Skip to Content

ICT YT - 2020-10-20 - ICT Price Action - View Price With Institutional Perception.srt

Last modified by Drunk Monkey on 2021-06-11 14:59
1 00:00:16,619 --> 00:00:28,289 ICT: Okay, folks, welcome back. And this is a brief lecture on intraday swing trading. And I'm gonna highlight a few things here that you can start to look
2 00:00:28,289 --> 00:00:36,989 for in your own price action study and look at past price swings. And you'll start seeing what I'm outlining here. So that we will develop your perception
3 00:00:37,019 --> 00:00:50,879 about smart money technique, or SMT. So, what is that? Well, when we look at price action in any timeframe, then we're only focusing on the one hour chart
4 00:00:50,879 --> 00:01:02,609 for this example, but it's applicable to all timeframes. When we look for key swings in the marketplace, invariably, the traders that are indoctrinated in
5 00:01:02,639 --> 00:01:17,759 trading, they will use oscillators, stochastic RSI, CCI MACD something to that effect. And while I don't subscribe to that view, I initially was thrusted into
6 00:01:17,759 --> 00:01:34,529 that myopic view of price action. I want to kind of stimulate your, your imagination on how you can just rely on price to give you that perception, that
7 00:01:34,559 --> 00:01:44,849 gives us the idea of divergence. Okay, I guess when I first started in the 90s, as soon as I saw stochastic indicator, and the books were saying, look, every
8 00:01:44,849 --> 00:01:55,949 time I made a higher high in price, and the stochastic failed to make a higher high and it diverged, it sold off? Well, naturally. That's the thing I was
9 00:01:55,949 --> 00:02:03,179 looking for all it was all along, I knew, that's when I saw that I was the thing I wanted. And then when I started trading in that in a Live account, it just
10 00:02:03,179 --> 00:02:18,419 kept going up, and up and up. So while there are times when indicators will flag a setup, the problem with that is the creators of these indicators and the
11 00:02:18,419 --> 00:02:33,809 authors and the promoters of them in their pet models or systems. They don't really go into a great detail on or at least not in the vein of accuracy. When
12 00:02:33,809 --> 00:02:46,919 do you When do you apply them to the chart accurately that that's, that's the thing that I discovered early on. That no real educator has the appropriate
13 00:02:46,919 --> 00:02:57,929 placement for these indicators, because they're relying on support and resistance in a classic sense. And then the overbought, oversold in the classic
14 00:02:57,929 --> 00:03:06,359 sense, and then applying the divergence. When it's like that, when you don't have an understanding of the narrative, like what market profile Are you trading
15 00:03:06,359 --> 00:03:15,509 in? Are you in a trending environment? Are you in a range bound environment and range bound environments? Generally, oscillators will do very well if you're
16 00:03:15,509 --> 00:03:24,209 looking at the trade divergence. But don't let me entice you into thinking that Okay, now he just gave us the invitation, start using indicators. Because if
17 00:03:24,209 --> 00:03:34,289 you're a student of mine, we shun all that stuff, because it's a distraction from the actual price itself. Because price will give you everything you need.
18 00:03:34,589 --> 00:03:51,239 The open high, low and close is all that is necessary. Smart Money, institutional order flow, the brains behind these price moves cannot hide their
19 00:03:51,239 --> 00:04:00,029 footprints, they cannot do it, it's impossible for them to do it. And I just want to put this in here as another little bullet point because I'm getting
20 00:04:00,029 --> 00:04:12,779 hammered by new students reaching out to me. And the common fear is if I'm teaching this, is it going to stop working? And let me just briefly speak on it
21 00:04:12,779 --> 00:04:22,169 for about a minute or two and then we'll go right into the heart of this lesson. Anything that I'm teaching, whether it be here or in my private mentorship, it
22 00:04:22,169 --> 00:04:39,059 is not going to change, okay, because it's rooted in the basis that the large order flows that exchange between the central banks, the large producers or
23 00:04:39,569 --> 00:04:57,059 creators of commodities. These entities are in lockstep with large fund traders. I'm not considered a large fund trader, I've traded large funds, but I'm not
24 00:04:57,059 --> 00:05:07,679 considered a large fund trader. So I'm not a Commercial trader, okay. And I'm not a large fund trader, in the sense that we look at Commitment of Traders
25 00:05:07,709 --> 00:05:08,999 data. So
26 00:05:10,530 --> 00:05:19,830 that relationship between these two parties the commercials, which will deem that as the central banks if we're gonna refer to currencies, okay, in deference
27 00:05:19,830 --> 00:05:36,300 to forex, so but it's not limited to forex, it's the same thing across your stock indices, everything. So because their marriage, okay and dance between the
28 00:05:36,300 --> 00:05:47,340 ebbs and flow of the marketplace, the commercials pair up with the large fund traders. And they're always diametrically opposed. So when the large fund
29 00:05:47,340 --> 00:05:59,130 traders are bullish, and they're buying long term trends, the commercial traders are providing that liquidity to be counterparty and they have deeper pockets,
30 00:05:59,130 --> 00:06:09,840 they can write out those long drawn out moves, because they understand that it's going to eventually revert back to the main. So if we apply that thought process
31 00:06:11,070 --> 00:06:23,670 to the question or concern that many of you have, it's going to stop working, it's not going to stop working. Because to say that means that large trade
32 00:06:24,480 --> 00:06:35,790 between commercial entities and large fund traders is going to disappear. And that's not going to happen. so badly if if that happens to disappear, if there's
33 00:06:35,790 --> 00:06:48,480 no large commercial producer of anything, or a central bank stops becoming a central bank, and they stop managing large funds, okay, then we have bigger
34 00:06:48,480 --> 00:06:59,700 problems to worry about. But as long as those two entities exist, the things I teach on, are never going to diminish, they're not going to stop working, and
35 00:06:59,700 --> 00:07:09,450 they're not going to fail, okay? It does not mean that you as the speculator will not interpret it incorrectly, because you are human, just like I'm human, I
36 00:07:09,480 --> 00:07:18,630 can make a mistake just as well as anyone else. So don't think that anything that I teach or have taught or will teach in the future, has an expiration date
37 00:07:18,630 --> 00:07:27,330 on it, because it doesn't. Alright, so with this lesson gonna talk on Well, if you've been a student of mine for a number of years, you are not going to be
38 00:07:27,330 --> 00:07:36,090 surprised by what I'm going to talk about. But I want to give you some framework to try to build in some perception of how you can go and look at price. Now
39 00:07:36,090 --> 00:07:45,060 everyone, everyone knows that my pet pairs are fiber and cable, which is euro dollar and British Pound versus US dollar. And I couple that with the dollar
