the high and the low of the displacement leg. The 4044.50 level is the equilibrium of that drop down. This range is noted because there is a swing low broken. It could have stopped there, where the first swing is broken, and started to move up and that range could have been used but the price kept breaking lower and lower. Look at the chart. There are 3 swings broken, hence this is the reason why the Fibonacci is placed so low. As you are learning you will shade the displacements as seen here and then you start breaking it down into the lower timeframes.
This is where I saw the FVG on the 5m timeframe
4m timeframe – US500
Follow the chart as you read 09:30 is the highest candle inside the red shaded area. That is the Judas swing; at 08:30 it starts its run. This is an algorithmic price run. The price goes to Friday’s low, rebalances the entire range on Monday’s trading, it changes the narrative on retail traders thinking it has created the low. All the bullish divergence they would be seeing and screaming to buy. Breakout “artists” are looking at the break above your BSL as being a resistance turned into support, it breaks a bit below, it goes back above making them think it is still going higher. But YOU are looking at something very specific. In that shaded area you are looking for an FVG. There is an FVG on this timeframe, but you are not looking for that one. That FVG is below equilibrium. You want to sell short from a premium market, not from a discount market. You have to wait the price to get to at least the 50% price point of the swing. Above the 50% is a premium, below 50% is a discount based on that price swing. 191
Following this principle, meaning to take short positions from a premium market will keep you out of so many ill-fated scenarios. Yes, it will not work 100% of the times. Expect to lose money. 3m timeframe – US500 As there is no FVG to consider on the 4m timeframe, you are switching into a lower timeframe. The 3m timeframe. Can you see the FVG inside the red shaded area on this timeframe? No. There is no FVG to be considered. There are, but not in premium.
2m timeframe – US500 Finally, the FVG is present on the 2m timeframe.
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Removing the extras, this is the clean chart on the 2m timeframe. The imbalance is clearly visible. Also there is a short term low taken.
Now consider that you were watching live the 2m timeframe and you saw this break below the short term low. Is this displacement? One could argue perhaps it is. The alternative will be now presented. Have in mind that this is not bending the rules, it is just showing the logic of when you put a trade on in your demo account. This movement lower is the one that creates the FVG. There is also a short term low taken out. If you would have taken a short from the FVG, where would your stop loss be? It would have to be at least above the candle that creates SL the FVG. You might get scared when the price runs back up into the FVG as it comes back and retraces but remember that you cannot open a trade like this and put a stop loss as EQ already shown and then trail it as you see the price initially dropping down. You will have to hold with a certain measure of risk open. This filters out many people in this industry; they cannot do this. They rush to get out of the trade that is marginally profitable because they cannot stand it. They are so used to seeing it turn against them and stop them out. And when they start getting marginally profitable trades they get out prematurely and they do not even hold it for the model’s rules. OR they trail their stop loss so tight and quickly that it strangles the position it does not even give the chance to move and breath.
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Stop loss placement The rule is that you will use the candle that creates the FVG – 1-2 pips above that as a stop loss. If you are scared and want to use a more ample stop loss, you will use the swing high. If the swing high is a too big risk for you, then use the micros futures. That is 5 dollars per handle for micros vs 50 dollars per handle for mini contracts. Ample SL Tight SL
Trail the SL after a large shift in structure is made
The stop loss can be moved lower only and only when you see a larger shift in market structure like this break below. You will accept the fact that you are probably wrong. If it stops you out, it stops you out. Why would you not care? Well… how many times have you seen this pattern form over the course of a week. It is forming somewhere every day – London (overnight highs and lows) or it is forming in the New York session. The New York session is taught here because you have the advantage of knowing what took place in London. Does it work in London? Absolutely! Does it work in Asia? Not that often. If you indeed cannot trade in New York and you are forced to trade in Asia, trade the YEN pairs, New Zeeland and Australian dollar as they tend to have a bit of more movement during this period because that is when their market start. Watch for this pattern to form on the 1m through 5m timeframes in the Asian session. We have here the whole model identifying the setup moving up to a rebalance of Monday’s price range back up to Friday’s low/ The Friday’s low in this case is that upper red line across the charts. It hits that level and then it creates the setup that is happening at the time elements as it was taught and then it pairs up with the SSL. Smart Money sells short at that highest high and ads on their positions when the price is retraced into that 2m FVG. The price trades down into the SSL during the lunch hour. The price should have hit the SSL just ahead or right at 12pm. This is the only thing that did not line up with the expectation on this day.
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In closing Looking at it like this, doesn’t this logic make sense? The market goes up to trick people into thinking it is going higher or knock those people that are short making money going down, in other words. Their orders that protects them or puts them in a new trade going up or out of a short trade, that buyside liquidity is attacked. The algorithm goes up there not because people bought it or because the smart traders worked together to get the trade go up there because of their buying pressure, but because the algorithm moved it. There is no buying pressure. The algorithm goes up there whether there is sufficient volume or not. That is the dividing statement. These markets are controlled, they are rigged and they are algorithmically driven. How many times do you need to see these things before you can just lay down all the other ideas? There is no reason to buy other people’s courses, you do not need to be in anybody else’s subscription. If you put the time in learning those concepts, you will not need to do anything else. No breakers or mitigation blocks, buyside imbalance sellside inefficiencies… none of those things.
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Example Of Tape Reading Practice – LINK This is the clean 1m timeframe chart of ESM2022 (E-MINI S&P FUTURES) for June 2022 contracts where a trade against the daily bias will be taken. The trade is a long position on the basis of the sell stops or sellside liquidity being taken as the price already traded inside an FVG. The price could run up and take out the buy stops above the high of the day. It does not need to do that to be profitable. But the buyside liquidity should be taken to clear the “Profitable shorts”. The high of the day to be taken is the best case scenario.
Annotations and framework for the logic of why the trade is taken
4 contracts were longed. Pay attention to the price, not to the P&L. It dipped inside the FVG and below the relative equal lows noted as sellside liquidity. The retails sees that last portion of price as a bear flag, so they are thinking that lower prices are incoming. 196
Even if you would be wrong about it and not taking the buyside liquidity (the highest high on the chart), you are confident that the price will go up into the buyside liquidity noted in blue. Notice how the stop loss is managed. It is placed right below the candle that formed the FVG. The price reacted to the FVG, went higher and then it retraced into an OB where 2 more contracts were added.
The stop loss will also be moved higher below the low that was created inside the FVG. The price should not trade back down into that. If it does, that is fine. Why is there confidence about placing the stop loss there? Because it is, basically, inside of the lower end of the FVG and the old short term high around 09:30am. There is market structure supporting the idea. Plus the sellside liquidity that was already taken. Now the price is back inside the range between where the stop loss is and the short term high noted as buyside liquidity. 4 contracts will be taken off as the price hits that level. Note in the image below that the price hit a bullish orderblock after it rejected the FVG and went higher.
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Further on the price taps again the first bullish orderblock (the lower one) and reacts going higher and creates another bullish orderblock.
As you are studying you will be drawing on your charts to train your brain. The algorithm can drop into that last orderblock and pick up momentum from there to reprice higher to the buyside liquidity. This way you are preparing in case the price drops into the orderblock. It might touch the wick of the OB, but the line of the OB is drawn on the highest open price of the last 2 down candles.
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Look closely. The price hit the wick of the +OB. That could have been a buy. Here another contract could have been added totaling 7 contracts.
Think about what is happening here below. The down close candles are supporting price and we are seeing expansion. 4 contracts were taken off here as the price hit the buyside. You can also see the executions. The stop loss was moved higher in profit with the expectation of being lucky and the price will deliver higher to take out the high of the day. Profits were taken. You can close the charts.
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Counter trend ideas – LINK Daily timeframe – NQ1 NASDAQ 100 E-mini FUTURES
EQH
Here we have Friday’s trading as the last candle on this chart. There was a nice decline during the week and then Friday there was a retracement. Looking at Tuesday’s and Wednesday’s candles you can see a relative equal high so you are thinking that the price can be drawn there. The draw on liquidity does not need to be traded into to have a profitable framework or setup. What does that mean? If you are below that relative equal highs objective and you think that the market is going to draw up into that level, whether that is today or next week, you look for a setup that will allow you some kind of participation in the expansion towards that. It does not need to get there as you will soon see. 1h timeframe – NQ1 NASDAQ 100 E-mini FUTURES
On this timeframe you can see the same daily relative equal highs. That is the 12553.25 level for Wednesday’s trading. Tuesday’s high is 12547.00, slightly lower than Wednesday's, hence you will use the higher one. 200
The market traded down from Wednesday, and then started to run higher with a shift in market structure. Also notice the two lows being swept, the market went below them, it came back above the two relative equal lows, it tried one more time to go lower and then it rejected it. So… as the market started to trade higher after that last try to go down, where is most likely to go? The market has already taken out a large pool of liquidity, meaning the relative equal lows from the left and everything below the EQL is sellside liquidity. Now the price is back above the EQL, so where buyside is? Clear and obviously, that is exactly that Wednesday’s high at 12553.25. There is am imbalance there, but that was already rebalanced. There is also a higher smaller imbalance at the top. Should the price go into that small area there the thought process is “there is likely to punch through and take the buyside that is resting above 12553.25”. That is the draw of liquidity. Think of it like it is a big magnet drawing price up towards it.
15m timeframe – NQ1 NASDAQ 100 E-mini FUTURES – ICT’s chart will be used Afternoon retracement
London’s low
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You have the market trading lower during London and then a bit lower in the New York session. That last push down could have tripped you up, but that was 09:30 in the morning, a manipulation that took out the overnight London’s low. Then it rallies. Considering that you did not take any trades during the New York morning session, you will be looking for the retracement in the afternoon. 5m timeframe – NQ1 NASDAQ 100 E-mini FUTURES – ICT’s chart will be used
09:30 manipulation
Sellside
09:30 manipulation
You have the overnight London lows. At 09:30 the market ran through it taking out the sellside below the London’s lows and then it starts to rally. At 12 o’clock the lunch hour begins. At that moment the price started to retrace down into the range that was created between the 09:30am and high printed at 12pm. What did it trade into? Discount. The same chart will be zoomed a bit to see only what happened shortly before the 09:30. You can see here the consolidation, the drop down creating the low of the day. It built a PO3 which means that they accumulated long positions into the consolidation area, they manipulated the early longs out of the market at 09:30 taking out the stops over night and then it rallied. In the afternoon session you are looking for a continuation higher to take out the relative equal highs so you want to buy that discounted market. You are buying inside the FVG from the left because it is at or below equilibrium.
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5m timeframe – NQ1 NASDAQ 100 E-mini FUTURES – ICT’s chart will be used – annotated chart
13:30
EQL
You have here the New York session open at 09:30 in the morning, New York local time, creates the low of the day, it rallies creating a high at 12:10. That is the lunch time when the market usually creates a retracement of some sort or a consolidation that retraces lower. At 13:30 the algorithm will start seeking liquidity. If the market is going to continue higher, what is the algorithm most likely to do? Seek sellside. Where is sellside? Well, there are 2 equal lows there, but are those EQLs in a discount? No. The dashed line is the EQ between the low at 09:30 and the high at 12pm. Notice how the market drops down into EQ and then below it into the FVG at 2pm in the afternoon. It taps the FVG 5 times and then there is displacement. That displacement is a shift in market structure and will be analyzed on the smaller timeframes later on.
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4m timeframe – NQ1 NASDAQ 100 E-mini FUTURES – ICT’s chart will be used There is no FVG shown here except for that small little area. There is a small return into it, but you are not looking at that.
3m timeframe – NQ1 NASDAQ 100 E-mini FUTURES – ICT’s chart will be used There is a gap there and, again, you can see that candle reaching into the FVG. That is OK if that is what you are looking for.
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2m timeframe – NQ1 NASDAQ 100 E-mini FUTURES – ICT’s chart will be used So, here you have two down close candles acting as an orderblock, the FVG inside the blue shaded rectangle and the price retracing back into the FVG after displacement.
