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ICT - Trading Plan Development 3.srt

Last modified by Drunk Monkey on 2021-06-11 13:56
1 00:00:11,759 --> 00:01:22,769 ICT: This we're looking at the top down ICT approach. Okay. And also, as we've always mentioned before in previous examples of education in my work, everything
2 00:01:22,769 --> 00:01:32,789 hinges upon the interest rate market. Okay, whatever you see in the interest rate market will have a driving force in the United States Dollar Index, which
3 00:01:32,789 --> 00:01:43,049 is essentially the barometer for foreign currency markets. If US dollar is weak, it bodes well for most foreign currencies. And if the United States dollar is
4 00:01:43,289 --> 00:01:55,799 bullish, it bodes poorly for foreign currencies and expect lower prices and sympathy. And obviously, that train of command maintains its infact across all
5 00:01:55,799 --> 00:02:05,819 market asset classes, that being the stock market, the commodity markets as well. It's not limited to just currency markets. So, obviously, what do I mean
6 00:02:05,819 --> 00:02:15,959 by it all hinges on the interest rate markets while we watch the 10 year five year two year and 30 year market in the yields. Okay, and by looking at the
7 00:02:15,959 --> 00:02:31,919 yields. What we look for is, generally the yields are moving in tandem. Okay. In this example, crudely examples, we're looking at a downward shift in yields. So
8 00:02:31,919 --> 00:02:42,959 that would indicate that yields are dropping, that is a risk off scenario. So while risk is off, we are no longer looking for buy signals, we're focusing more
9 00:02:42,959 --> 00:02:55,589 on the sell side until we see a divergence in the yields. Okay, and this could take form in five year it could be in a 10 year. Generally, you want to be
10 00:02:55,589 --> 00:02:57,449 looking at three
11 00:02:58,470 --> 00:03:08,490 yields, like for instance, like I trade the British Pound in the fiber. Well, it's crossed with the US dollar. So the triad, the yield triad that I use, as
12 00:03:08,490 --> 00:03:17,520 the US yields to UK yields and the German yields as described here in this again, rather crude example, at some point, and usually between two to three
13 00:03:17,520 --> 00:03:29,250 months, couple times a year, there's a shift that takes place in the interest rate market. And its quarterly driven. So at some point, the yields will fail to
14 00:03:29,250 --> 00:03:37,950 make comparable lows, okay, instinct, but more or less depth Dow Theory, that's what I've applied here is they have to confirm one another. If they don't
15 00:03:37,950 --> 00:03:45,930 confirm one another, something's taking place. Fundamentally, I'm not claiming to understand what it is fundamentally that's taking place. I'm just stating
16 00:03:45,930 --> 00:03:56,460 that I see it in the chart, following the yields. So in one diverges in this example, you see that the UK and the US yields failed to make lower lows while
17 00:03:56,490 --> 00:04:07,050 the German yields did, okay, that's generally an indication that the German markets are less favored. But yes, they probably will move up in 10 in sympathy.
18 00:04:07,710 --> 00:04:18,060 So now we see a shift on their way now as the yields are increasing for the next quarter. This generally will be bullish for foreign currencies and or bearish
19 00:04:18,630 --> 00:04:30,480 for the US dollar. And this will maintain its impact over the market for a period of time until at some point, the yields will encounter a resistance level
20 00:04:30,480 --> 00:04:39,600 of some kind. And that's going to come in the form of one yield failing to make a higher high and or more than one, okay, so what you're doing is you're looking
21 00:04:39,600 --> 00:04:50,160 for a shift in the overall trend of the yields, okay, so it's going to tip your hand that something fundamentally is slowing down. There's waning interest in
22 00:04:50,160 --> 00:04:59,790 risk, and there may be a turn likely don't sue. So now you want to be a little bit more cautious in your balls by signals. Because we may see a drop in yields
23 00:04:59,790 --> 00:05:08,040 which would be a risk off scenario and then the dollar should be rallying at this point. Okay, so these are the concepts that you have to apply, beginning
24 00:05:08,040 --> 00:05:16,290 with your top down analysis understanding, are we in a risk on or risk off scenario overall in the interest rate markets. And then once we have that, we
25 00:05:16,290 --> 00:05:20,400 can look at a more macro view down to a micro view.