40 00:07:45,060 --> 00:07:56,460 index. So that's my triad, I look at those three markets to get my bias, my analysis, my weekly profile I'm looking to trade in or my daily profile to day
41 00:07:56,460 --> 00:08:09,540 trade in. And I don't need to do anything else. So if I want to be a deviant, then I will trade dollar CAD, which in recent months have been really
42 00:08:09,570 --> 00:08:21,120 lackluster, I haven't had a lot of interest in that pair. But I will sometimes go to Australian dollar and or New Zealand dollar. But it requires something
43 00:08:21,750 --> 00:08:31,470 very dry in price action for a euro and cable for me to come out of those two pairs of find something else. And it's usually in instances where I'm really
44 00:08:31,470 --> 00:08:39,900 pushing hard, which is not a good thing to do. But because I'm an educator, I like to use examples outside of my two pet pairs. Because just like the question
45 00:08:39,900 --> 00:08:50,580 of will these things stop working? Because I'm teaching it on a large scale? No, that won't. But does it work in other pairs. And it makes me smile, because I
46 00:08:50,580 --> 00:09:00,330 used to think that way too. It only works on special markets. And it works on every pair and works on every asset class. Okay, so just understand what I'm
47 00:09:00,330 --> 00:09:11,670 sharing here. It's very powerful, but you need to study it and compare old price moves. And you'll really appreciate how strong it is. But we're looking at a
48 00:09:11,670 --> 00:09:22,440 range bound market here and without reaching for an oscillator, like stochastic MACD or RSI to look for overbought, oversold and divergence, we can look at just
49 00:09:22,440 --> 00:09:23,070 price action.
50 00:09:24,720 --> 00:09:33,840 We have equal Highs over here. So everyone in the retail universe is going to say hey, look, this is resistance. So therefore it's stopped here stopped here
51 00:09:33,840 --> 00:09:41,760 and traded lower. When it trades back up to what should happen. It should hit that level that imaginary level and it should go down. But it goes up a little
52 00:09:41,760 --> 00:09:54,060 bit higher. trades lower. starts to do the same thing here that it did here. So we're seeing equal highs. Equal highs or as I call them relative equal highs. So
53 00:09:54,180 --> 00:10:09,840 between this high in this high and this high in this high we can end participate by stops to form and start pulling. And the words start to collect or gather
54 00:10:09,990 --> 00:10:18,360 just above these highs, because traders that want to buy on a breakout, they think buying strength, like it broke out here, they have orders to trip them in
55 00:10:18,360 --> 00:10:28,470 the marketplace to go long. And their stop loss will be below some low down here. Or traders that have been looking at the idea that this is resistance. And
56 00:10:28,470 --> 00:10:36,810 now this is resistance, and they're trying to sell it, because I don't know about you. But when I first started trading, I believe that everybody that was
57 00:10:36,810 --> 00:10:47,640 making big money was selling tops and buying bottoms. And I soon found out that that's not true. They're buying after the move establishes itself and trades to
58 00:10:47,640 --> 00:10:57,720 a level that's highly probable. And they're getting the large portion in between the turning points. And it took a long time for me to get to that point where I
59 00:10:57,720 --> 00:11:07,680 was content with that, and I stopped chasing these endless pursuits of perfection. Now, it's not to say that my obsessive compulsive disorder, which is
60 00:11:07,710 --> 00:11:17,550 what I live with and wrestle with, doesn't flare up, and I look for certain things that is unreasonable for the average trader. But that's also been a
61 00:11:17,790 --> 00:11:27,690 blessing and not just a curse, because it's helped me pursue things that would otherwise would have never made its way into the community and analysis or
62 00:11:27,690 --> 00:11:37,560 technical analysis concepts. So when we look at these levels here, just understand that as it creates these relative equal highs, they are signatures
63 00:11:37,560 --> 00:11:47,670 that I teach my students to look for. Now, there are instances where trading above these levels, it goes right to it and then reverses. Other times, it's a
64 00:11:47,670 --> 00:11:55,380 continuation to go higher, that, again, is narrative that is not going to be within the scope of the teaching here. But you're going to be able to look back
65 00:11:55,440 --> 00:12:03,180 in your old trades. And maybe if you look at trades where you've lost, and it was stopped out or went the other way, you're going to discover you're probably
66 00:12:03,180 --> 00:12:06,870 trading counter to what I'm going to show you here. But
67 00:12:07,830 --> 00:12:20,190 there is a way of measuring divergence, okay, and the price action. And the way I do it is I put a closely correlated market with the market, I'm looking to
68 00:12:20,190 --> 00:12:31,320 trade, and I just overlay it. So Alright, so you start by having an underlying premise, what should the market be reacting to? Why should it be reacting to it,
69 00:12:31,620 --> 00:12:40,470 in the sense that it gives you a buy or sell scenario? In other words, what is your bias? What are you anticipating happening once price trades to a particular
70 00:12:40,470 --> 00:12:49,920 price level? Well, as I mentioned, here, we have Basilicata here and here, and the market trades up and then breaks down. Now there's two schools of thought
71 00:12:49,920 --> 00:13:00,300 here, you can be the trader that is down here buying and exits above these levels. And there's nothing wrong with that. Or you could be a trader that wants
72 00:13:00,300 --> 00:13:10,260 to trade above these levels here and look to go short. Now that might be a little frightening for you, especially if you're a new trader or new student, it
73 00:13:10,260 --> 00:13:18,930 feels uncomfortable, because the markets been going up. And your natural tendency is to believe that it's going to continue going up. And if you look at
74 00:13:18,930 --> 00:13:28,560 your trades that you lost money on, I guarantee you, especially if you're a new student, or a new trader, you were trying to buy something that has already been
75 00:13:28,560 --> 00:13:36,090 going up for a length of time. Okay, now, what's your buying, like in here thinking it's going to keep going up cuz it's a bull flag. We've already went
76 00:13:36,090 --> 00:13:44,250 above this. Suppose that resistance and refining some support level here, supposedly, and it starts to move higher, and you chase it. everyone's done that
77 00:13:44,430 --> 00:13:56,730 every single trader has always done that stupid mistake of chasing price in some silly early stage of their development. They did that everyone did that. There's
78 00:13:56,730 --> 00:14:04,890 no reason to feel silly, to the point where you beat yourself up about it. But it's something you got to smile about. Now look back saying, you know, I'm glad
79 00:14:04,890 --> 00:14:10,440 we don't do those things anymore. But if you're a new student, and you're still falling victim to that this lesson is going to give you a different perspective.
