ICT - Precision Trading Volume 3 - An indepth study on Precision.srt
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ICT: Okay, guys, welcome back, we are in volume three of the
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positioning concepts video series is the last in the series.
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And the first series volume, we talked about weekly order
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flow. And the second volume, we talked about weekly order
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blocks. And now to bring this series to a conclusion, we're
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actually looking at the concept of trading inside the range.
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Okay? And it's a concept that I used to teach my kids how to
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trade with it. And I always try to find a way to
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conceptualize what it is that I see in the marketplace. And
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because I don't have another source, readily available, so I
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can just take them to and say, Okay, this is what it is that
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I'm referring to. I kind of dubbed it as an L seven range.
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Okay, and l seven. kind of silly. sounding but what is it
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exactly? Well, whenever you're looking at a price chart, and
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I have purposely picked the US swissy pair, and it's because
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I believe this is the king of volatility in terms of pairs.
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If you were to look at any one of these reaction high in
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reaction low, this is a daily chart of the swissy. I'm going
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to draw your attention to a few things and
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I want to show you that if directional premise is a
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stumbling block for you, it need not be because it is not
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necessary for you to have a directional premise at 100% of
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the time. Okay? If you're comfortable trading inside of
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dealing ranges, okay? It's quite lucrative actually, if you
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understand what it is specifically you're doing when you
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trade inside of a predetermine range. And what do I mean by
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that? Well, the reason why I dubbed this as the L seven,
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inside the range concept is because if we look at, say, for
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instance, this range here, okay, this low to this high, and
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we'll define it by this. And this is a rather simple
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concept. But it's absolutely amazing if you apply it in your
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trading. And actually, if you start looking at it as a
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training, exercise, trade within a predefined range, because
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young Our understanding is is obviously the markets are 70%
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of the time in a trading range. Now, the definition Have
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that okay, was one of the longest stumbling blocks for me as
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a trader when I was first developing, because I always
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misunderstood what they were saying. Like, I assumed this
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was the trading range here, okay? But I looked at this and
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said, Okay, well, this is a trading range, okay? And look
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how much time it's spent out there and a rally up here and
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rally up here. To me, it seems like it's always trending and
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spent very little time inside of a trading range. It wasn't
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until I understood the natural ebb and flow in the
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marketplace, where it became quickly apparent as to what
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that statement means when markets are 70% of the time inside
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of a trading range. We have a high here and a low here that
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the range is defined by this low and this high, the
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likelihood of price moving out and continuingly to move
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higher is rather low. Okay, in other words you have the way
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I interpret it and you can go with this if you want. I view
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this as we have a 70% odds that this market is going to have
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a very difficult time breaking out to run to new highs. Now
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it could stab through. The way I interpret that is that as
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the market begins to move outside of that range, hi. That
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statement indicates that it has a 70% chance of failure to
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move to new highs and continuing higher. Okay, yes, we see a
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violation on a few candles on the daily chart where it did
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in fact, sweep above that range high back here. But
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ultimately, what did it do? It returned back inside of the
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Define range of this low and this high back here. Okay, so
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how can we use this information? And what does it mean? You
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To us as a trader, well, as price trades down and makes a
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low here, I'll ask you this. What do you think the least?
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least road of resistance, okay? Is it to go higher, or you
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could go lower? Because we've already went lower than this
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low here. We went lower than this low here. We took out this
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high with a very small minor move here, but we've recently
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started to move higher. If you start looking at this like a
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letter L, okay, in envision a letter L here. We're trading
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down here at these levels here. Where is the point of
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reference for this range? If we're at the lows here, it's up
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here. Okay, so now how do we incorporate that? Well, at this
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old high, if we start looking At the order blocks that
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represent the selling that caused the market to drop. Well,
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we'll look at a few of them. We have, this is a Sunday. So
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I'm going to avoid that. We're going to say this is the
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first bullish candle prior that is Sunday here.
