ICT YT - 2020-09-08 - ICT Forex Price Action - Cross Currency Relationships and HTF Institutional Order Flow.srt

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ICT: Okay, folks, welcome back. All right, this lesson is

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going to be on forex cross currency relationships and higher

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timeframe institutional order flow. This is going to be an

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example of precision price action theory. It's not a one

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video answers all questions. It relies on you having gone

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through a lot of the lessons that are taught on this YouTube

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channel.

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Alright, cross currency relationships and higher timeframe

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institutional order flow. When we talk about well, I'm going

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to unravel the mystery of cross pairs. I'm going to show you

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how to determine which pair leads how to determine which

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pair stalls How to use this insight in order flow and find

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explosive price swings as a result. How do we do that? Well,

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it starts with the economic calendar. Alright, so let's zoom

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in here and take a quick look at what this particular week

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is. Now the time of this recording is Tuesday, the calendar

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week would be September 7 2020 to September 11 2020. clearly

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see in the US on Monday, we had bank holidays for the US and

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Canada. Looking through the calendar, the only thing we have

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for Euro appears on Thursday. So we have Thursday's economic

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calendar having a large high impact event and nothing going

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on the cable front. Nothing really to speak of. So the only

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economic driver we have for Euro is on Thursday and it's hi

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impact and nothing on cable. So if we are looking for

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explosive price action moves, that means that euro is likely

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to be stunted. Okay? In other words held back because it's

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waiting on a big impact news driver on Thursday and cable

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has nothing so it's allowed to trade however it wants to

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trade euro has to wait for some impact news that comes out

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later in the week. So right away, there's your clue that

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euro is likely to be held in consolidation in later in the

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week allowed to be more explosive okay not mean that it will

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be an explosive price action, it just means that using this

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idea helps you focus on which pair will be strangled, okay

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or held in consolidation. Whereas the other pair cable which

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is not being seen at all in economic calendar at all. That

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is implies that it will be allowed to trade more freely, and

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less manipulation and manipulation will be where? In euro.

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So let's go to the charts and I'll give you a little bit

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more insights on this and how we can flesh it out and give

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it a little bit more process oriented approach. Okay, folks,

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we are looking at the Euro pound on the right, and the

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dollar index or Dixie on the left. So now when we look at

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price action, and we're comparing the dollar index as a

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barometer, if we're looking for higher prices on dollar, we

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would be reasonably expecting lower prices in foreign

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currency. And if the dollar were expected to go lower, we

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would expect to see bullish prices or higher prices on

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foreign currency. Now there isn't a simple always follow

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this procedure and you'll get the big price match and moves

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you'll you have to look at some other things and that's kind

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of like what gonna talk about a little bit tonight and it's

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the cross. So the relationship between crosses now obviously

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there's a cross between dollar in euro and then we have that

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as the euro dollar. But when I say crosses, I'm referring to

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foreign currencies crossed with another foreign currency not

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that of the dollar index. Okay. So that way we understand

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each other going forward. We're going to assume for the

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moment that we have been bullish on the dollar index, okay

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for the sake of discussion, my students know we were and

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have been now for a period of about a week or so bullish on

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dollar. Now, if you look at the relationship between the

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dollar index daily and the Euro pound daily, they both from

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September beginning have seen a price rally higher. Now in

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the simplest of determine bullish or bearish, if I'm

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expecting the dollar go higher, then I'm looking for shorts

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on foreign currency. Now there's a big jump from bullish

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dollar to going short all foreign currency, there's a step

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in the middle we have to refer to. Now, again, my students

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are familiar with my favorite pet pairs, that mean the euro

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dollar and cable or pound dollar. Now I have traded other

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currency pairs, and I can trade other currency pairs but I

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prefer to use these two as you'll see why tonight, because

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it's really easy to see which one is going to lead, which

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one's going to

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fall behind. And the only way you're going to be able to get

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that information clearly, is to use the Euro pound. Now the

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Euro pound is a currency pair that a lot of people just are

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focused on this pair as well. It makes them money per Pip.

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It's this sense that, and I never really trade this pair.

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And if you're new to my channel, it probably is very

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shocking. I never trade it. I use it as a selection tool.

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And I'll show you what I mean by that tonight. If you've

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been gone through my videos, you've probably seen lessons or

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discussions about this, but I want to give a little bit more

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meat to it tonight, so that we get something out of it and

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more value to your support of the YouTube channel. So,

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again, we're going to go in assuming that we have been

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bullish on dollar. Now, how you arrive at bullish dollar,

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you can get that information from studying the concepts and

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tutorials on his YouTube channel. This is not a silver

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bullet video. It doesn't answer all questions. It's

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specific, highly focused on one part, one segment of the

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process that leads to Finding explosive price action moves.