80 00:14:10,920 --> 00:14:21,600 And how to fight that tendency of chasing price because we don't like to buy above old highs. That's a rule right away in your notes you should have never
81 00:14:21,600 --> 00:14:34,440 buy above old highs and onwards if we just traded above old highs. We can't take new Long's there that they can't happen just as well. We can't sell short below
82 00:14:34,710 --> 00:14:46,530 old lows. We can't do that. Because above old highs, there's bias out liquidity that's buy stops. You're entering like the retail trader does. You have buy
83 00:14:46,530 --> 00:14:57,360 interest there. When we as institutionally minded traders are not looking at that. With the buying interest. We're either looking for it to offer a
84 00:14:57,360 --> 00:15:06,930 counterparty and we're going to sell short to those buyers. interests, or want to wait to see if it drops away from that level. And that's the more
85 00:15:06,960 --> 00:15:15,330 conservative approach. And there's nothing wrong with that either. And the way you would do that, and this is just one instance of how you can do it, you find
86 00:15:16,770 --> 00:15:37,140 a breaker, the breaker is essentially this high to that low in this low up to this higher high. Can you see that? So it's this pattern. So what you want to do
87 00:15:37,140 --> 00:15:50,490 is train your eyes to look at that last down closed candle, because that last down close candle is the actual new future resistance level. It's not ambiguous.
88 00:15:50,580 --> 00:16:01,920 It's not a question of which low do I use here, because every one of these lows it in some way, shape or form, educator or a teacher will say, it's this one,
89 00:16:01,920 --> 00:16:14,100 it's that one. The fact that we had this run higher clearing these highs, this particular candle, right did that one down close candle, I mean, take this out,
90 00:16:14,100 --> 00:16:24,510 move it away just one little bit. Alright, so you can see the heavy down closed candle there. That candle is the actual bearish ICT breaker. When market trades
91 00:16:24,510 --> 00:16:37,350 below that low, we wait for the trade back up into it. Once it trades back up into it, then you could look for to trade to what the low that formed prior to
92 00:16:37,350 --> 00:16:39,930 this retracement. That in itself
93 00:16:40,350 --> 00:16:52,230 is a complete trading model. By itself, it is all one of you out here listening to me is all that you're ever going to need to do in trading. And you can find
94 00:16:52,230 --> 00:17:02,910 this pattern on five minute charts, 15 minute charts, for our charts, eight hour charts, daily charts, weekly charts, monthly charts. And you can frame that
95 00:17:03,750 --> 00:17:12,660 whole model on the timeframe in duration that you would like to trade in relative to that timeframe. If you want a lot of setups, you can trade them on a
96 00:17:12,660 --> 00:17:25,950 15 minute, multiple times a week on a 15 minute chart, it's not going to offer a huge amount of pips because it's framed on this movement here. And you're
97 00:17:25,950 --> 00:17:37,890 selling short at a logical level. And you're going to take profits below the low that foreigns prior to that return to the breaker. Okay, so once this occurs,
98 00:17:37,890 --> 00:17:49,320 once you go below this low, you're out, you're done. Or if you have framed this whole thing, on the basis that it's a little bit longer term setup, then you can
99 00:17:49,350 --> 00:17:57,630 take off some portion, I don't know, I don't want to say too much here and try to drive too much of your decision making process. But you could say, say take
100 00:17:57,630 --> 00:18:06,900 off half, okay, or more than half below this low as it trades below it. And then you leave a stop that's reasonable locking in something, then you let the
101 00:18:06,900 --> 00:18:17,700 remainder trade. And if it can go lower, you'll be able to participate in that and then keep scaling out as it keeps going lower. But initially, when you first
102 00:18:17,700 --> 00:18:25,950 start to look for things like this, you want to try to take all of your profit here because you want to train yourself to feel comfortable, engaging number
103 00:18:25,950 --> 00:18:39,780 one, and then clearing the trade with a profit banking banking completely. If you see this pattern in hindsight, and you study you want to print out or at
104 00:18:39,780 --> 00:18:49,110 least screen capture and save these in your electronic journal. Okay, so every one of you in this community should have a study journal, if you just watch my
105 00:18:49,110 --> 00:18:57,690 videos, or if you just watch my videos and just go to your charts and look and don't make any annotations, don't screen capture anything, you're wasting your
106 00:18:57,690 --> 00:19:10,620 time. You clearly are wasting your time and you're not gonna be able to develop in you're looking at ICT is forex Netflix? And listen. That's not equivalent to
107 00:19:10,620 --> 00:19:19,500 learning how to do it yourself. You have to train yourself. And that only happens by practicing and putting the work into it. But what about in these
108 00:19:19,800 --> 00:19:32,580 relative equal highs? What can we see to anticipate these turning points? Well, you can go to the Compare tab. Put in this pair here is the New Zealand dollar.
