ICT Charter PAM 6.3 - Supplementary Lesson
Last modified by Drunk Monkey on 2024-02-09 09:34
Outline
00:06 - Market maker models and long-term market analysis.
- ICT discusses long-term market maker buy and sell models, mentioning gold market distribution.
- ICT discusses market maker models and their relevance to higher timeframes.
03:52 - Gold market analysis and trading strategies.
- ICT highlights the alignment of weekly chart patterns with previous areas of distribution, indicating potential rebalancing opportunities.
- Analyst identifies areas of accumulation and distribution in gold market.
08:21 - Gold and dollar index correlation.
- ICT identifies a potential entry point for a long position in gold based on accumulation and support.
- ICT discusses the dollar index and gold, highlighting their recent price action and potential future movements.
- ICT suggests using Colico to accumulate short positions and potentially take out lows in a prolonged bull move.
14:29 - Market making principles and gold price analysis.
- ICT explains how price action in the gold market demonstrates market making principles, with price moving in contraction and expansion phases.
- ICT provides an example of how the dollar could maintain its daily range while gold rallies, using a market maker bimodal distribution.
17:19 - Using weekly charts for swing trading.
- ICT discusses using weekly charts for swing trades, capturing huge moves.
- ICT identifies a fair value gap in a weekly chart and provides a trading plan for model number six.
Transcription
| 1 | 00:00:06 --> 00:00:16 | ICT: Okay, folks, welcome back. This is model number six supplementary lesson. And the model number six, obviously is dealing specifically with market maker |
| 2 | 00:00:16 --> 00:00:26 | buy and sell models. And we talk a lot about scalping and day trading in one shot, one kill in swing trading, but I want to kind of like touch on a little |
| 3 | 00:00:26 --> 00:00:37 | bit of position trading. And if some of you have that affinity for that longer term, analysis style. So right away, you should see this as a market maker by |
| 4 | 00:00:37 --> 00:00:46 | model. And the reason why it took me so long getting to this lesson, I apologize, we didn't hear the very last day where it can be delivered. So we are |
| 5 | 00:00:46 --> 00:01:02 | on the 31st of July 2019. And what I was looking for was the lesson in which between April in June, something in there, one of the videos, I mentioned, this |
| 6 | 00:01:02 --> 00:01:06 | actual setup here, and I just can't recall exactly which video it was. |
| 7 | 00:01:08 --> 00:01:21 | I want to talk about how from a long term perspective, and I was going to add some notes on this as we go. I'll just Java and a little bit as I'm doing |
| 8 | 00:01:22 --> 00:01:34 | the the gold market, I mentioned at the time of the recording, and again, I don't I don't have the recording on the top my head right now. But it's in the |
| 9 | 00:01:34 --> 00:01:43 | mentorship library. Because the commentary I gave was along the lines like this, I was talking about how we did have a smart man rebirth, so low risk by Re |
| 10 | 00:01:43 --> 00:01:58 | accumulation, and the market should accumulate in here. Okay, because of this area of distribution. And I mentioned specifically with reference to the dollar |
| 11 | 00:01:58 --> 00:02:12 | index that it could go higher for gold, in other words, versus the dollar. And the dollar would remain in the range. So that's how I know that the weekly |
| 12 | 00:02:12 --> 00:02:24 | commentary videos has the dimension of it. I just don't recall exactly which one it is. So can you help me help me find that I'd appreciate it, I'd like to be |
| 13 | 00:02:24 --> 00:02:44 | able to add an annotation to this post for other members. But the the understanding of the market maker by model is necessary. Before we have any |
| 14 | 00:02:44 --> 00:02:55 | understanding of higher timeframe, long term position traits, but everything that we talk about in reference to it, and market maker models, hot button, buy |
| 15 | 00:02:55 --> 00:03:05 | or sell. They're all fractal, that means the things that we look for on one timeframe will be the same thing in other timeframes. So we're not really |