You can frame what it is taught here inside of a countertrend model if that is what you are by nature, a contrarian. If you want to be trading with the highest probability and in sync with the early session move, then trade exactly how the principles outlined around the 08:30 to 09:30 window. These FVGs are useful if you know what the bias is. If you still struggle with the bias this is because you have not worked that long enough. You will have to go into the charts and study each day. A video watched or some ideas read even here will not make you understand exactly how to do bias. You have to backtest. Backtesting is going back on the charts and look at moves like the one just presented, marking them up on your charts, hindsight or using the replay button on Tradingview. All that you saw in the last charts is backtesting showing you what ICT actually did. The idea of him (ICT) seeing it before it happens is proof of concept and understanding.
“I’m the author of this algorithm, so I can operate in it very efficiently. You, as a student of mine, you have to understand my language first and then you go into the charts and you study with that language and you’ll be able to see repeating phenomenon. And because you’re able to do this in your own leisure, you collect these examples of hindsight movement with all of your annotations and your points of interest that you studied and see.”
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Trading Bullish Narrow Range Days With ICT’s SMT Concept – LINK In this lesson only ICT’s chart will be used due to the black background he used. There will be a few charts on the daily timeframe and then he switches on the lower timeframes – 1m. From the start the attention is pushed on the relative equal highs that were also mentioned in the previous lesson. Daily timeframe – E-MINI NASDAQ-100 Futures Having those equal highs as a buyside liquidity target, the bias was already bullish. This was the basis of why a long entry was made on this day, Monday 16th of May 2022. He was looking for that specific draw on liquidity – DOL.
EQH
Daily timeframe – E-MINI S&P 500 Futures
No EQH
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The S&P, much more like NASDAQ, had a daily swing low and while it did not have relative equal highs, the bias was bullish and warranted for a continuation higher at least in the beginning of the week. On 17th of May 2022 there were news and volatility was expected. This was one of the reasons why the market on that Monday was a bit lethargic.
1m timeframe – E-MINI S&P 500 Futures
09:30
We are starting with the bullish bias. Follow the chart as you read. At 09:30 the market does, in fact, take out a short term high and it declines. ICT mentions he was not interested in getting short as the price did not print a pattern, anyway, and no FVG was revisited. Then the market creates the relative equal lows and start to rally. Now the expectation is for price to create a buying opportunity. The logic is that the market is in a day before the FED Chair speaks, so this means that there is going to be low volatility as a result of that. It is going to be a small range day. It does not mean you cannot trade it but it takes a little bit more experience. It is important to know when the volatility is likely to occur and also when the volatility is likely to shrink up and get lethargic.
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The SMT 1m timeframe – E-MINI S&P 500 Futures [top ] and NQ1! E-MINI NASDAQ-100 Futures [bottom]
2
1
1
2
On the S&P, the top chart above, you see the drop down and the relative equal lows. There is a similar pattern on NQ but look closely at the price. It created a lower low as the S&P created a higher low. It was resisting going lower. Then both of them retraced higher, but NQ made another lower low than the one formed at 10:00. At the same time the S&P, once again, made a higher low. This means that there is divergence. You do not need indicators. This is the SMT known as Smart Money Technique or Smart Money Tool. The importance here is that there was, already, a bullish bias. There was no interest in going short. 1m timeframe - E-MINI S&P 500 Futures
This FVG does not meet the criteria to take a short entry
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In the higher left side of the chart you can see a rally up, a break below a short term low and an FVG, but that price action does not meet the criteria for a short entry because that displacement you see would require to see an FVG above the 50% of the high and low of the displacement leg and this does not exist here. But watch what happens. The market creates a run on sells stops and then rallies. It retraces back down into an FVG. Counting the candles you can see that there were around 8 opportunities to take a long entry.
MSS
2nd entry
Run on sell stops
You want to get in close to that FVG without having the price running too far away. That is a close proximity entry. That means that you might not get so precise with your entries. You might fumble with your order entry or you just not be on the charts at that moment. A 2nd position was added in this example by ICT where you can see the first higher FVG after the first one. If you miss the ideal entry and as long as you get in real close it is nothing wrong with it. The ideal entry is where the model is suggesting it. Bear in mind that on the daily timeframe the bias was bullish and on those smaller timeframes the NQ made a lower low creating that SMT previously discussed. When the market rallies after it last hit the lower FVG, there is one more indication that the market structure has shifted again bullish with the highs being taken out. There is an MSS and an FVG right below it. Indeed, there was “a bit of heat” on that entry before it started running in the expected direction. The full pool off at the top where the BSL is.
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This lesson was a brief review of trade that ICT took on a paper trading account as you can see in the images below.
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PM Session Trading with Fed Chair Volatility Injection – LINK Here is presented the 1m timeframe chart of E-MINI NASDAQ-100 Futures. The FED chairman spoke at 2pm in the afternoon. It will be a bottom up analysis, not a top down analysis. 1m timeframe – E-MINI NASDAQ-100 Futures. This is the morning’s high printed at 9:43:
Ahead of the 2pm in the afternoon you can see the price being quiet. Then there is a Judas swing that falls short of the morning high. The high comes at 12535.5 and the morning session’s high is 12535.75. The values are very close one to each other. Judas swing
It breaks lower, there is no model for a short entry. The market drops once more below relative equal lows. Those lows are the lows in the lunch hour – 12 to 13. Many times where there is an 211
afternoon continuation to the upside you will see that the lows at lunch time will get swept. Here the price dug down deeper into an area of imbalance that is below the relative equal lows. The market drops below that. That whole leg down was manipulation. Initially the market rallies up. What is actually happening is that the buy stops are triggered. Anyone that wants to go long on bull flag pattern or breakout trade, they are buying and then they are getting taken against their long with drawdown until they are stopped out or squeezed if no stop loss was applied; they just ail out. Below the equal relative lows any long holders from the morning have trailed their stop loss below the EQLs. So the market takes them out because THEY do not want them being able to participate and profit from the real move. That is the run previously specified for 12553.25 which is a draw on liquidity. It took out the New York lunch lows. There the shorts are squeezed as it rips higher into the 12553.25 level.
Here, in the lower part of the chart, there is, indeed, an FVG, but not one to go short from. The price took out the equal lows formed during the lunch hour and it also hit a lower FVG. The price reacted from that level, it went up and then down to an OB as it was revisiting the left side FVG.
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5m timeframe – E-MINI NASDAQ-100 Futures Here it does not look so obvious as to what may be available. The price bumped just below the high formed in the morning and then it broke down. All the liquidity sitting above the highs was treating the retail market like “Hey, you can trust us. This is resistance. It is not going to go up there”. And then the market starts to sell off. Notice that the model did not give a setup in this morning. It did not run the buyside and it did sell off. FVG in the AM trading session
Bump
15m timeframe – E-MINI NASDAQ-100 Futures There is an imbalance here, the price trades down into it and into the OTE – optimal trade entry, and it runs up into the buyside liquidity.
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1h timeframe – E-MINI NASDAQ-100 Futures This is where you can see why the 12553.25 was suggested. Equal highs can be seen. The next anticipated level to be hit is inside the purple circle. Even more to the left there are more EQHs.
EQH
EQH
The general factors that go behind the afternoon session If you are bullish and the price consolidates during the lunch hour, find the lunch lows, wait for it to run that out and then they will resume.
Consolidation
Lunch lows
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E Mini S&P 500 AM Session Example & Sellside Liquidity At Old Lows – LINK Daily timeframe – E-MINI 500 Futures
1h timeframe – E-MINI 500 Futures
If you would be in the upper highlighted area and you would not have the whole price action unfolded as it is here, what would you see on the left of the chart where the orange line is place? Sellside liquidity.
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15m timeframe – E-MINI 500 Futures Looking at this lower timeframe you can see a bearish orderblock from which a short entry was executed. The retracement happened around 10:45.
5m timeframe – E-MINI 500 Futures In the same area but on the 5m timeframe there is an FVG. For a short the stop loss would be above the candle that created the FVG. Stop loss
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2m timeframe – E-MINI 500 Futures On the 2m timeframe you can see the same FVG. In the highlighted area there are 2 candles that created a swing high. As soon as the 3rd candle closes, the short entry was made on the 4th candle trusting the fact that it already had an FVG, it already went through it, there is a swing high and it is bearish. We are looking for a run below that old low shown on daily and 1h timeframes.
The short entry was made where mouse pointer is and the exit was made on the lower orange line with a first partial slightly above it.
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At noon you can see the usual consolidation, there is an FVG, it hits it and continues lower.
Stops taken
Same happens later in the day.
Stops taken
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Consolidation Day Explained & Market On Close Profile – LINK Daily timeframe – E-MINI 500 FUTURES
Outside day
Double bottom
An outside day is a day that is higher than the previous day’s high and lower than the previous day’s low. This can be seen on the chart above on the 3rd candle from right to left. The whole range of that candle is outside of the previous day’s range. When this happens there is typically this type of price action formation but it is really included with the odds on your favor if you are trading down to an old low but falls short of it. This is usually where that double bottom idea comes in and it feels safe to look for a run through that old low; but if they stop it short it tends to be a choppy day especially when there is an outside day.
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1h timeframe – E-MINI 500 FUTURES The blue shaded area will be zoomed in into and that part of price action will be analyzed.
There are old highs in here. The high on the pointed candle comes in at 3933.25, a level that ICT mentioned it will be traded into again. Looking at price and studying in the way that he teaches it, it will be very easy to fall victim in this type of trading day where is choppy, back and forth. So… how to anticipate it? What to look for? Let’s check the 5m timeframe.
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5m timeframe – E-MINI 500 FUTURES
3933.25 level
Short term low
Old daily low - 3855 Short term low
In the upper high left you can see the 3933.25 level mentioned by ICT in his tweets. The market did not reach into the old daily low at 3855, it started to trader higher reaching into an FVG, and it dropped. ICT mentions here that there was no entry model for a short entry. The FVG should have offered a little bit more movement lower. Why wouldn’t it go down and take out that short term low? It went below another short term low and then started rallying working towards the relative equal highs at 3933.25.
The real setup that would be formed can be found if you place 2 vertical lines. One at 3pm and one at 4pm in the afternoon. 221
That would be the setup to take the price back down into the middle of the range. As you can see, there is a Fib placed from high to low on the left side of the chart. The price ran above the short term high at 3pm in the afternoon taking out the relative equal highs aka buy stops. The market will use the running up to take out the buy stops and squeeze everybody that was short and trail their stop loss down and also to induce people into thinking that it is going to go higher so that way it builds up liquidity below the lows as sellside liquidity as they are protecting their long positions with sell stops. But the main thing was focusing on the middle of the range as highlighted with the Fib tool. If you are looking for setups that are going to be based on a run above for buy side and a pull back into the range, that needs to be specific in terms of time – the window between 3pm and 4pm in the afternoon. 1m timeframe – E-MINI 500 FUTURES
Here you can see the price rallying above the highs and bumps into the buyside liquidity. The smart money uses that to go short. ICT specifies that this was outlined before it happened in his tweets. After the price hits the buyside it breaks down below a swing low, it creates an FVG, it trades back up into it and then it goes lower into the middle of the range. It is very difficult to trade in those types of ranges. You must know what you are looking for in terms of what the algorithm is going to do. A consolidation day happens like this: The market starts trading and creating an initial range and it stays in that range until the afternoon. The 3pm sets the tone for on close orders. What happened before 3pm? The price went up. What did it go up for? The buyside liquidity. But traders will look at that as a breakout to go higher.
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Once again let’s explain what happened here: As the price was dropping down after forming the relative equal highs, the retail trailed their stop loss above those highs. They ran up and bumped the relative equal highs on a shallow basis. It happened one more time at 3pm and ran them out clearing the buy stops. That taught logic would be that it is utilized by smart money at the close between 3pm and 4pm. They ran up there and all the buy orders that were resting above the previous highs to protect their short positions became a rushing liquidity wave of willing buyers at the market. Willing buyers at the market at 3pm on a day like this when it is consolidated, it will want to go back to the middle of the range. The middle of the day here is considered as between the 09:30am and 3pm. When you are caught like this in a choppy day and you do not know what to do, wait until 3pm because many times during that time windows between 3pm and 4pm the algorithm will do something where it goes outside the bounds of the daily range like it happened here at 3pm. Anyone taking a long entry as a breakout strategy gets liquidated as the market drops and anyone who was short had their stop losses above the highs and they are also taken out from the market.