109 00:19:32,910 --> 00:19:48,240 So a closely correlated pair would be Aussie dollar Alright, so here's the Australian dollar. And I want you to look at how price we had these relative
110 00:19:48,240 --> 00:19:58,800 equal highs. The market trades higher and look even the Australian dollars making higher highs. See all this this commutative line. That's basically the
111 00:19:58,800 --> 00:20:10,020 price action for me Take this away as you can see it, that's essentially the price action for Ozzy versus the US dollar. Now, if we put New Zealand price
112 00:20:10,020 --> 00:20:21,420 back on it, look at how the high in New Zealand went higher here. But look at the highs comparably. In the Australian dollar, it was lower on par, you see
113 00:20:21,420 --> 00:20:33,720 that? That is my SMT divergence, okay, or smart money technique or smart money tool. However, when usable spend always been abbreviated as SMT. There's a lot
114 00:20:33,720 --> 00:20:42,750 of people on Instagram, a lot of people on the internet that's created supposedly courses around it. And they'll show you examples, but they don't ever
115 00:20:42,750 --> 00:20:52,590 have the narrative ahead of the curve, where they're looking for the SMT divergence before it happens. Like you never see them do a video where they use
116 00:20:52,590 --> 00:21:02,700 it before it forms. And then the trade goes there. It's always this perfect excuse of in hindsight, okay, but when you first learn how to do it, or look for
117 00:21:02,700 --> 00:21:13,950 it, obviously, like anything else, you have to see it in hindsight, and this is how I'm teaching you how to look for it. There are several examples of SMT
118 00:21:13,950 --> 00:21:23,130 divergence per week. And if you drop into 15 minute time frames, you get a lot more of them. And in five minute charts, you get, again, a lot more of them. But
119 00:21:23,130 --> 00:21:35,040 just because there's a divergence between the relationships of the highs, like here's the higher high in New Zealand, and the lower high in Aussie dollar. Just
120 00:21:35,040 --> 00:21:36,360 because it does that
121 00:21:38,220 --> 00:21:49,980 doesn't necessarily mean there's going to be a trade, you have to have, like I was showing you moments ago, before I included the Australian dollar overlay is
122 00:21:50,040 --> 00:21:59,460 you have these understandings that the buy side liquidity is going to be tapped. Now, you may not know that it's going to go up here and reverse, you don't need
123 00:21:59,460 --> 00:22:11,610 to know that. Okay, that's the benefit of having the understanding of my breaker pattern, you are just going to simply wait. And believe me, initially, you look
124 00:22:11,610 --> 00:22:19,950 at these types of trades here and say, Wow, I want to sell up here. And I want to get out down here, I want to sell here and get out down here. And okay,
125 00:22:19,950 --> 00:22:28,620 that's fine. But you have to graduate into that, no one's going to just step out here in trading, watch a couple videos or read a book, or go to a seminar, buy
126 00:22:28,620 --> 00:22:39,030 course, and go out there and start doing that it just doesn't happen. You have to really train yourself gradually modularly to get to that point. And the
127 00:22:39,030 --> 00:22:48,540 easiest training wheels to get to that is using the breaker pattern, that means learn to anticipate this high forming and then reject, but don't trade that yet.
128 00:22:49,410 --> 00:22:58,470 Once it breaks down, you know, all you're going to do is wait for this candle to get traded back up to right here. Once it trades back up into the breaker,
129 00:22:59,700 --> 00:23:13,020 you're going to frame a short that has the stop loss above the breaker candle. You have to have closed candle in here, that's a bearish order block, a close
130 00:23:13,020 --> 00:23:25,200 candle a closed candle, so your stop has to be above this candle. Because you're comparing the order block with the location of the breaker, the order block
131 00:23:25,200 --> 00:23:33,120 gives you a little bit higher, yes, doesn't have to be a big stop. But as it trades up into this level, you're going to be looking for a stop loss above
132 00:23:33,120 --> 00:23:39,360 that. And then you don't have to worry about it. If you get stopped out, you get stopped out you did it wrong. It's a wrong selection on the trade. And there's
133 00:23:39,360 --> 00:23:46,740 no reason for you to going out there trying to avoid every losing trade. That's also a problem with new traders because I did that stuff too. You're going to
134 00:23:46,740 --> 00:23:57,660 lose, okay, there's no reason for you to worry about losing if you have a sound model. And this is a sound model like this is the complete model. You don't need
135 00:23:57,660 --> 00:24:08,610 to do anything else. But look for these types of setups. And they form weekly, every single week, this pattern forms, but you have to know what you're looking
136 00:24:08,610 --> 00:24:16,800 for. And the only way you're gonna know what you're looking for is by repetitive study, taking snapshots of your own charts with your own annotations. And what's
137 00:24:16,800 --> 00:24:25,290 that mean? Like I have these little markers here. And maybe in these areas over here, you can put some additional notes like how many candles did it take to get
138 00:24:25,290 --> 00:24:34,440 up to this level here after it broke. Because when you see this breakdown like that, the first thing is I want to get right back to this this candle here if
139 00:24:34,440 --> 00:24:42,150 you understand my breaker and you don't necessarily know how to submit to the amount of time that can take place. So when you do your screen captures in your
140 00:24:42,180 --> 00:24:51,780 study journal, you want to record how much time it takes from the initiation of the setup which once it trades below this low here that sets the stage for okay
141 00:24:51,810 --> 00:25:07,950 now your setup is the next action point. Okay, the next process The natural order of the trade process. So this sets the stage, now you are in waiting mode,
142 00:25:08,010 --> 00:25:16,560 what are you waiting for it needs to trade back up into that candle. How long does it take to do that, because it takes several days to get to it. Because
143 00:25:16,560 --> 00:25:28,920 it's an hourly chart, sometimes it can happen within the same day. But until you appreciate him any varying examples, there's going to be you have to submit to
144 00:25:28,920 --> 00:25:41,700 that time. And it's real impatient. For a new trader, or as a new trader is impatient, I say that should say it like that, for the setup, and sometimes they
