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Version 1.1 by Drunk Monkey on 2020-11-20 16:01
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3 ICT: Okay folks, welcome back. Okay, this teaching is going
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7 to be specifically dealing with accumulation, manipulation
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11 and distribution.
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15 Okay the ICT concepts used in this module the ICT power of
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19 three important importance of developing anticipatory price
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23 skills, engineering liquidity in the market, neutralizing
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27 liquidity in the market, market making and pairing of
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31 orders. What accumulation looks like in bull and bear
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35 conditions Where does manipulation occur in bull and bear
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39 conditions? What distribution looks like in bull and bear
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43 conditions? Alright, so we're looking at a crude depiction
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47 of a open high low close bar. And for the purposes of this
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51 teaching, every individual bar or candle is going to be
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55 referred to as a daily range or daily bar. Okay? Now
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59 everything I'm going to suggest to you here is applicable to
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63 every time measurement, okay, and almost every time
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67 interval, if it can be charted, this same phenomenon or
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71 concept can be applied to it. So regardless of what time
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75 frame you can pull up and form into a chart. As long as you
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79 have a beginning time, the highest value, the lowest value
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83 and an ending In terms of measuring time, this concept is
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87 applicable. Okay? But for the sake of our discussion here,
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91 and for something that you can practice and look for two
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95 times a week, the ICT power three is basically a concept of
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99 looking for cumulation waiting for manipulation, and then
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103 looking for a period of distribution. Now I look at
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107 candlesticks because it helps to be able to see after many
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111 years of looking at price action, it's very hard on your
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115 eyes. As long as I've been doing staring at spending lots of
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119 time in charts, both on a screen and on paper, I can see
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123 that my eyesight has diminished over the years. One of the
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127 benefits of knowing what you're looking for is spending far
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131 less time in the charts than most traders that like me and
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135 before me, we spent a lot of time researching and looking at
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139 things So, I gravitate towards candlesticks because it's
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143 easier on the eye not that there's any magic behind it. But
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147 that same concept that's seen here with a bullish open high
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151 low close bar to the left is comparable to what you would
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155 see any bullish closed candlestick. Much easier to see by
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159 staring at the Bat versus that little tick to the left or
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163 the little tick to the right, that distinguishes the open
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167 close on individual candles or bar. Okay, so back to our
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171 discussion. Using the open high low close bar, it's gonna be
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175 a lot easier for me to describe the phenomenon that makes up
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179 my ICT power three. And the origination behind this idea was
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183 inspired by my mentor Larry Williams. He made a point in one
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187 of his lectures that he ended up repeating several times for
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191 a number of years. But he made a point of making a remark
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195 about he wished he knew How the traders or who the traders
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199 were, that could be buying below the open or selling above
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203 the close on bullish or up close days. And I took that as a
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207 personal challenge. And I spent the first quarter of my 25
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211 years mastering just that concept, because I felt that it
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215 was enough for me to work towards it. Cracking that code, if
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219 you will, and I think I've done it. I thought it to other
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223 people. So I know that it's something that is real, it's
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227 tangible. It can be repeated not only in my own results, but
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231 other people that have learned from me. But it all hinges on
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235 the reference point that starts our time interval. And
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239 again, we're referring to every bar or open high low close
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243 bar depiction in my diagrams as a representative Have one
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247 daily bar. Okay, so a full 24 hour period. It does not
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251 matter that if it's forex, or commodities or bonds or
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255 whatever it is, if it's a market, it can be measured in time
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259 intervals, the highest value, the lowest value, a time at
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263 which it starts trading in time it ends trading, you only
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267 need is for reference points. So the open high, low and
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271 close is all we're concerning yourself with here.
