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34-ICT Mentorship Core Content - Month 4 - Liquidity Voids

Last modified by Drunk Monkey on 2022-09-12 06:35
1 00:00:40,530 --> 00:00:51,630 ICT: Okay, folks, welcome back. This is teaching number five of eight for the ITT mentorship content for December 2016. We're gonna deal with specifically the
2 00:00:51,660 --> 00:01:04,230 reinforcing of liquidity voids, and when to anticipate ranges to fill in. Okay, liquidity void is a range in price and delivery, where one side of the market
3 00:01:04,230 --> 00:01:15,030 liquidity is shown in wide or long one sided ranges or candles, price, typically we'll want to revisit this pores range, or void of contract and liquidity, we're
4 00:01:17,970 --> 00:01:29,520 going to look at an example of a liquidity void. And when price is in a small consolidation or trading range, we call this price imbalance. In other words,
5 00:01:29,550 --> 00:01:42,450 prices in point of equilibrium, at some point, price will eventually move out of the consolidation. When this occurs, we know that there's our participation in
6 00:01:42,450 --> 00:01:53,340 the form of smart money. Smart money's the only one that has the deep enough pockets, to cause price to move out of consolidations or move at all really in
7 00:01:53,340 --> 00:02:11,130 any significant manner. This causes a price imbalance, or, as we call it displacement. Price can stay away from that drop down aggressively, where there
8 00:02:11,130 --> 00:02:21,930 was only two or three candles that moved away from that consolidation, that range can stay open for a while. There's no specific time limit on how long it's
9 00:02:21,930 --> 00:02:29,910 going to take for these voids to close in. And that's one of the repeating questions I get a lot is there a way to know how long it's going to take for
10 00:02:29,910 --> 00:02:41,130 these to fill in that void would be in terms of how fast and when can we reasonably expect it to fill, that's all going to be germane to what you're
11 00:02:41,130 --> 00:02:51,090 seeing in the market at the time you see the voids, they can stay open for months, I can say open just for a brief session, intraday, and you can close it
12 00:02:51,090 --> 00:03:02,010 in, it's all gonna be relative to what you see in price action around that void. Now when I say void, what am I specifically looking at and we're referring to,
13 00:03:02,400 --> 00:03:12,840 it's this small little area of price action where it was only delivered. On the downside, we have we have long bodied candles, where price has only been
14 00:03:12,840 --> 00:03:24,330 delivered on the downside, and has a small little gap in between the two biggest down candles. This is what we've framed as the liquidity void. Now this is a one
15 00:03:24,330 --> 00:03:33,090 minute chart, because a one minute chart is going to give me the opportunity to show you how there are pockets in these big runs. And not that this is a big run
16 00:03:33,090 --> 00:03:41,670 in terms of how many pips it moved. But it's a big move away from that consolidation in relative terms. So the shaded area that consolidation price
17 00:03:41,670 --> 00:03:49,980 moves aggressively away from that, when we see this, this is indicating that they're smart money in the marketplace, and they believe that price is wanting
18 00:03:49,980 --> 00:03:57,360 to go lower. Now, because they're smart money, their their orders are going to be larger than ours. And that means their participation is going to have to be
19 00:03:57,360 --> 00:04:07,290 scaled in, they can't facilitate their entire net short position and all at one price. So they have to gradually mark that position in it may require them this
20 00:04:07,290 --> 00:04:15,840 take a little bit lower entry, sometimes they may even push it higher and run back above that consolidation and take it in the form of running out buy stops
21 00:04:15,840 --> 00:04:25,380 and they can sell to those buy stops. But that's not the point of this teaching. We're going to specifically deal with the liquidity void alone. When we have a
22 00:04:25,380 --> 00:04:36,060 liquidity void, and it's broken down like this, what is it's basically saying there's a void of buyside liquidity. That means the markets aggressively moved
23 00:04:36,060 --> 00:04:46,860 away from that consolidation that shaded in and because it repriced aggressively lower, it was all one sell side liquidity only very little buying took place in
24 00:04:46,860 --> 00:04:59,280 that rundown. So, the nature of illiquidity void is that we'll probably see with a great deal probability of move back up into that 104 76 level, which would cap
25 00:04:59,280 --> 00:05:07,140 or fill in In the entire liquidity void that we see in the form of those two big candles that dropped down away from that consolidation, but remember, it's a
26 00:05:07,140 --> 00:05:17,760 void of by side liquidity that causes downward ranges like this, which is what we call a liquidity void. In other words, we expect price to come back up and
27 00:05:17,760 --> 00:05:24,240 trade right back over those same price levels that we see here between 104 76 and 104 50. there abouts.