145 00:25:41,700 --> 00:25:49,410 just lose their mind, because they want to get in there and do it, they want to take the trade. But this is the benefit of going through your charts yourself
146 00:25:49,440 --> 00:25:58,410 and the markets that you'd like to follow. And you'll see by capturing examples like this, you'll be able to see how many opportunities have formed over a week
147 00:25:58,410 --> 00:26:09,990 or a month, and how much time it takes from when the setup is initiated to its actual formation? How much of a stoploss Do you need to use? And how much does
148 00:26:09,990 --> 00:26:12,660 it offer in terms of pips, so
149 00:26:13,769 --> 00:26:23,909 by itself, again, this is all some of you will ever require, you would never need to buy a course, you would never need to watch another ICT video, I know
150 00:26:23,909 --> 00:26:31,979 you're not gonna do that you're gonna keep watching videos. But the point is, is you don't need to do it. Okay, you'll be doing it just because you like it. But
151 00:26:32,459 --> 00:26:41,699 as far as knowing what to look for, for some of you, this is all you ever need. But the point is this, you have to look at the relationships, again, with
152 00:26:41,789 --> 00:26:51,149 correlated pairs, or correlated markets. The fact that the Australian dollar, okay, see how it's made that lower high here relative to this high, whereas the
153 00:26:51,179 --> 00:27:02,639 New Zealand dollar high here, it has a slightly higher high, whenever this occurs in price action, okay, this is indicating that there's a lot of selling
154 00:27:02,969 --> 00:27:13,319 going on in Australian dollar. The fact that the Australian dollar was not able to get back up, and trade above its old high like the New Zealand dollar did
155 00:27:13,319 --> 00:27:26,969 here, it's tipping its hand that these two pairs are likely to go down. Because they're closely correlated. If we see that the Australian dollar is having the
156 00:27:26,969 --> 00:27:34,559 lower high form, or it's failing to make that, then what that means to me as a trader is that we're running above these relative equal highs. And this is a
157 00:27:34,559 --> 00:27:48,959 fake out. This is just a run on stops, and anticipate a rejection or a reversal. And then you get it here. So the underlying, I guess, signature here is you want
158 00:27:48,959 --> 00:27:59,069 to look for relative equal highs, here in a consolidating market, and then look at a closely correlated asset, no words if, say, the candlestick chart portion
159 00:27:59,069 --> 00:28:10,889 of this example was British pound. And the red overlay was euro dollar. If that occurred here, the same would be expected. Okay. So euro dollar and cable are
160 00:28:10,889 --> 00:28:20,939 very closely correlated pairs, not all the time, sometimes there's a cracking correlation. But generally, they move pretty close to one pillar. When it
161 00:28:20,939 --> 00:28:37,469 doesn't exist like that, then you have trades in like euro pound, when you have the markets in consolidation as a whole, and we see this pattern here. This also
162 00:28:37,469 --> 00:28:48,749 indicates that we have a weak pair like Aussie dollar is showing us here. And you can combine that with a strong pair like in recent days, euro dollar, and
163 00:28:48,749 --> 00:29:01,679 then you can get a very strong setup for a buy in euro Ozzy. So it doesn't just limit to just giving you a turning point here, it shows you that this pet this
164 00:29:01,679 --> 00:29:14,459 pair of Aussie is underlying the week. And I gave my students and mentorship a cell example before it happened using this criteria here. And they're learning
165 00:29:14,549 --> 00:29:26,219 more about that set up that that was not exposed to them in my mentorship, but they're seeing more, you know, underlying narrative behind it. So using this
166 00:29:26,219 --> 00:29:43,259 idea, finding underlying the weak currencies and coupling it with a strong currency, we can do something like this, because the euro and I'll take this
167 00:29:43,259 --> 00:29:56,099 off. We don't need that. So here's euro, and you're always been trading pretty strong. If we look at that relationship of Aussie dollar being weak, when euro
168 00:29:56,099 --> 00:30:09,209 has been strong, that's going to cause a really nice up I move for Euro Aussie, but the run on euro dollar has been essentially 130 hundred 40 pips. That's not
169 00:30:09,209 --> 00:30:20,429 bad. But for you freaks out there. When you want to do a couple more legs in your analysis, you'll be able to find times when the Euro Ozzy cross pair will
170 00:30:20,429 --> 00:30:34,709 have an outperformance where it moves, one to 300 plus pips. So the question is this, are you going to be comfortable trading? A major, which is like euro
171 00:30:34,709 --> 00:30:48,689 dollar pound dollar? The Aussie dollar New Zealand dollar dollar CAD dollar? yen? Are you going to be comfortable trading those majors and not participate in
172 00:30:48,689 --> 00:30:59,279 these big moves? settling for reasonable 100 pips or so? Or do you feel like you have to be this type of trader, because that's the next level in your
173 00:30:59,279 --> 00:31:09,629 development. Once you understand what I'm showing you in prior discussion with between New Zealand dollar and Aussie dollar, the the highest form of analysis
174 00:31:09,629 --> 00:31:15,329 is to find the strongest leadership and institutional sponsorship and all the process.
175 00:31:16,019 --> 00:31:25,829 But the crosses only have these pair move like this, when we are in an underlying consolidation as a whole. Like, look at the Dollar Index, the dollar
176 00:31:25,829 --> 00:31:34,769 index is consolidating, as doesn't mean it's not moving on lower timeframes, but it's still in a consolidation. So when they put a stranglehold on dollar, your
177 00:31:34,769 --> 00:31:45,059 mind as a trader should start thinking, Okay, we are in an area or environment that the crosses are going to have the big moves. There's all kinds of these
178 00:31:45,119 --> 00:31:52,979 educators out there to tell you, this is how you use this and you find a bigger move here. And you go here and you do that, and it's fresh in this and tetanus
179 00:31:53,009 --> 00:32:06,239 Look, this is the only thing the algorithm does. If the dollar is in consolidation, okay, if it's in an intervention range, okay. If the feds holding
180 00:32:06,659 --> 00:32:17,069 dollar in a narrow range, you immediately start going through and finding the strong and the weak pairs using what I showed you here by comparing and
181 00:32:17,069 --> 00:32:26,249 contrasting their relative equal highs or relative equal lows, and in which one's the strongest, and then start looking for other pairs that are stronger.