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275 Now, the first of the four is the opening price. Now for
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279 definition terms, this is the initial value price prior to
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283 any imbalance, and I'll talk more about that as we go. The
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287 closing price is the ending value price post price
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291 imbalance. Okay, the portion that makes up the range between
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295 the open and close is referred to as range expansion. And
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299 this is a dynamic price imbalance. Now this can be a bullish
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303 or bearish imbalance relative to the open. But for example
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307 sake our first one's going to be referring to a bullish up
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311 close. So this would be a bullish range expansion or a
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315 dynamic price imbalance of a lot more movement to the
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319 upside, seeking a higher price above the initial value price
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323 of the opening price. In layman's terms, we're looking for a
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327 bullish close. Okay. Now as far as it goes in terms of
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331 accumulation, manipulation and distribution or power three,
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335 the first thing we have to determine is what is
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339 accumulating. Now if we're bullish on the marketplace, we
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343 would be looking for accumulation in the form of long
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347 positions building up. It's going to be around that opening
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351 price. And I'll talk more about the opening price in in
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355 future tutorials. But the opening price just above it, or
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359 below it when we're bullish. That's where Long's are
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363 accumulated. Now who's accumulate, there's long positions
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367 smart money. When we're bullish, and we're anticipating a
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371 bullish range expansion to the upside, okay or higher close,
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375 we would be hunting a manipulation cycle immediately after
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379 the opening price. So on a daily range, that opening price
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383 if we're bullish, we want to be buying at that opening
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387 price, or below it, ideally, why would we want to be buying
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391 below the opening price when we're bullish? Because the
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395 market makers are going to be looking to engineer short
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399 liquidity. What does that mean? If a market breaks quickly,
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403 below an old low, there are traders that look to be a
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407 breakout entry. So they'll look to sell short on a stop this
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411 engineering forces liquidity in the marketplace To sell at a
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415 very, very low price that run below an old low or a quick
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419 sudden movement will entice traders that are on the
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423 sidelines just watching price and you know what that feels
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427 like if you watch lower timeframe charts, any sudden move
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431 lower, your heart starts to have palpitations, you get
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435 excited, you think it's gonna keep going lower. What
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439 happens? You take the bait, you go in there and you sell
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443 short and the market stops on a dime reverses and goes
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447 north. immediately below the opening price on a daily range
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451 when it's bullish. This in initial drop down is very
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455 significant because it's going to engineer willing parties
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459 to sell short. That selling short will flood the market with
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463 the counterparties to Smart Money wanting to buy it at a
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467 deep deep discount the other form of manipulation It takes
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471 place when it's bullish is neutralizing long liquidity. That
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475 means there's individuals that's probably already long or
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479 just recently bought near the opening price in the drop down
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483 below the opening price will upset their long position. In
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487 other words, it'll just run their stop, not to engineer them
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491 into a new lower entry, but to knock them out of an
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495 initially well placed position. So we're seeing two
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499 conditions are happening at the same time. The opening price
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503 and below it when we're bullish, is knocking individuals
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507 out. That's right that would otherwise be profitable with
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511 the market rallies. And it's also inducing or engineering of
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515 short term sentiment shift to bearishness by running short
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519 term lows. Not only we take out long holders with their sell
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523 stocks, but traders that want to sell short on a stop. They
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527 would be in they would be placed in the market on the wrong
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531 side and over selling short and otherwise bullish market so
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535 finally as we interpret this, the manipulation is we're
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539 looking how the market makers pair orders by pairing the
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543 sell stops with smart money buying interest, we can see the
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547 manipulation cycle as it really is
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551 a run below the opening to accumulate long positions before
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555 the big up move. And finally, the distribution cycle where
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559 Smart Money pairs its long exits selling out other Long's
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563 with pending buy interest now that pending buy interest is
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567 going to be in the form of buying above an old high that
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571 would be a breakout artists idea. They're gonna want to
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575 break out above a previous high and they would view that as
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579 strength buying strength. Well smart money will Look to sell
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583 their long position to those breakout artists that want to
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587 buy above an old high or those individuals that would
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591 probably try to sell short intraday they would have a buy
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595 stop above intraday high, smart money would look to run
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599 through that intraday high and sell it to those by stops so
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603 they're long and exits would be paired with a short term
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607 intraday swing high. If we seen a nice little retracement
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611 lower intraday before the close, that's where an area of
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615 distribution would come in. So we're looking at a reverse
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619 idea here, the open high low close with a down close and
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623 again this represent rotation is a crude depiction of a
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627 daily open high low close bar. And we could see that same
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631 thing in the form of a bearish closed candle much easier on
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635 the eye but we're gonna take our focus back to the open high
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639 low close bar. And again, the opening price, much like we
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643 just said, but just for completeness sake is the initial
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647 Value price prior to any imbalance. The closing price is the
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651 ending value price of that time interval that you're
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655 measuring words what time frame you're looking at. And if
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659 it's daily, it's the ending value for the daily range post
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663 or after the price and balance in order to the movement took
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667 place between the open and where it's now closing. And we
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671 have the range expansion cycle that is basically dynamic
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675 price imbalance. So between the opening price and the
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679 closing price when we're bearish This is what we would be
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683 expecting or anticipating in price came a lower close. Now
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687 in the form of power three, what is accumulating well from
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691 the opening when we're bearish. short positions are building
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695 up and who's building up short positions, smart money at the
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699 opening price or just above the fold, Price when we're
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703 bearish, we would be anticipating manipulation. And what
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707 form of manipulation will we expect to see? engineering long
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711 liquidity, no words. We're looking for a quick sudden
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715 movement higher to entice breakout artists that want to buy
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719 want to break out and they would be placed in on the wrong
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723 side of the marketplace. Another form of manipulation this
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727 would be neutralizing short liquidity. In other words, those
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731 individuals that would already be short in the marketplace
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735 that would otherwise profit from the future coming decline.
