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69-ICT Mentorship Core Content - Month 7 - Short Term Trading Low Resistance Liquidity Runs Part 1

Last modified by Drunk Monkey on 2022-09-29 14:12
1 00:00:15,150 --> 00:00:22,530 ICT: Welcome to Lesson five folks, short term trading, this teaching is gonna be specifically talking about low resistance liquidity runs in consolidations.
2 00:00:29,460 --> 00:00:43,050 Okay, we have to preface it by a reminder of every setup that we look to execute on. And stock into the track, if you will, is based on time and price. And the
3 00:00:43,050 --> 00:00:58,920 time element is going to be related to the data ranges, last 60 days, 40 and 20. And we're going to be focusing on premium and discount PD arrays. So, for short
4 00:00:58,920 --> 00:01:13,860 term trading, we will excel in the range of the last three months. So the up to date range of 60 days is our look back period. And it's going to comprise every
5 00:01:13,860 --> 00:01:27,540 element that we need to frame a short term trade or one shot one kill. Now, as a reminder, when we deal with timing price, price moves from a premium to a
6 00:01:27,540 --> 00:01:40,710 discount array, or from a discount array to a premium array. In between these two realms of premium and discount, price will key off of a time element related
7 00:01:40,710 --> 00:01:55,140 to the data range. So we're blending both time and price, an element of the last 2014 60 Days to a institutional reference point in the realm of the pdra matrix.
8 00:02:03,390 --> 00:02:16,320 Okay, for our study and case study examples, we're gonna be looking at the cable, or British Pound USD. And this is a daily chart. And what we do is we
9 00:02:16,320 --> 00:02:27,210 define a market whether the it's it's trending, or it's in consolidation. And obviously, anyone with the average intelligence in terms of market analysis,
10 00:02:27,210 --> 00:02:35,880 they can tell looking at the British pound, we have been in a consolidation markets not been in a trending markets been in consolidation. So whenever we see
11 00:02:35,880 --> 00:02:46,770 a market, it's range bound, or it's cannot move outside of the current trading range that you're looking at. Any given time on a daily chart, you're looking at
12 00:02:46,770 --> 00:02:57,360 a frame of that three months ago, and looking back three months or 60 trading days, which is the relative if the data range that we use for maximum definition
13 00:02:57,420 --> 00:03:10,710 of look back. So when we have this framework, in terms of last 60 days, what we do is is we have to define the range in terms of a high and a low. Now what we
14 00:03:10,710 --> 00:03:20,460 do is we define the range in the form of its highest and lowest candlestick body. We're not concerned about the wicks so much. But we're primarily looking
15 00:03:20,460 --> 00:03:31,080 at the bodies of the candles. So I have here, the lowest and the highest in terms of the candlesticks bodies, and you can see those reference points here
16 00:03:31,650 --> 00:03:44,520 with the errors. And that's going to be our range that we're going to be framing all of our analysis concepts as it relates to one shot one kill. Okay, so what
17 00:03:44,520 --> 00:03:54,840 we'll have to do is we have to look at the market in this range. And we can use a tool that's on every platform, it's the Fibonacci. So we're gonna use our fib
18 00:03:54,840 --> 00:04:06,960 tool to determine the 50% of the range, and we're going to note that range, midpoint. So I'm dragging the FIB, from the highest body candle to the lowest
19 00:04:06,960 --> 00:04:16,830 body candle. In other words, I'm not using the lowest wick low in the highest wick Hi, I'm looking for the highest body. On the candles, either it's an open
20 00:04:16,830 --> 00:04:27,780 or close, I don't care which one it is, but wherever highest form of high, open or close, that's the one I'm looking for in the last 60 trading days. And I'm
21 00:04:27,780 --> 00:04:38,970 looking for the lowest open or closed in the last 60 trading days. That gives me my defined range in terms of consolidation. Then I note the 50% level and I draw
22 00:04:38,970 --> 00:04:40,920 a horizontal line on my daily chart.
23 00:04:49,590 --> 00:05:01,770 Next we have to determine the 50% levels of the upper and lower ranges. Anything above the 50% level that's going to be our area which We look for sell scenarios
24 00:05:01,770 --> 00:05:16,050 either by taking profit on Long's or short positions. And anything in the lower portion we're looking for Long's or covering short positions. Now the upper
25 00:05:16,050 --> 00:05:27,000 portion of the range from the highest body close or open to the midpoint that we defined by the total consolidation range, we measure that with the FIB as well.
