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70-ICT Mentorship Core Content - Month 7 - Short Term Trading Low Resistance Liquidity Runs Part 2

Last modified by Drunk Monkey on 2022-10-03 13:05
1 00:00:04,440 --> 00:00:12,720 ICT: Welcome to the ICT mentorship short term trading lesson number six, teaching low resistance liquidity runs in trending conditions.
2 00:00:12,960 --> 00:00:28,050 When it came much like we mentioned in the low resistance liquidity runs in consolidations. The same thing applies obviously, in training conditions,
3 00:00:28,230 --> 00:00:38,490 because we understand that the market moves from a time in price theory. But looking back 2014 60 trading days for up to date ranges and referencing time.
4 00:00:39,300 --> 00:00:50,700 And for one shot one kill or short term trading, we focus primarily in the last three months, for the most salient institutional reference points. We key off of
5 00:00:50,730 --> 00:01:00,930 obviously, the PDA arrays based on a premium or discount market. And we're looking to trade from one PD array to the next, ideally, from a discount to a
6 00:01:00,930 --> 00:01:03,450 premium range that can be easily defined.
7 00:01:08,580 --> 00:01:17,400 Okay, for our case study for liquidity runs and trending conditions, we're gonna be looking at the pound again. And this time, we're gonna be looking at a
8 00:01:17,430 --> 00:01:29,310 different fractal of the larger consolidation. So we're going to be looking at a smaller segment of this price action. And because prices universally fractal,
9 00:01:29,640 --> 00:01:40,500 what could be a consolidation on one timeframe can be a trending environment in another. So we're only going to add RPD arrays from the monthly, weekly daily.
10 00:01:41,010 --> 00:01:52,290 And we're going to use this information in conjunction with the training environment conditions that we use to trade from a low end discount to a high
11 00:01:52,290 --> 00:02:04,080 end premium market. In other words, we're going to be looking at an example buying during a Upswing or a trending bull market. Our case study is going to be
12 00:02:04,080 --> 00:02:14,550 focusing on this price leg here, as identified in the shaded area. And this is going to be our trending condition. Now before we get into it, notice that we
13 00:02:14,550 --> 00:02:28,620 are originating the basis of that swing up from a deep discount market, overall departure and consolidation, we can see clearly that the market has found
14 00:02:28,680 --> 00:02:38,520 support. And because we're in a discount market, the market generally is going to want to move to a premium, either by a short term basis, or Aimia term basis
15 00:02:38,520 --> 00:02:49,740 or long term basis. So since we're looking for short term trades, we know that predominantly, the market in the March time period is in a oversold condition,
16 00:02:50,460 --> 00:03:00,720 an oversold condition are defined as we refer to it as a discount market. So the market is going to want to reach up into some measure of a premium. And if
17 00:03:00,720 --> 00:03:09,630 there's a displacement and the market trades higher, we'll know that because the market is showing aggressive nature to trade higher. And if that is being shown
18 00:03:09,630 --> 00:03:19,200 in price, then we know that institutions are funneling money, and they're also building positions in the up move. Now obviously, if they are building long
19 00:03:19,200 --> 00:03:26,700 positions and the market is accelerating on the upside, they're reaching for some institutional reference point where they can unload that long position at a
20 00:03:26,700 --> 00:03:37,980 profitable point, they have to find willing buyers at a higher level. So we have to look for premium PD arrays were willing participants in the marketplace will
21 00:03:37,980 --> 00:03:53,820 want to buy from lower holding long holder, or in this case, smart money. Okay, for one shot one kill, we're going to be dealing specifically with the four hour
22 00:03:53,820 --> 00:04:04,560 chart and on the four hour chart is, in my opinion, the easiest trading timeframe for one shot one kill setups or how to frame that setup. Because it's
23 00:04:04,560 --> 00:04:16,200 my cup of tea, if you will, it's my forte, my my go to trading model, I have learned that the four hour chart can give us all the insights that's necessary
24 00:04:16,470 --> 00:04:26,640 for using all the details and components to finding one shot one kill or short term trading with high probability trading conditions. So by using a four hour