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ES Review & More Insights On FVG & Intraday Market Structure – LINK Daily timeframe - E-MINI 500 FUTURES You can see the price running the low printed on 12th of May 2022.
1h timeframe - E-MINI 500 FUTURES
It consolidated, the market ran up and moved up into a deeper FVG creating the high of the day, it broke down. This happened on a Friday. The FVG was hit during the London session and went down taking 3 sellside liquidity areas including the daily low. ***ICT used the E-MINI 500 futures chart. I am using the US500 so I can go on the 15m timeframe later on.
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15m timeframe - E-MINI 500 FUTURES
Here you have the 1h FVG. When the first level was breached, there was a gap formed and then another one later on. It finally created the short term low and at 13:30, when you start watching the afternoon session, it starts to rally, it creates a short term high, there is also an FVG and in the last hour of trading, meaning from 3pm to 4pm the market rallies back up into a 15m FVG. If you draw a Fib from high to low on the price action above you will see that the price reaches back into a premium area. The 50% is a target. What you see here is a reversal on a Friday’s trading up into an imbalance. My Tradingview account does not permit me to go under the 15m timeframes so the next charts will be ICT’s charts. The price levels will be slightly different.
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5m timeframe - E-MINI 500 FUTURES
Here is the same idea where it went to create the low. At 13:30 it starts doing its business reaching for the middle of the range into a premium inside the 15m FVG previously highlighted. That is the array above – at the halfway of the move. After 3pm the price goes down again into the FVG printed AFTER 13:30 and then the market starts sending the price into an algorithmic spool where all the price action starts running aggressively into the close up into a “completely random level”. Remember the 1h SSL levels initially presented? Those are the white lines.
FVG
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Every time the price passes below those 1h levels and creates an FVG as you can see in this chart on the 5m timeframe, those gaps can be used as short entries. Watch again. The price breaks the 1h levels and then it comes back up into the 5m FVGs recently created and breaks even lower. Notice once again that those gaps occur at those levels that are on the chart marked as old lows where sellside would be resting. You are using the FGV after a run below those levels. Think of it like support broken and return back into the FVG, NOT “go back to the old low broken and act as resistance”. That is not how you look at it. If the FVG does not exist, do not trust that level as a support broken and turned into resistance. You might say that this is trading “break and retest” or “support and resistance”. It is not. And this is because you classify specific levels beforehand looking at them with the logic that the market is going to create those patterns around them. On those charts you cannot see the FVGs on the 15m timeframe, but the gaps are visible on the 5m timeframe. The key levels noted are not just indiscriminate levels. Are levels that are built on a logic based on liquidity, not support and resistance. It is liquidity. The orders you know are going to be there based on the logic that the market is likely to reach for that 3855 level ONLY IF it breaks below the first 1h level and then there is an FVG on the 5m timeframe and so on and on and on…
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Watching and analyzing the opening price on ES – LINK 15m timeframe – E-MINI S&P 500 FUTURES
10
3 4 6
1
8
2 9 7 5
ICT mentioned on Twitter that he is interested in the old high linked with the gap formed when the session started again at 6pm. 1. It drifted lower. 2. Had a small little rally. 3. SMT divergence and creating relative equal highs and then it broke down at 09:30. 4. It formed an FVG and ran the sellside and the opening gap from Sunday opening. 5. It traded through it all the way down to another FVG. 6. It rejects the FVG and runs back up into the opening range. 7. It drops into an OB. 8. It rallies taking out the STH – short term high. 9. Retraces back down into an OB. 10. And it rallies into the relative equal highs.
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5m timeframe – E-MINI S&P 500 FUTURES
FVG
Rebalance FVG
Sunday’s gap +OB
Retracement into Sunday’s gap
Swing low broken
Here the FVG previously mentioned at #4 is a bit more visible. When that FVG was hit it broke lower and traded into the Sunday gap and below it with a first 5m candle and then it comes back up into it and rejects it. It drops lower and hits the old FVG highlighted on the 15m timeframe. Ahead of lunch the price consolidates and has a typical retracement during the lunch hour all the way back up to the opening range. After it breaks the swing low it comes up to rebalance the gap AND into the Sunday’s gap and trades down into a bullish orderblock. After this it starts to accumulate and rallies up back above Sunday’s gap, it trades down into it, hits it, rallies and falls short of the relative equal highs from the upper left of the chart. It retraces back down again into the Sunday’s opening gap and rallies, creates an FVG, hits the FVG and then, finally, it goes into the relative equal highs. In the afternoon the price action became a lot better. In the morning was sloppy. When we say that the price is sloppy, it means that it is not really giving you a lot to work with. There are very few options and you have to know exactly what you are looking for. Even if the drop from 09:30 to 11:00 is a nice delivery, the price is sloppy because it is not giving you a lot of the mechanics for entries like you can see on the upper chart – OBs, FVGs. If you plot the Sunday’s opening gap and plot it across the entire week you will see that many times there is a lot of valuation around that gap. It will be treated as a dynamic price level. If the price is above, look for it to act as support and if the price is below it look for it to act as resistance.
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If you can find a swing high as this one below, look for the price to trade down into the Sunday’s gap and then look for it to run above the swing high that dropped into the Sunday’s gap. That swing high acts as relative equal highs – and there are even 2 highs close to each other.
You do not need this as a target.
You already have this one.
Sunday’s opening gap Drop and rally
Sometimes the price will run away from it and will not really come back to it. But in weeks when there is consolidation, like FOMC, those types of events create those choppy range bound markets that do not give you a real clean takeoff one way directional move. You have to know how to trade in those environments. 15m timeframe – E-MINI S&P 500 FUTURES
The expectation with this gap is to be filled and not going to be left opened. There is missing data. The price level would be the low of the candle from where the gap starts. That is ideal.
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And it he price goes above the Sunday’s gap, that means that the price will go into a deeper run on the daily timeframe. That means that the targets are the swing high and the orderblock from the daily timeframe.
OB
Daily high
Some ICT students when they first come in, they will look at a range like this and measure the 50% of it and use that level when the price retraces like here. That is not how we do it.
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If you are looking for a long, you want to look at a price leg that drops. You will draw your Fib from a low up to a high. For that dealing range we are waiting for it and anticipate a retracement down to and below the 50% level. You are hunting for longs at the 50% level or less. If the price come into an FVG, also, that is good.
The same thing is done here as it did not take the relative equal highs from the left. The price comes down into a discount.
You want to be looking at expansion swings in the direction you want to trade. You do not want to use a price leg from high to low measuring something that you are trying to go long on. You want to be using the impulsive price swings that goes in the direction you are trading. THEN it retraces down below the 50% or at it into an FVG that you can probe it as a long entry. 232
EPISODE 35 – LINK Daily timeframe – E-MINI S&P 500 FUTURES
As you can see there was a nice delivery to the upside inside the FVG and into the bearish daily orderblock. Notice that it traded up into the up close candle with today’s range. Did not take out the high so you can expect it to happen. The up close candle is the bearish orderblock here. When you are looking at a candle used as an orderblock, the low, the open and the middle of the range are 3 sensitive areas that you are watching for. If the market trades up into the middle point of it, that is the mean threshold. The mean threshold was taken today and that bodes well for continuation to take out the short term high. Using a Fib across the candle you will find the 50% level of that range. 15 timeframe – E-MINI S&P 500 FUTURES – I am using the US500 chart to go on the 15m timeframe
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Here you can see the Wednesday’s trading going up into the low of the Sunday’s opening gap. And above some relative equal highs as well. On Wednesday it trades down into an FVG and OTE, it rallies up taking the buyside liquidity above the EQH [or STH] from the left of the chart.
Ahead of Thursday the price consolidates and during the crossover into NY midnight it has a small little Judas swing where it drops down creating the low of the day, it rallies, it creates relative equal highs and an intact high a bit more to the left. It drops down, it rallies once more and drops a bit more and then does a shallow run above the 4000 level. ICT mentions here that the 4000 level is the low of the daily bearish orderblock. On this chart the low is at 4005.5 and the open is at 4006.8. 5m timeframe – E-MINI S&P 500 FUTURES – ICT’s chart will be used From the 15m tf
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Notice this price leg here that has, in fact, 2 price legs. If you look a bit to the left of it you will see one single pass – where you see only down moving candles. Because that move higher has 2 stages of delivery you will want to use the most recent one between the short term low to short term high. Using a Fib retracement from STL to STH you will find the midpoint of that dealing range.
STH
FVG STL
Below 5m timeframe – E-MINI S&P 500 FUTURES – ICT’s chart will be used. Not sure what timeframe this is, but it is not the 5m as the chart shows.
STH
STL
The market rallies, it drops back into an FVG below the 50% level of STL to STH, at 08:30 you can see the candle dropping into the FVG at 09:30 it starts to move higher into the daily bearish OB.
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STM divergence – an extra reason to take a long at that level For SMT divergence ICT used here the E-MINI S&P FUTURES and NQ2022.
For the SMT divergence you need to have NASDAQ plotted at the bottom of the chart and set the line chart on the LOW. As you can see the NASDAQ went lower as the E-MINI failed to go lower. EMINI accumulates as the NASDAQ is taking liquidity out. It is a cracking correlation between the two. Usually they move in tandem, but at certain times as 08:30, 09:30, news events released – they will create this divergence. And if you have a bias this is when the SMT becomes helpful. But if you do not know where it is going are going to, many times, encounter what would look like SMT divergence and then it disappears as they start moving in concert with one another. KNOW WHAT IT IS REACHING FOR. At 08:30 the E-MINI already snapped down into that gap and it is not likely to go lower than that because there is no need to. It is being compressed like a spring and then it explodes. At 09:30 it breaks back down into the FVG and rallies. The SMT will usually occur around the 09:30 time period when there has already been a nice run before or at 07:00.
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How to set the Tradingview for SMT divergence For the sake of the “HOW TO” here is an example between US500 and US100. In Tradingview you will have to click the (+) icon in the upper left corner, type in what you want to add as a new symbol and then click on the “New pane” so it can added it in the bottom of the chart. It appears when hovering the mouse over your symbol.
After you added the new chart at the bottom you will have to set the price source for “LOW”.
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1h timeframe – E-MINI S&P 500 FUTURES For the 1h timeframe the price is most likely to be drawn into the buyside liquidity – draw of liquidity – that can be seen in the upper left corner of the chart.
All the down movement is almost completely rebalanced. The price consolidated ahead of running all the way up into that area. Notice what happened. The price has a low, it rallies, it comes down into a discount and into the hourly FVG and rallies.
Then the price creates a new dealing range, it retraces into discount and then rallies again.
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It creates another dealing range, it retraces into discount, FVG and orderblock and rallies.
After this happens there is the consolidation and the lower timeframe FVG and the SMT highlighted on the lower timeframes.
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EPISODE 36 – LINK In the description of this video I noticed that he shared a link of a Twitter post. Let’s see what is it about. Twitter link and chart link
1h timeframe – US500 – E-mini S&P 500 on ICT’s chart
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There is a swing low to high dealing range where the market dropped into discount and into an hourly FVG. It means that the market is in an oversold condition. 5m timeframe – E-mini S&P 500 FVG
MSS EQL
FVG SSL
ICT mentioned on Twitter at that time that the price is likely to go higher and it needed to go to a premium relative to this high and low. The market moves up into a premium and drops taking out the relative equal lows – that is where sellside liquidity rests. It was quick to do that right at the opening at 09:30. It has a short bounce and drops again taking the sellside. Then it had a shift in market structure rebalancing the price. It drops back down where there is a 5m FVG. Ultimately it hits a higher FVG into a deep premium. 1m timeframe – E-mini S&P 500 SL for the 11:20 long TP
Sell stops
SL
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On the left you can see a trade taken during the morning New York session and with partials taken. What I see is that the first trade was taken right before 9am. The 2nd trade was taken around 11:20am when the price dropped below discount. When it did, ICT says that he had a bit of “heat” – negative PNL of 5 handles as the price dropped below his entry. The stop loss was just below the swing low highlighted on the chart above [personally I do not understand how is that a swing low]. The stop loss was not hit and the price ended coming back up running the high on the left BECAUSE the price has taken out the sell stops after running higher. I am putting the same chart here again, but with no annotations. Use it for study.