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And if we're down here, we could look to see if price would
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rally back up to that price point. Now, yes, invariably, we
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could probably see it retest this high, but what do we what
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do we already state that markets have a 70% likelihood of
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staying inside of predetermine ranges. So if we could find a
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long down in here, we could look for this market to move
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higher up into this level here. Now, also note that we have
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this short term range from this high. And all I did was note
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the bullish candle prior to drop down in this low here. So
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this is a pre determined range as well, if we were long
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here, we could look for initial objectives in here and if
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this is taken out, reasonably expect this order block here
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to be retested. And if it continues to country even higher,
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we could retest this high here and maybe look to see some
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kind of sweeping event like we see many times in my videos
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or in commentary. So as the market also traded in this range
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with this high here, in this low, the range was this high
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and this low. If we could find a long in here, we could
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trade inside the range and look for this bullish I'm sorry
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bearish rather, this bear ICT order block to be retested,
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okay, we entered into that same area had a small little
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turtle soup, which is a false break above an old high and
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then rejection. Okay, but I'm not trying to teach that
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pattern here. So I probably shouldn't have said that. So it
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is what it is. But any longer here, your objective would be
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to look forward to the counter order block that saw price
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drop down, okay, we we try to trade back up into it, this
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would be a known level of institutional selling. Okay. And
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you can see that does in fact, come under way, the market
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has dropped down precipitously. We're using the L concept in
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here of this con is dis particular approach, okay. It's
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probably over simplification, okay. But to me this makes
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sense and helps you my kids learn this as I teach it to
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them. So we have a point where we are now and where do we go
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from here? Well, The range pi is here. So that would form a
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letter L. Okay. And it probably sounds like Sesame Street to
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people in the States. But it really is a really simple
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approach. Now, how do we approach a seven range? Okay? Or
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the concept? How does the seven come into play? Well, if you
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look at and we get some of these lines off here, because
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it's going to get in my way here, price at these levels,
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okay? And we're not going to reference anything over here.
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For now we're just going to look at where we're at in terms
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of the dealing ranges and such. We have this high here and
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you see price runoff back into the order block here. And
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when we start to sell off, if we were able to see something
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bearish back here, okay, the point of reference is what,
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here's the area where we're at the likelihood of us
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continuously breaking higher, okay? Because this was the
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previous high price rally out of that. Okay, now it's
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several hundred pips because it is a daily chart. But look
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what happened it was unable to stay above this, this range
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high, so it pulled back inside of the range to run below
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this old low, but more importantly, okay, it's this range
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low here and the new high that formed.
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So we have dealing ranges this high this low. So if you're
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up here hunting sell signals. Okay, where's the range? Well
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we have several ranges to deal with. So that's the question
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and why I always ask, Where are we inside the dealing? What
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what dealing range are we within? We have these highs. We
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have a reaction low here. So that's a point of reference.
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Okay, this is one point of reference This is another point
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of reference. Another point of reference. And another point
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of reference, okay, so these are all ranges that price works
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within while trading, okay? This low here, price bounced off
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this is pretty, pretty nice. Obviously price came down into
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this low here swept up just a little bit and then rallied
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even more. Okay? price when we made this range here
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we have this high in this low, okay, where's the path of
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least resistance, okay? It's going to be on the upside
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because it's been dropping Lower, lower, lower, lower,
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lower, lower, lower. And now the only thing that we got to
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consider is where the stops are and that's where the price
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is going to seek it's going to seek liquidity, because
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everything's been going lower. So eventually, there's going
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to be In a low and selling so what will happen is the market
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will reach up and seek out liquidity above the short term
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highs and see if there's any stops. But still notice even as
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aggressive as this bounce was and rally higher, whereas it
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run back to previous order block. Okay, this bullish candle
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prior to drop lower if you want to use this candle as well
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you're still within that same range, okay? here Okay, so
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inside this range, we've come all the way back up to here.
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Okay, so now again, while price is right here is it likely
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to continue and break through this high in trade onto the
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new highs. Odds tell us statistically that 70% of the time,
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price will stay inside of a range so as price rallies on up
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here aggressively. Okay. When we start moving back into
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these dual bearish order blocks, it's reasonable to expect
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this market to try to look for sell scenarios or sell
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patterns. Okay? Now, Where's it? Where's the range at this
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point? Because we have this high here
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and this low where it came from originally down here. So the
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order block that resides down here is this one.
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Okay, so if we sell up in here, we could really expect it to
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come back down in this area. Okay, and maybe retest this
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low, but again, we have a 70% odds that it's going to stay
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within this range. Okay, price comes down. Does it break
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this low? No. What does it do it rallies once more. Okay.
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How Why is it rallying up here? We have high here. We have
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short term high here. Okay, this is a this is a bearish
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order block. Trade back into this is a bearish order block
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that it trades back into okay the range is this short term
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high to this short term low notice we did not classify it as
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this low because this is the this is the true range here
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this is the range that has not been violated this high in
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this low so, as we have the short term high price moves from
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this point down does not break this low and rallies back up
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whereas rally up to above the short term highs taking out
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any liquidity is resting in the marketplace is short term
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high here and the short term high here. Okay both being
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order blocks that it does trade within and then what does it
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do it sells back off now. We do see price violate this low
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and the old reference point low here. Okay, it, it breaks
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below it. it sweeps back into the range here. Now what's
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going on? Here, we have a new range. We have this high here.