26 00:05:27,660 --> 00:05:36,060 We are obviously, beginning all of our analysis with the interest rate markets. And you don't want to have to expect this to shift every single day, okay, you
27 00:05:36,060 --> 00:05:44,880 want to be having a higher timeframe, macro view on interest rates, and monitoring that based on our buy signal oriented buy program or sell program.
28 00:05:45,510 --> 00:05:54,780 Next, obviously, we would be considering the direction of the United States dollar and the technical levels that that in the sea is currently being impacted
29 00:05:54,780 --> 00:06:08,190 by obviously, it helps to trade with the understanding that's found in the futures market, that being the treasuries in the Tino markets that mean the five
30 00:06:08,190 --> 00:06:22,170 year 10 year and 30 year treasuries. The stock indices are always a good to watch, I go from interest rates to the US dollar to Treasury markets. And check
31 00:06:22,170 --> 00:06:31,860 out what the overall risk tone is in the stock market are the averages again confirming using Dow Theory? If they're not, it may be an indication that there
32 00:06:31,860 --> 00:06:41,580 may be a short term and or longer term shift taking place in the marketplace. Then I obviously look at the CRB index i try to get a feel for Are we still in a
33 00:06:41,580 --> 00:06:50,730 risk on risk off scenario that's confirmed with the commodity markets and if the CRB is bullish, that would indicate that we are in fact risk one. And that would
34 00:06:50,730 --> 00:07:00,600 be bearish for the dollar and bullish for foreign currencies. And obviously, it always helps to look at a few other select markets like gold and oil, because
35 00:07:00,600 --> 00:07:04,800 those are good barometers for risk on risk off as well.
36 00:07:10,590 --> 00:07:23,220 For the anticipatory stage, okay, the first stage of analysis is always going to be the anticipatory stage, okay, you're going to spend more time in this stage
37 00:07:23,220 --> 00:07:33,540 of your analysis than any other stage. And it begins with seasonal tendencies. That could be the are we in the bush quarter or a bearish quarter based on price
38 00:07:33,540 --> 00:07:44,760 action? Are we in an area where seasonally we expect prices to rally or decline? That there's a subtle taste that takes place in generally every marketplace
39 00:07:44,760 --> 00:07:53,280 there, that is tradable? And it's my advice to use that then learn what they are, and I'm going to share with you a few of them that are very strong in this,
40 00:07:54,450 --> 00:08:03,210 this presentation over the course of this presentation, you're gonna learn more, but you have to have an understanding of where we are seasonally. And obviously,
41 00:08:03,990 --> 00:08:12,930 you know, while we're looking for seasonal influences in the marketplace, you're always watching that yield SMT. Okay, you know, we're just looking for the triad
42 00:08:12,930 --> 00:08:20,460 to be diverging comparable to the highs and the lows, one's going to fail to make a higher high. And that's going to give you an indication that we're
43 00:08:20,460 --> 00:08:30,210 probably seeing a shift from risk on to risk off, and vice versa. Okay. And we always look at correlated pairs that we trade, and it's good to be a specialist
44 00:08:30,210 --> 00:08:40,500 in market trading, because it's not, to me, it's me, it's never been advantageous to be a trader in every single every market, okay? Because you
45 00:08:40,500 --> 00:08:48,000 can't watch too many things at one time you have a really good relationship with the marketplace. If you spread too thin, obviously, you How are you going to get
46 00:08:48,000 --> 00:08:56,730 a fix on what's going on in price. So be a specialist, you know, pick one or two markers that closely correlated strongly correlated, and inspecting is basically
47 00:08:57,480 --> 00:09:11,460 trade likes, look at correlate highs and lows. And obviously, you and me looking at the stock market indices, NASDAQ Composite Index, the s&p and such. Okay,
48 00:09:11,460 --> 00:09:19,170 every week, you want to be maintaining a watchful eye on the CO T and we watch the net serious position. Okay, the overall net position, are they bullish or
49 00:09:19,170 --> 00:09:28,500 bearish? And are they lessening or increasing their shorts? That's going to be an indication whether or not the market is in fact, bullish, bearish or if the
50 00:09:28,500 --> 00:09:39,960 current market moves been on their way is in fact legit or if it's not. You always watch the open interest and the premiums between the nearby in next month
51 00:09:39,960 --> 00:09:51,030 out on your currencies. And you're going to be looking for indications that there may be a strong demand for or waning demand. If there is a premium for
52 00:09:51,030 --> 00:10:05,100 that particular market. market sentiment obviously, you know, this could be derived that by using online market vein numbers, we can look at sentiment based
53 00:10:05,100 --> 00:10:13,650 on chatter that's going on in the news, the forums, talking heads on TV, if everybody's expecting the same thing, it's generally going to be the other way.
