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1 -OTE Pattern Recognition Notes
1 +OTE Pattern Recognition Notes1
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1 -Main.WebHome
1 +Forex.The-Inner-Circle-Trader.WebHome
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1 1  {{box cssClass="box floatinginfobox" title="**Quick Links**"}}
2 -{{toc start="2"/}}
2 +{{toc start="2" depth="5" numbered="true"/}}
3 3  {{/box}}
4 4  
5 5  == {{id name="Primer"/}}Optimal Trade Entry Primer ==
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17 17  ** look at HTF (M, W, D, 4h) and look for key levels where price has moved away from in the past
18 18  ** HTF shows where the big players are most likely going to push things around.
19 19  ** LTF is too noisy to show this detail.
20 -* Assuming bullish market, we are looking for where the market wants to trade higher.  OTE is based on buying during the retracements that occur before the further push upwards.
20 +* Assuming bullish market, we are looking for where the market wants to trade higher.  {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} is based on buying during the retracements that occur before the further push upwards.
21 21  * The impulse move has to incorporate a break in Market Structure.
22 22  * Using Fib Retracement as a visual guide, set the following levels
23 23  ** -1 - Symmetrical Price Swing
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26 26  ** 0 - First Profit - Scaling
27 27  ** 0.5 - Equilibrium
28 28  ** 0.618 - 62% retracement
29 -** 0.705 - OTE 70.5%
29 +** 0.705 - {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} 70.5%
30 30  ** 0.79 - 79%
31 31  ** 1 - 100%, or likely SL
32 -* OTE (70.5%) is an ideal target.  getting deeper is better, but you run the risk of not filling your order.  62% retracement is also acceptable, but it results in smaller profits because our SL range will be larger, necessitating smaller order sizes to maintain our risk profile.
32 +* {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} (70.5%) is an ideal target.  getting deeper is better, but you run the risk of not filling your order.  62% retracement is also acceptable, but it results in smaller profits because our SL range will be larger, necessitating smaller order sizes to maintain our risk profile.
33 33  * First Scaling, or slightly before, represents the place to take initial profits.  It should be a decent return, preferable better than 1:2 risk/reward, but slightly less than 2 (1.5? 1x75?) is also acceptable.
34 34  * Setups on 1h charts better than 5m charts because the pip movements will be larger.
35 35  * Key levels xxx.00, xxx.20, xxx.50, xxx.80, yyy.00
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45 45  ** institutional levels
46 46  ** old monthly high at 1.1720 (1.17137 rounded)
47 47  ** price runs down until it hits the 20 level (1.1720), rallies and creates a new short term high (old - middle red line, new STH, top red line. It's also called a "market structure break"
48 -** the new STH makes for a more likely trade opportunity. (market maker model) and opens up the chance for an OTE.
49 -** also, a high, with two lower highs on either side makes that high more significant.  when this high is broken, it's a more convincing move than breaking the other shorter term highs, thus giving us the opportunity to find a likely OTE.
48 +** the new STH makes for a more likely trade opportunity. (market maker model) and opens up the chance for an {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}}.
49 +** also, a high, with two lower highs on either side makes that high more significant.  when this high is broken, it's a more convincing move than breaking the other shorter term highs, thus giving us the opportunity to find a likely {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}}.
50 50  ** at the fib, we see price rockets away from a STL
51 51  
52 52  * when old highs/lows are broken, trades will tend to reach back to those old positions (retail calls it "support")
53 53  
54 -== {{id name="Intro"/}}Introduction ==
54 +====== ~[[[top>>doc:WebHome]]] ======
55 55  
56 +== {{id name="Intro"/}}Introduction - AUDUSD ==
57 +
56 56  * how to annotate the charts to look for specific price patterns
57 57  * study for the patterns for a month, and it'll start to become more easily recognizable as you train your brain to recognize it, then see if you can see it live
58 58  * the pattern should appear every day, but not necessarily on the same pairs
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71 71  Mark out the previous days high and low.
72 72  \\The black line (6450) represents the closest institutional or key level near the previous days high.  The blue lines above and below are a 10 pip spread.
73 73  
74 -* The OTE pattern occurs during the 8:30 to 11:00am NY session.  That's when the major news and reports tends to come out. 
76 +* The {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} pattern occurs during the 8:30 to 11:00am NY session.  That's when the major news and reports tends to come out. 
75 75  [[image:Screenshot 2020-06-29 at 05.02.49.png||queryString="width=385&height=579" height="579" width="385"]]
76 -The green box represents the 62 to 79% Fib retracement levels in the OTE pattern
78 +The green box represents the 62 to 79% Fib retracement levels in the {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} pattern
77 77  
78 78  * The Fib box is drawn from the low to high when the previous days high has been broken.
79 79  * Trade
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100 100  ** where do you take partials
101 101  ** what you avoid doing to your revised stops (choking them out)
102 102  
105 +====== ~[[[top>>doc:WebHome]]] ======
106 +
103 103  == {{id name="Ex02"/}}Example 2 - USDJPY ==
104 104  
105 105  * Daily Chart
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112 112  
113 113  * Dropping into the 5m chart:
114 114  [[image:Screenshot 2020-07-07 at 01.43.50.png]]
115 -\\Where do you think the OTE is going to be?  Look before scrolling further.  Remember the magic hours of 08:30 - 11:00 NY time. 