ICT’s chart with annotations
The MSS occurs here
2nd MSS
The low
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Look at the chart and try to follow: There is a short term shift in market structure on the left of the chart and there is a bigger one that happened when the high at 10am was taken by the move that happened AFTER 10am. Look at the chart. After 10am it dropped, took sellside and created the MSS – market structure shift. Now… which one is THE shift in market structure? ICT says that he was playing the run on the left running the price to a premium. So if that is the range he is working with, the shift in market structure occurs here – see the blue arrow on the left, where price takes out the high. Then the price drops down into an FVG where he bought believing that the price will not take out the low. That should have happened at 08:30 when the news were released. So the price retraces into the FVG, does not break the low and rallies into 09:30am where they (The Smart Money) sank the market. Notice that there is no model entry on the drop down. That is telling. It is tipping its hands to you. Because there is no setup and there is a rush to drop down the price and clearing out sellside liquidity. At 09:30 the price rallies, creates that double bottom sellside liquidity, the market takes it out and at that time the retail traders are afraid to enter again with a long as they were stopped out. They will not take a re-entry after something like that. Then the market rallies up, it creates a shift in market structure and comes down into an FVG. It rallies again creating equal highs, drops into another FVG and OB, goes once more higher to fill the imbalance – the red shaded area, it consolidates and drops one more time clearing the liquidity. Around 11:30 it starts to expand higher. This is when ICT entered long – check the link shared at the start of this chapter. The first partials were taken at 4143.25 and then the full TP with a limit order at 4143.75.
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EPISODE 37 – LINK Daily timeframe – E-MINI S&P FUTURES (JUNE 2022)
FVG and EQH
1st draw on LQ
BB
The price has worked into a daily FVG where there is also a breaker block – BB. A breaker is a high, a low and a lower low – find the high in between, extend it out in time. The market traded it and also into the daily FVG. If the price starts to rally the first draw on liquidity is the last daily high and then the relative equal highs where the FVG can also be seen. BIAS LESSON When the market is moved from a low like this and starts to trade higher and creates a swing low, it is easy to assume that it might want to come back to this high – see the orange arrow. Notice how every day was bullish except one after the low was taken. The bias is expected to be bullish until the high is taken. The price then retraces a day or two. It is logic because it created an FVG. The expectation is now that the price to reach into the 1st draw on liquidity. At that time for the next day there were Nonfarm Payroll news. During those days you should only be studying the price, not trade it.
Just because you are in front of the charts it does not mean you will trade.
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1h timeframe – E-MINI S&P FUTURES (JUNE 2022)
The blue lines are the daily blue lines you previously saw on the daily chart. The price trades down into the discount zone of – the bottom of the daily FVG. Those levels here are not drawn to show support and resistance. On Wednesday the market trades down into the bottom of the daily FVG, it consolidates and it drops one more time and rallies taking out the short term high, the equal highs from the left and the final target will be the draw on liquidity from the daily timeframe. At the end of the chart there is an FVG in which the price can drop down before going into the daily draw on liquidity.
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15m timeframe – E-MINI S&P FUTURES (JUNE 2022)
STH
STL
On the left there is a Short Term High on Wednesday’s trading, the price drops inside the daily FVG, it rallies and consolidates. It becomes choppy and the price drops below the NY midnight. Notice how this day formed. It opened at midnight, it consolidated and rallied up without taking the BSL. Then it drops down into the daily FVG low. That is when it bounced and rallied above the BSL and above the STH. This formation of price action is what ICT calls “Power of Three – PO3” where is accumulating, manipulating and distributing. In short this means opening, around 9:30 it creates the low of the day and then rallies. Now… if you see this pattern on a daily chart, it is easy to understand; but when you look at the lower timeframes it is easy to get lost in all the candlesticks and all the volatility and the movement in the quick fluctuations on these 1m and 5m charts. That is why the uninitiated will look at it and say “it is noise”. It is not noise. It is doing what it does on the daily chart, just being represented on smaller intervals on the 1m or 5m timeframes. If you lose the context, for instance when the market dropped into the low of the daily FVG, you will not understand that it is dropping down into that higher timeframe key level, which is the daily FVG low. Then the market can rally higher. ICT further mentions that he shorted as the price was dipping below the short term low. He forced himself to engage but not because he was breaking rules or he is not disciplined. He wanted to teach his audience WHY he is avoiding those kind of days. His precision drops as he does not have the visibility on these particular days as he does on other days. If you have a built in advantage, why would you go in an arena where you have built in disadvantages? I you have advantages by trading on days that do not create those types of conditions, you trade in those arenas and in that timeframe and you avoid the times where, historically, your proven results have been diminished on these particular days. If you know that this is the time of the month when you should not be doing, do not do it or lower your expectation in terms of the measure of precision. ICT presses on his students to stop trading on Wednesday by the New York session. So if you have not bagged anything by that time from Sunday’s weekly opening until Wednesday New York session, do not take any trades. Deal with that desire of wanting to trade but do not do anything. This 246
forges discipline and patience and rewards you psychologically and emotionally because you did not do anything. *** What I've noticed is that the price remains stable, not exceeding the opening value from midnight until 6 am. From 6 am onwards, it gradually decreases, falling below the midnight opening price until 9:30 when it reaches the daily low point and then begins to rise again. Thus, there is a period of accumulation above the midnight level, followed by manipulation leading up to 9:30 starting around 6 am, and finally, a distribution phase occurring after 9:30. On Twitter and various other social media platforms, I consistently come across this representation of the PO3:
However, in actual trading situations and real-life market charts, the price movement appears quite different. Frankly, I currently find it challenging to identify or predict any of the stages accurately. It's only in hindsight that things seem to work perfectly.
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THE AFTERNOON SESSION 5m timeframe – E-MINI S&P FUTURES (JUNE 2022) BSL
5m FVG
No trades were made in the morning. If you look at the chart above, I guess that you can see the 5m FVG above the BSL – buyside liquidity. Going into the lunch hour the expectation was for price to reach into that FVG as a buyside objective. The next draw on liquidity would be the highest high on this 5m chart – upper left. Before the price reached into the FVG, ICT had a post on Twitter highlighting it.
What was the purpose of bringing this up? For study. Before the charts already happened, he was highlighting and taking his student’s attention to the right (correct) side of the marketplace at that particular time – before reaching into the gap. When he mentions a level on his Twitter account, that is not a trade signal, that is meant for study; to see how the market reacts and if it delivers the price at that level.
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2m timeframe – E-MINI S&P FUTURES (JUNE 2022)
Notes and observations OB
Lunch hour 12pm to 1pm
There are 2 little arrows on the chart right before the lunch hour. Those are not trades that he took. This is how YOU should draw on your chart. Notice the orderblock, the consolidation and the drop into the 2m FVG. The price delivers into the 5m FVG previously mentioned. Then on the right side of the chart where you have some free space write down any observations like: how much time did it take for price to reach the 5m FVG after it hit the 2m FVG? Roughly 20 minutes in this case. After you have your annotations on your chart, you will put down any observations that you noticed and phrase it in advance like it already happened. What you are doing is actually training your subconscious into believing that this is an experience that you had. It is self-talk. You are reassuring and reenforcing something that would be a positive thing for you. And while you may not have seen that trade and you did not have the experience, you borrow that experience for your study. In your journaling your chart would look like the one you see above and then you will fill in the chart with notes and observations where you have free space on the chart. NEVER put anything negative into that area. These journal entries are for you to reflect upon them at a later time. You want to be positive. Anything is a matter of fact and you are going to phrase is like you saw it beforehand. Overtime, meaning weeks, months, half a year or so, you will have tricked your brain into having all of those pseudo-experiences. The benefit of this, because you are logging the charts and making it look like this and retaining and then referring back to them during the weekend, is understanding the benefit of doing it. This is how you get it. If you fail using ICT concepts is because you did not do this. This is where everybody that fails starts their “tailspin” into failure.
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2m timeframe – E-MINI S&P FUTURES (JUNE 2022) Old high
STL
Notice what happens in the lunch hour. There is a short term low – STL during that time. The price is consolidating, the market drops back down and takes the STL. There is unfinished business below that old high. The drop below the STL is a stop run and then it slowly drifts up and takes the old high out.
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EPISODE 38 – Intraday Profile And Daily Range - LINK Daily timeframe – E-MINI S&P FUTURES (JUNE 2022)
In the previous chapter we discussed about the daily FVG. On this particular day the price hit the FVG again. ICT mentioned on Twitter that he was looking for a potential run into the 4070 level – this would mean that the price to go slightly below the FVG and below the relative equal lows formed on the daily timeframe inside the FVG. The expected targets to be hit are the lines you can see in the right side of the chart. The lower one is the first draw on liquidity if the price rejects the daily FVG. If it is going higher, the 2nd line is representing the 2nd draw on liquidity where the relative equal highs are. The first draw on liquidity – DOL – is enough for a target. Do not get greedy. So… you are expecting higher prices after this shift in intraday volatility. We will be looking at that on the lower timeframes.
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1h timeframe – E-MINI S&P FUTURES (JUNE 2022) EQH
Previous day’s high
EQL
You can see how the price did not take the relative equal lows. It did not give a setup, either, based on the setup that is being thought in this mentorship. The intraday volatility and the framework were used to teach more about bias and how to change gears with your bias and how to, also, manage your bias. Initially in the beginning of the morning you would be looking for price to reach lower below the relative equal lows. It gave an opportunity to tape read or “paper trade” using the draw on liquidity, but the model itself did not materialize. The main takeaways for this lesson are: - what to do and how to go about abandoning a specific bias? - how to changed gears if it is applicable to reverse? - what are the characteristic that would lead to a bias that is changed and how to use that logic going forward and how to navigate the New York lunch hour? You are seeing multiple lows being taken and then the market reverses while offering no high probability shorting opportunity. The 4070 level was not tagged and the liquidity is left in place. The previous day’s high was not traded to. That high is at 4168.25 and an FVG a bit higher. Those 2 are premium arrays that may be a draw on liquidity and maybe even run above the EQH.
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15 timeframe – E-MINI S&P FUTURES (JUNE 2022)
MSS
On the 15m timeframe you can see how it kept going lower than the previous lows and then, finally, it had a run higher – that is a short term shift in market structure relative to the 15m timeframe. Remember that the 15m timeframe is your bellwether chart. Look at the chart – it runs higher, it creates and FVG and it trades down into it. Chris Laurie talks about liquidity voids. He teaches how the market wants to come down and fill all of that area in. There are times when that can happen, but not for most times. As you probably noticed ICT teaches the fair value gap – FVG. On the chart below I drew a few FVGs that were tested. Notice it happened after 9am. It is important to know what the market is reaching for and then look for these imbalances in price.