54 00:10:14,040 --> 00:10:23,700 And obviously, we always have a watchful eye on key higher time frame support resistance levels. That is the mack daddy of all things that we do in technical
55 00:10:23,700 --> 00:10:38,610 analysis, understand our key support resistance levels. Alright, the execution stage before we take any trade before we do any order entry, okay, once we have
56 00:10:38,610 --> 00:10:48,810 a higher timeframe, top down analysis done, we have an understanding of where we are at in terms of yields and interest rates. Okay, we got to get for the day
57 00:10:48,810 --> 00:10:58,500 that you would actually be doing any trading, you still get a market, major market tone, or are we still bullish overall going into the new day? And what I
58 00:10:58,500 --> 00:11:07,800 mean by that, what are we risk on a row scarf, you have to understand this, because if you're buying generally in a risk on scenario, that's good. But if
59 00:11:07,800 --> 00:11:13,470 you're buying foreign currencies in a risk off scenario, you have the tide moving against you. And it's very, very difficult to make money in that
60 00:11:13,470 --> 00:11:23,310 situation. So it pays to understanding what it is you're doing every single day. And judging what markets doing going into London, are we rejecting highs or
61 00:11:23,310 --> 00:11:32,610 rejecting lows, probably pricing in the daily low daily high, you want to be trading in that direction on premise. And obviously it goes without saying that
62 00:11:32,610 --> 00:11:42,870 if we have a buy or sell for programming, higher timeframe, based on directional premise on monthly, weekly, daily, and for our if we're in a bull program, by
63 00:11:42,870 --> 00:11:45,210 program rather, you will be focusing on the buy signals.
64 00:11:47,700 --> 00:11:57,510 Obviously, we have to have our macro support resistance levels from the higher time frame monthly, weekly, daily for hour and one hour on our sub 60 minute
65 00:11:57,510 --> 00:12:05,160 charts. So in other words, our 515 minute charts have to have these higher time frame support resistance levels in the chart, you have to see them be aware of
66 00:12:05,160 --> 00:12:11,580 them, okay, don't just have them written on your piece of paper, having your chart, look at them know where they are, where they're at, you'll get a better
67 00:12:11,580 --> 00:12:21,420 feel for what price is actually trying to do. market structure. Okay, before we execute, we have to understand where are we at. If we're bullish, we're looking
68 00:12:21,420 --> 00:12:29,310 for intermediate term or long term lows on the left hand side of our chart, okay, so we're going to be looking for short term to medium term lows to be
69 00:12:29,310 --> 00:12:40,680 keying off of to get ourselves in sync with the higher time frame macro view. Okay, and market structure is a key role in that understanding in execution and
70 00:12:40,710 --> 00:12:49,260 your trading. If you're bearish, okay, you want to be seeing out long term or short term high on the left hand side of your chart. And where you're trading
71 00:12:49,260 --> 00:12:57,120 now you'll be shooting for intermediate term highs or short term highs to be getting short and getting in sync with that overall market structure that is
72 00:12:57,120 --> 00:13:10,470 bearish. The market flow obviously, you have to understand simply because the market is poised to trade higher. And technically, yields may be moving up and
73 00:13:10,470 --> 00:13:21,870 risk or all those things are in place. You know, support has been traded to it makes a lot easier trading if we use market flow and a higher timeframe for our
74 00:13:21,870 --> 00:13:32,250 daily to make sure that we have the tide in our favor. Okay, and then once it starts moving, it makes trading a lot easier. Okay, so we have a bullish market
75 00:13:32,250 --> 00:13:43,020 structure, bullish market flow with a bullish macro view, okay, and we're trading with risk on scenarios in a buy program. Now, simply moving to a simple
76 00:13:43,050 --> 00:13:55,410 time and price theory of expecting the low to form during London. Okay, you can expect the Asian range to be a very key role in your order placement, you'd be