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Okay, so now when we look at Euro and contrast that with the

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dollar now for expecting a large price move, you can expect

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the dollar to be moving in tandem with a cross like euro

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pound. If it does that if it's starting to move in the same

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direction, that is highly indicative of a huge imbalance

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between otherwise closely correlated pairs. Now, that's a

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mouthful, I know. But what I'm saying is if the dollar is

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going higher, but not all foreign currencies will rally or

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decline the same. So if the dollar is bullish, this is how I

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start all my analysis. And now I teach my students, we start

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with the dollar. So if that's the case, and we're bullish on

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dollar, then we have to determine which foreign currency is

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more likely to go lower. So, what we're doing is we're using

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relative strength analysis to find out which currency is

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likely to stall, and which currency is likely to go lower.

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If we can determine that and fear that solution out by

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studying price action in euro pound, and using the economic

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calendar, as I mentioned, before going to the charts, we

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have a very strong likelihood, okay, or probability that

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we'll find the right pair to trade now. Do I always get it

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right? No, you're going to get it wrong too. But over a

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large sample size and career in trading, you're going to

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find it this concept this technique will help you find these

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really big explosive price action moves. Alright, so again,

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I'm not trying to draw your attention to or sell the idea

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that this euro pound move is to the discussion. That euro

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pound move is the catalysed to determine which currency pair

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to trade whether it be euro dollar or pound dollar. Okay, so

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let's go into little bit more detail THE DOLLAR traded down

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into its fair value gap as I mentioned in the previous

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discussions and I challenged everyone that was in my

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mentorship if I was lying about you expecting these levels

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to be traded to while way back over here and even before

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that, that there would be a large number of thumbs down. You

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can see there wasn't a large number of thumbs down. So if we

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expect price to trade higher, okay, you can clearly see we

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have relative equal highs in here. So it's not a stretch to

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imagine that it could reach up to that point now we're gonna

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stop and just say that is all there is for our analysis.

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Okay, say that was all that was possible at your level of

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understanding. Okay, and from trade. Down here up to here.

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Great, that's wonderful. You had a bias, the bias is bullish

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dollar, all foreign currency should go lower. But we have to

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use the step between just simply dollar going higher or

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foreign currency going lower, we want to look for the

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weakest of the two currencies in closely correlated pairs.

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Because if you look at all foreign currency, they should be

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declining over the last few days. But not all of them fell

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as much as others. There were other currencies that were

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extremely weak, and they lead downside draft

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on delivery on price versus the upside on the dollar index.

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So, if we look at the relationships between euro versus

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pound, we start with the Euro pound cross. So what causes

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the Euro pound to rally higher? Well, there's only two

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instances that will cause that euro dollar goes While at the

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same time, pound dollar consolidates it means euro dollar is

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allowed to go higher trade higher and pound dollar or cable

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stays in a range. Now it doesn't have to be a very clear

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range, it could be a muddy choppy trading session or

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sessions in plural or euro dollar consolidates and pound

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dollar drops. The same thing would be seen in this chart,

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with euro pound going higher regardless of which scenario

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over here is true. Now, as I shown on the economic calendar,

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the Euro dollar has strong economic news coming out. So no

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real indication that cable has any news this week at all. So

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which pair is going to be likely to wait around for the big

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news For the for the trading week, it's euro pound doesn't

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have anything really allowed to inject volatility and it's a

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high impact news event. And after that there's nothing cable

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related either a pound related. So the probabilities are

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euro dollar will likely be held in consolidation until its

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big news event for the week. That's why I teach my students

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he used economic calendar and how you plug that little

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component into the entire process. So we look for euro

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dollar to consolidate because of the economic calendar. So

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if the economic calendar hints at it's likely to

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consolidate, then what does that imply if we are also

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bullish on euro pound, the scenario is going to be euro

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dollar consolidates and pound dollar drops. So right away,

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we can clearly see that there's an advantage to Not trading

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short euro, not going long euro, but selling short pound

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dollar. So now if we take a look at Euro versus the Dollar

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Alright, so here's the euro dollar daily chart and you can

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see we are in a rather large consolidation on euro. And my

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students know that this whole entire time we have been

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really reluctant to have large intermediate term analysis

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calls on this pair after where we've traded to here. I

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wanted 120 we got 120 and now we've been sitting our hands

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for Euro couple that with what I'm showing you here tonight,

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it leads very well into shorts on cable, and you'll be able

