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38-ICT Mentorship Core Content - Month 4 - Double Bottom Double Top

Last modified by Drunk Monkey on 2022-09-12 06:36
1 00:00:31,320 --> 00:00:44,730 ICT: Welcome back folks, this is teaching number eight of eight in December 2016 itt mentorships content we're dealing with specifically double tops and bottoms.
2 00:00:44,850 --> 00:01:00,630 Okay before we get into it I want to talk about measured moves and clean highs and clean lows. If you look at this price action in here we have a drop down in
3 00:01:00,630 --> 00:01:28,440 price but relatively equal highs in here okay in the marketplace there is a pretty recurring phenomenon it takes place about measured moves and you can see
4 00:01:34,380 --> 00:01:49,830 this price swing here projected up gives us pretty close to that level up there. And when I was going through my coming up as a trader I took a lot of the things
5 00:01:49,830 --> 00:01:59,130 I learned from institutional trading and retail trading and blended the two together and I knew that there would be runs on stops above the highs and runs
6 00:01:59,130 --> 00:02:10,890 on stops below the lows. And I noticed that there was measured move ideas throughout all of price action. And I also noticed that by blending some of the
7 00:02:10,890 --> 00:02:23,370 things like price delivery and double tops like we see here these two highs here in close proximity to one another price has already shown a willingness to want
8 00:02:23,370 --> 00:02:35,730 to go lower and inside this consolidation let's take a look at the liquidity pools and ranges above and below well above here we have
9 00:02:42,090 --> 00:02:43,170 this range here
10 00:02:52,260 --> 00:03:10,440 okay and what I'm noticing here is this candles opening 7742 And this candles high coming in at 77 even big figure so there's our range in here. Now what I've
11 00:03:10,440 --> 00:03:22,650 delineated on the chart is the open at which price was an up candle beginning and another up candle here and then everything below this candle here is all
12 00:03:22,650 --> 00:03:43,680 sell side delivery. So there is a gap or liquidity void in this range here down here we have a fair value gap written here these candles here this candle here
13 00:03:52,470 --> 00:04:01,680 so we have that and we have the body of the candle of this down candle which is the bullish order block which is right before this big move up to last down
14 00:04:01,680 --> 00:04:05,340 candle we're going to focus primarily on the open on that candle
15 00:04:15,510 --> 00:04:30,030 okay so we have mapped out both sides of markets liquidity and we can now build ideas about what we would reasonably expect to see price do now the retail
16 00:04:30,060 --> 00:04:43,320 universe is going to see this as double top seller for there's resistance. Let's get short and put a protective buy stop above these highs. And we're gonna be
17 00:04:43,320 --> 00:04:51,630 looking for the market to trade down into this low because Support Resistance says this is where support bounced. So therefore price should reach all the way
18 00:04:51,630 --> 00:05:03,150 down to that level. Institutionally. What we would be thinking is price definitely has by stops above here. So all traders that are already short back
19 00:05:03,150 --> 00:05:17,520 here, we want them to drop their protective buy stops down here. So we're going to wait for price to drop lower, close in this fair value gap and potentially
20 00:05:17,520 --> 00:05:28,200 hit this order block level down here, a price drops down to that level, we could reasonably expect price to go back up and clear out, these buy stops, or the
21 00:05:28,200 --> 00:05:42,330 market could come up, trade into this void, close it in and then trade lower to closest fair value gap or hit to fall short of law to close the trade. Here are
22 00:05:42,330 --> 00:05:52,770 the two scenarios as it is the market starts to break down so we know that we're gonna be looking for this side of liquidity first. So that means we're going to
23 00:05:52,770 --> 00:06:05,160 trap into this area here is fair value gap or will shorter block and then we'll expect to see the equal highs or double top to be blown out and to reach up into
24 00:06:05,160 --> 00:06:15,270 this area here. But at this point here we also noticed that we have a range in here and we also have the liquidity buoyed up here and a fair value get below so
25 00:06:15,270 --> 00:06:34,680 we're looking for the market to trade down hits the bullish order block shows willingness to want to rally double top is now gone. This by stops are gone.
26 00:06:35,790 --> 00:06:50,220 We're looking for the void closing up here. So now we're going to take our level put rate on that candles opening right there comprise trades up hits it to the
27 00:06:50,220 --> 00:07:14,310 PIP high comes in at 7742 to open on this candle comes in at 7742 double top by stop liquidity run up into a liquidity void to a bearish order block which is
28 00:07:14,310 --> 00:07:27,060 the last two up candles it goes right to the liquidity void being closed in by stops ran out above a double top then the market makes it run liquidity below
29 00:07:27,060 --> 00:07:41,940 that low. And there you go. Let's take another example on double tops and bottoms and here we have a double top price has traded down into a bullish order
30 00:07:41,940 --> 00:07:50,490 block which is last down candle rate for the up move. This will be a nice buying opportunity here. So what would you be reaching for what liquidity well retail
31 00:07:50,490 --> 00:08:05,070 is going to see this as resistance so in the mind of the retail universe, they see this as resistance here is price hit this here. And it traded lower by stops
32 00:08:05,070 --> 00:08:16,440 or above that now short traders had their protective buy stop above this equal high or double top and you knew there's gonna be buy sets above this high but
33 00:08:16,440 --> 00:08:27,330 nonetheless, we're focusing on double tops and bottoms for this teaching bullish order block here who could be a buyer here price will be reaching for and
34 00:08:27,330 --> 00:08:45,030 through this. Now the question is is how much beyond that we have our double top again your measure too high down to the low between the two peaks.