28 00:05:31,860 --> 00:05:39,810 Okay, let's take a closer look here with a five minute chart that same consolidation. You see, this time, it's only showing as one big five minute
29 00:05:39,810 --> 00:05:53,220 candle that drops down aggressively. That same area is denoting a liquidity void. Again, it's the absence of buyer's or buyside liquidity. And they're
30 00:05:53,220 --> 00:06:08,280 running lower aggressively repricing so prices jumping down into that 104 40 to 104 30 range before they start seeing buyers again. But pay attention to these
31 00:06:08,280 --> 00:06:16,020 lows down here we're gonna take a look at something. While price is showing a short term support level like this, what's going to be building up below those
32 00:06:16,020 --> 00:06:26,490 lows, sell stops. So if we anticipate price, potentially going up and closing in that range that we've identified here as a liquidity void, what we're seeing
33 00:06:26,490 --> 00:06:38,310 there is a big single five minute candle that's bearish. Sometime in the future, we expect to see that entire range of that down candle, that big long thin
34 00:06:38,310 --> 00:06:49,800 candle that we've identified here is a liquidity void, that will be covered back over at some future time. In other words, with that range, with bullish price
35 00:06:49,800 --> 00:06:56,310 action, in other words, there's going to be a bullish candle or bullish price swing that covers that entire range that's identified here with a liquidity
36 00:06:56,310 --> 00:07:07,230 void. When it does that price action has been balanced out. And onwards, it's been a complete and uniform delivery of price action. It's been offered on the
37 00:07:07,230 --> 00:07:18,300 down move, and it's been offered on a bad move up. You see here, the sell stops below those lows get ran in price runs up. At this point here, you would
38 00:07:18,300 --> 00:07:27,330 reasonably expect to see that liquidity boy completely closed in. Sometimes it does. And then sometimes it doesn't. Sometimes it'll come right back down, run
39 00:07:27,330 --> 00:07:36,240 an area liquidity again, that same equal lows, and then it runs up and hits it. And that last portion noted here, you can see where that fills in the liquidity
40 00:07:36,240 --> 00:07:47,100 void. Closing right up on that one 476 level. Looking at this price action, here, you can see there's several trades that you've could have taken even on
41 00:07:47,100 --> 00:08:00,150 both sides of the marketplace. But the ultimate draw on price was to get up to that 104 76 level closing in that liquidity void. Note again, the stops that
42 00:08:00,150 --> 00:08:13,170 were ran below that level here right before the void was closed. That low would be the Buying Opportunity. Also you can see right before that load has been
43 00:08:13,170 --> 00:08:26,790 shown here with the arrow, there was a short term load that price dropped down below to hit that same 104 10 to 10405 level that the biceps that would be below
44 00:08:26,790 --> 00:08:38,640 one Oh 14 on that initial short term low weight above that bold arrow denuding for the last low before drives up to into that 104 76 level. That run on those
45 00:08:38,880 --> 00:08:47,460 cell stops. What was necessary for them to facilitate new Long's so that way, if they're gonna take out the one at 476 They're gonna make it worth their while.
46 00:08:47,760 --> 00:08:57,180 They're gonna pick up some buy orders around 10405104 big figure, depending on what data feed you're looking at. But on this year for the Forex Ltd platform
47 00:08:57,210 --> 00:09:18,180 for demo trading, the feed shows 10405 there abouts, and in price, right makes a run of 75 pips up to 104 76 and closes in that liquidity void. Seeing again,
48 00:09:18,510 --> 00:09:28,680 just on a 15 minute timeframe, you see now that big one single 15 minute candle drops lower. But we've met consolidation, again denoting that liquidity void.
49 00:09:29,370 --> 00:09:47,760 And you can see now a little bit more friendly on the eye where the runs on those 104 10 and 10408. Cell stops would have been on the 15th and on the 16th
50 00:09:47,760 --> 00:09:57,480 of December. But notice also here we have something that's a little bit interesting I want to show you. There's two times it trades up into that 104 76
51 00:09:57,480 --> 00:10:07,620 level but this time he trades us a little bit higher than the first time I hit it First time I hit it was around 1500 December 16. The second time I hit it, it
52 00:10:07,620 --> 00:10:21,090 was on the 19th of December. When we see this second time run up into that, it just poked his head above the previous time it went above 104 76. But look at
53 00:10:21,090 --> 00:10:30,960 the two candles immediately after the run into 104 76. There's two down candles, one has a little bit longer wick and the next candle it gaps down at the opening
54 00:10:31,530 --> 00:10:32,790 and creates a bearish candle.