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739 They are knocked out by having their by stops tripped. So
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743 they're neutralizing their short position. And their short
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747 position being neutralized is a buy stop so that buys out
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751 the hits the market as a market order. Smart Money will sell
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754 00:13:53,160 ~-~-> 00:13:56,490
755 to they're willing to buy stop somewhere it's at the market
756
757 190
758 00:13:56,490 ~-~-> 00:13:59,640
759 trade up to your buy stop. That buy stop becomes a market
760
761 191
762 00:13:59,640 ~-~-> 00:14:03,390
763 order to buy Buy at the market smart money will be
764
765 192
766 00:14:03,390 ~-~-> 00:14:08,190
767 Counterparty to that they will sell to those buy stops. But
768
769 193
770 00:14:08,190 ~-~-> 00:14:11,250
771 their sell position is to ride it lower and make money.
772
773 194
774 00:14:13,650 ~-~-> 00:14:17,460
775 manipulation in its truest sense is in this form when we're
776
777 195
778 00:14:17,460 ~-~-> 00:14:21,300
779 bearish at the opening price or above it by stops are being
780
781 196
782 00:14:21,300 ~-~-> 00:14:28,380
783 paired with short interest on the form of smart money. And
784
785 197
786 00:14:28,380 ~-~-> 00:14:31,140
787 finally, at the end of the day, the distribution cycle was
788
789 198
790 00:14:31,140 ~-~-> 00:14:35,340
791 seen where Smart Money pairs it's short exits are covering
792
793 199
794 00:14:35,400 ~-~-> 00:14:39,030
795 with pending sell interest. In other words, smart money's
796
797 200
798 00:14:39,030 ~-~-> 00:14:41,340
799 going to be short, and to gather short positions, they have
800
801 201
802 00:14:41,340 ~-~-> 00:14:47,700
803 to buy it back and they will be targeting some old low. What
804
805 202
806 00:14:47,700 ~-~-> 00:14:51,480
807 would be resting below an old low sell stops. Those sell
808
809 203
810 00:14:51,480 ~-~-> 00:14:54,090
811 stops once they're triggered. They become market orders to
812
813 204
814 00:14:54,090 ~-~-> 00:14:58,590
815 sell to marketplace which floods the market with sellers and
816
817 205
818 00:14:58,800 ~-~-> 00:15:02,010
819 the best time to cover Short is when there's a flood of
820
821 206
822 00:15:02,220 ~-~-> 00:15:04,710
823 sellers in the marketplace willing to sell at a low price.