| 16 | 00:03:07 --> 00:03:16 | demanding a whole lot of new insight, just understanding the same insights this apply to a longer higher timeframe. So |
| 17 | 00:03:18 --> 00:03:34 | what I have here is the model itself, the by model, has been outlined. So everything to the left of the curve, and this is the curve. |
| 18 | 00:03:36 --> 00:03:47 | Everything to the left of it is the sell side of the curve. Everything to the right of the smart money reversal is the buy side of the curve. All we need to |
| 19 | 00:03:47 --> 00:03:57 | do is look at the points of reference where there's up close candles on the left hand side. Okay? For folks that are not into mentorship that are not formally |
| 20 | 00:03:57 --> 00:04:08 | trained by me, when they see these things, they quickly right away run away with thinking, well, this is Wycoff the application of taking the very points here |
| 21 | 00:04:08 --> 00:04:19 | and bringing them over here, taking this point here and bring them over here and adding institutional order flow that is not Wycoff and anyone that's ever |
| 22 | 00:04:19 --> 00:04:28 | studied Wycoff and I challenge if you have never done this, study it in passing and you'll see that what we're teaching here is completely beyond the scope of |
| 23 | 00:04:28 --> 00:04:38 | Wycoff. So what I want you to look at is how everything on this side of the curve on this weekly chart for gold |
| 24 | 00:04:44 --> 00:04:47 | is directly lined up with |
| 25 | 00:04:52 --> 00:05:05 | previous area of distribution. So there's no there's no ambiguity there's no gap. assuming there's no what's what supply and demand zones do I look at |
| 26 | 00:05:05 --> 00:05:17 | because it's not supply and demand zones that we're working with. We're looking at specific criteria relative to a model of accumulation and distribution. It |
| 27 | 00:05:17 --> 00:05:25 | goes without saying that the point of equal highs up here is our buy side liquidity |
| 28 | 00:05:33 --> 00:05:39 | and this will be the area at which we would look for price to want to rebalance. |
| 29 | 00:05:47 --> 00:06:02 | In these areas here, we're gonna go down to a lower timeframe again, this is a weekly chart, the market will want to seek the buyside liquidity above this high |
| 30 | 00:06:05 --> 00:06:17 | and you'll see we recently done that. So from the area of accumulation to an area of offset distribution, okay, so when pairing up buyers, we're going to |
| 31 | 00:06:17 --> 00:06:29 | Okay, we're gonna buy down here, why are we buying we're rebalancing, and we're also mitigating previous shorts. So it does allowing that distribution here to |
| 32 | 00:06:29 --> 00:06:41 | be accumulated and rebalanced. And then after rebalancing, look how much time they spent inside that range, that's accumulation. Okay, so I feels alien to say |
| 33 | 00:06:41 --> 00:06:50 | a hate sounding like this, but I know it's in the mentorship. But I said that we will be bullish on gold here and look for this to be ran out and still see the |
| 34 | 00:06:50 --> 00:06:58 | dollar index remain in a large range, which is essentially really what it did. But in this area, we can see accumulation and in this area, we can see |
| 35 | 00:06:58 --> 00:07:09 | accumulation here. Okay, so what I'm going to do is I'm going to add one more rectangle in here to kind of differentiate |
| 36 | 00:07:17 --> 00:07:38 | the areas on the lower timeframe that we should be paying attention to Okay. Now do it. All right away, you can see there's very handsome amount of points or |
| 37 | 00:07:38 --> 00:07:48 | pips you want to refer to, to get from this point here, and irregularly some more, and then run the micellar code. So you're buying here looking to sell to |
| 38 | 00:07:48 --> 00:08:00 | willing participants that are willing to buy up here. So we're buying and Smart Money area. And we're selling to an area where there'd be buy stops, which buys |
| 39 | 00:08:00 --> 00:08:08 | our liquidity would be up there large funds, because remember, they're selling short on gold. And this one here, look how much time it takes. Now, again, it's |