77 00:13:55,410 --> 00:14:03,360 looking for the Asian range high or less to look for your buy signals. And vice versa. If you're expecting a risk off scenario, you'd be using the time of day
78 00:14:03,360 --> 00:14:15,540 principle of the Asian range low or greater looking for a Judas swing up and looking for your shorts to be anywhere in the London open and or the New York
79 00:14:15,540 --> 00:14:27,210 open sessions to be keying off of that directional premise in the higher timeframe. Drill down through all the steps we just covered here. More detail
80 00:14:27,270 --> 00:14:36,390 obviously will be given as we go through actual real top down analysis and real breakdown of the market moved it took place in the spring into summer months of
81 00:14:36,390 --> 00:14:46,470 2012. But for now what we're doing is is we're outlining really the top down approach in a nutshell so that we you going into your charts every day. This is
82 00:14:46,470 --> 00:14:54,600 the framework that you should have in your your psyche as a trader, what it is that you're doing every day is it on a daily basis. Is it the same thing over
83 00:14:54,600 --> 00:15:01,320 and over again, this is my routine. You may tweak it a little bit. You may take some things out of here and move it around. You do something a little bit
84 00:15:01,320 --> 00:15:09,570 different in terms of order. But these are essential to me in terms of my concepts, my material, the things that I use when I do my analysis. Then
85 00:15:09,570 --> 00:15:18,540 finally, once we understand what we're supposed to be doing based on the hard timeframe premise, it goes into your order entries. Okay, and 90% of the time,
86 00:15:18,570 --> 00:15:31,230 I'm using limit orders to get in and get out and stop orders for protection. And unless I'm trading a breakout, and I wanted to keep buying strength, or selling
87 00:15:31,230 --> 00:15:39,300 weakness, okay, that's the only time I'm using a stop just 10% of the time. So what does that tell you? 90% of the time, I'm not trading breakouts. Okay, I'm
88 00:15:39,300 --> 00:15:48,450 actually fading the market moves, trade entry orders, we're going to talk about that in the last module, because we're gonna actually give you specific orders
89 00:15:48,450 --> 00:15:59,700 and specific examples on how to use these orders for actual demo trading counts. So you can you can practice in the sandbox and see whether or not these things
90 00:15:59,730 --> 00:16:15,270 work for you going forward. Alright, the reactionary stage right there, um, basically, there's times the market where, if you're in the trade, okay, and you
91 00:16:15,270 --> 00:16:27,150 have little to no movement at all, you've anticipated a market move, and price does go stagnant, it goes nowhere, it just starts going sideways, okay? That's a
92 00:16:27,150 --> 00:16:37,860 time for you to more or less kill the trade, especially if you're expecting a price move. And we're moving into a specific time of day where volatility should
93 00:16:37,860 --> 00:16:44,700 be increasing, but it isn't. Okay, it's just better just to close the trade. Do not
94 00:16:44,700 --> 00:16:55,950 expect your success to be hinged upon one single event, one single trading day, okay. And I think if you really take a look at your heaviest losses, look at
95 00:16:55,950 --> 00:17:07,290 your biggest losing days, okay? Or your string of losing days. I guarantee if you go back the mindset you had going into that trade is that you are expecting
96 00:17:07,290 --> 00:17:16,980 and hoping and praying that this move is the winner. This is going to be the one that puts you over the top or get you back to even okay. Don't Don't think like
97 00:17:16,980 --> 00:17:30,780 that. Okay. demand the tools to place you in optimal trade entry. If it doesn't provide you that and you don't see a very short term near term feedback in your
98 00:17:30,780 --> 00:17:37,800 trade? In other words, are you seeing the things that you're expecting in terms of volatility? Are you seeing a rejection at the lows that you were buying into?