824
825 207
826 00:15:05,400 ~-~-> 00:15:08,010
827 And this would be the distribution cycle of the daily range.
828
829 208
830 00:15:11,190 ~-~-> 00:15:13,800
831 Okay, so what does accumulation look like in a bull
832
833 209
834 00:15:13,830 ~-~-> 00:15:17,310
835 condition or when it's bullish? It's not important that we
836
837 210
838 00:15:17,310 ~-~-> 00:15:20,190
839 zoom in here and see the details, I just wanted you to see
840
841 211
842 00:15:20,190 ~-~-> 00:15:22,740
843 the overall characteristics in the green shaded area, you
844
845 212
846 00:15:22,740 ~-~-> 00:15:25,590
847 can see that there's a consolidation around the opening
848
849 213
850 00:15:25,590 ~-~-> 00:15:31,290
851 price. And that consolidation leads way to a decline, which
852
853 214
854 00:15:31,320 ~-~-> 00:15:35,010
855 gives us the framework for what does manipulation look like
856
857 215
858 00:15:35,040 ~-~-> 00:15:37,980
859 in a bull condition? Well, this is what manipulation looks
860
861 216
862 00:15:37,980 ~-~-> 00:15:40,800
863 like, right before the market starts to trade higher after
864
865 217
866 00:15:40,800 ~-~-> 00:15:43,860
867 consolidation when the accumulation of Long's are being
868
869 218
870 00:15:43,860 ~-~-> 00:15:49,380
871 made. The problem is, you see that decline below that green
872
873 219
874 00:15:49,380 ~-~-> 00:15:54,060
875 shaded area as weakness, and who would be wanting to buy
876
877 220
878 00:15:54,090 ~-~-> 00:15:57,660
879 ahead of that smart money traders. Okay. They have very deep
880
881 221
882 00:15:57,660 ~-~-> 00:16:03,360
883 pockets in the market. has a tendency of creating this fake
884
885 222
886 00:16:03,360 ~-~-> 00:16:10,560
887 move, okay? Where in Tyson's or induces the opposite mindset
888
889 223
890 00:16:10,590 ~-~-> 00:16:14,910
891 or sentiment, this drop down of that consolidation when
892
893 224
894 00:16:14,910 ~-~-> 00:16:18,390
895 we're overall bullish is manipulation, it's knocking out
896
897 225
898 00:16:18,390 ~-~-> 00:16:21,030
899 short term lows. So anyone that's long, they're knocked out,
900
901 226
902 00:16:21,030 ~-~-> 00:16:24,570
903 they can profit from the up move. And it's also putting
904
905 227
906 00:16:24,570 ~-~-> 00:16:27,690
907 traders in on a breakout short and they're gonna be on the
908
909 228
910 00:16:27,690 ~-~-> 00:16:32,190
911 wrong side of the marketplace. And finally, at the highs of
912
913 229
914 00:16:32,190 ~-~-> 00:16:35,880
915 the day, we have our distribution, where the Smart Money
916
917 230
918 00:16:35,970 ~-~-> 00:16:40,020
919 exits their long positions by selling above an old high,
920
921 231
922 00:16:40,590 ~-~-> 00:16:43,470
923 whereby stocks will be resting. So this buy stocks will be
924
925 232
926 00:16:43,470 ~-~-> 00:16:46,590
927 hit. floods the market with buy stops buyers at a higher
928
929 233
930 00:16:46,590 ~-~-> 00:16:50,820
931 price, smart money to sell their long positions to higher
932
933 234
934 00:16:51,210 ~-~-> 00:16:54,060
935 buying interest traders in the form of their buy stops being
936
937 235
938 00:16:54,060 ~-~-> 00:16:59,820
939 tagged. Okay, and what does accumulation look like in a bear
940
941 236
942 00:17:00,000 ~-~-> 00:17:06,810
943 condition, we have a consolidation and price moves higher,
944
945 237
946 00:17:07,140 ~-~-> 00:17:10,500
947 which would be the manipulation. Now if you look at the left
948
949 238
950 00:17:10,500 ~-~-> 00:17:13,950
951 side of the chart, you see a double top. That's exactly
952
953 239
954 00:17:13,950 ~-~-> 00:17:19,020
955 where what bizstats would resign, okay, lesser informed
956
957 240
958 00:17:19,020 ~-~-> 00:17:21,630
959 traders would have their buy stocks resting above that is
960
961 241
962 00:17:21,630 ~-~-> 00:17:26,130
963 viewed as a stiff resistance price point. And those levels
964
965 242
966 00:17:26,160 ~-~-> 00:17:29,520
967 are to clean, the market will in fact want to go through
968
969 243
970 00:17:29,520 ~-~-> 00:17:33,780
971 their pro bit for buy stops. Those buy stocks are gonna be
972
973 244
974 00:17:33,780 ~-~-> 00:17:38,040
975 triggered. Anyone that short is now allowed to be profitable