25 00:04:26,640 --> 00:04:38,190 chart, it's easier to frame a one shot one kill or short term trade in this timeframe, because you can see with a simple couple clicks of your MT four
26 00:04:38,190 --> 00:04:50,160 platform and if your platform doesn't use this, whatever the equivalent would be, but if you hold down, control and touch the letter Y it'll give you the day
27 00:04:50,160 --> 00:05:00,000 dividers. Okay. And specifically when you're in for our it's not giving you the daily dividers, it's actually giving you the weekly dividers. So everyone
28 00:05:00,000 --> 00:05:09,180 Artikel dotted line here represents the beginning and end of a new trading week. When we look at price like this, and we have the PD arrays on our chart, it's
29 00:05:09,180 --> 00:05:21,810 very easy to see where price will reach up to notice that we're also looking at this pair with the gradients shown across all of the discount and premium
30 00:05:21,810 --> 00:05:31,020 ranges. So we've not only had the discount premium range divided, and then we have the upper portion divided, and then we have those smaller divisions in half
31 00:05:31,020 --> 00:05:41,610 as well. So we can see how the market has different levels of progressive premium and progressive discount lower levels. In other words, lower levels of
32 00:05:41,640 --> 00:05:51,510 discount and higher levels of premium. When we look at the four hour chart, and we can see a PD array, for instance, a discount PD array, this can be in the
33 00:05:51,510 --> 00:06:05,490 form of a bullish order block, and old low a fair value gap, a breaker any of these types of PD arrays. If we're looking to go long, if that occurs, or forms
34 00:06:05,490 --> 00:06:09,030 near a divider level,
35 00:06:09,240 --> 00:06:19,410 or a quadrant level, as I call it, you'll be able to see high probability movement away from that level and then reach for an opposing level. For
36 00:06:19,410 --> 00:06:34,950 instance, if we look at the market in March 15, where price had come down into the fair value gap, it also trades back to a breaker seen here, that move
37 00:06:35,460 --> 00:06:49,320 trading to that level gives us an ideal scenario to get long, we may have missed the entry at a lower level. But we can see this return to a breaker or fair
38 00:06:49,320 --> 00:07:01,950 value. And market explodes on the upside and trades higher. You don't need the absolute low in a bullish weekly close or up weekly range to be a one shot one
39 00:07:01,950 --> 00:07:12,660 kill. You just need one setup that you wait for that makes logical sense. That gives you a realistic PIP objective. And I think realistically, for starters,
40 00:07:12,690 --> 00:07:21,960 you should be looking for 30 to 50 pips a week those types of scenarios, and then graduate into 50 to 75 and 75 to 100 pips per week, I wouldn't try to go
41 00:07:21,990 --> 00:07:31,890 more than 100 pips and I like to live in a 50 to 75 pip range myself personally, but you do to suit yourself, I just know that you're not always going to get big
42 00:07:31,890 --> 00:07:38,580 weekly ranges, sometimes you'll get small weekly ranges, and it's gonna be harder for you to get that 100 pip range, if it only moves about 150 pips for
43 00:07:38,580 --> 00:07:47,940 the week. So you're going to really define a perfect entry and exit strategy to get that I'm not saying it can't be done, folks, but you just give yourself some
44 00:07:47,940 --> 00:07:57,300 flexibility on both ends getting in and getting out. And so if you're looking for the lion's portion of that weekly range, you know, taking a portion of that
45 00:07:57,900 --> 00:07:59,610 is all it's necessary for your career.
46 00:08:05,070 --> 00:08:13,290 So if you look at the four hour chart, what we're doing is we're encapsulating the weekly range. And you can see this is the entire weekly range for this
47 00:08:13,290 --> 00:08:25,980 particular week, shaded in yellow, you can also see that the market reaches up into logical areas of premium PD arrays. And we'll cover that in a few moments.
48 00:08:26,430 --> 00:08:35,670 But look at this for a second and think about the power three that I teach, where if the markets bullish, the open will be near the low of the range, and
49 00:08:35,670 --> 00:08:45,630 the close will be near the high of the range. You can see that here. The market has a initial move lower than the beginning of the week, makes the low of the
50 00:08:45,630 --> 00:08:56,430 week and then explodes on the upside, it gives a few not many a few high probability entry points. If you missed a very low point, that's not a problem.