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to see some of the things I've actually taught on this

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YouTube channel how they fall into place just perfectly. So

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we can see there's consolidation in here on euro we don't

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have to really go through a whole lot with this, this pair

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If you break it down into a hourly chart and compress this a

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little bit, you can see while we are drifting with the

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strength in the dollar lower, it's still consolidated in not

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really expanding on the downside. In other words, there's

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not a lot of momentum for this pair eurodollar to cross a

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lot of ground on a bearish price swing. So we did take out

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equal relative equal lows, we did sweep through that. It

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just hasn't had a lot of expanse on the downside. If we look

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at the cable market in relationship to what we've seen here,

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there's a stark contrast. Right away you can see that this

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market has a lot more symmetry. That means the price action

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is much easier to read. It's much more explosive, it wants

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to reach down for lower price objectives. And I'm going to

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show you this magnified and we'll zoom in a little bit. I

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see here's Friday's price action. And I'm showing Friday's

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high in Friday's low and splitting that range in half. So if

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we were going to be bearish, the best sell scenarios are

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going to be in the lower half of that range for that

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Friday's daily range. You can see each trade here on this

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candle it's 4am New York time so that's the one that I've

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been kills on. You all are familiar with that. If you've

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been studying my content on this channel

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up close candle here that's your bearish order block price

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trades up into that close in balance trades to this candles.

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Low what's that low 132 38 and one pet and the high on this

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candle comes in at 132 38 and seven pets. So 38 seven 38

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one, so it went six pips that's a little bit further than it

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needs to just to trade into this candle, creating the high

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in the London session, and price breaks down and then we

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start to consolidate. Now we are in a long period of

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consolidation in here, but look where it's staying. Okay,

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it's staying below the previous day's low. And the next

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trading day starts here at midnight, on the eighth of

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September, and the high forms, whereas if one is a cross

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over the Mondays 50% of the daily range No. So the short

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forms in the lower half of the previous day's range, which

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is Monday's trading. And again in London open two o'clock in

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the morning, New York time, creates the high in London and

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then we sell off aggressively. And then during this period

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here, that little shaded box that is the 830 to 11 o'clock,

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New York trade session I taught for the YouTube channel. Now

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there is a new york session kill zone. Okay and or New York

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open kill zone. Then if you watch my tutorials here, you'd

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learn about that. But this specific opportunity is limited

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to 830 in the morning to 11 o'clock in the morning. So it

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really refines it to a time window where you can literally

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open up shop and that would be your, your operating time for

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trading. only focusing on the New York session, not having

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to worry about trading London, not having to worry about

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trading Asia, nothing doing in London close or even late New

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York sessions. This is a very short window of opportunity

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that gives you a lot of potential trades. So if we look at

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this on a 15 minute timeframe, you can see the 15 minute

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timeframe. Again, very clean price action. Lots of expansion

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down we create this retracement here ahead of New York open

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this low forums at 930. So there's your dealing range, you

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have the low and the high here. So that's your optimal trade

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entry, you would pull your fit across that. And it takes you

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right up into optimal trade entry right here during the 830

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to 11 o'clock in the morning timeframe. And then you can

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expect price to trade lower this line right here, I'll take

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you out into a daily chart and show you what that is. But

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it's just a liquidity pool very easy, obvious level that

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reach for using higher timeframe price action. So now if we

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look at how price has delivered one cable in relationship to

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everything I've shown so far, which is bullish dollar,

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looking at the economic calendar determine Is there any

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clues to which pair of a closely correlated group of markets

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for instance, euro and pound, they're very, very correlated.

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They're highly correlated. So when they trend higher, they

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usually tend to trend together. But there's times when that

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won't happen. There's a crack in that correlation. So by

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using economic calendar first determine Is there any real

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heavy hitting news for one currency over another, and then

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you study price action when the new week starts, which one's

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having a lot of struggle to go in the direction that the

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dollar index implies. So if we're bullish on dollar, that

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means euro dollar should go lower cable or pound dollar

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should go lower. But if we see bullishness on euro pound,

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then we go through the scenario as I outlined at the

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beginning of this video, looking for which one is likely to

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occur in terms of scenario. As you can see here, cable has

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led on the downside. And we're gonna look at this little

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portion of price action right there. I'll add the fib so you

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can see without having to trade in London session. Not that

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there isn't Anything wrong with trading on this session?

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Because it's, to me, it's the biggest opportunity for the

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day. You don't need the biggest opportunity. You can do New

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York session trading every single trading session and do

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very, very well because you have the advantage of knowing

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what London did. And this actually didn't go where I wanted

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it to go right there. All right. So I'll zoom in here and

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let you take a look at what cable did.