99 00:17:38,010 --> 00:17:44,220 Are you seeing are you seeing follow through the upside after you bought that long, if you're not seeing that, and it's going stagnant, and you're getting
100 00:17:44,220 --> 00:17:53,460 close to the end of the day, going to the London close? Or if you're going into New York open, okay, and prices are stagnant. It may actually bounce up against
101 00:17:53,460 --> 00:18:02,280 you, if you're, if you're short. Or if you're if you're long, it may actually pull back against you or could just go into a longer term consolidation. Why sit
102 00:18:02,280 --> 00:18:12,180 in it? Okay, if it's showing you failure to move, that's your time to react, kill the trade. There's no risk now. Okay? If it runs off, and if you would have
103 00:18:12,180 --> 00:18:24,330 stayed in made money, big deal, let it go. Okay. But we act quickly when trying to preserve our capital. We act slowly when we're trying to make money okay, we
104 00:18:24,330 --> 00:18:35,730 want to be methodical we want to be very very focused. Okay, in detail oriented, when it comes to exposing our money to risk we want to really put it to work
105 00:18:35,940 --> 00:18:47,430 when there's something highly probable in our favorite to take advantage of why risk on very low odd setups there's no reason to use enough of them happening in
106 00:18:47,430 --> 00:18:54,660 a week there's enough I'm happening in a month and over the year Good grief, you have tons and tons opportunity to make money. Don't sit in questionable trades.
107 00:18:54,810 --> 00:19:03,540 If it's not moving for you kill the trade take another setup. If you see rejection of the key support level that's counter your expectation or you're
108 00:19:03,540 --> 00:19:14,670 injured and you're in a trade kill it, why eat up open profits, okay? Turn your paper profits into literal profits go to cash, move to the sidelines, take your
109 00:19:14,670 --> 00:19:25,590 profits and get out. Okay? If you see rejection, strong rejection, something comes across the wires and hits you you know unexpectedly which you know in the
110 00:19:25,590 --> 00:19:34,830 event that major catastrophe or global national event something that nature you know, that can rock the markets you never really know when that's gonna happen.
111 00:19:35,190 --> 00:19:43,710 So if you see that it's this better this the collapse the trade and just get out. You could always get back in. Always get back in even for those folks that
112 00:19:43,710 --> 00:19:54,720 are in carry trades. Okay, you can get back in those moves. Okay. And look what happened in Japan. If, you know, the earthquake hit New tsunami took out new
113 00:19:55,530 --> 00:20:05,850 reactors and the whole world's waiting for New Japan. You slip into notion in dissolve those things, we can't expect them the other acts of God. So we have
114 00:20:05,850 --> 00:20:15,240 to, more or less take ourselves out of out of the risk environment, okay in stand on the sidelines where there's no more risk, okay? And we can you
115 00:20:15,240 --> 00:20:25,560 hopefully gain a more objective view of the marketplace and then react objective news with objective analysis, not you reactionary. gambling and trying to get in
116 00:20:25,560 --> 00:20:34,890 there and throw the dice and chase that near the market chasing you mentality, it. That's not, that's not how we make money, okay? You want to react by getting
117 00:20:34,890 --> 00:20:43,230 out and take yourself out of the risk. And obviously, if you're sick, and if you have a life event that takes place and requires your time, your kids might have
118 00:20:43,230 --> 00:20:51,510 something that you know, requires you as a parent, where your spouse needs you to do something with them. You What takes precedence is your relationship in the
119 00:20:51,510 --> 00:20:59,790 real world or the charts. Okay? Hopefully, you know, I appreciate you guys want to spend time with me in these video modules, but I certainly enjoy it, but I
120 00:20:59,790 --> 00:21:08,400 enjoy my family more. And you know, if it's going to be a choice, whether if it's you and YouTube and baby pips, it's going to be my family. Okay, so if
121 00:21:08,400 --> 00:21:17,370 something takes place that requires me and my time or if I get sick, you gotta react if you're in a, in a trade, and you just think that you're not going to be
122 00:21:17,370 --> 00:21:27,240 able to adequately manage the position, react, React responsibly, and just collapse the trade and or tighten up the stop loss. So that way, if you do fall,
123 00:21:27,540 --> 00:21:34,200 ill or you fall, disconnected to the marketplace, because of life events that need to take place, maybe there's a death in your family,
124 00:21:34,800 --> 00:21:44,160 you're going to be able to think objectively during that. Okay, grief can have a major impact on a trade your psyche, and it's just better, just more or less,
125 00:21:44,400 --> 00:21:47,280 remove yourself from the risk. Okay, and you can always get back in.