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What makes it a fair value gap is the fact that the price is coming back into those areas. Those are all FVGs. It is a fair value to buy it if you are bullish. Do not try to insist that these imbalances completely rebalance. That is one of the main differentiation between ICT and Chris Laurie. You can learn from him but have in mind that there is a contrast between ICT and Laurie. It is a degree of precision that is given to you when you understand the things ICT teaches. It goes beyond imbalance – rebalance. What you are being thought here is “What is the market likely to go to?”. There are no entry patterns with the importance of getting in a trade at a specific price as the most important factor. It is not this. You are being thought how to determine where the market is likely to go to next – where is that draw on liquidity? There are a lot of different ways in which that is calculated on an institutional level and how it is determined. It is not buying and selling pressure. It is algorithmic. The easiest way to cut through all of the very complicated things that can easily bog you down, and you may feel like the concepts thought here are complicated, when you remove the idea of using an indicator that says overbought / oversold or a crossing over two lines that gives you a buy or sell is not wisdom to determine your bet, gamble or investment on what an indicator is saying compared to reading the price action and getting the logic behind what it is doing. And that is narrative. What is narrative? Narrative is the understanding of what price should do, why and what things will it encounter to prove that the narrative that you are assuming is in place is, in fact, underway. Now consider the chart previously shared where ICT mentioned the 4070 level for the E-MINI S&P FUTURES to see if it can get down outside the range of that daily FVG. The price failed to do so and then the market shifted higher. The whole time you are looking at the market and it is not giving you any kind of short opportunity and then, all of a sudden, the market does this:
Do not panic, do not FOMO, do not ask someone else for their opinion on what is happening. Do not care about someone else’s opinion. You are going to learn how to trust yourself. As the market creates an FVG on the 15m timeframe, that is your you area to watch and see if the price supports a run. If the market hits that first FVG and starts to repel higher and it takes the STH, that is enough to set up a stage for the afternoon trend. That is what you are looking for. Because the market failed to go to an objective you were looking for as it was respecting the daily FVG and it rallied up breaking above a STH, that is an absolute market structure shift.
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STH
FVG
The price comes down and rebalances the FVG. It is not resistance turned into support. You are looking at the fact that the price went through the STH and created an imbalance. When the market comes into that 15m FVG, you will be interested in looking at intermarket relationships and study real accumulation and distribution. HOW? By going into the lower timeframes 5 timeframe – E-MINI S&P FUTURES (JUNE 2022) When and if the price reaches back into this area, you will take half of the position off if you traded the lower 5m FVG
FVG
This is the area of the 1st FVG you saw on the 15m timeframe
The 15m FVG does not look like one on the 5m timeframe. Remember that the 15m is your bellwether chart. After that first FVG is hit and rejected the price rallies and drops into a 5m FVG. The partials previously mentioned in that area were mentioned because on the far left, as you can see in the chart below, there is a buyside liquidity and the run that happened on this day could have been just a run on liquidity and the price could have dropped after. Notice the FVG, also. 255
At 4168.25 is the high of the previous day. That is also a BSL where the price can reach into. It is a target.
Previous day’s high
Potential run on BSL BSL
The afternoon session If the market starts to higher, in other words if it has been in a bullish market structure and the order flow is bullish and the market is going higher on all timeframes, that is an easy trading scenario. But here you are inside that little trading range area on the daily chart. The last few days the price has been hanging around that small range. So you have to know what you are doing or you are going to be caught up. Notice the blue line drawn at the bottom where there are 2 lows with one lower than the next one. If you add the NASDAQ chart, you will see that there is a divergence. E-MINI S&P was a little stronger than NASDAQ. NQ made a lower low while the E-MINI S&P made a higher low. If you are bullish you want to be buying AT OR CLOSE TO THE MIDNIGHT OPENING PRICE. If you know that the market is likely to go down so it can go up, then you can wait for the price to give you this type of setup where it goes down, creates a shift in market structure AND comes back down into a 15m FVG. This is intraday or day trading. It is not the model where it is a scalp. “The model provided for you for this YouTube channel is a scalping model.” - ICT But if you are going to day trade daily range, you are going to use the 15m and 5m charts. You can use the model for entries and scalping as your entry criteria with the logic and narrative that you are going to trade the daily range. If you are bullish you are going to be looking for the opening price at midnight, the drop down, create the low of the day – in this case the low was formed at 9:10am New York local time, it rallies up, creates a shift in market structure, it drops down into the 15m FVG and then it rallies. Once you saw that you are good to go and waiting for the afternoon session. But watch what is happening. The market falls short of 4140, it drops down into the higher FVG, it starts to rally, it creates a smooth relative equal highs and drops once more below the STL. 256
ICT’s 5m chart with annotations. The lower green area is the daily FVG from where the price rejected.
EQH
STL Midnight opening price
Dealing range
IMPORTANT!!! If you are bullish, generally, what will happen is that the market has ran higher in the morning, then it consolidates into the lunch hour and after the lunch hour it will drop down and sweep the sell stops or below some short term low or the lows made in lunch. Follow the chart The market creates a low ahead of the lunch hour at noon, then it drops Retracement down deeper into the FVG. The low with the red line was formed around 11:50 and then it was swept later, around 12:15, when it dropped into the FVG. This is exactly what liquidity is doing in the afternoon, post NY lunch when it is bullish. What is different? The price is NOT consolidating. That drop into the FVG is not a consolidation. It is a retracement. So if you can identify an area of where it is likely to retrace look at the 50% level of the swing. If you are asking WHY that FVG was chosen and not a higher one, this is because that FVG level is measured with a Fib between the 2 red dots you see in the 2nd last chart above. That is the dealing range. You are factoring in the midnight opening price. Notice that the price went above it 2 times after the New York session opened. You are not expecting the price to go back below the first FVG. It is pointless to refer to the lowest point. The market is in a rush now. The algorithm reprices down to a discount. Once it gets there it creates the STL, it rallies a little bit, it leaves smooth highs, it makes them believe that there is resistance and anyone who is short will trail their stop loss above the EQH. Then the market drops one more time right below the STL. What is below the STL? Sell stops. This is happening inside the lunch hour. 257
The main thing to understand is that here the model from the YouTube channel is not used. Here you also learn how to read price when the model is giving you a setup. In this lesson you also learn how to change gears when the market shows you it is time to change gears. Can you use timeframes outside of the 1m through 5m charts and use the same logic? Yes! That is the mindset you need have. On the lower time frames the chart is giving you a lot of experience and setups to practice. Do not limit yourself to that; there are so many other trades to trade using ICT’s concepts. You still to understand what the price is likely to do and where is it drawing to. NARRATIVE 5 timeframe – E-MINI S&P FUTURES (JUNE 2022) This is the daily FVG
Here
15m FVG
When the market shifted here bullishly and it came down into the 15m FVG and then rallied, that leg up tells you that they (The Smart Money) want to set this up for a bullish run in the afternoon. WHY? Go back to that daily chart – look at the small little inserted daily chart. The price dips down into the lower end of the daily FVG and then rallies, trades back down into ta 15m FVG ant then it rallies. At that very moment after the rally and in your mind, that tells you that the algorithm is priming itself for an afternoon run up to, potentially, previous day’s high – that is the blue line from the 5m chart you have above. As soon as the price trades above the midnight opening price AND creates the shift in market structure AND drops back into the 15m FVG AND then rallies, from that, then you know it. THIS IS NARRATIVE. By itself it does not mean “go there and buy it because the narrative it is going to probably run to previous day’s high”. You could see yourself stopped out if you are premature. You want to see something that makes sense from a logical point of view. - Do you see displacement? YES! - Is that an energetic price run? YES! Then that low to that high will be measured for discount and you will wait for discount.
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To refresh your memory, here is the chart with the leg to measure for the afternoon setup.
If the price would have hit the 5m FVG and rallied and would not have drop again, you would have missed the move. But you are looking for sellside liquidity, You want to see a stop run because what that is doing and how that fits in the narrative is: if you are thinking at the move from low to high of that leg and then retracing down setting up an afternoon run to, potentially, previous day’s high by the close of the day, you want to be like smart money and buy sell stops. SMT divergence To see the SMT divergence on your charts you will have to perform the following actions: Add a symbol to compare the ES with. In Tradingview you need to click the (+) symbol from the upper left corner of the platform. In this case, for 2023, you will have to have the main chart as ESZ2023 for S&P 500 E-Mini Dec '23 (ESZ23) and at the bottom you will add NQZ2023 for Nasdaq 100 E-Mini Dec '23 (NQZ23). Because you are comparing and contrasting the lows inside of an FVG after a retracement into a discount expecting to potentially trade into the previous day’s high, the settings are as follows:
When you are bullish you are plotting that line as a compare and contrast tool. Remember to have the “PRICE SOURCE” on “CLOSE”.
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This happens during a classic buy day. It opens at midnight. It trades down after midnight. Creates the low of the day. It rallies. It creates an OTE, an FVG or you are going to buy the STL during SMT divergence.
See the red lines for the SMT
Use the www.barchart.com site to find the Commodities’ names.
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1m timeframe of an SMT divergence during today’s trading, 20th of October 2023 for ESZ2023
Shortly after 3am New York local time, which is the London opening, there was an SMT divergence between ES and NQ on the 1m timeframe that gave a fantastic opportunity for a long entry targeting the BSL from a discount area after a rally and from inside a 5m FVG. Just my observation here – this can work in other sessions and is not limited for the New York afternoon session. In the upper right corner after the BSL was taken, the market showed a willingness to go lower after it created that 1m FVG. I did not short it, but if I would have, at this point I would take partials as the price went below the 50% of the whole leg. REMEMBER AND TAKE NOTES: For the afternoon session wait for the market to really communicate to you that the algorithm is pricing in a narrative that the afternoon session is bullish. Give up the morning session. Just because you are sitting in front of the charts it does not mean you are taking a trade. You have to wait. And be patient. There is more time waiting in between the setups than actually doing anything. You have to have incredible patience in both stages: you have to be patient and wait for the setup and then once you get in a trade you have to be patient enough to let the trade pan out. Once it comes into that 15m FVG and rallies, it is then when you will be comfortable knowing what you are looking for. What is that? Dealing range low and high, find the 50% of it, find the FVG on the 5m timeframe, wait for it to trade down into it, buy sell stops!
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EPISODE 39 – LINK This lesson is to bring your attention to levels that are sensitive on one timeframe and how it is subordinate on the lower timeframes to those higher timeframe levels. At 9:27 before the equities opening on 9th of June 2022, ICT mentioned on his Twitter account that the 4070 level as his interest for this day on ES – the SSL level you see on the daily timeframe on the left side of the chart below. The same lines from the daily timeframe are transposed into the hourly timeframe. Daily and 1h timeframes – E-MINI S&P FUTURES (JUNE 2022)
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The expectation was that if the price goes below the SSL, it will go lower into the daily FVG. Lots of ICT’s students think that if a sellside is taken the price will, then, reverse. That is not the case. The narrative must be understood and narrative requires experience and this experience is what ICT is lending. Looking at the chart you see the following: - The market takes a swing low with displacement. - It consolidates before midnight. - Around 6am to 7am the price reaches into the 1h FVG and into the higher bearish orderblock. - It rejects the levels and reaches into the daily SSL and FVG. As the price touches the 1h bearish orderblock, you can take that trade, but here you are trying to draw your attention to the 1h FVG area. The price reaches into it and goes above. But look at the candles. See how the candle’s bodies stay predominantly in the FVG area? Yes, there are wicks above and below, but the volume is incapsulated inside of the 1h FVG. Notice the old low at the 4076 level. Having the price in the 1h FVG and targeting the 4076 is something that you should have already identified. If not, do not worry. You will get it in time. 1h timeframe – E-MINI S&P FUTURES (JUNE 2022)
If you would have taken a short in this chart, you would have taken partials at the top of the daily FVG and then wait for the daily range to fulfill. That means you have to submit yourself to time. What time? 3 pm to 4m. Wait until that last hour of trading because you will get the delivery of price when it trades down into that sellside liquidity. ***On this 1h timeframe what I can describe is that after midnight, starting with the London opening at 2am, the price started to reach higher into an FVG that was hit between 4am and 7am. It starts to look like a consolidation. The price just stays in that area and does not have large movement or swings. 263
There are 4 1h candles there. After the first SSL is broken, the 9am candle pushes above midnight and it is then when the price actually starts to move into the daily SSL and FVG. I always need to reconsider the analysis to be made on the daily timeframe first. Consider the PO3 – accumulation of shorts, manipulation of those individuals that were already short (the Judas swing), the market goes back to a premium, it starts the distribution stage trading lower in the opposite direction, taking out the first STL, it retraces a bit at 9:30, it consolidates a bit more and then it melts. The dealing range is between the blue dots.