35 00:08:50,880 --> 00:09:08,580 Okay, so we have the high down to the low. We can project that up here. And now while retail thinks this is where it's going to go. The algorithm is going to
36 00:09:08,580 --> 00:09:28,530 reach this far up because it's going to remember the range back here. So we're looking for 7445. market rallies, trades through here right in here, there's
37 00:09:28,530 --> 00:09:43,290 probably some kind of momentum divergence. And just for completeness sake in this month's teaching, let's put a momentum indicator up in here some divergence
38 00:09:43,290 --> 00:09:52,320 right there at a level of or resistance at a double top. Retail is going to think this is a sell and you're going to look for price to come back down to
39 00:09:52,320 --> 00:10:01,920 this support level. That's what retail is thinking. We're thinking is going up to 7445 with the double top is here by style Sure above that, and we're going to
40 00:10:01,920 --> 00:10:19,770 take the measurement that the algorithm is going to use and project it above to get its objective, the high comes in at 7446, off by one pip. And then you go,
41 00:10:19,800 --> 00:10:33,600 you have a market move, right to a specific price level running to double top out. And then there's your move. Because the subsequent down move running out of
42 00:10:33,600 --> 00:10:45,630 liquidity below these lows, and now we're gonna look at the double bottom. Traders gonna see this as support. Price rallying away, sell stocks will build
43 00:10:45,630 --> 00:10:46,470 up the low here
44 00:10:55,080 --> 00:11:10,050 used to hide down into the low, there's a range, and we're gonna project that down. Right there. And what that'll do is that'll give us our algorithm
45 00:11:10,320 --> 00:11:26,400 objective, or price, we'll look to expand and seek downside liquidity enago and subsequent price reaction after that, right back up to the double top reference
46 00:11:26,400 --> 00:11:38,310 point. So it's exactly on both price points here. And here. The tip off is, is when you're looking for double bottoms and double tops. The algorithm is going
47 00:11:38,310 --> 00:11:48,090 to know those reference points, even if time has passed, it knows how to find these reference points by consolidation, then it takes those projections and
48 00:11:48,120 --> 00:11:57,510 moves it above and below and expands down and above that far. And that's why you get these spike reversals on both sides of the marketplace and why you get the
49 00:11:57,510 --> 00:12:12,570 reactions as a consequence. So when you're looking at double tops and bottoms, while they may take time to eventually get through and trade through them. We
50 00:12:12,570 --> 00:12:22,830 never trust double bottoms and double tops, because we understand that the market makers and the interbank algorithm will go through these old highs and
51 00:12:22,830 --> 00:12:36,240 old lows, seeking liquidity below them in the form of sell stops above them in the form of buy stops. extreme ends of the range is where high probability
52 00:12:36,240 --> 00:12:45,870 trading is in the middle of the range where there's low probability. When we use double tops and double bottoms, were framing the extremes of the current trading
53 00:12:45,870 --> 00:12:54,750 range. Every time you look at charts going forward, you want to be highlighting these double tops and bottom areas because they're going to give you specific
54 00:12:55,140 --> 00:13:08,490 laser guided precision levels at which price will drive through above. For the buy stops and below for the sell stops. You can see on an hourly chart, it gives
55 00:13:08,490 --> 00:13:18,180 us a lot more framework instead of using like a 15 minute timeframe for intraday trading. We're usually it's a 10 and 20. Pip, run on stop usually we expect a 20
56 00:13:18,240 --> 00:13:27,090 Pip 10 to 20 pip range run above an old high or 10 to 20 Pip run below an old low for stop runs. When we're using higher timeframe charts like the hourly
57 00:13:27,090 --> 00:13:36,960 chart, you can't use a 1020 Pip grade, you have to use other ideas and the algorithm will reach for these reference points based on the double tops and
58 00:13:36,960 --> 00:13:51,900 double bottoms. And you can see that the ranges in this case. It's 48 pips. So it's moving that far based on the movement inside of the double bottom, or
59 00:13:51,900 --> 00:14:01,770 inside the consolidation. And in here, it's moving based on this move here, inside the consolidation before the double top is right now, notice the double
60 00:14:01,770 --> 00:14:12,750 top formed here and we had a reference point of this level, based on these double top highs in the rains projection inside of it. Price traded all this
61 00:14:12,750 --> 00:14:23,370 time. until Wednesday over here, it worked it out. So that's why I taught in September, what you should be focusing on. Look for levels that are clean like
62 00:14:23,370 --> 00:14:32,640 this. You may not have a trade today with that information. But it will give you insights at a later time when we start to run through it. Or once we have run
63 00:14:32,640 --> 00:14:40,710 through that level, then we can understand where it's going to reach for and contrary in view, if they've taken the buy stops already. What's the marketplace
64 00:14:40,710 --> 00:14:50,730 they're gonna reach for now. The sell stops. You can see that happening here. Go through your charts and I'm sure you'll be amazed at how many times you see this
65 00:14:50,730 --> 00:14:59,010 phenomenon take place. It's on all timeframes. So don't think just in a 15 minute or five minute basis, or an hourly look across all the timeframes and
66 00:14:59,010 --> 00:15:02,880 you'll see it's there. Until next time I wish you good luck and good trading