55 00:10:33,180 --> 00:10:44,760 I want you to look at something specifically in here. You see that little space right there? But the bodies don't close in? What is this? This is a gap. Okay,
56 00:10:44,760 --> 00:10:53,940 it's a price gap. So if price gaps in here, how can we use this information, we see that the liquidity void has been closed in, they made a run one more time
57 00:10:53,940 --> 00:11:05,100 into 104 76 blowing out the level two times closing the void. And if we know that they gapped down or made that liquidity void away from that consolidation
58 00:11:05,100 --> 00:11:16,110 around that 104 at institutional level, that's what it's moving away from it trades back up into 104 75. or there abouts two times that trades there. We know
59 00:11:16,110 --> 00:11:24,360 that it's more likely to trade lower because it's moved aggressively away from that one and 480 level. And it's tried a couple different times to get up there.
60 00:11:24,600 --> 00:11:34,680 And remember, pricing in on an institutional level has to happen in graduated terms. In other words, it can't be done on the first pass, it goes to a level it
61 00:11:34,680 --> 00:11:41,430 runs away from our level, let's say it like that first day runs away from a level in this case it moves lower from 104 ad. And then it works its way up
62 00:11:41,430 --> 00:11:49,920 gradually up into that one or 475 level once and then sells off. Why did a sell off here initially in the on the 16th of December, because they priced in some
63 00:11:49,920 --> 00:12:00,420 more selling. So they build more of a net short position there. Then price trades one more time up in that 104 75 level 104 76 on the 19th of December, and
64 00:12:00,420 --> 00:12:09,150 then we see price immediately to bearish candles, but one gapped down a little bit. What is it showing you there? Again, an aggressive move that it wants to go
65 00:12:09,150 --> 00:12:17,700 lower. But now it's given you a golden opportunity. This is where we're going to talk about gaps a little bit more liquidity voids our gap during price trading.
66 00:12:19,530 --> 00:12:30,390 Where it extends across the this distinct range when we see a gap where price has closed from one kindling and gaps into another opening of another candle,
67 00:12:30,570 --> 00:12:41,010 and that separation between the two price don't have a closure. In other words, it doesn't have a range closing that in, it creates a common gap. What can we do
68 00:12:41,010 --> 00:12:49,560 with this common gap? Well, we have a inclination that we're going to be moving lower. So if we're going to be moving lower, and we see a gap here, we can put
69 00:12:49,560 --> 00:13:02,850 an order in here to sell with a limit order at 104 70. So in that price gap, we can be a seller at that specific price level at 104 70. Look at the reaction
70 00:13:02,850 --> 00:13:13,020 there. Once it closes in that gap. Only the body closes it in, it wicks up into the body, but the bodies of the up candle as it closes that gap. That's all it's
71 00:13:13,020 --> 00:13:21,930 necessary very, very little drawdown. And immediately it trades lower and re prices and makes it run down below the equal lows it's been formed on the 15th
72 00:13:22,050 --> 00:13:32,190 of December and the 16th of December. Seen a little bit more information here in this 15 minute time frame, you can see once that 104 76 level had been hit, the
73 00:13:32,190 --> 00:13:43,650 gap had been closed at entry at 104 70. With the ideal use of a common gap price makes a run for 10404 cell stops, where we can take a cover on positions that
74 00:13:43,650 --> 00:13:53,130 are short, their cell stops are used to pair up short covering buys with and price makes one more leg lower making a run out on one and 365. So again, one
75 00:13:53,130 --> 00:14:03,990 more time, pairing up sell stop orders with Bice to cover on shorts. Everything that I'm showing you here is this reverse with when the market is bullish. And
76 00:14:03,990 --> 00:14:13,080 I'm going to give you examples in your PDF file. So don't be feeling a little bit lost here because a lot of examples that I can give you on gaps in liquidity
77 00:14:13,080 --> 00:14:22,440 voids and order blocks. And you have a lot more information coming to you in Supplementary teachings the last week of December because there's no trading on
78 00:14:22,440 --> 00:14:31,410 the week of Christmas while we're doing this mentorship, but it will be daily teachings and it'll fill up your PDF file. So your PFL is going to be rich with
79 00:14:31,440 --> 00:14:34,500 a lot of content that can't be shown here for the sake of time.