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15m and 5m timeframe – E-MINI S&P FUTURES (JUNE 2022)
1h FVG Equities Open 9:30 AM ET Midnight open
15m FVG
Midnight open
5m FVG
TP – most recent low
15m timeframe [left] – here you can see how the price rallied up into the 1h FVG and it broke down, it traded above the midnight opening price, it breaks lower, it consolidates and then goes lower. After it hits into a 15m FVG the price continues its move lower reaching into the higher timeframe, the lower side of the daily FVG. 5m timeframe [right] – here you can see the 09:30 equities opening. If you look closely at the chart, there is a 5m FVG that was touched at 09:30. That was a trade to take with a TP below its most recent low. After 09:30 there was a lot of “chop ”. Following the red dots from left to right there is a high, a low, a higher high, a lower low, another lower low and then the rally above midnight.
Midnight open
Swing low
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The midnight opening price was hit 2 times. If you are bearish you want to go short at or above that level, as close as you can get to it. One of those levels can be seen on the chart above – the buyside liquidity is marked. The price drops down and between 11am and 12pm the market consolidates and then it retraces back up, it takes the BSL, it breaks lower, it returns back to swing low, level from which it drops into the 4070 level. 5m timeframe – E-MINI S&P FUTURES (JUNE 2022) If you look at the daily range through the scope of the 5m timeframe, you can see the opening price at midnight, the price gravitates around that and in London they rally and start building in a premium ahead of the 08:30 time window. The market creates the high inside the 1h FVG, it breaks and takes out the short term sellside liquidity, it retraces up above it, it consolidates for the majority of the afternoon. Then it breaks lower and aggressively attacks the sellside below 4070.
1h FVG Consolidation
Rally
Midnight opening price
London open – 3:00am
New York open – 8:30am
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The afternoon session The rules for an afternoon session trade: Before you even consider trading in the afternoon session you have to consider the following: - what the daily range is trying to do? - Is it trying to expand higher or lower? Did it reverse in the morning session and is it going to have a counter trend move? - Or is it just going to consolidate because it is waiting on a big news even the following day?
Lunch hour high BSL
Stop raid
In this day there was a big news event – employment data. The market consolidated and the bias was bearish as the mentioned target was 4070. The market started to break after lunch, meaning after 13:00 New York local time. The red shaded area on the chart above is between 12pm and 13:30. If you are bearish, the market will clear the stops during the lunch hour. What highs where formed in the lunch hour? Look at the chart. At 13:00 the algorithm reprices and runs to take the stops above the buyside liquidity. So during the lunch hour you can see it took the stops. If you are aggressive you can put on a trade in the stop raid area because you are in directional move. You are trying anticipate a large range day. Large range days can, typically, form with a busy lunch schedule. If it is going to be a fast market, it can create a significant high or low during the lunch hour. The premise is that if you are bearish you are looking for highs to be swept because they do not want the participants to be profitable that may have assumed a short position from the morning session. OR prior to that high forming – stop raid – they may have been already short from where the BSL line is [notice an FVG to its left] and instead of letting the market release and break to a lower PD array, the algorithm reprices, knocks those individuals out of the market. The smart money utilizes this run above the short term high [the stop raid above the BSL] as an influx of buying interest and liquidity that is available immediately while the market is being priced above the BSL and held at that level. Here the smart money will go in and sell to those buyers that have orders resting above BSL; so their stops are being tripped. Their short positions are being knocked out and. Conversely there will be 267
traders that will see that high being broken as in means of getting long [resistance turned into support] and they have a buy stop that triggers them getting in on a breakout. Smart money is cannibalizing those 2 types of orders. What orders are they? Buyside liquidity. The counterparty to their short has to have buying interest and that buying interest is being engineered by the algorithm when it runs up above the BSL creating that stop raid. The smart money goes short there with the expectation that they can take off a portion below previous lows and back to an old low of 4070 and then to 4040 and then into that daily FVG.
BB STL
… and they take off from their shorts here
Sticking to the rules of the model thought by ICT, if you are not trading during the lunch hour, that is fine. You are going to wait until after lunch for a setup to form. The breaker block - BB A breaker block is a pattern where price runs out a pool of liquidity – in this case is a buyside liquidity pool – and then it reverses and trades back below that short term low. If after this the price runs back up into the BB and the narrative is bearish the expectation is to repel from the breaker block and go lower and then the market to be aggressive and go below the lows marked on the chart above as there is sellside. You want to see the price accelerating towards and through it.
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Later on in the afternoon, after the breaker block was hit, heaviness falls below 4070 and then it accelerates. It has a small little consolidation, no retracements, no return back to an old low broken, support becomes resistance… forget about it. This is the algorithmic sell day.
Acceleration Small consolidation
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ICT’s son model This model is for traders that have short attentions span, that are easily distracted. This model gives a very low threshold of return of points or pips. The spreads can be an issue and those are going to be a plague for traders that are using forex. The futures market is a professional and very liquid market – E-MINI S&P – and it is systematic in the way of how it delivers price. You will have to backtest and see how many times it forms. It will not happen every day. ***REMINDER BEFORE GOING FURTHER • Price is delivered by an algorithm. • There is no buying or selling pressure – it is just an excuse that they make. • Algorithmic theory is based on time and price. • Price levels are useless until time is considered – just because it is trading at your favorite price level, this is the reason why support and resistance is a fallacy. There are many instances that anyone can go back in hindsight and say „here is where it worked and it repelled up or down”. Do it live consistently! Pick the right level consistently! And that is the problem that the retail traders have. This is why time must be considered first. The algorithm is going to start working a specific macro. A macro is a short order of things that it will do as instructions. It is going to seek a specific level, move to a premium, move to a discount, suddenly move or consolidate and wait for another time element in that trading day or trading week or month. Understand the element of time is crucial. Your inability to know everything there is t know about time is going to be the area of which you will have the largest growth in, but you will have the initial adversities. WHEN? When when when to this or that? When going to the motions of what it is ICT is teaching, it will happen for you that you understand why certain things are happening at a specific time. Over time your eyesight, your understanding, the visibility, the perception of price will be dialed in. • Time is of no use unless price is at a key PD array – just because it is the time for you to sit in front of the chart, does not mean anything unless it is at a PD array. • Blending the two yields astonishing results and precision.
“When I wrote this algorithm, coding it leans heavily on the time element” – ICT
What does that mean? What time of day, what day of week, what week of month, what month of year, what seasonal influences. There are several factors encoded in the algorithm that seek these reoccurring phenomenon that can be capitalized by those individuals that know what it is that they are hunting, that little billboard that flashes “hey, it is time for you to engage now”.
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1m timeframe – E-MINI S&P FUTURES (JUNE 2022)
Looking at this chart does anything stand out? If you are a new student to price action or new student of ICT, a lot of those movements in terms of price action look like a foreign language. If you look at the price action like this it looks like it has no reason for doing what it is doing. It is completely random. If you take all of the noise away from just all this back and forth movement and you add “just a little bit of lipstick”, suddenly you have a lot more to work with. What is the first element to algorithmic theory? Price or time? It is TIME. Time begins in the morning session, for you, as an index futures trader at 08:30. That is when the news embargo lifts. That means that at 08:30 there is usually a news event or some kind of economic report that comes out at 08:30 New York local time. That is the reason you have to set your Tradingview platform time to the local time of New York. ICT teaches his son to look for setups that are going to target a specific pool of liquidity. It means that you have to have a clear idea of where the market is likely to go. Up for buyside or down for sellside. It is not trading support and resistance ideas. It is not “going to a level to watch it repel away”. That is not what you are going to do. That is a fallacy. That is the reason why the retail traders drop the ball so many times and blow their account and never find consistency because they are trying to force something that is design to fail. Any tiny minute little fluctuations in these price movements are absolutely controlled, engineered and premeditated, either by artificial intelligence – that is the algorithm; it is following the code that has been written for it OR there are times when manual intervention comes in and they will send price to a specific level. Sometimes it is going to be abrupt and aggressive and other times it is going to be exhilarating because you were on the right side. When those interventions occur, that is a manual intervention. That means that someone is literally going in and manipulating price to do a specific things. 271
What would that be like? – manual interventions are for FOMC or for rate announcement and the market will reprice aggressively to a price that is well outside the scope that will be reasonable expected for that short term perspective – big explosive price movement. The economic calendar is useful because you can go in and see where these events are likely to form. ICT is looking for days, in his son’s model, when he can go in and engage price when there is a medium or high impact news event. If there is a lack of one, he can practice but he should not be engaging with his normal risk percentage. The first opportunity is at 08:30 The first element of this model is time. At 08:30 the news embargo lifts. The 2nd one is 09:30. At midnight, that opening price is BEFORE 08:30. - Did the market rally above the midnight opening price at 08:30? Yes! - Is the bias bearish? Yes! When you have a bearish bias you will short at or above the midnight opening price if you are trying to capture movement on a daily range on a down day. This is the the PO3 concept.
News embargo lifts at 08:30am ET
STH
STL
Look at what happens after midnight. The price runs up and takes out a STH. Who is going to have stop loss above that 1m candle? Anybody that would put a stop loss on these lower timeframes. There are traders that are doing that all the time. The algorithm is not aware of how much volume rests above or below a high or a low that is penetrated. It has no understanding of that. It does not need it.
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ANALOGY – think about Pacman. What keeps Pacman inside the boundaries of those lines that make up the maze that it runs around and collects and eats those dots until it gets to a power dot or it is chased down and killed by ghosts? The program language keeps it limited. The play board or game maze has limitations. Those limitations are programmed as such. Every video games has a map. The daily range has those limitations programmed into it as well until manual intervention is brought in and the initial boundaries are removed. Think of price like that. The algorithm does not care how many orders were above that STH; it just has to take out a short term high. So it is at a premium and took out buyside. What is it likely to do now as you have a bearish bias and the price is above the opening price and it is at 08:30? It is likely to reprice for sellside. Where is sellside? 4101 in this case or the 4100 big figure. So there is liquidity resting below that. What kind of liquidity? If the price is at that first FVG you see on the chart and the sellside is lower – as old lows / relative equal lows – there is sellside below that. The market is at a premium when is above midnight and anything below is discount. The algorithm goes from buyside liquidity at 08:30 on a bearish day above the opening price, wait for the market to trade lower through a short term low – STL – it creates an FVG, it rallies up into it and then you can sell short with the expectation that price is going to run to sellside liquidity. This is what ICT is teaching his son to do at 08:30. This is all he is trying to capture. In that move he may not run all the way to the sellside. He is going to get his 5 points and once he does, he stops and gets out. Why to get out at 5 points? Because 5 points are very easy to obtain. That is the lowest threshold of points a setup should, hopefully, yield. If you are trying to do anything less than that you are doing ultra short term scalping and the commission costs will kill you as it is not worth doing it. 5 points are an easy threshold. You can do it once in the morning, once in the afternoon and even on a really weird choppy day. You could reasonably pull out 5 points if you have the experience. At this moment you o no have that experience. Over time the expectation would be to take off portions of the position and hold the rest until it hits the target. 5 points might sound too less but consider the following – if you just did 5 points in the E-MINI S&P, 1 contract and never engaged money management to the degree where you start parlaying it up and start doing 2 contracts and then 2 contracts becomes 4 contracts, eventually, if you did 1 contract on E-MINI S&P, that means that 1 point in your favor or against you, is 50 dollars. 50 dollars x 5 = 250 dollars per day. If you did that consistently once every single day, that is 25 handles or points / week. That is $1250 / week.
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The second opportunity is at 09:30 Equities open 09:30am ET
STH FVG
FVG This is the short setup I observed on this chart after it hit the higher FVG Previous low
At 09:30 they opened the market and initially they sent it lower. ICT’s expectation was that the price will be sent higher into the FVG [the red shaded area] and also to clear the 4105 level. That is where the buyside liquidity is, that is where the stops are and there is, also, an FVG there. It should reprice there and then you should see the real move for the day. The market hits that level, it spikes a bit higher above the FVG, it drops, there was a short setup there that could have been taken with a target on the previous low formed shortly after 09:30. After this happened the price went back and run above the STH above the midnight opening price. This means that the price is in a premium. It consolidates and breaks down. How do you know if the price is reversing?