119 +\\Where do you think the {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} is going to be?  Look before scrolling further.  Remember the magic hours of 08:30 - 11:00 NY time. 
116 116  
117 117  * Fib added from the previous low at point 1, to the last recent high at point 2
118 118  [[image:Screenshot 2020-07-07 at 01.47.47.png]]
123 +
124 +* Trading View chart, 15m
125 +[[image:Screenshot 2020-07-07 at 02.10.10.png]]
126 +
127 +* On the above chart is a second {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} occurring just after the {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} period opening
128 +[[image:Screenshot 2020-07-07 at 02.19.10.png]]
129 +\\From the swing low, to the new high breaking the previous high.  The {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} opportunity crosses the weekend.  
130 +
131 +* 5m chart view
132 +[[image:Screenshot 2020-07-07 at 02.22.17.png||queryString="width=591&height=819" height="819" width="591"]]
133 +\\the recent low marked, right side showing the new high forming the {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} pattern.
119 119  
120 -== {{id name="Ex03"/}}Example 3 ==
135 +====== ~[[[top>>doc:WebHome]]] ======
121 121  
122 -* example
137 +== {{id name="Ex03"/}}Example 3 - S&P 500 E-Mini Futures (June 2020) ==
123 123  
124 -== {{id name="Ex04"/}}Example 4 ==
139 +* Daily Chart
140 +[[image:Screenshot 2020-07-07 at 02.43.11.jpg]]
141 +
142 +* currently inside of an OTE 
143 +[[image:Screenshot 2020-07-07 at 02.46.32.jpg||height="696" width="687"]]
144 +\\The fib provides a framework - old low, old high, retracement back to the 79 level.  On the daily chart, the momentum is likely to go higher.  It could be reaching for the old high, it could break through, or it could fail.  It doesn't matter.
145 +\\What we do care is that it is likely to run the previous day's high.
146 +
147 +* Previous day's high marked
148 +[[image:Screenshot 2020-07-07 at 02.53.30.jpg||height="167" width="848"]]
149 +
150 +* 5m chart
151 +[[image:Screenshot 2020-07-07 at 03.24.45.jpg]]
152 +
153 +* Marked up
154 +[[image:Screenshot 2020-07-07 at 03.28.25.jpg]]
155 +\\The "big figure" is 2900.  Price has traded down into that during the NY session.  Whenever a big figure is swept, either down into, or up into, it generally creates a tradeable bounce or retracement, even if it is very short lived. 
156 +
157 +* Focus on the NY session time to find the {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}}
158 +[[image:Screenshot 2020-07-07 at 03.31.40.jpg||height="417" width="313"]]
159 +
160 +* {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} marked
161 +[[image:Screenshot 2020-07-07 at 03.34.05.jpg||height="850" width="775"]]
162 +
163 +* and here is how it played out
164 +[[image:Screenshot 2020-07-07 at 03.36.45.jpg]]
165 +\\In this example, the market tends to want to gravitate towards the old high because the market is bullish, and will catch out the market short sellers.
166 +
125 125  
126 -* example
168 +====== ~[[[top>>doc:WebHome]]] ======
127 127  
170 +== {{id name="Ex04"/}}Example 4 - GBPUSD ==
171 +
172 +* 1H chart
173 +[[image:Screenshot 2020-07-07 at 04.22.04.jpg]]
174 +
175 +* Marked up using "support and resistance" paradigm. Note that this is a retail trading mindset and it is wrong.
176 +[[image:Screenshot 2020-07-07 at 04.31.28.jpg]]
177 +\\Again.  Wrong.
178 +
179 +* ICT Markup - [Market Efficiency Paradigm] (link to definition later)
180 +[[image:Screenshot 2020-07-07 at 04.34.19.jpg]]
181 +\\It's basically the narrative of why price goes where it does and why it reacts the way it does when it gets there and where it is reaching to next.  The ICT Bearish Breaker cuts to the whole narrative immediately. 
182 +\\Why?  You want to look at price and look for areas where they run an old high because above that is going to be buy stops.  And this is buy side liquidity.  This could be in the form of buy stops for new long entries, or stops protecting existing shorts.
183 +\\The big candle to the right runs through that zone to gather the liquidity.  Also, ICT calls this candle pattern a "Judus Swing" because it's a fake move because it appears to signal a bullish move.
184 +\\When we see these sharp runs that that run previous highs/lows, it's highly suspect to ICT.  If we get back down below the lowest down candle (ICT Bearish Breaker), breaking that low (which it does in the 3-6am bull candles above), the narrative changes to Bearish.
185 +\\So what we do is go to that Breaker, draw the line out in time and then you'll be able to see the real turning point, or the real support/resistance level if you like.  Look at the 7-9am candles on the right where it touches the 1.2371 line.