26 00:05:27,510 --> 00:05:37,290 And I gave you two examples of where you could draw the anchor points with your fib but the arrows and you note the 50% level on your fib and you drop a
27 00:05:37,290 --> 00:05:57,360 horizontal line near. by noting this, we've now noted the upper range for the total consolidation range. Next, we do the same thing by noting the 50% level or
28 00:05:57,360 --> 00:06:10,050 the lower range between the midpoint of the total consolidation range to the lowest body close or open, noting it's 50% level as well on the fifth and I drop
29 00:06:10,050 --> 00:06:11,160 a horizontal line on that.
30 00:06:16,290 --> 00:06:30,240 Now, what we have here is by defining our consolidation range in this manner, it gives us a form of premium and discount identification. Anything above the
31 00:06:30,240 --> 00:06:40,890 midpoint or main 50% level or in this case, the gray that will be deemed as a premium range and anything below it will be deemed as a discount range.
32 00:06:46,650 --> 00:07:00,540 Next, we identify the PD arrays in each new range. Now I'm going to save us a lot of time and just apply everything from a monthly, a weekly, and daily. Okay,
33 00:07:00,540 --> 00:07:09,960 so now you can see all of the if the data ranges in from a form of a premium and discount have been applied to the chart. Now I want you to look at this for a
34 00:07:09,960 --> 00:07:14,850 moment before we go to the next slide. So pause the video here and really study what's been identified.
35 00:07:23,460 --> 00:07:36,210 So every premium and discount array provides setups in the overall pdra matrix. So what we're looking for is a element of time and price to blend. A setup for a
36 00:07:36,210 --> 00:07:50,190 buy or sell, we understand that the highest probability trades for shorts is by looking for any PD array in the premium range of this consolidation, so anything
37 00:07:50,190 --> 00:08:04,440 above the midpoint of the 50% level, or the gray level here, that's going to be ideal cell scenarios. If it is coupled with a PD array, for a premium market, we
38 00:08:04,440 --> 00:08:18,060 are blending both time and price, we would look for that move to be correlated to a later discount pdra When price moves that down to either the 50% level of
39 00:08:18,060 --> 00:08:32,580 the total consolidation or any level below the midpoint, or 50% level of consolidation. An example would be the fair value gap and bearish order block in
40 00:08:32,580 --> 00:08:51,510 the premium level around the February time period of 2017. And pairing that with a weekly bullish order block lean threshold in a discount in March of 2017.
41 00:08:59,550 --> 00:09:11,880 Now when we look at their quadrants like this, where it's been broken up into a premium and discount, we can also further define those quadrants into their own
42 00:09:11,880 --> 00:09:24,930 respective or unique premium and discount trading range. And what do I mean by that? Well, let's take a closer look. As you can see here, the lower quadrant
43 00:09:25,470 --> 00:09:39,930 can be divided into equal halves as well. And that in itself can be viewed from a premium and discount format. When we see these elements here, anything that
44 00:09:39,930 --> 00:09:52,500 forms as a discount PD array and a discount range, from this view or perspective, this is going to be high probability, short covering objectives, or
45 00:09:52,830 --> 00:10:06,600 it's going to be high probability new long positions, and any first profit would be best to taken along once it enters the premium range of this PDA array
46 00:10:06,600 --> 00:10:07,260 matrix.
47 00:10:13,230 --> 00:10:25,770 Again, moving up, the same thing can can be applied to the new quadrants, as shown here, ideal Long's are entered into discount level or in that discount
48 00:10:25,770 --> 00:10:42,420 range. And taking first profit would have to be best applied by taking your first long exit in the premium range of this pdra matrix. Now, what you're
49 00:10:42,420 --> 00:10:54,330 looking at is a daily chart. So, in the form of a four hour or one hour, you'll see that there's going to be premium PD arrays in those lower four hour and one
50 00:10:54,330 --> 00:11:02,640 hour timeframes that you could pair up first objectives for targets, I'm giving you the elements to look at through the scope of a daily chart.