OB 1 2 3 4 5
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Orderblock overtaken
Why that candle, the OB, was picked wen the price went above it? ICT says that he took off partials when that level was breached. 1. If you look at the sellside liquidity outlined on the chart as the red line, the sell stops were tapped here. 2. Then it went lower and created equal lows creating another level of sellside below that. 3. It went below that and now there is another low formed here that has sell stops resting below it. People are always trying to pick bottoms. 4. The sellside gets taken once more. 5. And then that low gets taken. Notice what is occurring. The price went below sellside 5 times without moving very much. After the market took the buyside liquidity when it hit the FVG the price should have kept moving lower and the bearish OB should have kept price from moving higher. Price should not have breached that level and aggressively close above it. It is allowed to be hit once or twice, but the market continued higher as the orderblock was overtaken. The price hit once the OB. It could have hit it again to take out the STH and then to move lower, but it did not. This is problematic for a short position because there were multiple levels of sellside liquidity taken from below the original sellside liquidity that was outlined as the red line.
STH
In short, the high created in the FVG after 09:30 should have been the high of the day and continue lower. But as the market overtook that orderblock and after taking multiple levels of sellside, what is the algorithm going to do? Seek buyside. Where is now? Above the high. Look at the chart. The price went above that and above the midnight opening candle. The afternoon session • If you take a trade in the morning and it was profitable, you can take another trade in the afternoon. • You are aiming for 08:30 or 09:30 for the morning move. • If you get your 5 points at 08:30, you will not trade the 09:30. • If you miss something at 08:30, you will try at 09:30. • If you take a loss at 08:30, you can try to get back with the 09:30 setup. • If you miss the 09:30 setup or you take a loss in the morning, you can trade the afternoon. • If you make money in the morning, you can demo trade the afternoon. Be disciplined, not greedy. • Do not try to do 3 trades per day. TIP – there is a similar setup that happens in the last trading hour from 15:00 to 16:00.
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1m timeframe – E-MINI S&P FUTURES (JUNE 2022) Buy stops
Bearish breaker Displacement
Imbalance EQL
What is the time that was taught in this mentorship? What is the afternoon session for index futures? After lunch. But specifically what time? 13:30. Look at the chart At 13:30 the price leaves an area of buy stops that have been taken. It is breaking down. It returns back into a bearish breaker and it starts to go lower. It has displacement – that could have been an entry, it goes lower, it creates the EQL and it breaks it. This is what you need to be training for to see. Remember – what is resting below equal lows? Sellside liquidity AND on a bearish day. Does it create an imbalance? Yes. Does it trade back up into it? Yes. That is where you are going to sell short and looking for 5 points. When you learn this skillset it removes fear. It removes fear of missing out. It removes the fear and anxiety of failing. But it also removes the fear of inflation because this skillset will always outpace inflation.
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EPISODE 40 – LINK Daily and 1h timeframe – USDCAD
Notice what happened last week here. The market traded up and just bumped the short term daily high. What do you see once that occurred? What formed on that daily chart? When the market ran into that old high, it hit it [2] and the next day it created a lower high candle [3]. So you have a high candle [1], a higher candle high [2] and a lower high candle [3]. This is what you call a swing high. Did this last high [2] ran the previous high? Yes, but only slightly. That movement is clearer on the hourly chart and the following day creating a high that has a lower high than the highest one that ran into that previous high. The next day you are going to expect the market to trade lower. Here is the problem with this particular market Yes, it is likely to trade down with the benefit of hindsight shown here. If it is dropping down, you have that down close candle, so It could be met with some resistance digging into its range; about half of it. If you look closely, the 2nd bearish candle was closed around the midpoint of the down close candle. The dashed red line is the opening of the down close candle. That is a bullish orderblock. It is not suggest that the price went into that and now it goes higher. As the market started the down move and digging into that candle, that is going to be the impediment to the big sudden one big candle that can take the price into the first lower FVG to clear the sellside.
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1h timeframe – USDCAD
You can see that last week the market ran up into the old daily high, it started drifting lower, created an FVG and it rebalances to that, pushes back down and consolidates between this high and this low, it comes back inside the range and drops attacking the SSL. Consolidates once more and breaks down digging into the daily orderblock. Watch what happens – it goes into it overnight and then rallies. That rally is ahead of the 08:30 news driver. That is all manipulation that takes the price into an imbalance running a short term high, buyside is taken. ***on 21st of June 2022 those were the news for CAD
High impact news driver as a red folder for Core Retail Sales. Medium impact news driver as an orange folder for Retail Sales. You are not interested in the yellow folder events.
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15m and 5m timeframe – USDCAD
3rd FVG
07:00am – 10:00am is the ICT New York killzone for FOREX. Follow the chart Looking at the price movement on the 5m chart, you can see that once the price went up at 7am in the morning, it creates a short term high and runs above it. The buyside is taken and then the market drops just below a low. You would want a more meaningful displacement. You want something that is more energetic. This little “toe in the water” here is not enough. You want to see it fall in. Then the price drops down again, creates a shift in market structure, this move has a more energetic displacement and that candle was printed exactly when the news driver came out at 08:30. The price creates and FVG, but have in mind that there is, also, a higher FVG. Now… ahead of the news you might be thinking “well… couldn’t you have sold short here?”. Yes, but the economic driver that comes at 08:30 could have sent it up higher and taken the price higher into the highest FVG [notice the highest FVG above the red lines]. This is really a matter of waiting for the news to hit the market and then create the setup. This is a bit more conservative. There are times when it is so obvious that they are going to continue to move that starts ahead of the news driver, but it takes a bit more experience to find those setups and trust them. You would rather use your demo account to see those types of moves real time, wait for them to form and then go in an engage with your demo. Do not try to forecast how much of a move it is going to further increase higher or lower once the news driver comes out or the news event hits the marketplace. After the buyside was taken after 07:00am and the FVG was formed, that FVG also creates an area of buyside. Once the price trades lower and prints the 2nd FVG, have in mind that the market, due to volatility, could trade up into those higher FVGs. You will have to make sure to have that defined with your risk management. The draw on liquidity is at the bottom side of the chart where the relative equal lows are as sellside. The market is likely to pull down into that level or in the FVG that is a bit higher. Partials can be taken when and if that FVG is hit. 279
At 08:29 on 21st of June 2022 ICT had a Twitter post highlighting this.
Buyside is here
Sellside is here
“Study if it wants to run its sellside before buyside… or rebalance to a discount” – what does it mean? At the news driver release it could go up and bump the buyside and then dig in for the imbalance that is at a discount OR run the sellside. All that movement up since 05:00am in the morning was just ahead of that news driver. They were building in a premium. Then, during the New York killzone it gave the setup taught in this model, it delivered to the FVG and to the sellside liquidity pool. Between the low and the high there is the EQ. You have to find a discount array below that if you are going short. Having the FVG below the EQ, you can take partials there and target the sellside liquidity. If you look at the chart you can see that after the FVG was hit, the market had a strong bounce. At that moment you do not know if the market goes higher into the FVG or not, so that is an opportunity to take partials.
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4m timeframe – USDCAD
Stop loss It could reach up to here. Use this for defining risk & stop placement.
Follow the chart The FVG is hit, it has a shift in market structure and it prints an imbalance. By itself that is a rather elongated imbalance. All of that sellside delivery is imbalanced and there is not enough buyside delivery, so it will want to wait for the market to come up. In forex there is no central measure of volume and the algorithm that delivers price is going to want to go back up and overlap that down move and offer buyers an opportunity to get in on that [yes, he said buyers, not sellers]. As the market offers that rebalancing, where in that range would you be looking for to take an entry knowing that the higher FVG could be revisited and you will have to utilize that for your stop loss. So your stop loss would have to be higher. It does not matter where you are going short in that imbalance area, you will have to define the risk with the stop loss placed as shown on the chart based on the model taught here.
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If you look at the range of high to low, as shown below, you can find the 50%. That is the EQ price point. You need the price to get to that point or higher. By definition you can get short from and above the 50% level of that high to low. The range you want to get short in looks like this:
That is the range you want to get short from. You are not really risking a lot of pips, but you are defining the entry a little bit better. Even if the price goes above a bit, that is OK. The bottom line is that, eventually, it gets in sync. Watch the bodies of the candles support that premium high of the imbalance. It starts to break lower soon after, it hits the lower FVG, you take partials so you are paid if the price reverses on you. You aim for the sellside liquidity. ICT mentions here that the short entry can be made anywhere above the EQ zone of the specified range, starting with the 50% and also including the top of the imbalance.
Stop loss
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This is the chart with all the annotations
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London close – 10:00 to 11:00am – profit taking out 10:00am to 11:00am is the London close. If you are looking for directional plays and you are in a trade, you want to have about 80% of your trade taken off during this time window. Not all the time, but usually, that is when it creates the opposing end of the daily range. So if it is creating the high of the session in the New York killzone – 07:00am to 10:00am, the low is likely to form between 10:00am and 11:00am. That is algorithmic. There are some times, like news events, when the USDCAD is influenced by the CRUDE OIL numbers and that would, sometimes, skew this time window. On those days when there is CRUDE OIL inventory numbers are coming out and you are interested in taking a trade, you will trade with the expectation between 10:00am to 12:00pm and not have such a tight window of 10:00am to 11:00am. Keys to daily bias There is no simple “cookie cutter” approach to find the daily bias. - Every day bias is unrealistic. - Determine the likely weekly expansion. - Look for obvious liquidity in that direction. - Identify imbalances in price delivery top down. - Focus on the high or medium calendar event dates. - Look for directional price runs in the killzones intraday. Find where it is likely to gun for this particular week. Who is in the crosshairs? Have people been making money going long? Is there a low that they are going to run down and stop them out with it? That will be enough for you to frame an expansion going lower. You are looking for obvious liquidity in that direction – below old lows, above old highs or identifying imbalances in price delivery top down. That means from the weekly down to the daily, 4h, 1h, 15m and once you get to the 5m chart you do the scaling from 5m, 4m, 3m, 2m and 1m, whichever has the clearer obvious FVG for you based on the model’s rules. Focus on days that have high or medium impact calendar events only. If you go through the economic calendar, even for the next months, where are the high the high or medium impact news events for the markets that you trade? What day of the week and what time? So if you have a news driver that is coming out on a particular day, say Tuesday or Wednesday, and you are expecting the weekly range to expand lower, on those medium or high impact news events you are going to see, hopefully, something that is going to run up higher and go into an FVG or run above a short term high running stops and then break down and show displacement, THEN create an FVG and you can go short on that. You are looking for that setup and that directional price run inside the killzones intraday at the same time when the economic calendar is suggesting medium or high impact news event is likely. There is absolutely no expectation to know the bias every single day of every single calendar trading day. You are only focusing on these “sweet spots”, those “low hanging fruits” days where everything is coming to get all the stars aligned. You are looking for the higher timeframe, weekly, to expand in a specific direction. That starts your bias. Then if you think that it is going higher or lower for a specific target or imbalance, then you are going to go the economic calendar to look for when that might occur. There may be a move that happens prior to that calendar event occurring, and that is a missed opportunity and you will have to 284
use another pair, something else to trade with. Sometimes that occurs, but you will see that there are a lot of opportunities using this criteria. This is very forgiving for you as a developing student because it has already given you permission not to know the daily bias outside of these rules. You want to trade every single day because you want to be the “everyday trader”. The everyday traders are more prone to have losing trades because they are trying to do something every single day when there are times when they should not be trading at all. If you start journaling these things you are going to notice that the setups occur when these calendar events are in play and they originate around that same time. What will happen is that it will convince you to say “I do not need to be the everyday trader, I do not need to be the super scalper, I do not need to be in here trying to an Olympic trader because trading is not an Olympic sport or event and they do not give gold medals for overtrading, but they do blow accounts”. Backlog every day and show everything that took place, mark-up your charts. 1h timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022]
It has traded down and left relative equal lows, but the 2nd low went just a bit below the previous one. That is all you need. It hit it and started to retrace higher. On the chart there is a whipsawing movement of price in both side of the marketplace. It took sellside and buyside and then it broke down. Whenever you see price action like that, you can ignore the both sides of the movement. Usually it is FOMC or some kind of rate announcement type event. Just ignore the wicks. The real range is marked on the chart – that swing high. When the market drops down it creates a low then it goes a little bit lower it starts to consolidate, there was holiday on Monday, the market starts to drift higher.