186 +
187 +* This provides the narrative behind finding and {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} with this structure in place.  It can occur in a trendless market environment, and doesn't have to have a bullish or bearish trend on the daily chart, so go into the lower timeframes.
188 +
189 +* 1h chart marked up showing the previous days low as our highlighted candle is a ICT Bearish Breaker and tends to indicate that we are going for new lows and it is likely we will target the previous days low.
190 +[[image:Screenshot 2020-07-07 at 04.59.43.jpg]]
191 +\\The new ICT bearish breaker is highlighted in the pink box.
192 +
193 +* 5m with the NY Session highlighted
194 +[[image:Screenshot 2020-07-07 at 05.01.46.jpg]]
195 +\\
196 +* and here is the {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} Fib marked.
197 +[[image:Screenshot 2020-07-07 at 05.04.42.jpg]]
198 +\\stops will be above the 1.0 point
199 +\\We see the high, down to the low, and then the price returning to the {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} where we can fill our order.  Our -2 level is the 1.23 big level and the institutions reaching for the old lows and the liquidity that can be found there.
200 +
201 +* Also note, that we have not yet taken our previous days lows, so there is a second possible {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} entry.  The price starts to retrace at at 11am - which is just outside of our session window, but still acceptable.  So, place the fib and see if this retracement suggests a trade
202 +
203 +* Fib placed
204 +[[image:Screenshot 2020-07-07 at 05.17.16.jpg]]
205 +\\We see the high, low, the retracement into the 62 {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} region and we'll be targeting the previous days low with a short.  The stop would be above the high
206 +\\Our targets: 
207 +- 1.2282 - 1.2283 for our 0.5 level
208 +- 1.2265 for our 1.0 level, or we could target the 1.227 level as a more likely target rather than getting a full fib.
209 +\\We're rounding down our numbers and being content with not being too greedy so we don't make a winning trade a losing one.
210 +
211 +* Results:
212 +[[image:Screenshot 2020-07-07 at 05.25.06.jpg]]
213 +\\\\0.5 taken.  1.0 taken.
214 +
215 +
216 +====== ~[[[top>>doc:WebHome]]] ======
217 +
128 128  == {{id name="Ex05"/}}Example 5 ==
129 129  
130 130  * example
131 131  
222 +====== ~[[[top>>doc:WebHome]]] ======
223 +
132 132  == {{id name="Ex06"/}}Example 6 ==
133 133  
134 134  * example
135 135  
228 +====== ~[[[top>>doc:WebHome]]] ======
229 +
136 136  == {{id name="Ex07"/}}Example 7 ==
137 137  
138 138  * example
139 139  
234 +====== ~[[[top>>doc:WebHome]]] ======
235 +
140 140  == {{id name="Ex08"/}}Example 8 ==
141 141  
142 142  * example
143 143  
240 +====== ~[[[top>>doc:WebHome]]] ======
241 +
144 144  == {{id name="Ex09"/}}Example 9 ==
145 145  
146 146  * example
147 147  
246 +====== ~[[[top>>doc:WebHome]]] ======
247 +
148 148  == {{id name="Ex10"/}}Example 10 ==
149 149  
150 150  * example
151 151  
252 +====== ~[[[top>>doc:WebHome]]] ======
253 +
152 152  == {{id name="Ex11"/}}Example 11 ==
153 153  
154 154  * example
155 155  
258 +====== ~[[[top>>doc:WebHome]]] ======
259 +
156 156  == {{id name="Ex12"/}}Example 12 ==
157 157  
158 158  * example
159 159  
264 +====== ~[[[top>>doc:WebHome]]] ======
265 +
160 160  == {{id name="Ex13"/}}Example 13 ==
161 161  
162 162  * example
163 163  
270 +====== ~[[[top>>doc:WebHome]]] ======
271 +
164 164  == {{id name="Ex14"/}}Example 14 ==
165 165  
166 166  * example
167 167  
276 +====== ~[[[top>>doc:WebHome]]] ======
277 +
168 168  == {{id name="Ex15"/}}Example 15 ==
169 169  
170 170  * example
171 171  
282 +====== ~[[[top>>doc:WebHome]]] ======
283 +
172 172  == {{id name="Ex16"/}}Example 16 ==
173 173  
174 174  * example
175 175  
288 +====== ~[[[top>>doc:WebHome]]] ======
289 +
176 176  == {{id name="Ex17"/}}Example 17 ==
177 177  
178 178  * example
179 179  
294 +====== ~[[[top>>doc:WebHome]]] ======
295 +
180 180  == {{id name="Ex18"/}}Example 18 ==
181 181  
182 182  * example
183 183  
300 +====== ~[[[top>>doc:WebHome]]] ======
301 +
184 184  == {{id name="Ex19"/}}Example 19 ==
185 185  
186 186  * example
187 187  
306 +====== ~[[[top>>doc:WebHome]]] ======
307 +
188 188  == {{id name="Ex20"/}}Example 20 ==
189 189  
190 190  * example
311 +
312 +====== ~[[[top>>doc:WebHome]]] ======
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