51 00:11:08,910 --> 00:11:20,310 And finally, we can apply it to this area as well. Each path is further divided into new halves, but we're looking at it in the form of an algorithmic way of
52 00:11:20,310 --> 00:11:31,290 defining premium and discount. So when markets are creating discounts like this, again, this discount range is shown here, their high probability longs, and
53 00:11:31,290 --> 00:11:40,500 again, a four hour or one hour premium PD array as defined here. You can't see him daily, but you would drop down into a lower timeframe, four hour and one
54 00:11:40,500 --> 00:11:47,700 hour to take first profit on your lungs that you used to get entries on by buying in a discount area.
55 00:11:53,250 --> 00:12:04,320 Now we're above the midpoint of the total consolidation range. So now, even though we're above it, and technically in a overall premium market, we can still
56 00:12:04,320 --> 00:12:14,130 take Long's but it has to be defined in the scope as we're showing here, we have the overall consolidation, we divide it in half, then we divide those halves
57 00:12:14,130 --> 00:12:22,470 into halves as well. So we have quadrants, then those quadrants are divided in half as well as we're showing here and incremental increases moving further up
58 00:12:22,470 --> 00:12:33,810 the overall consolidation range by buying into discount range, and again taking first profit and a lower for our one our premium range coupled with a PD array
59 00:12:33,810 --> 00:12:45,570 that's premium based. Whereas if we were buying, for instance, the bullish order block mean threshold here in a discount. Now, overall, we're in a premium
60 00:12:45,570 --> 00:12:57,660 market. But this is still a possible long entry because we're in a lower portion of that total, larger premium range. So we still have room to reach for higher
61 00:12:58,230 --> 00:13:06,900 premium PD arrays. And honestly, we have reigns and reach for much higher objectives. So looking at it like this framing it what would otherwise be deemed
62 00:13:06,900 --> 00:13:17,520 as overbought, we don't view it like that. This is why indicators do not work. From a algorithmic perspective, looking at price ranges like this, it gives us a
63 00:13:17,520 --> 00:13:30,450 greater definition on how we can frame entries, and classify them as oversold or undervalued entries for Long's or overvalued or overbought entries for shorts.
64 00:13:32,160 --> 00:13:40,470 In this case, we could take a example of the daily bullish order block mean threshold, we could be buying there. And then once price trades up into the
65 00:13:40,470 --> 00:13:49,230 premium range, we could look for a four hour or one hour premium PDA rate the couple and exit with.
66 00:13:58,380 --> 00:14:08,520 And moving further up the consolidation range, we have a new discount and premium PD array matrix. And we could define this as well. And then what we're
67 00:14:08,520 --> 00:14:22,590 doing is we're coupling the range as defined by premium and discount with actual pdra. In the form of fair value gaps, bearish order blocks, weekly rejection
68 00:14:22,590 --> 00:14:31,860 blocks, all those things to the left of our chart, we're looking back that 2040 and 60 trading days for the up to date range. So we're blending both time and
69 00:14:31,860 --> 00:14:42,630 price in the form of premium and discount. So we're blending the elements of time price, we're looking at the market in scope of overbought, oversold but not
70 00:14:42,630 --> 00:14:53,880 in the context of an indicator. We're looking at it algorithmically in the scope of quadrants that are broken down into premium and discount. And by itself it
71 00:14:53,880 --> 00:15:05,610 doesn't mean anything. But when price trades down to a PDE array, whether it be a discount out for a premium. If we trade into that element, whether it be a
72 00:15:05,610 --> 00:15:16,500 bullish order block, a breaker, any of those things from the PD array matrix that we've taught you, if you're looking for a long, the highest probable
73 00:15:16,650 --> 00:15:29,490 entries for Long's again are entering in the discount range, and coupling it with a premium range PD array. It doesn't matter that we're in a premium range
74 00:15:29,490 --> 00:15:38,700 of the overall consolidation, because price can move back and forth and oscillate from the highest portion and many times make a slightly higher high
75 00:15:38,700 --> 00:15:46,020 and return back inside of the range. And you can go to the lowest low, move outside the range a little bit and come right back in the middle range as well.