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And we have a new range low here. Okay, so we have this high
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to this low price rallies on up. And where's it go back to a
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previous bearish order block right here, this candle right
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there. draw that out in time you see it tag it right there.
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So now what are we saying here? what's what's the what's the
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premise behind this? Well if you understand where we are in
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terms of the present, trading range, you don't need a
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directional premise. Okay? You can trade very, very short
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term, either intraday or day trading or short term trading.
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Okay, with a premise in mind that is long as you know,
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you're not going to overstay your welcome Okay, you have the
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likelihood of taking short term, intraday scalps, short term
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intraday price swings and short term trading and capture a
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lot of these little little moves here. Now if you're very
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disciplined, you can do this over and over and over again,
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with a good pair like this. Like I said, the swissy is
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pretty volatile in this gives you a lot of opportunities to
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trade like this. I don't trade the swissy a lot. But if I do
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trade it, I trade it in this capacity because I don't feel
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that it's one of the pairs that I can trust because it's
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very, very volatile. It comes down a lot takes out lows hits
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a highs, and it's it's characteristic is very, very range
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bound. And you can trade a lot of setups with this with this
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pair. You have a bullish order block here. Okay, price dips
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down into rallies. Okay, and you can take profits in here.
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Yes evaluates and goes through it. Okay? But look at the
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profit potential. It's available by understanding where you
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are in the range. That's 280 pips catching up I like that.
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Just so you know, I'm not cherry picking. We have a dealing
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range low here and dealing range low on high here. Okay,
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price rallies back up to what the old order block right
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here. sells off. Where's it go down to this range high to
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this range low to the previous bullish order block right
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here. Okay? Don't buy take profits at old highs. Okay, sure
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you can hold on to higher prices, but there's no guarantee
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is going to do it. Remember we have a 70% chance that price
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will stay within a range. So you can take a large portion of
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your trade off maybe 80% 20% on these types of incidents,
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that's what we're talking about when we talk about taking
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partial portions of our trade off. You want to be doing it
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with a systematic approach to it,
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but a framework as to why you're doing it. Because as we
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trade up to here, there's no guarantee this is going to
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continue going up, it could deeply retrace, and you'll have
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to ride through all that. And many times, it could just
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continue to trade lower and blow out your stock. So it's
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it's very, it's nicer as a trader to take some profits as a
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logical place of resistance. Or we could see potentially a
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retracement where we don't want to ride through that. Okay,
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because if we're at the extreme of the range, we want to
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hopefully see this continuation, but there's no guarantee
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it's going to happen. So by having that understanding, we're
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trading with a 70% chance of, yes, this may hold us lower,
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but you also you're taking 100% likelihood of taking a large
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portion of your trade off. So let's say you took 80% off it
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This high from a low down here that you've went long on a
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previous order block, you're trading inside the range here,
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this is your high and this is your low. We know that 70% of
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the time, we're 70% odds that you are not going to see a
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higher breakout. That means take a larger portion your trade
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off. So let's say we took 80% off and long down here, leave
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20% on look at it does, you end up making more money on the
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20% remaining in the position than you did on your 80%
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taking it off from here to here. Okay. And you're keeping
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risk low you're minimizing risk and maximizing profit
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potential, okay. Now, we have another range here we have a
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low and a high to this high and this low order block is
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right here, dips down into it 70% likelihood that this range
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low will maintain and this range high will maintain. So what
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do we do? You can be a buyer here and taking profits here.
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If that's the case, and we buy right at the order block high
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as 343 pips made available, and taking out again 80% of the
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position right here leaving 20% on and look at it as it
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gives you a little bit more of a pump in that position. Now
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we have another dealing range, we have this low and this
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high, okay. Price comes down, and here is your bullish order
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block right in here. This right here would have amounted to
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a loss, okay, I want to give you opportunities where this
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would not work. Okay, I wanted to sit here and look at a
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chart and cherry pick everything in hindsight and say, Look
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how great I am. Look how great the tools are. But this is
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one where if you were trying to capitalize on this range
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phenomenon, it didn't work, but I'm gonna ask you a
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question. If you use your fibs in conjunction with This
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wouldn't this be below the 79% retracement level. So would
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this swing qualify up here it would but you didn't dip down
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in the order block far enough back here. Okay. So
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forgive me I can't remember if I went over this pattern here
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this is bearish or block here, but we have one price breaks
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back down below inside this dealing range high here and we
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violated this low here we have a new range low and this
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range high up here. But inside of this range we have this
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high, this high this high, this high, this high, this high.