| 40 | 00:08:08 --> 00:08:18 | weekly chart, every one of these candles represent one week. It takes a great deal time to get in here. And once they accumulate, did they waste time no man |
| 41 | 00:08:18 --> 00:08:30 | it's a large range and start kicking off this is a weekly chart. So struck down into a daily and get a taste of what transpired on that timeframe. So right in |
| 42 | 00:08:30 --> 00:08:47 | here, we have our normal delivery of price. Inside this area of accumulation, we have a rally higher after seeing support support here and we're also looking at |
| 43 | 00:08:47 --> 00:08:57 | the October contract. Okay, so I'll ask you to go and look at the August contract for gold, we have a rally higher one big candle and then we have a |
| 44 | 00:08:57 --> 00:09:08 | complete return back to the bullish order block. And we have a little bit of a fear of a gap in there as well. And price accumulates and releases to the upside |
| 45 | 00:09:09 --> 00:09:19 | by side liquidity Paul spent some time in here comes right back down into here's our high here's our low next candle the red candle in here is our fair value |
| 46 | 00:09:19 --> 00:09:32 | gap. All it needs to do is trade down to the low of this candle, the low that candle is 130 30.6 the low on this candle here comes down to 130 29 Six goes one |
| 47 | 00:09:32 --> 00:09:46 | point into the fair value gap. That is our institutional order for entry drill entry technique. By goal there inside and at a deeper discount than what we |
| 48 | 00:09:46 --> 00:09:54 | expected see on the previous sales have occurred member we extend that over here from the weekly. Anything in here can be used to accumulate a new long position. |
| 49 | 00:09:56 --> 00:10:06 | Market again, creates a most order block Your market expands on the upside trades back down into the bullish order block inside that area. Okay, we can |
| 50 | 00:10:06 --> 00:10:18 | cumulate new long positions here or add to what we already accumulated down here. And the market expands and trades above the original consolidation where |
| 51 | 00:10:18 --> 00:10:35 | the large pool loss of liquidity rests. So I want you to think about how in this area, may the dollar market, okay, or the dollar US dollar became relatively |
| 52 | 00:10:35 --> 00:10:52 | bearish inside of its large trading range. Okay, and it traded down into June 23. I think it was. Let's see what is that? June 25, creates the low. And then |
| 53 | 00:10:52 --> 00:11:06 | we start to trade back to the middle of the range. It starts rallying after we get this breakout here, but this low on the 25th of June, the 25th of June is |
| 54 | 00:11:09 --> 00:11:26 | where we are here 25th of June is there. Okay, so the low inside the range of the dollar index on its daily chart was here. And gold maintain this area around |
| 55 | 00:11:26 --> 00:11:42 | that old equal highs on daily chart and weekly chart. So the Buy Sell liquidity pool is being consumed. So gold is staying up here allowing the dollar index to |
| 56 | 00:11:42 --> 00:11:53 | come back in rally. Now we have since taken out the buy side liquidity pool here close in our weekly Sibi. So if this were to start trading higher than the |
| 57 | 00:11:53 --> 00:12:04 | weekly swing trading into its weekly volume and bounce for the dollar index, and again accounts, you do that, research yourself look on a monthly chart. Contrast |
| 58 | 00:12:04 --> 00:12:16 | that with how we have traded to this area here on gold. If the dollar index at this moment starts to rally higher than 9040. This will be bearish for gold and |
| 59 | 00:12:16 --> 00:12:30 | gold want to come back down in here and we'll see what it wants to do if it comes back to this area or not. My concern is they have both moved to a point of |
| 60 | 00:12:30 --> 00:12:46 | buyside liquidity. And generally these two markets are inverse or inverted in terms of correlation. Very difficult to decide which one I would want to see |
| 61 | 00:12:46 --> 00:12:58 | happen. But if I were looking at the chart, I don't feel that we're done on the outside for $1. So that to me would indicate that this myself Colico is being |