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What you should be concerned about is this run from high to low.
2
If it is going higher, what is it reaching for? It is going to go into a premium. There is an FVG right in the middle of that run down. You are not interested in that one because it is overlapping with the equilibrium. Even if this is going to go up to go down, you want to know if you have an opportunity to see it go up into higher areas. Using the first FVG as the low hanging fruit approach, the market is going to want to revisit that area. Look at the bodies of the candles. There is a little bit of movement just above but look at the bulk of those candles. Their bodies are staying withing that range that is defined as an FVG in a premium market. What makes it a premium? It is above the 50% level. Now is consolidating. 15m timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022]
1h FVG Short term shift in market structure
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London open killzone – 02:00am to 05:00am New York morning session from 08:30am to 11:00am – specific to index futures for the morning session Follow the chart Starting from the left side of the chart you have the midnight opening price in orange, there is an FVG that was formed before midnight and also 3 consecutive down close candles that act as one single bullish orderblock. The price digs in the FVG and into the orderblock, it hits it during the London session and it rallies up. It creates another FVG, it runs the buyside and it creates relative equal highs ahead of the New York session. So, the market drops down into the FVG and into the last down close candle that acts as a bullish orderblock and that is where you can be a buyer ahead of the 09:30 opening. Why would you feel confident to do that? Because there is already an energetic price run from London open. The market started at midnight and went down into an imbalance and there was a lot of energy off of that. The market created a short term shift in market structure that is bullish. London creates the high or the low most of the time. 70% of the time you are going to find that this is true if your directional bias is correct. In this case we trust that low created in London is probably the daily low. The retracement intro the New York session goes into an orderblock, closes the FVG left behind from London, it rallies a bit and drops back down into the FVG once more creating an OTE. You have the New York morning session from 08:30am to 11:00am. This is specific to index futures. The lower and upper side of the 1h FVG presented previously will act as a target – draw on liquidity. The market runs from the London 15m FVG up to the low and high of the 1h FVG after clearing the buyside liquidity created during the London session. 5m timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022]
1h FVG
Consolidation at 09:30
Low Lower low
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Follow the chart You can see there is a low and that low is ran. THEN it rallies and moves away from the orderblock and comes back down into the last down close candle on the 5m chart. There is a hierarchy of how the market is trading down into a higher timeframe to a lower timeframe to a lower timeframe; all being supported by down close candles within the bullish bias. Once the FVGs have been closed in, the market goes higher. It is indicating and signaling to you. You do not need an indicator. Everything is shown here in price action relative to time and price. At 09:30 the market is consolidating before the run up reaching into the London BSL and into the lower and upper side of the 1h FVG as a draw on liquidity. Three targets, all hit. 3m timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022]
MSS 5m imbalance
Levels based on the 5m chart
BSL
09:30 consolidation
MSS
Refined imbalance
Stop running event
Refined levels
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This is the zoomed in chart of the session that starts at 08:30am and going into the 09:30 opening. On the first chart you see a the low and a lower low into the OB, it rallies, creates a short term shift in market structure, comes down back into an imbalance. You can be a buyer in the area of the refined imbalance and trust that it is not going to take that last low out. Why? Because you already had a stop running event – sell stop raid. The buyside liquidity is the first level for partials. For pyramiding, if you look at the high to low marked on the chart with the red dots, you can clearly see that the market came down after 08:30 into the discount area. During the 09:30 consolidation you can add to the position because the sell stop raid already happened. This is the case where you do not need to wait for the 09:30 to get that volatility. During the 09:30 consolidation the market has no reason to come back and take that last low out because the only FVG that was formed is already closed in.
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EPISODE 41 – LINK 1h timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022] STH
What you can see here is a sellside being taken, the market dropped down and it rallied up as it was reaching for the buyside liquidity. The expectation here was for the market to reach into the buyside liquidity in the morning session. Instead the market gave up the ghost after it reached that STH and it dropped before reaching the buyside liquidity pool. If it would have been hit, ICT specifies that he would have looked for a short setup. 15m timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022]
Speech moment FVG
FVG
New York morning session – 08:30am to 11:00am – for Index trading. New York afternoon session – 13:30 to 16:00 – for Index trading.
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On this morning, the Chair of the Federal Reserves of the United States, Jerome Powell, had a speech at 10:00am, the market started to go up taking the buyside liquidity. The target ICT had on the E-MINI was the blue line at the top of the chart. You can take trades after 11:00, but you would want to stick to the rules. Following the rules you will miss some opportunities. And that is OK. You are going to get them wrong, sometimes. When you have the FED Chair news event and the price does not pan as you would expect to, it is better to move away, close the charts and check later.
In the lower side of the chart there is a 15m FVG. The market, after it ran the BSL came all the way down, it overran a smaller FVG that is above the wider one. When you have this kind of scenario with 2 FVGs, chose the larger FVG. Looking closely you will see that those 2 FVGs overlap. So if the price is going to reach the higher gap, it is also going to reach for the lower gap. The price does that as it goes into the lunch hour. Until 13:00 it touches the low end of the FVG closing it in. From 13:30 to 16:00 the market drew all the way up to the target – the blue line at the top. The expectation in the morning was for the market to go above the BSL, hit the higher target, sell off and go into the FVG for a discount and then create the run and go beyond the 3808.5 level. You do not want to hold new positions INTO the lunch hour. You should wait for a stop run in the lunch hour
Stops run
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The afternoon session 5m timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022]
15m FVG
Inside the 15m FVG the price reaches the low end of it around 13:00. For a cleaner price action you can wait until 13:30. At 13:00 the price starts to rally away from the gap, it drops into a 5m OB and FVG, then you have a shift in market structure, creates a return into a higher 5m FVG and then it rallies reaching for the initial target.
MSS FVG
FVG 15m FVG
OB
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The morning session 5m timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022]
Run on BSL Displacement
15m FVG
The morning sessions starts with the run on buyside twice, it breaks down, it shows displacement, returns into an FVG, it rolls down into the 15m FVG and then, once again, it returns into an imbalance to go at the low end of the 15m FVG. At the closure of lunch hour it creates that low. 2m timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022]
Candle 1
Candle 2
The blue shaded area is the 2m FVG from which ICT was expecting the price to reject and reach into the 3805.5 level. When the price reached the 2nd time above the BSL, that would have been a good moment to “pay the trader” – partials and/or break even.
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Look at that FVG. Price hits it and it has movement. It comes back again for a complete closure, that is acceptable. Does it start to rally after that? Yes. That is why ICT was confident that the price will reach higher into the 3808.5 level. If candle 1 would have close like candle 2, meaning to close below the low, that would have been a short opportunity. Notice how ICT leans a lot on displacement. He seems to be looking at aggressive candles closing below or above a swing so he can consider that an FVG with energetic price movement.
Rules of risk management and stop loss management The afternoon session 2m timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022] This will be the bulk of the discussion. The logic around risk management and stop loss management will be framed. The rules that were shared until this point of the mentorship are static and always the same.
STH FVG
STH
Follow the chart This is the 2m chart of the afternoon session for the E-MINI. It traded down into the low end of the 15m FVG at 13:00 and then it starts to rally up. It has a short term shift in market structure at a key time of day. At 13:30 it hits a bullish orderblock. ***The orderblock is the purple line on the chart and I observe that ICT here included the wick of that candle. Basically the price is trading into an orderblock after a shift in market structure AFTER trading down to the low end of a 15m gap. When it goes back down into the 2m OB and FVG, that is an OTE entry. FVG + OB + OTE is the golden pattern. If you go long from here, the targets to aim for are marked on the chart as STH. In the middle of the chart there is an FVG that pushes the price into the 3805.5 level.
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5m timeframe – E-MINI S&P FUTURES (SEPTEMBER 2022) [ESU2022]
Profit objective
Limit order Stop loss
You are looking at the idea that of: - Did it trade down into that FVG? - Does it show willingness to go higher, yet? - Is there a short term shift in market structure? Yes. - Is there a gap? Yes. - Down close candle to the left of it as an orderblock? Yes. It drops down into the bullish orderblock, OTE and FVG. The limit order is placed at the top of the FVG with a stop loss below the low as shown on the chart. For profits you will aim for the 50% of the high to low swing. Just above the 50% here there is an imbalance – that is the low hanging fruit. How to whether drawdown Drawdown is having your account reduced from starting balance; or if your equity increases and you start taking losses, that is also drawdown. That drawdown has to be managed. For instance, if you took a trade with 1% and you get stopped out your next trade should have 0.5% risk. WHY? Because you have emotions and you will be, most likely, wanting to have revenge and you will, probably, use more leverage than you should and get impatient. Being impatient is a losers’ cycle, a gambler’s mentality. By reducing the risk on your next trade once you have taken a loss, then you have to make back 50% of what you lost before taking a 1% risk again. It is not easy to follow this logic. What happens if you get that 2nd trade risking 0.5% and that trade results in a loss? On the next trade you will be using 0.25% and this is the lowest you can go with. You have to determine what your risk is and this is going to reduce the number of trades you can take. If you are trading a funded account you may aim for 10-15% / month. Just make that and STOP. Do not try to push it, do not try to get rich real quick.
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Knowing how to manage a drawdown will keep you from blowing the account, it will control the equity, it will not be a sharp jagged falling off a cliff. It will be a run up to new equity highs and you have a losing trade, which is reasonable, or even a streak of losing trades. But if you take a 1% loss and then you take another loss at 0.5% and then another loss at 0.25% you will be down only 1.75%. It is not a big drawdown and you have taken 3 consecutive losing trades and it is easy to come back from. When you have a loss or if you go through drawdown, the professional money manger views it as “it is a loan that you are going to collect interest on”. When a bank loans out money is it crying about how it had to give out your down payment for a home or your boat loan or some other purchase that you made a loan with them? Are they upset about giving you that big lump of money? Are they expecting to get it back right away? No. In fact they do not want you take it and ay it off real quick because that is their business model. They want to lend out the money and get as much interest as possible. While you do not want to leave the account drawdown in long periods, just consider you will get interest on it. Your career will not be framed by the last 5 trades, weeks, months or years. You need to have a long term view. That is the problem with being an infant in this industry. It is too easy for you to want to quit because you do not want to see past what has happened to you right now or last week or last trade; and that last trade you have made such a monumental experience out of and it is a make it or break it. Every single trade is a make it or break it. A loss is a tax on success. You have to pay it. Nobody gets around that. If you do not know where to place a stop loss, you really do not know what you are doing. With this model shared throughout this mentorship, that mystery is removed. Your hard stop needs to be place. Period. If it gets hit it means it has done you a favor. And it is your job as a trader to manage the trade with less risk. Your task now is to come out of drawdown no matter what the drawdown is. You have to come back incrementally. Stop management When price moves 50% of the expected targeted range, the stop loss can be trimmed by 25%. When price moves 75% of the expected targeted range, the stop loss can be trimmed to breakeven. You have to determine where you are getting in at and where you are trying to get as the target. The range is determined by where your entry is and where the target is. For example if you would have got in at 3755.75 and the target is 3780.25, the range is for 25.5 points. If you see the price move half of that range, meaning roughly 12.5 points, your stop loss can move 25% up of the range between the stop loss and your entry. You are not jamming it up to break even because you will worry about it. When price moves to 75% of the expected target, meaning 75% from the entry to the first target, the stop loss goes on break even.
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Here is an example of a trade on EURUSD from 23rd of November 2023:
It is a 15m chart. The trade was taken at the open of the orderblock. As the price already moved 50% of the range, meaning 50% from the entry to the expected target, the SL can be trimmed higher to 25% of the range from the initial stop loss to the entry. When and if the price will move at the 75% of the targeted range, the stop loss can be moved on break even. In this case I personally prefer to take partials, move the stop loss on break even and let it run to its target. As profits will be already taken you have no reason to worry about the trade. Partials can also be taken at the 50% level and then trim the stop loss.
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