51 00:08:56,790 --> 00:09:07,350 Look at the four hour chart with all of the monthly weekly daily PD arrays. Now obviously on the four hour to keep this chart clean. I didn't add the four hour
52 00:09:07,380 --> 00:09:17,610 PD arrays, you can add them and you'll have more detail on this chart and you'll have more insights to trade off of but to keep things germane and only on the
53 00:09:17,610 --> 00:09:32,370 higher timeframe. We're just using the PD arrays from the monthly weekly and daily levels. And subsequent week is seen here. Same scenario the market trades
54 00:09:32,400 --> 00:09:43,320 down initially making a low of the week and look at the response off of the divider between the total macro consolidation that we did and we discussed in
55 00:09:43,320 --> 00:09:58,440 the beginning of lesson number five for cable that removing that movement down into the the midway point or equilibrium of the overall consolidation that is a
56 00:09:58,860 --> 00:10:08,160 high probability level In itself, now, if you don't understand how to break a range down or grade a range or price swing, you're going to miss these types of
57 00:10:08,160 --> 00:10:14,250 moves. So you have to always look at the trading ranges that the market is trading in, look at the highest high and the lowest low in the form of the
58 00:10:14,250 --> 00:10:21,600 bodies, not the wicks. And define that. And then once you have that, that's like your master blueprint, if you will, and you start breaking that down. Because
59 00:10:21,600 --> 00:10:30,210 the algorithm is going to work within that range, it's going to go back to reference points based on time and price, where prices already traded, where it
60 00:10:30,210 --> 00:10:46,080 hasn't been traded to, and reference to time. So we're looking for that same move that originated in March 14, going into the 15th, that low formed in cable
61 00:10:47,460 --> 00:10:59,490 that was in a discount market. The second week that shaded in yellow here sees us reaching up into a halfway point of the upper portion of the total range, or
62 00:10:59,490 --> 00:11:13,320 in other words, half of the premium range that we defined by the daily chart in its larger trading range. It moves from one level of logical discount to another
63 00:11:13,320 --> 00:11:24,060 level of logical premium, it's very discernible, you can clearly see it, just by disgracing over the chart real quickly, you're not going to get the benefit of
64 00:11:24,060 --> 00:11:33,180 looking at price like this, if you if you don't study it, basically, and see the reactions out prices moving and grab gravitating towards how I've broken down
65 00:11:33,240 --> 00:11:45,360 the range. They act like magnets, if you will, there's a component to trading that people like to put on a truck I and I used to use, I used to trade with it
66 00:11:45,360 --> 00:11:45,810 as well.
67 00:11:49,080 --> 00:11:56,940 I used to trade with it as well. They're called pivot points. And while they still are called pivot points, to be honest, but they came from the floor
68 00:11:56,940 --> 00:12:06,240 traders and pit traders, where they would do calculations based on the high and low and adding specific measurements to get the projected highs and lows and
69 00:12:06,240 --> 00:12:17,820 suppose it support resistance. Now, that was like a self fulfilling prophecy. But when you look at the grades of a trading range or a price swing, it helps
70 00:12:17,820 --> 00:12:27,630 you really discern where the market has its highest probable support or resistance without really having a logical old reference point like when we do
71 00:12:27,690 --> 00:12:35,700 support resistance, we look for an old level, we draw it out in time. And just because it did something back then we expect it to do it again in the future.
