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edited by Drunk Monkey
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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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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 -====== ~[[[top>>doc:]]] ======
54 +====== ~[[[top>>doc:WebHome]]] ======
55 55  
56 56  == {{id name="Intro"/}}Introduction - AUDUSD ==
57 57  
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73 73  Mark out the previous days high and low.
74 74  \\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.
75 75  
76 -* 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. 
77 77  [[image:Screenshot 2020-06-29 at 05.02.49.png||queryString="width=385&height=579" height="579" width="385"]]
78 -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
79 79  
80 80  * The Fib box is drawn from the low to high when the previous days high has been broken.
81 81  * Trade
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102 102  ** where do you take partials
103 103  ** what you avoid doing to your revised stops (choking them out)
104 104  
105 -====== ~[[[top>>doc:]]] ======
105 +====== ~[[[top>>doc:WebHome]]] ======
106 106  
107 107  == {{id name="Ex02"/}}Example 2 - USDJPY ==
108 108  
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116 116  
117 117  * Dropping into the 5m chart:
118 118  [[image:Screenshot 2020-07-07 at 01.43.50.png]]
119 -\\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. 
120 120  
121 121  * Fib added from the previous low at point 1, to the last recent high at point 2
122 122  [[image:Screenshot 2020-07-07 at 01.47.47.png]]
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124 124  * Trading View chart, 15m
125 125  [[image:Screenshot 2020-07-07 at 02.10.10.png]]
126 126  
127 -* On the above chart is a second OTE occurring just after the OTE period opening
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
128 128  [[image:Screenshot 2020-07-07 at 02.19.10.png]]
129 -\\From the swing low, to the new high breaking the previous high.  The OTE opportunity crosses the weekend.  
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.  
130 130  
131 131  * 5m chart view
132 132  [[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 OTE pattern.
133 +\\the recent low marked, right side showing the new high forming the {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} pattern.
134 134  
135 -====== ~[[[top>>doc:]]] ======
135 +====== ~[[[top>>doc:WebHome]]] ======
136 136  
137 137  == {{id name="Ex03"/}}Example 3 - S&P 500 E-Mini Futures (June 2020) ==
138 138  
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154 154  [[image:Screenshot 2020-07-07 at 03.28.25.jpg]]
155 155  \\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. 
156 156  
157 -* Focus on the NY session time to find the OTE
157 +* Focus on the NY session time to find the {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}}
158 158  [[image:Screenshot 2020-07-07 at 03.31.40.jpg||height="417" width="313"]]
159 159  
160 -* OTE marked
160 +* {{glossaryReference glossaryId="Glossary" entryId="OTE"}}OTE{{/glossaryReference}} marked
161 161  [[image:Screenshot 2020-07-07 at 03.34.05.jpg||height="850" width="775"]]
162 162  
163 163  * and here is how it played out
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165 165  \\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.
166 166  
167 167  
168 -====== ~[[[top>>doc:]]] ======
168 +====== ~[[[top>>doc:WebHome]]] ======
169 169  
170 170  == {{id name="Ex04"/}}Example 4 - GBPUSD ==
171 171  
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178 178  
179 179  * ICT Markup - [Market Efficiency Paradigm] (link to definition later)
180 180  [[image:Screenshot 2020-07-07 at 04.34.19.jpg]]
181 -\\It's basically the narrative of why prices goes where it does and why it reacts the way it does when it reaches there and what it is going to do next.
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 +
182 182  
183 -====== ~[[[top>>doc:]]] ======
216 +====== ~[[[top>>doc:WebHome]]] ======
184 184  
185 185  == {{id name="Ex05"/}}Example 5 ==
186 186  
187 187  * example
188 188  
189 -====== ~[[[top>>doc:]]] ======
222 +====== ~[[[top>>doc:WebHome]]] ======
190 190  
191 191  == {{id name="Ex06"/}}Example 6 ==
192 192  
193 193  * example
194 194  
195 -====== ~[[[top>>doc:]]] ======
228 +====== ~[[[top>>doc:WebHome]]] ======
196 196  
197 197  == {{id name="Ex07"/}}Example 7 ==
198 198  
199 199  * example
200 200  
201 -====== ~[[[top>>doc:]]] ======
234 +====== ~[[[top>>doc:WebHome]]] ======
202 202  
203 203  == {{id name="Ex08"/}}Example 8 ==
204 204  
205 205  * example
206 206  
207 -====== ~[[[top>>doc:]]] ======
240 +====== ~[[[top>>doc:WebHome]]] ======
208 208  
209 209  == {{id name="Ex09"/}}Example 9 ==
210 210  
211 211  * example
212 212  
213 -====== ~[[[top>>doc:]]] ======
246 +====== ~[[[top>>doc:WebHome]]] ======
214 214  
215 215  == {{id name="Ex10"/}}Example 10 ==
216 216  
217 217  * example
218 218  
219 -====== ~[[[top>>doc:]]] ======
252 +====== ~[[[top>>doc:WebHome]]] ======
220 220  
221 221  == {{id name="Ex11"/}}Example 11 ==
222 222  
223 223  * example
224 224  
225 -====== ~[[[top>>doc:]]] ======
258 +====== ~[[[top>>doc:WebHome]]] ======
226 226  
227 227  == {{id name="Ex12"/}}Example 12 ==
228 228  
229 229  * example
230 230  
231 -====== ~[[[top>>doc:]]] ======
264 +====== ~[[[top>>doc:WebHome]]] ======
232 232  
233 233  == {{id name="Ex13"/}}Example 13 ==
234 234  
235 235  * example
236 236  
237 -====== ~[[[top>>doc:]]] ======
270 +====== ~[[[top>>doc:WebHome]]] ======
238 238  
239 239  == {{id name="Ex14"/}}Example 14 ==
240 240  
241 241  * example
242 242  
243 -====== ~[[[top>>doc:]]] ======
276 +====== ~[[[top>>doc:WebHome]]] ======
244 244  
245 245  == {{id name="Ex15"/}}Example 15 ==
246 246  
247 247  * example
248 248  
249 -====== ~[[[top>>doc:]]] ======
282 +====== ~[[[top>>doc:WebHome]]] ======
250 250  
251 251  == {{id name="Ex16"/}}Example 16 ==
252 252  
253 253  * example
254 254  
255 -====== ~[[[top>>doc:]]] ======
288 +====== ~[[[top>>doc:WebHome]]] ======
256 256  
257 257  == {{id name="Ex17"/}}Example 17 ==
258 258  
259 259  * example
260 260  
261 -====== ~[[[top>>doc:]]] ======
294 +====== ~[[[top>>doc:WebHome]]] ======
262 262  
263 263  == {{id name="Ex18"/}}Example 18 ==
264 264  
265 265  * example
266 266  
267 -====== ~[[[top>>doc:]]] ======
300 +====== ~[[[top>>doc:WebHome]]] ======
268 268  
269 269  == {{id name="Ex19"/}}Example 19 ==
270 270  
271 271  * example
272 272  
273 -====== ~[[[top>>doc:]]] ======
306 +====== ~[[[top>>doc:WebHome]]] ======
274 274  
275 275  == {{id name="Ex20"/}}Example 20 ==
276 276  
277 277  * example
278 278  
279 -====== ~[[[top>>doc:]]] ======
312 +====== ~[[[top>>doc:WebHome]]] ======
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