76 00:15:46,260 --> 00:15:56,760 So we're anticipating the oscillation effect of price while it's in consolidation. But in that consolidation, there's smaller consolidations. So
77 00:15:56,760 --> 00:16:06,330 we're able to look at price in the view of overbought and oversold without the element of indicators, or relying on mathematically derived number crunching
78 00:16:06,330 --> 00:16:18,270 lines. What we're looking for is range defined in the overall context of the consolidation as we've had here, we're in a the upper half of the portion of the
79 00:16:18,270 --> 00:16:28,650 larger consolidation. And by itself, that would many times filter out by signals from anyone else that would look for overbought oversold. But for us, we can
80 00:16:28,650 --> 00:16:41,700 frame this with the oversold condition. Even in the elements of a premium market. It's a discount market in a overall premium market that still has room
81 00:16:41,700 --> 00:16:51,090 to go. That's basically in other words, a layman's way of approaching a definition. But whatever we do in terms of entry or exits, we're looking for
82 00:16:51,090 --> 00:17:01,290 elements to frame the discount PD arrays, that means both order blocks breakers. Fair Value gaps below us and price, trading below an old low to take our sell
83 00:17:01,290 --> 00:17:14,280 stops. We're using those ideas to frame long positions and taking first profits at a four hour or one hour basis once it enters the premium pdra Matrix range.
84 00:17:20,099 --> 00:17:29,549 And finally, at the top of the larger consolidation, we can see that there is still an opportunity where one could be a buyer. But the opportunities fall off
85 00:17:29,549 --> 00:17:44,609 precipitously in terms of probabilities. And you can see now that the premium array area and the words per pdra, matrix, bears waterblocks, old highs, bearish
86 00:17:44,609 --> 00:17:54,929 breakers, bearish mitigation blocks all those ideas, they're going to be much more influential in terms of price action, and you'll see much more dynamic
87 00:17:54,929 --> 00:18:04,709 price action from that side of the spectrum. And you can see that in the form of the weekly rejection block prices traded from in March of 2017. We saw also a
88 00:18:04,709 --> 00:18:13,589 move away from the fair value gap and bearish order block again. And it's largely hinged on the fact that we're in an upper portion of the overall
89 00:18:13,589 --> 00:18:29,009 consolidation. And we made it up into that last smallest portion of the premium market or premium PD array matrix. The shaded area that says premium, that's the
90 00:18:29,009 --> 00:18:39,959 highest portion or last little segment of price in this consolidation. So anytime price reaches up into that, it's going to have a much more impactful
91 00:18:40,199 --> 00:18:51,389 response in price when it trades to a bearish PD array, or a premium PD array. So we see that happening with a weekly rejection block. It also took out an old
92 00:18:51,389 --> 00:19:02,189 high formed in February. So there's many instances there we can see why price had a strong rejection. Also, keying off of that last midpoint that's dividing
93 00:19:02,189 --> 00:19:11,819 the premium and discount levels noted here. We had a really significant sell off and it trades all the way back down into a daily bullish order block mean
94 00:19:11,819 --> 00:19:22,469 threshold. Then we had a 100 Pip move that we call for in our day to day meetings in charts. And you see the response, it trades right back up to what
95 00:19:22,949 --> 00:19:34,229 the daily bearish order block and it also overlaps with the premium 50% level. So there's a lot of things that you need to be able to look at conceptually and
96 00:19:34,229 --> 00:19:43,379 you have to do it on your own time. I can give you a plethora of examples over and over and over again. But this is one teaching that I've given you enough. If
97 00:19:43,379 --> 00:19:52,529 you break your charts down and do your own study. Yes, this is the part that requires your work. This takes study time it takes you wanting to be in the
98 00:19:52,529 --> 00:19:59,249 charts looking for it because I'm not going to be there when we separate. You're going to have to do these things on your own. You have to find these these
99 00:19:59,249 --> 00:20:07,469 opportunities on your Don't. But by having this element, what we're doing is we're looking for low resistance liquidity runs from one PD array to another
100 00:20:07,649 --> 00:20:16,769 from a discount to a premium. But we're coupling it with looking back over the last three months because one shot one kill, uses and excels inside the last
101 00:20:16,769 --> 00:20:27,119 three months of trading. So when we look back the last 20, the last 40 and Alexis 60 trading days, it gives us framework to say Okay, where is the premium
102 00:20:27,149 --> 00:20:39,389 PDA array matrix, leading me to in terms of what I can sell to, and what I can reach for, for longs to couple exits with, or where are my discount PDA array
103 00:20:39,389 --> 00:20:50,009 matrix, and where are those levels, I can cover my short set. And I'm going to look back over the last 2040 and 60 days to pair those things up. I'm also now
104 00:20:50,009 --> 00:21:00,269 applying ranges in terms of the PD array matrix, whether be a premium or discount market. So allows me to build context of what I'm looking for as an
105 00:21:00,269 --> 00:21:14,219 entry and how I can look for my first objective in targeting. Now in an ideal world, the best buys are going to be in the lower portion or lower half of the
106 00:21:14,219 --> 00:21:21,089 overall consolidation. And in the lower quadrant, in other words, the discount matrix.