72 00:12:35,940 --> 00:12:43,620 And you've seen how that's worked out in your own trading, it doesn't have any consistency. So you have to look at what the institutions are doing and look
73 00:12:43,620 --> 00:12:53,700 behind the scenes. And what's the institutional order flow. So if we can grade a price swing from a premium or discount measure, we can see the market was
74 00:12:53,700 --> 00:13:03,720 clearly in a discount range in the 14th of March. So by trading down there trading into the fair value got to shaded in green, the natural response would
75 00:13:03,720 --> 00:13:15,570 be see price trade higher, it does that. And then it starts finding new levels of support institutionally based based on a discount. PD array, which we're
76 00:13:15,570 --> 00:13:26,610 looking for reasons to support price could be in a form of a bullish order block, fair value gap, a breaker, a mitigation block, it can be a old low, or an
77 00:13:26,610 --> 00:13:39,420 old high once broken now turning support all those ideas, okay, lend well to supporting price going higher, and you start working towards a premium market,
78 00:13:39,870 --> 00:13:51,180 Intro week, the more we get closer to a another level of premium based on defining your range and defining your pricing and grading it you know what's
79 00:13:51,180 --> 00:13:59,130 breaking it down into quadrants and in splitting and a half when the market reaches for these measures, okay, it's almost like a mile marker for the
80 00:13:59,130 --> 00:14:11,010 algorithm, it will reach for it and then give the participants at the bank opportunities to facilitate trade. If it breaks through a level, okay, and it
81 00:14:11,010 --> 00:14:19,620 trades right through it, you know that it's going to most likely reach for the next level up. A very rarely do you see any midway points between the grades
82 00:14:19,620 --> 00:14:28,110 that have already given you here are the way we define the market breaking it down and cutting the the ranges in half. The way we did that in less than five.
83 00:14:28,140 --> 00:14:34,260 That's the same levels we're seeing here. So I didn't add anything new except for the shading of the yellow box. I'm just giving you the context behind the
84 00:14:34,260 --> 00:14:40,410 market and why it was doing what it was doing. Now clearly, obviously one would say okay, well this is obvious. You know, armchair quarterbacking, it's
85 00:14:40,410 --> 00:14:49,680 hindsight. But if you go through the charts, it's the same thing happening almost all the time. So by having the theory behind why it's doing what it's
86 00:14:49,680 --> 00:15:07,260 doing, we can look for how each week, this same component, or element to one shot one kill will repeat itself. Looking closer. Looking closer, we can see
87 00:15:07,260 --> 00:15:17,160 that each week that the market, we trade is going to seek to trade from one PD array to another, it will trade from one quadrant to another with the least
88 00:15:17,160 --> 00:15:26,700 resistance, it can move from premium to discount or discount to premium market valuation. Now, the determination of whether it's going to move higher or lower
89 00:15:26,730 --> 00:15:34,020 is based on where we're trading it as a time when you're sitting down from the charts. If we're in a premium market, it means we're really pushed up, we're
90 00:15:34,020 --> 00:15:43,620 into a logical area of where price has shown a willingness to sell off before it's away from its lowest levels of historical buys, or where old loads have
91 00:15:43,620 --> 00:15:52,680 formed, basically, how we framed premium and discount which we've already taught in this mentorship. But when we have the levels on our chart, and it's in a four
92 00:15:52,680 --> 00:16:02,250 hour basis, it gives us context, it tells us how we can anticipate the four weekly rains because these daily, or in this case, on a four hour, it's a weekly
93 00:16:02,250 --> 00:16:12,420 divider, by hitting Ctrl. And tapping why you get these vertical lines on Mt four, what you'll end up doing is each week before the market starts trading on
94 00:16:12,420 --> 00:16:20,730 a Sunday, what you want to do is just load up your four hour chart, have your PDA arrays loaded on there. And make notations of where you think price may
95 00:16:20,730 --> 00:16:27,870 logically reach up to when it's in a discount market, or where it may reach down to when it's in a premium market.
96 00:16:29,250 --> 00:16:40,020 By looking at where the PD arrays are in a four hour chart, it's almost like you can anticipate what the weekly range will do in a completed sense. In other
97 00:16:40,020 --> 00:16:49,680 words, what the market looks like after the week closes on Friday. And in a good example, or exercise in this case would be to do this every single week, try to
98 00:16:49,680 --> 00:16:57,960 anticipate what the weekly range will look like. Now, you're not going to get this all the time is not going to be perfect. And many times you're not gonna be
99 00:16:57,960 --> 00:17:06,900 close to it at all. But what it will do is it will help build your anticipatory price skills, which is necessary to start seeing this stuff before it happens.
100 00:17:07,470 --> 00:17:15,660 You're trading in probabilities, we're looking at a statistical edge that the market if it's in a premium, it's most likely going to want to trade lower.
101 00:17:15,810 --> 00:17:24,720 Where does they trade down to? It's not just looking for a support level? It's looking for an old area of institutional order flow? Where was their old buying?