976
977 245
978 00:17:38,040 ~-~-> 00:17:41,520
979 and to move going lower. So they're neutralizing their
980
981 246
982 00:17:41,520 ~-~-> 00:17:45,900
983 shorts by hitting their bus stops. Also breakout artists
984
985 247
986 00:17:45,930 ~-~-> 00:17:48,840
987 that see that equal high to the left of the chart and the
988
989 248
990 00:17:48,840 ~-~-> 00:17:52,080
991 consolidation that move out of that day would be buying that
992
993 249
994 00:17:52,110 ~-~-> 00:17:56,190
995 on a breakout or trying to buy strength in their eyes. Both
996
997 250
998 00:17:56,250 ~-~-> 00:17:59,640
999 are incorrect. And what we're actually seeing is a market
1000
1001 251
1002 00:17:59,670 ~-~-> 00:18:04,080
1003 drive hire the pair of traders to buy higher or at a high
1004
1005 252
1006 00:18:04,080 ~-~-> 00:18:07,410
1007 price and short sellers on the Smart Money camp, they're
1008
1009 253
1010 00:18:07,410 ~-~-> 00:18:09,510
1011 going to be selling short to those individually that want to
1012
1013 254
1014 00:18:09,510 ~-~-> 00:18:12,390
1015 buy at a high price to make a profit as the market moves,
1016
1017 255
1018 00:18:12,840 ~-~-> 00:18:16,230
1019 eventually lower. Towards the end of the day, we see the
1020
1021 256
1022 00:18:16,230 ~-~-> 00:18:20,100
1023 distribution cycle come in, where shareholders and the Smart
1024
1025 257
1026 00:18:20,100 ~-~-> 00:18:22,110
1027 Money camp, we're going to be looking to collapse their
1028
1029 258
1030 00:18:22,110 ~-~-> 00:18:24,990
1031 short positions. To get a short position, you have to buy it
1032
1033 259
1034 00:18:24,990 ~-~-> 00:18:30,060
1035 back, you have to look for an area to run below old lows.
1036
1037 260
1038 00:18:30,330 ~-~-> 00:18:33,660
1039 You look at the original consolidation 20 pips below that
1040
1041 261
1042 00:18:33,690 ~-~-> 00:18:36,840
1043 that's where we see the low that they form. It's exactly
1044
1045 262
1046 00:18:36,840 ~-~-> 00:18:38,940
1047 where smart money would be collapsing their short positions
1048
1049 263
1050 00:18:38,940 ~-~-> 00:18:41,880
1051 where they trade. And we see the ending cycle their
1052
1053 264
1054 00:18:41,880 ~-~-> 00:18:45,480
1055 distribution, smart money collapse in their short in the
1056
1057 265
1058 00:18:45,480 ~-~-> 00:18:49,410
1059 form of buying it back at an area where sellers below the
1060
1061 266
1062 00:18:49,410 ~-~-> 00:18:55,680
1063 market would be interested in selling. Overall if you
1064
1065 267
1066 00:18:55,680 ~-~-> 00:18:58,140
1067 understand this concept and there's lots more information
1068
1069 268
1070 00:18:58,140 ~-~-> 00:19:03,780
1071 that's coming in By way of my tutorials, you can look at the
1072
1073 269
1074 00:19:03,780 ~-~-> 00:19:06,060
1075 marketplace like this and see the original consolidation
1076
1077 270
1078 00:19:06,060 ~-~-> 00:19:08,250
1079 here in the green market reaches down below the
1080
1081 271
1082 00:19:08,250 ~-~-> 00:19:11,100
1083 consolidation into an area of liquidity, which is 10 pips
1084
1085 272
1086 00:19:11,100 ~-~-> 00:19:14,220
1087 below equal lows. Their sell stops are triggered where smart
1088
1089 273
1090 00:19:14,220 ~-~-> 00:19:17,610
1091 money will be buying. Once they sell stops or tripped,
1092
1093 274
1094 00:19:17,940 ~-~-> 00:19:20,880
1095 they're buying the low of the day the market rallies up, we
1096
1097 275
1098 00:19:20,880 ~-~-> 00:19:24,270
1099 have an expansion move or range expansion up into a move of
1100
1101 276
1102 00:19:24,270 ~-~-> 00:19:28,620
1103 running 20 pips above the old high in your distribution
1104
1105 277
1106 00:19:28,620 ~-~-> 00:19:32,310
1107 cycle goes into the marketplace, and has a complete daily
1108
1109 278
1110 00:19:32,310 ~-~-> 00:19:34,650
1111 range using the power three concepts that I've outlined
1112
1113 279
1114 00:19:34,650 ~-~-> 00:19:37,500
1115 here. So hopefully, you found this teaching insightful.
1116
1117 280
1118 00:19:37,650 ~-~-> 00:19:40,500
1119 There'll be more built on this with the future tutorials.
1120
1121 281
1122 00:19:40,890 ~-~-> 00:19:43,440
1123 And until next time, I wish you good luck and good trading.