182 00:32:26,669 --> 00:32:39,389 Okay, and then find a strong versus a weak currency. And you'll get this type of move here. Now, it's said that when markets are in carry trade mode, where one
183 00:32:39,749 --> 00:32:51,899 currency is giving a stronger or higher interest rate, so if you buy that one, and sell basically, because it's what we're doing, we when we buy euro dollar,
184 00:32:52,619 --> 00:33:01,769 we're buying euros and selling dollars. In essence, that's what you're essentially doing. But if you look at a currency that has a higher interest
185 00:33:01,769 --> 00:33:13,289 rate, and it happens to be the currency that you're buying, and you're selling short, a currency that has the lower interest rate, the common idea is that that
186 00:33:13,289 --> 00:33:22,469 is a carry trade idea. And it should keep going up because of the underlying interest rate differential. And that is not always true. And a perfect example,
187 00:33:22,469 --> 00:33:37,349 it's looking at Euro dollar this year. So if you go back to euro dollar, and look at it on a daily chart, back in here, this right here this very day here in
188 00:33:37,349 --> 00:33:45,629 my mentorship, and folks that are joining in in January, you can go back and listen to my archives, and you'll hear me talk about how if I was making the
189 00:33:45,629 --> 00:33:55,229 market for euro dollar, I would just take it below this low here, and then run it above this high here. And eventually we were looking for these over here. And
190 00:33:55,229 --> 00:34:04,499 we got all that here. But I'm not here to beat my chest. I know some of you don't like that. But my point is this all through here, if you look at the
191 00:34:04,499 --> 00:34:15,239 interest rate differential, you would not have expected this type of move just on the basis of interest rates. Now there are times when you want to be using
192 00:34:15,239 --> 00:34:27,389 that interest rate differential where it's a good time to be a buyer with pairing up a strong interest rate, economy and currency versus a low interest
193 00:34:27,389 --> 00:34:39,929 rate or weaker economy. And you'll have just really easy trading. We have not had that environment this year because of the illness that's been making its way
194 00:34:39,929 --> 00:34:50,459 around the world. And that's all I'm gonna say about that. Okay, but it that has upset a lot of the normal see in the marketplace. And I have learned a great
195 00:34:50,459 --> 00:35:02,939 deal in this environment, not new trading techniques. But I've learned a lot about myself as a trader and I'm more risk averse. I've been more risk averse
196 00:35:02,939 --> 00:35:11,519 this year than I've ever been. And not just because of the illness, but because it's an election year, all the turmoil and stuff that's going on. And it just,
197 00:35:11,999 --> 00:35:22,139 you can't rely on in this environment, I've seen that you can't rely on your typical classical ideas, okay? Because there's people out here that have videos
198 00:35:22,139 --> 00:35:29,759 on YouTube, and they're selling the idea that, you know, the interest rate in this markets better. And I'm going to hold this and hold this, okay, you're
199 00:35:29,759 --> 00:35:40,559 going to hold this trade, it's going to clean your clock. Because at some point, the dollar did have a higher interest rate. But it was declined, it dropped. And
200 00:35:41,339 --> 00:35:53,099 the Euro doesn't have anything, it's like it's nothing. So you can't rely on this type of movement with that type of technique or analysis concept. And it's
201 00:35:53,099 --> 00:36:04,139 it doesn't, it doesn't bode well, for expecting the type of moves here. You need to rely on other things. And I relied on in front of my mentorship, the just
202 00:36:04,139 --> 00:36:05,009 pure
203 00:36:05,130 --> 00:36:14,640 reading of dollar. Okay. And there was periods throughout this year that I was uncertain. To the point where I said, I don't know, I really don't know. And it
204 00:36:14,640 --> 00:36:23,700 took a week or two for us to get more information. And then once it showed us then I was back in sync. And I had a good, a good run with everything lining up
205 00:36:23,700 --> 00:36:34,890 with what I was expecting. But you can't. And you shouldn't have a lot of expectation, especially this year, because this is not your a typical year like
206 00:36:34,890 --> 00:36:50,910 this has been a very challenging year for me, like November 5 will be 28 years I've been doing this. And I don't ever recall the level of difficulty that this
207 00:36:50,910 --> 00:37:02,910 year has shown me like I felt like I did when I first started trading many times throughout this year, because I had so many conflicting signals. And while
208 00:37:02,910 --> 00:37:10,980 that's not a problem, because usually if I have a conflicting signal, then I'm just going to sit on my hands and do nothing. It's no problem. But because I'm
209 00:37:10,980 --> 00:37:20,250 obligated to give my interpretation, and I have to cosign every single time I sit down with my students, I have to make a decision. Whereas I normally
210 00:37:20,280 --> 00:37:26,700 wouldn't have to worry about it, I wouldn't be doing anything. And I'm comfortable with that. And that's a normal thing. That's a position and it wins
211 00:37:26,700 --> 00:37:39,300 all the time, you don't suffer any loss. But this year, there were a couple times where I was forced to make a determination gun to my head type scenario.
212 00:37:40,080 --> 00:37:53,550 And a couple of times I was wrong. I'm still okay for the year a more way more than I'm wrong. I'm right more times than that. But it's still surprising to see
213 00:37:53,640 --> 00:38:03,750 how the things I teach still hold up well, even in this environment. So that's what I meant when I said I learned a lot. There's also a greater appreciation
214 00:38:03,750 --> 00:38:13,770 for risk for me now. And it may be me getting older, and maybe the fact that I have more people under my wing, and I feel more compelled to talk about risk and
215 00:38:13,770 --> 00:38:23,070 managing it better. And I guess it's a good thing all around anyway. But I went down this rabbit trail. And I'm thinking about as I'm talking now. And it was
216 00:38:23,070 --> 00:38:35,580 not inside the scope of the discussion. But I just felt like including it. I don't know why. So we're we're here. But if you start looking at closely
217 00:38:35,580 --> 00:38:47,400 correlated markets, okay, and you start comparing that a good way of using this approach would be if you look at commodity markets, okay, and you look at the
218 00:38:47,400 --> 00:39:01,320 metals, like LOOK AT Gold, look at silver. Generally, you'll see some type of information like what I just showed you here. High Grade copper tend to be a
219 00:39:01,320 --> 00:39:08,700 different animal altogether, palladium and platinum. Again, same thing, they have a little bit of a different thing. Back in the 90s. In the 80s, they were a
220 00:39:08,700 --> 00:39:17,670 little bit closer and the way they traded. And you could use this tool really easy. But there's been the separation between the metals. It works really well
221 00:39:17,670 --> 00:39:27,660 with the grain market. So if you're an agricultural trader that trades commodities, I use this concept to outline soybeans that moved over $10,000 per
222 00:39:27,660 --> 00:39:37,260 contract this year. I outlined the setup, outline the framework outline where it was going, and it was using what I just showed you here tonight. Now $10,000 per
223 00:39:37,260 --> 00:39:52,020 contract in soybeans is a pretty respectable move. And while corn and wheat went up in sympathy, the leadership was soybeans. And that was the market I mentioned
224 00:39:52,020 --> 00:40:00,510 that was the market I said was going to lead that was a market that was going to outperform and it did, so it's not limited to forex. Okay, so when you Have this
225 00:40:00,510 --> 00:40:09,570 perception of price and reading it like an X ray view. Behind the scenes, I didn't reach for any indicators here. The only thing I was looking at was
226 00:40:10,590 --> 00:40:16,620 reading price how it was going above old highs. So there's a little leg line segment trend lines, okay, they're there just for you to understand what I'm
227 00:40:16,620 --> 00:40:26,880 focusing on. But they're not on my charts, when I'm trading. The overlay is just another market. That's not an indicator, I'm just making it show up as an
228 00:40:26,880 --> 00:40:35,610 overlay and aligned format. And there it is. Now, you might not like let's go back to Aussie, or actually New Zealand.