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So here's that range the high to the low with the 79%

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retracement level trading up into it here. And yes, we

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consolidate a little bit before breaking down. If recall in

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the last few videos I've been talking about. This is the

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reason why I am never in a hurry to move my stop loss.

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Because this is what can happen, the algorithm can keep

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priced in a range longer than it's comfortable for you to

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stay in the trade or without moving your stop. See, the

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first impulse you have as a retail trader is, I want to

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protect my open profits and I don't want to get a loss. I

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don't want to have a losing trade. And that's one of the

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things you're going to have to grow into allowing,

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happening. If you're going to lose, you're going to have a

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stop out. If there's nothing wrong with that. I stop at a

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trades. Sometimes the trade doesn't work for me and it runs

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right to my stop when I first get in. I'm not infallible,

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you're not going to be infallible. So it's important to

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welcome that in your development because you learn a whole

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lot about doing it wrong in the beginning, but some of you

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only really most of you are trying to avoid that

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uncomfortable period of struggling and fumbling and just not

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knowing what you're doing. So if you can just allow yourself

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and give yourself permission to make mistakes in a demo,

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where you're not hurting yourself. Financially, and you're

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not really scoring or measuring up, you know, to whether or

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not you're making money in a demo account or not. The first

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objective is to not show a huge draw down, okay? If you can

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go back and forth, you know, make a little, give it back,

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make a little and not really make money or not make up a

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huge decline in the equity for your demo. That's actually

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very good. That's a good goal to have initially try to aim

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for breakeven is most traders when they first start, they

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have no ability to trade like that. It's always like a train

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wreck where it just completely blows out the account and

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have to reset and restart a new demo. You don't want to

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learn those lessons on a Live account. The only thing that's

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going to do is teach you to be fearful of trading. And there

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should be no apprehension, no reluctance, no fear, or

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uncertainty about why you're putting the trade on and using

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a hard stop, not mentally Stop, pretend stop. If it goes

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here, I'll get out. There's never work. Okay, they always do

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more damage than they help. So by looking at the things I've

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taught you, on this YouTube channel, using the concept that

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I just walked you through here, you can clearly see that

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everything still works. We have the range, optimal trade

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entry. This candle is the highest one in here and it's still

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10 o'clock in the morning. You have until 11 o'clock to find

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the setup. And the 11 o'clock hour is here. So it's this

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candle right there. So you have that range. From here to

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here, it retraces, and then you let it go. Stop above here,

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and you just let it trade. It's going around sideways always

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always. Does it break this low yet. No, it doesn't break

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that low until this candle. Then and only then would you be

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considering moving your stop but not before then. Because

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you have to give the market time to gyrate move around and

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then leave the dealing room See, the problem with most

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traders is that they look at these candles and they

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attribute much more significance to them than they really

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have. The algorithm trades on time and price. Okay? Not

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price and time it's time and price. So, the most significant

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factor is the element of time. The algorithm can stay in a

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predetermined range longer than traders are comfortable

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holding. And this entire time it stays within this low and

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this high. All kinds of ideas have changed from being

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bullish to bearish trade has been put on trades have been

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taken off. trades have been stopped out moving them too

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tight because most people do not know how to trade. So

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looking at this example here and then thinking about how you

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seen live examples where I'm executing, entering and

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managing the trade, this is a reason why I do not rush to

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move Stop Loss because I understand this component and price

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action, it can stay in a range or a consolidation before

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moving into my expected you know, move below this low here,

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and then we would see it reached below this low here, that

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blue line, I promised I would tell you what that is, let's

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go out to a daily chart. And let's take this off for a

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moment. Daily.

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Okay, and you can see this low rate there, you see that. So

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we have this low, all up to here. So this is the dealing

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range, we've been working on a daily chart, so liquidity

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rest below that low, and I'll add annotations back on and

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you'll see it there's that low, that blue line and it's

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trades down into it and below it. Alright, so I'm certainly

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not saying that's the actual end of the move. I'm not

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implying that at all. I'm just saying that that was a level

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that you could reasonably expect to see it draw to Alright,

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so alright, so hopefully you've got something out of this. A

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lot of things I've provided here. If it went over your head,

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I promise if you've spent more time in the tutorials on this

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YouTube channel, it'll fill in the gaps, not all the gaps,

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it won't fill in everything. But it will give you have a

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greater understanding about why these pairs do what they do,

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and how to use the crosses to find the explicit price action

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moves. I'll talk to you next time. I wish good luck and good

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trading.