102 00:17:24,750 --> 00:17:34,680 Where was their old institutional order flow seen in the marketplace? And it's going to be in the form of a PDE array. So we look at our pdra matrix, determine
103 00:17:34,710 --> 00:17:44,760 what are those PDE arrays that exist in your chart at the time, and you look at how reasonable it is for it to reach down into or up into that level between the
104 00:17:44,760 --> 00:17:54,120 two vertical lines. You only have Monday through Friday, well, Sunday's opening till Friday. So you have an element of time that you have to work within. So
105 00:17:54,240 --> 00:18:04,110 because it's relatively short term in nature, it's easy to predict where the market may go between a Monday and a Friday. And you don't have to have the
106 00:18:04,110 --> 00:18:11,190 highest highs and you don't have to have the lowest low, you just need to know what's the probable direction, and what levels will it most likely key off of.
107 00:18:11,550 --> 00:18:19,530 That's the benefit of using a four hour chart and using the PD erase from the monthly, weekly and daily and four hour if you want to have all that on here.
108 00:18:19,530 --> 00:18:29,250 But nonetheless, if you key off of daily, weekly and monthly PD arrays on a four hour chart, you're gonna get the highest probable trade reactions. And that's
109 00:18:29,250 --> 00:18:36,780 where the institutions step in. Now, when you refine it down to a lower timeframe, obviously in an hourly chart, you get more detail, you get more
110 00:18:36,780 --> 00:18:48,150 opportunities to reduce the risk, and you might get another opportunity if you miss the overall daily or weekly PD array. And then what if you missed that
111 00:18:48,150 --> 00:18:57,900 entry, it may give you one more shot to get on it with an hourly chart. But it's better if you just train yourself to work off of a four hour chart and start to
112 00:18:57,900 --> 00:19:10,260 envision and kind of more or less predict what the weekly range gonna look like. Here's an example here where the market trades down into the fair value gap.
113 00:19:10,440 --> 00:19:22,230 We're in a deep discount market. And for that week, it trades up into a bearish order block and the subsequent week we have the price trading down into the
114 00:19:22,650 --> 00:19:33,720 equilibrium price point of the total macro range from the daily chart that we showed in lesson five and also trades back down into an old bullish order block
115 00:19:33,720 --> 00:19:49,470 from the previous week. The market trades up and closes in a fair value gap seen back in February. Now taking this information and refine it even further down
116 00:19:49,470 --> 00:19:58,980 into a 60 minute chart, you'll start to see a little bit more definition in the market. And looking closely you'll see that there are many times you'll see
117 00:19:58,980 --> 00:20:08,760 breakers and many gauge blocks that didn't exist on your four hour chart. So anything less than a one hour chart, when you look for one shot, one kill really
118 00:20:08,790 --> 00:20:19,740 reduces the effectiveness because what you're looking for is that impulse price swing to help facilitate the weekly range or complete the weekly range. Anything
119 00:20:19,740 --> 00:20:29,490 less than a 60 minute chart, you're really just day trading or you're scalping. So that's why you want to focus primarily on a four hour chart for the the
120 00:20:29,550 --> 00:20:37,530 levels you want to key off of. But once you get down into an hourly chart, then you can break the market down into a day by day basis, then we can start
121 00:20:37,980 --> 00:20:48,660 incorporating day of week phenomenon. So if we're looking for a bullish market, moving from a discount market to a premium each week, what we're looking
122 00:20:48,660 --> 00:20:55,770 essentially for is the low of the week to form between Monday, Tuesday and Wednesday, they are the highest probable trading days in this environment. So
123 00:20:55,770 --> 00:21:03,420 the criteria is in a trending environment, we expect birth price to trade from a discount to a premium. In this case, we will reverse everything, we were
124 00:21:03,450 --> 00:21:11,880 expecting lower prices from a premium down to a discount market. But we have our PDA raise on our chart, and our levels and our quadrants on so we have all of
125 00:21:11,880 --> 00:21:15,510 our natural support resistance, which is the grading of all of
126 00:21:16,650 --> 00:21:27,690 the levels that we did in lesson five, and then incorporating the actual PD arrays and deference to the if the data range in the last 6020 and 40 days, the
127 00:21:27,690 --> 00:21:37,830 lower the week. In bullish conditions and training environments we look for the Monday, Tuesday or Wednesday low to form in the first week we see here Monday,
128 00:21:37,830 --> 00:21:47,880 Tuesday and Wednesday, the low forms on Tuesday. Notice the low forms off of a logical PDA array in a discount fashion trades down to a fair value gap that's
129 00:21:47,880 --> 00:21:58,650 seen on the daily chart. So price trades up creates a high that slightly higher than Monday's high on Wednesday, and then breaks through it and creates a higher
130 00:21:58,650 --> 00:22:08,280 high for the week. So the intra week high is formed on Wednesday. Notice on Thursday, it trades down into the fair value gap into a mitigation block also
131 00:22:08,280 --> 00:22:16,140 from Wednesday's intraday trading. And the market does what another impulse praying price selling higher all the way into Thursday goes into consolidation.