| 62 | 00:12:59 --> 00:13:07 | used to accumulate short positions. And then they may take these lows out if we get a really long term prolonged bull move on a doubt. And that's just the |
| 63 | 00:13:07 --> 00:13:15 | conjecture at this moment. I don't know for certain, I'm just really leaning heavily on the fact that I told you in the mentorship that we would be bullish, |
| 64 | 00:13:15 --> 00:13:24 | go down here and wanting to trade up to this level here. So if we zoom out here on the daily chart, you can see we don't have a whole lot of price action |
| 65 | 00:13:24 --> 00:13:37 | because it's spotty. The liquidity wasn't there until early about in this area March and main reason why I also I'm talking about October is generally factor |
| 66 | 00:13:37 --> 00:13:49 | we come from much more liquid and always the largest open interest goes to October. And we don't really see too much of the August contract. So August |
| 67 | 00:13:49 --> 00:14:08 | contract is too. You can see a little bit thicker in terms of the candles. Alright, moving back to the October contract. You can see that while up Tober is |
| 68 | 00:14:08 --> 00:14:20 | later in the year. Generally you want to be trading in nearby contracts in October is not the nearby contract when we're in like may in June. August is but |
| 69 | 00:14:20 --> 00:14:30 | I generally will roll to October if I'm going to treat gold because and you'll see that October generally has all the open interest. You want to compare all |
| 70 | 00:14:30 --> 00:14:42 | this contract nonetheless. But you want to be in the October contract if you're going to do any trading for paper trading it so this is what we have for the |
| 71 | 00:14:42 --> 00:14:57 | gold market. And to me, I think it's a testimony to what we have already shown multiple times with the market maker by model with price action that how price |
| 72 | 00:14:57 --> 00:15:10 | is delivered. And it's also A convincing factor for me when I was coming up and understanding how price is delivered, all of these factors are leaning on the |
| 73 | 00:15:10 --> 00:15:25 | same principles of market making prices offered to a imbalance than the imbalance is rebalanced. So it goes from contraction, to expansion, to |
| 74 | 00:15:25 --> 00:15:36 | contraction to expansion, from premium to discount to discount the premium. Everything is logical, there's nothing that's ambiguous when you can see it in |
| 75 | 00:15:36 --> 00:15:45 | price. Now, granted, there's gonna be periods of time when you just don't see it. And that's fine. There are periods where you don't do anything else, and you |
| 76 | 00:15:45 --> 00:15:55 | don't force it. But when you have things in alignment, and you understand that it becomes very easy. Over time, you'll learn as I depicted in recent months, |
| 77 | 00:15:55 --> 00:16:04 | especially with this particular pair here, will this market here pair that with the dollar, I gave you specific criteria about how the dollar could maintain its |
| 78 | 00:16:04 --> 00:16:17 | daily range. Okay, it would be staying inside this large daily range. And still gold could rally. So we had this decline here, trading down to this level here |
| 79 | 00:16:18 --> 00:16:28 | starts to move higher. Again, I was uncertain about all this until we got to this order block is then I looked at this as a market maker bimodal for the |
| 80 | 00:16:28 --> 00:16:37 | dollar. So here's our original consolidation, we left came back to the original consolidation distribution, smart man reversal, low risk by Re accumulation, |
| 81 | 00:16:37 --> 00:16:46 | usable, shorter block, we had multiple instances where we saw that accumulate Long's. We hung around in here for a little bit and expanded to the upside here, |
| 82 | 00:16:46 --> 00:16:57 | then we had our trade, high probability theory. And then it sends us up into our weekly SEBI claim the Buy Sell liquidity pool of this original consolidation. So |
| 83 | 00:16:57 --> 00:17:12 | this dollar gave me the, I guess, the visibility to tell you how we could still stay in this large range, but gold permit gold to rally still. And we had a |