107 00:21:25,619 --> 00:21:35,909 And the highest probability trades for selling short or taking long exits are going to be in the premium range divided by the upper portion. So in other
108 00:21:35,909 --> 00:21:45,119 words, that last quadrant, that's going to be your best cells, the highest probability cells or highest probability exits for lungs, that's going to be
109 00:21:45,119 --> 00:21:54,809 your best scenario, that's where the algorithm is going to reach for, for selling or exiting on Long's. And any long position in here, again, you have to
110 00:21:54,809 --> 00:22:01,799 take it with a grain of salt, you have to know the overall range you're in because just because you see a train to a down candle, you have to have an
111 00:22:01,799 --> 00:22:12,509 understanding that it has a room to go up. And in this case, you can see with the daily bullish order block mean threshold, that 100 Pip rally was a response
112 00:22:12,539 --> 00:22:23,309 off of yes, a PDA Ray, discount, bullish order block, but it trades up to a daily bearish order block. But it trades up into that bearish order block once
113 00:22:23,309 --> 00:22:34,109 it gets into the premium range. That also gives us a high probability target. Now, yes, it's one shot one kill scenario. And we're trying to trade the weekly
114 00:22:34,109 --> 00:22:42,299 range. But one shot one kill is not defined by getting in on a Monday and getting out on Friday. one shot one kill is a couple of days of trading and
115 00:22:42,299 --> 00:22:57,329 short term trading, it can be as little as one day and as long as a week. And finally, when we look at the range in the middle, this can be the areas where
116 00:22:57,329 --> 00:23:06,299 you're going to get chopped up the most. Because if you're looking at a range incorrectly, if you've already defined the range, and you're looking at PDA
117 00:23:06,299 --> 00:23:16,229 array of premium and discount that have already been traded to enlarge if you look at a down candle in a discount market, normally, that may be a bullish
118 00:23:16,229 --> 00:23:23,519 order block. But if it's already been traded to the likelihood of it being a bullish or a block with high probability falls off, because it's already been
119 00:23:23,549 --> 00:23:36,809 used, we want to use a new pdra in a discount or premium market that has not been traded to because the algorithm knows price has been there once before, say
120 00:23:36,809 --> 00:23:47,099 it's going to seek new liquidity and expand to allow the banks to take participation in a move higher or lower. So looking at the range like this as we
121 00:23:47,099 --> 00:23:56,249 defined it, if you're trading in the middle of the range like this, and you're not strong and your directional bias or where the market may reach for next. In
122 00:23:56,249 --> 00:24:03,719 other words, an understanding where open float is where's the buy stops and the sell stops. If you're not really strong with that, if you're trading in this
123 00:24:03,719 --> 00:24:15,149 range here, you're going to get chopped up a lot. Over time, you'll learn how to better approach these specific premium discount ranges. But when you look at the
124 00:24:15,179 --> 00:24:25,469 outer rim, when we are just showing the previous slide, the higher you can get up in the overall consolidation in a premium market, the better your short
125 00:24:25,469 --> 00:24:37,049 positions are going to be and the easier it's going to be to reach for a profitable discount pdra The lower you are in the total consolidation the better
126 00:24:37,049 --> 00:24:48,179 your discount long entries are going to be and it's easier for you to get to a profitable premium pdra blending the two time and price working in a range
127 00:24:48,179 --> 00:24:59,219 environment like this gives you context and you can find very easy low resistance liquidity runs between one PD array to another and understanding the
128 00:24:59,219 --> 00:25:00,989 element of time In price