132 00:22:16,380 --> 00:22:28,230 And then Friday it has a small little Judas swing, trades down into equilibrium and then expands on the upside going into the clothes. The second week or
133 00:22:28,230 --> 00:22:39,570 subsequent week in our case study. We see the low forms on Monday after it hits the equilibrium price point of the overall macro consolidation as we defined in
134 00:22:39,570 --> 00:22:51,150 lesson number five. And then Tuesday we have a read trade back down into that same old low so we had another retouch of the equilibrium price point and then
135 00:22:51,240 --> 00:23:01,440 acceleration on the upside. And then Wednesday we have another opportunity to get long trading off of a breaker that's formed on that week's Monday. So we
136 00:23:01,440 --> 00:23:17,280 have Wednesday's trading trading down into a breaker bearish bullish breaker formed on Mondays high, Wednesday's low is formed off of that trades higher. And
137 00:23:17,310 --> 00:23:29,040 notice also, while we had slightly bullishness on Thursday, and then a relatively flat, closed on that week's Friday. One of the things I want you to
138 00:23:29,070 --> 00:23:40,200 see is when we go through this, this process, you're going to quickly learn that typically, the weekly ranges, they have a 30 to 50% of the weekly range
139 00:23:40,200 --> 00:23:52,080 completed between Monday to Wednesday, and always by London close on Wednesday 30 to 50%. Generally, the range is completed. So what does that mean? If we have
140 00:23:52,260 --> 00:24:04,980 the willingness to look for Long's only we expect the market from a discount to a premium to unfold for the week. If we do not capture the long, either Monday,
141 00:24:04,980 --> 00:24:16,560 Tuesday or Wednesday, and has happened to potentially form and we've seen some price action to suggest that that weekly range is going to be close or bullish
142 00:24:16,560 --> 00:24:24,450 as we expect it but we didn't get to trade on. Maybe we were stopped out. Maybe we missed it all together. Or maybe we were wrong. And we found out later in the
143 00:24:24,450 --> 00:24:31,470 week that oh yeah, this is probably what's gonna happen now because that's going to happen as well. You may expect something to unfold for the week, and then it
144 00:24:31,470 --> 00:24:40,200 doesn't do that and you have to be flexible and change gears and we're going to talk about that and lesson number seven. But if you've missed the Monday through
145 00:24:40,200 --> 00:24:52,050 Wednesday phenomenon, and the markets already traded, just know that it's important not to get PIP drunk, trying to get a lion's portion of the move by
146 00:24:52,050 --> 00:25:06,330 Friday's close. Because the weekly range may end up being smaller or less volatile than you've anticipated. So, just know that generally, a third or half
147 00:25:06,330 --> 00:25:17,640 of the weekly range is done by Wednesday's London close. And don't expect a massive move higher or lower in in the last few days of the trading week.
148 00:25:18,390 --> 00:25:25,920 Generally, if you get an explosive move usually on Tuesday or Wednesday, Thursday may see a little bit of follow up and follow through. But then Friday
149 00:25:25,920 --> 00:25:33,390 has either retracement or does what you see here in the second week, where it's basically a neutral close. It doesn't really do anything more stunning than what
150 00:25:33,390 --> 00:25:44,070 was seen in Thursday or Wednesday trading. So we're going to build on the idea of this and incorporate how to know when there's going to be an intra week
151 00:25:44,100 --> 00:25:48,450 reversal. So until next lesson, I wish you good luck and good trading