| 84 | 00:17:12 --> 00:17:14 | really nice size along on the outside. |
| 85 | 00:17:16 --> 00:17:26 | That level of analysis will come with experience. Usually they're diametrically opposed. One goes up, the other one goes down vice versa. When we have markets |
| 86 | 00:17:26 --> 00:17:34 | that are in consolidation, you have to really weigh a lot of things and be willing to say, I don't know right now, and I'm very honest with you, when I |
| 87 | 00:17:34 --> 00:17:43 | don't know something. Or if I'm not really confident about a specific idea or a directional bias, you've seen, I have no shame in telling you right now, I don't |
| 88 | 00:17:43 --> 00:17:54 | know I have to wait for more information. These two past market reviews, you can see now the things that I'm waiting for specific criteria. Once it happens, then |
| 89 | 00:17:54 --> 00:18:03 | I have more insight. And I know what I'm wanting to look for. Everything has its time in place. So when we look at model number six, don't think that you have to |
| 90 | 00:18:03 --> 00:18:14 | have these things on one hour charts for intraday scalps, or four hour charts for day trades, or a daily chart for a one shot one kill or short term trade. |
| 91 | 00:18:15 --> 00:18:26 | You can use the weekly chart for positions swing trades, and you literally can capture huge huge moves. And this is something right out of mentorship. We |
| 92 | 00:18:26 --> 00:18:50 | talked about it, we seen the effects of it. And also, if you look at the see here, over here to the cash market. We'll look at Gold versus the US dollar. And |
| 93 | 00:18:50 --> 00:19:02 | we'll put this on a weekly chart and you'll see there's an absence of that volume imbalance. It becomes a value gap. I can zoom in here. Okay, so here's |
| 94 | 00:19:02 --> 00:19:16 | the original consolidation, sells off distribution, distribution. Everything matches up over here. By by rating here, we have a fair value gap price trades |
| 95 | 00:19:16 --> 00:19:27 | back down into closing the fair value gap. There's your accumulation, up to the upside break, original consolidation. Everything's here, but this area here |
| 96 | 00:19:27 --> 00:19:37 | changes. So where there was a volume imbalance, there isn't a volume balance here. There is a fair value gap. And we rebalance to this point here. The high |
| 97 | 00:19:37 --> 00:19:54 | on this candle comes in at 1266 and the loan is Canelo comes in at 1266 Perfect rebalancing. And then it's prolonged contraction, small range and up to the |
| 98 | 00:19:54 --> 00:20:05 | upside clearly was on consolidation. So as a long term swing Position trader, you can accumulate Long's in here and just wait for it to expand on the upside |
| 99 | 00:20:05 --> 00:20:22 | and, and capture all the move here. And I think if I'm not mistaken you'll find this those comments on video, like I said in April, to the first week of June, |
| 100 | 00:20:23 --> 00:20:32 | look for it in that range, and you should find it. So, look out, you could go do that there's some homework where you investigate and find out where that video |
| 101 | 00:20:32 --> 00:20:45 | is for me. But nonetheless, this is the supplementary idea for model number six, supplying it to a weekly chart, nothing new is needed. All we're doing is |
| 102 | 00:20:45 --> 00:20:58 | applying what we've been taught in the original presentation and just applying it to a weekly chart. For your further study, in understanding, you want to look |
| 103 | 00:20:58 --> 00:21:11 | in these areas right in here, where we did our consolidation. Compare that with the dollar index, and also compare the lows down here with the dollar index, and |
| 104 | 00:21:11 --> 00:21:20 | also compare where we are right now with the dollar index, and I'm referring specifically with SMT and seasonal tendencies. Okay, so that's gonna be it for |
| 105 | 00:21:20 --> 00:21:28 | this one, guys. I will catch up with you. I'll catch up with you next time when we talk about price action model number six will be with the full detailed |
| 106 | 00:21:28 --> 00:21:32 | trading plan in 2022. I'll talk to you next time wish good luck in the tree. |