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So each one of these are potential dealing ranges the way we
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use it
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And put them on the charts. You can see it.
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I'll leave this one alone. That's a Sunday I'm sure. Okay,
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so we have and this low down here, which on this user full
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horizontal for that. So we have this range, and we have this
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range. And we have this range, and we have the old high back
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here and the low here prior to this rally up. Let's
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incorporate our fib Okay, price retraces to well this this
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this level here absolutely means nothing to me. So I
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wouldn't I wouldn't look at this fib level as a means of
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interest I like 62 from this high here we still don't have
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anything from this high here we have nothing still. We have
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this high here and suddenly we have a sweet spot. Now what's
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nice about this one is we have old lows here. Actually, we
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have a nice fractal low that was broken to the downside and
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we came back and retested it. Okay, see how prices move back
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into this area here. See this low, lower low, higher low.
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Okay, so we have a fractal here. We broke through it, and
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then retested it in here. Okay, back in this area over here,
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but now look behind price.
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Do you see in this consolidation in here? Okay, what do you
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see? Where's the waterblock? At?
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see it right there. So inside this range, we've rallied back
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up, I would not. This is and this is where we're getting at
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with this, I would not be willing to assume new long
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positions, trading up against this bearish order block on a
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daily chart, and we're at the extreme of the range. Again,
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we're getting up to these levels here, and we bar this
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level. Here's that swing high. So dealing range highs here.
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We're off the lows here. We got a 70% likelihood This is
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going to maintain price. Okay, that's what statistics tell
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us. Price spends 70% of time inside of range. So as we get
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up into this level, look what we're doing, would you be
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willing to buy up here up against a bearish order block at
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the far extreme of a dealing range on a daily chart like
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this, okay, so inside this range, okay, we have very little
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to go by in terms of statistical odds. In fact, it's
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statistically against us, okay, the odds are that this is
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not likely to continue higher. Okay. And that's, that's the
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benefit of looking at where we are in a current range. Now,
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let's go back to this level over here. Okay, down in here we
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have a bullish order block. Okay, and very handsome. You can
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see how that was handled there. As price starts to break
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down. Notice how we got very, very, very close to it, but
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never violated it. Okay, so price stayed What? Inside the
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range. Price eventually comes down to that range, okay?
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breaks it a little bit. But look at it as it trades deep
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back into the range again, sweet below it again work so a
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couple times and then eventually moves outside of the range,
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but look how long it took to get outside of that range a
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very long time. Going back through all of these levels,
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okay, we can see many instances were trading by defining
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where we are in terms of the current trading range. You
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could trade counter swing trades, both directions, okay,
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like this level in here. Okay, you have a bearish order
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block here you have a bearish order block here
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and I apologize if This seems like a whole lot of just
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looking at a chart and grabbing the best positions. I
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promise you if you spend a week going through every pair
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that you'd like to trade and go through and look at highs
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and lows, okay old highs and lows and see where prices
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retraced and and all of the retraces back to the highs and
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lows. Okay, you'll see that there are absolutely beautiful
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trading opportunities where over and over and over again.
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You could be really finding a lot of times what many traders
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can't see on the chart. This low to this high really
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handsome opportunity again now once we get up here, what do
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we do? We can look for a bearish scenario if you're a
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harmonic trader. Do we look for bearish bats bears
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00:28:44,640 --> 00:28:49,230
butterflies? bearish gartley up in here? bears turtle soups,
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00:28:49,620 --> 00:28:54,810
bearish stochastics, Barrett's MACD divergence, you know,
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00:28:55,230 --> 00:28:58,380
head and shoulders formations, all those types of patterns
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in this area here. Looking for what the retracement back
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into the dealing range here and this is your bullish order
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00:29:05,550 --> 00:29:09,930
block here. And we would look to take a exit point and maybe
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00:29:09,930 --> 00:29:13,320
even look for a bullish pattern to trade in here with the
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00:29:13,320 --> 00:29:16,800
expectation of this high being retested. So it gives you a
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00:29:16,800 --> 00:29:24,540
means of trading it very, very extreme of each range. Okay.