229 00:40:41,580 --> 00:40:49,020 Okay, and well, I can see hourly chart. And we'll add again, the Aussie dollar.
230 00:40:54,570 --> 00:41:06,210 Okay. Now, you might not like this line, being here. And as you move it around, it might shift a little bit, see how it does that. One of the things you can do
231 00:41:06,210 --> 00:41:14,280 on trading view, which I just recently found myself, which I thought was interesting, if you go here over here, and you click on this, and you type in or
232 00:41:14,280 --> 00:41:27,930 not type and click on the histogram over here and then change and change the opacity. Okay, and there you go. To me, I like this, I actually like this better
233 00:41:27,930 --> 00:41:41,010 than the line, because you can see the divergence, the high, lower high in Ozzy, high, higher high in New Zealand, you can see the low, higher low and Ozzy, low,
234 00:41:41,040 --> 00:41:50,070 lower low and New Zealand. If you look at a marketplace like this, and you anticipate the market reaching for liquidity below lows, and you see this
235 00:41:50,100 --> 00:41:58,230 pattern here that diverges, what that is actually showing and why this works, because you're probably new and you're listening to me saying what is what is
236 00:41:58,230 --> 00:42:05,130 the point of this? What is the fact that it's not making a higher high or failing to make a higher high? What is it indicating and was indicating when the
237 00:42:05,160 --> 00:42:14,130 Australian dollar is failing to make that lower low here, when the New Zealand dollar made a lower low than it did here? What does that indicating? That is the
238 00:42:14,130 --> 00:42:25,200 reason why I said in the beginning of this video, what I'm teaching you will never diminish, it will always be there because just like they were a lot of
239 00:42:25,200 --> 00:42:36,810 buying in Australian dollar here. And Australian dollar went higher. It led to a sympathy move on New Zealand dollar to it followed suit. But the crack and
240 00:42:36,810 --> 00:42:46,800 correlation between the two which we have a lower low in New Zealand and a higher low in Australian dollar. That's what we're seeing here. This is an SMP
241 00:42:46,800 --> 00:42:57,180 divergence that's bullish. What is it saying? It's saying that this currency, the Australian dollar is the stronger of the currency at that moment. And that
242 00:42:57,180 --> 00:43:08,790 this run below this low here on this low on New Zealand. This is a stock run. So you can feel confident buying below this low. Because you're buying up sell
243 00:43:08,790 --> 00:43:21,990 stops. But you can use this idea and say okay, at this moment here, Australian dollar is strong. At that moment, you would go through the same cycling through
244 00:43:21,990 --> 00:43:34,350 your currencies to find a weak currency. And then find a core a correlated forex pair that meets that criteria where all z is strong and a weaker currency is
245 00:43:34,350 --> 00:43:45,150 paired up with it. And the underlying bullishness of Australian dollar would lead that currency in this directional premise. Anyway, I gave you a lot in this
246 00:43:45,150 --> 00:43:55,200 video. And I probably confused a great deal of you. But that's not what I was intending to do. I love doing this. I love talking about the markets. I love
247 00:43:55,200 --> 00:44:06,300 teaching them I love tipping my hand and showing you all outside of my mentorship, things that you might not be thinking of. And I do talk about SMT in
248 00:44:06,300 --> 00:44:15,450 this YouTube channel. So don't think I'm dangling a carrot and saying you only have to learn this by going into my mentorship. That's not what I'm doing here.
249 00:44:15,480 --> 00:44:29,610 But I am drawing a contrast and you know, a basic differentiation between what we do and what is then provided here for free on YouTube because there's a big
250 00:44:29,610 --> 00:44:38,760 gap, okay, but you can find this. And clearly I just added another one to the library here, where you can go in and if the market is in consolidation, and I
251 00:44:38,760 --> 00:44:48,450 hope all of you can see that this isn't a range bound market. If you have a range bound market like this, this model works extremely well. And there are
252 00:44:48,450 --> 00:45:00,000 models that work well in trending models that you use the SMT for also, but this one I think is like the easiest one ground level entry level student just coming
253 00:45:00,000 --> 00:45:09,630 My YouTube channel, this is where they should start, okay, because if you're in a trending environment, it would be better for you not to reach for SMT when the
254 00:45:09,630 --> 00:45:19,800 market is trending, because it's going to have less likelihood of creating a setup for you to find it's easy to see where it's when it's range bound, it's
255 00:45:19,800 --> 00:45:25,170 easy to see a SMT divergence. But in final point,
256 00:45:26,699 --> 00:45:36,029 when the currencies have this relationship, where the Australian dollar was failing to make that lower low here and indicated, a higher low, at the time of
257 00:45:36,029 --> 00:45:48,779 the New Zealand dollar made this lower low, that's showing a lot of buying in Australian dollar. They're buying New Zealand dollar too clearly. But the fact
258 00:45:48,779 --> 00:45:57,659 that they're not always lockstep with one another, because if the markets were perfect, okay, if they were perfect, that means the Australian dollar would make
259 00:45:57,659 --> 00:46:05,669 a lower low here too. And then they would both go higher. And then right here on this higher high on New Zealand, relative to this high here, the Australian
260 00:46:05,669 --> 00:46:10,439 dollar should have made a higher high there as well. And if we just go to Australian dollar,
261 00:46:15,420 --> 00:46:27,180 you can see it didn't make that. Okay, so there's your relationship between the two and the strong contrast thing, views. But this was indicating there's a lot
262 00:46:27,180 --> 00:46:42,930 of selling in Australian dollar. And if that occurs in any asset, it shows you that there is a overwhelming desire, on an institutional level, that the volume
263 00:46:43,320 --> 00:46:52,800 of their buying and selling will create these cracks in correlation, or the SMT divergence in itself. Okay, so that's what causes this deviation between the