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00:29:24,660 --> 00:29:27,600
So when you're looking at trip, you want to be looking at
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00:29:27,990 --> 00:29:36,330
doing at least 90% of your trades at the far extreme of each
369
00:29:36,450 --> 00:29:39,840
range that you're working within. Okay, yeah, the likelihood
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of trading in the middle of the range is much, much lower.
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If If you trade in the middle range versus the extreme outer
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range. Like up in here, you being a seller up here versus
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being a buyer. It goes without saying it's pretty obvious,
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00:29:57,090 --> 00:30:01,470
okay. The prices rally this far. Just like we've seen here,
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00:30:01,470 --> 00:30:04,470
price rallies in this far one direction, you're going to
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00:30:04,470 --> 00:30:09,120
outer CUSP, okay? They're out a range of this trading range,
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00:30:09,300 --> 00:30:13,380
the likelihood of that continuing up is far, far less than
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00:30:13,380 --> 00:30:17,340
the likelihood of going lower. Okay. So again, the question
379
00:30:17,340 --> 00:30:20,280
is, is where are we in the range? And where is the path of
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00:30:20,280 --> 00:30:23,100
least resistance? If you think like that, look into the
381
00:30:23,100 --> 00:30:26,400
charts, defining the current trading range that we're
382
00:30:26,400 --> 00:30:28,950
working with, and understanding that mechanics are setting
383
00:30:28,950 --> 00:30:32,430
planning time price dates in a range, it does not mean 100%
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00:30:32,430 --> 00:30:34,230
of the time, it's going to be like that. But notice what
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00:30:34,230 --> 00:30:37,830
we're doing, we're looking for trades back and forth, each
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00:30:37,830 --> 00:30:41,970
direction and not having to rely on a trend directional
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00:30:41,970 --> 00:30:45,120
bias, like we talked about in the first two volumes. And the
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reason why I'm including this is because I know some of you
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00:30:48,360 --> 00:30:52,620
simply can't trust the moving averages, and you want to have
390
00:30:52,620 --> 00:30:55,290
something that has a lot more action in your trading. If you
391
00:30:55,290 --> 00:30:57,750
start trading inside the range like this, you're gonna have
392
00:30:57,750 --> 00:31:01,020
more trades than you ever dreamed of. But you're also going
393
00:31:01,020 --> 00:31:03,120
to have the likelihood of losing more times than you
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00:31:03,120 --> 00:31:04,740
probably would if you just stayed on one side of the
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00:31:04,740 --> 00:31:08,820
marketplace, like we discussed in volumes one and two. So,
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00:31:09,420 --> 00:31:14,040
to recap, when we look at price, we want to find out again,
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00:31:14,040 --> 00:31:17,040
where are we at in the range, what the only range highs and
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00:31:17,040 --> 00:31:20,820
lows are we working within, and the likelihood of that range
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00:31:20,820 --> 00:31:23,790
staying intact is 70%. Okay, so that's pretty good
400
00:31:23,790 --> 00:31:27,900
statistical odds. If you add that equation with the order
401
00:31:27,900 --> 00:31:31,350
blocks and you keep your profits very concise, very
402
00:31:33,990 --> 00:31:35,880
objective. In other words, this is an area where you would
403
00:31:35,880 --> 00:31:38,880
expect to see selling because we had selling all through
404
00:31:38,880 --> 00:31:42,390
here, but more importantly, we have a very clear, bearish
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00:31:42,390 --> 00:31:45,240
order block. price went way up in that level and what
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00:31:45,240 --> 00:31:49,710
happened true to form drop down, look at this, it goes right
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00:31:49,710 --> 00:31:52,950
back into a previous bullish order block is a perfect
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00:31:52,950 --> 00:31:55,620
opportunity to take your profits, just doing a trade like
409
00:31:55,620 --> 00:31:59,640
that. Okay, just simply doing something like that. here to
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00:31:59,640 --> 00:32:03,360
here. Hundred 80 pips? Would it be fun? It would be too far
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00:32:03,360 --> 00:32:07,830
for me to say that, realistically, there's a good 60 pips in
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00:32:07,830 --> 00:32:11,670
that that you could have taken out. Think about that. It's
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00:32:11,670 --> 00:32:15,960
not getting every high and low. It's about getting portions
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00:32:16,050 --> 00:32:20,220
of these moves, okay and banking them and compounding the
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00:32:20,220 --> 00:32:24,090
growth of your equity over a period of time. And I promise
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00:32:24,090 --> 00:32:26,490
you if you spend time looking at the charts and studying it,
417
00:32:26,910 --> 00:32:30,570
you'll see many many more opportunities trading inside the
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00:32:30,570 --> 00:32:31,080
range