264 00:46:52,800 --> 00:47:02,730 relationships of higher highs and lower lows. If we ever see that occurring, that is the surest sign if you have the profile, correct. And if it's range
265 00:47:02,730 --> 00:47:14,070 bound, and that's easy for you, hopefully, it should be easy for you to see this, then you'll be able to have an X ray view and see that the markets are in
266 00:47:14,070 --> 00:47:24,690 this point here under heavy distribution, and right here under heavy accumulation. And I use this concept. And I learned it from Larry Williams, it
267 00:47:24,690 --> 00:47:35,610 was just his relative strength market analysis. But it was just a real basic introduction to it. And if you look at his book, how I made a million dollars
268 00:47:35,610 --> 00:47:43,650 trading commodities, I think everybody should have that book in their library. It's still some things like the the moon phases and stuff, like I don't
269 00:47:43,680 --> 00:47:58,680 subscribe to that. But the idea of his intermarket relationships and looking at which contract month the buyer sell, and what market the buyer, so comparing the
270 00:47:58,680 --> 00:48:07,680 relative strength between them, not the indicator, RSI, but the, like, I'm comparing the actual price action of New Zealand versus the underlying overlay
271 00:48:07,680 --> 00:48:18,480 ahead of Aussie dollar, that relationship between the two. That is, in essence, relative strength analysis, as Larry Williams teaches it. The reason why I say
272 00:48:18,480 --> 00:48:29,790 this a smart money technique or smart money tool, I'm not trying to rename his just basic view of his interpretation of it, I found that it occurs at every
273 00:48:29,790 --> 00:48:37,770 liquidity pool of any importance. You don't hear him talk about that. He doesn't even mention that in his books. He didn't do I have everything he's ever put
274 00:48:37,770 --> 00:48:50,670 out. There's no teaching like this. But I always want to credit, the influencer, that stimulated my thought process, just like he stimulated my whole power
275 00:48:50,670 --> 00:49:04,380 three, he stated his weakness of wishing he knew where to buy on the low candles below the opening before it goes up. And I discovered how to do that. So I used
276 00:49:04,380 --> 00:49:18,510 his weakness as a pursuit in my life. And I use one of the things that he used for relative strength analysis. And I blended that with Dow Theory. And it
277 00:49:18,510 --> 00:49:25,410 started making sense to me, it's like, you know, if the market is going to have these internal turning points, that major intermediate term highs and lows.
278 00:49:26,760 --> 00:49:36,390 There should be some kind of signature there some kind of fingerprint, some kind of reoccurring phenomenon that I need to decipher what that is. And this is what
279 00:49:36,390 --> 00:49:47,520 I found. It's always there in a range bound market. It's in specific places in trending environments, but I'm not teaching that here. And it's something that
280 00:49:47,520 --> 00:50:00,000 relies on multiple supportive theories and concepts to make it usable, okay? It's not like this where it's pretty cut and dry. But I want you to understand
281 00:50:00,000 --> 00:50:11,820 That there's a way for you to see real accumulation and real distribution. And you can see it by looking at just the price. No indicators, none whatsoever.
282 00:50:11,850 --> 00:50:32,100 Now, if I put that chart back up over top of the New Zealand dollar, and I change it to the histogram if I was on Instagram, okay, and I did something like
283 00:50:32,100 --> 00:50:44,250 this, and I masked this over here, so you couldn't see that that was the overlay. People would flip out, oh, he's using an indicator. It's not, I'm using
284 00:50:44,250 --> 00:50:56,610 price, price will tell you everything. And the relationships between the two, here's Australian dollar, and I'm going to close this video. Here's that lower
285 00:50:56,610 --> 00:51:00,090 high, while the New Zealand dollar
286 00:51:06,060 --> 00:51:16,320 makes the higher high. So that's the cracking correlation, whenever you see this, that's indicating, on a grand scale, that heavy distributions coming into
287 00:51:16,320 --> 00:51:24,240 the marketplace. So if heavy distribution is coming in, how do we know that because the Australian dollar is unable to make that higher high, like the New
288 00:51:24,240 --> 00:51:32,460 Zealand is, so they're selling heavily? Australian dollar. So why are they selling Australian dollar heavy? Because they believe it's going to go lower?
289 00:51:33,870 --> 00:51:45,150 Why is it going to go lower? Because they're pricing it lower? Okay. It's controlled, 100% controlled. So if you reverse that theory, why is New Zealand
290 00:51:45,150 --> 00:51:56,010 dollar going up, it's to knock out the traders that are using this as resistance, clearing their stops, and then it drops. Okay, so I gave you lots of
291 00:51:56,010 --> 00:52:06,720 different ways to skin this cat. But I taught you again how to use the X ray view of using price action alone, no indicators, none whatsoever. And you can
292 00:52:06,720 --> 00:52:15,240 get a better read on accumulation and distribution. And the manipulation that takes place at key times one of those key times when the markets range bound,
293 00:52:15,480 --> 00:52:26,310 and it goes above relative equal highs. Look for the s&p divergence when that happens. You either are confident to trade the higher high market or wait for it
294 00:52:26,310 --> 00:52:39,000 to break down and get the breaker and then write it to a level of sells on liquidity. That my friends is a complete 100% from beginning to end price action
295 00:52:39,000 --> 00:52:52,500 model. You can use this on any timeframe. You can use this in commodities, you can use it in Well, clearly forex and you can use it for any type of trading,
296 00:52:52,980 --> 00:53:05,730 intraday, day trading, short term trading, swing trading, long term position trading, it's 100% scalable, and you can do this multiple times a week. It's
297 00:53:05,760 --> 00:53:13,230 there all the time. Don't believe me. I want you to go on your charts and look for it. So until I talk to you next time, I wish you good luck and good trading