126 00:21:52,710 --> 00:22:08,460 Alright guys, fractal analysis in price action. Alright, what's a fractal? Well, a fractal is a pattern in nature, and in many things that, you know, as a as a
127 00:22:08,460 --> 00:22:21,180 Christian, okay. I believe there is a creator. Okay. And I give thanks to him on a daily basis for the insights that I've been blessed with. And I share with
128 00:22:21,180 --> 00:22:34,140 you. I think that fractals are one little signature on his part. Also, that the industry they just said, there's a design to this, okay, everything around this
129 00:22:34,320 --> 00:22:49,230 has a specific design. Okay, there it shows intelligence behind it. And everything in nature has this same phenomenon. It's much like Fibonacci. But a
130 00:22:49,230 --> 00:23:03,240 fractal is defined simply as a pattern that is repeated in infinite size up and down. In other words, something that you see on one scale, okay, if you scale
131 00:23:03,240 --> 00:23:15,090 into it and zoom in, you can see it same pattern repeated on lower levels. And obviously, the same thing, if you magnify it out and look at it as a macro view.
132 00:23:16,170 --> 00:23:29,760 Well, that same principle is in effect in price. Okay, and price, because I'll give you a real generic way of viewing it. When I say price. Okay, what comes to
133 00:23:29,760 --> 00:23:40,290 mind to you? Is it a daily chart? Is it a one minute chart? Is it a tick chart, for some of you have may have been a weekly chart, or it could have been a five
134 00:23:40,290 --> 00:23:53,250 minute chart, it doesn't matter what time frame that we are referring to, it's always just the last price. Think about that. You're looking at price right now.
135 00:23:55,770 --> 00:24:09,090 At the time of this recording, the cables trading at 161 74. That 164 by itself absolutely is useless to you, unless you have a understanding of where you're at
136 00:24:09,180 --> 00:24:18,840 in terms of the big picture. Okay, by having the big picture. And using a higher timeframe, perspective in your analysis and understanding key support resistance
137 00:24:18,840 --> 00:24:29,040 levels. You can go into the marketplace and see patterns that repeat over and over and over again. There's specific fractal patterns. And I'm not gonna reveal
138 00:24:29,040 --> 00:24:39,630 them all in this module, but you'll have a few of them shared throughout the presentation over the last few parts of the series. But the fractal analysis
139 00:24:39,660 --> 00:24:50,580 concept can be applied to the simple optimal trade entry. Okay. What does that mean? How do we how do we go into the marketplace looking for a fractal? What is
140 00:24:50,580 --> 00:24:57,750 it? Okay, it's one thing that you, myself and other folks don't understand fractal analysis. We can go and show you a chart in hindsight say look, this is
141 00:24:57,750 --> 00:25:06,960 where this did that. This is where it that's Great, okay, but without a firm understanding what a fractal is, and what it looks like and how it's applied to
142 00:25:06,960 --> 00:25:16,530 the marketplace is not going to do anybody any good. Okay, so this section is really just going to highlight an example of one form of a fractal. Okay. And
143 00:25:16,560 --> 00:25:26,640 there's all types of fractals there. So there's many different kinds of fractals in terms of price action. But the main thing is, is if you can't understand what
144 00:25:26,640 --> 00:25:37,500 a fractal is, on a higher time frame premise, okay? It's going to mean little, to no good use to you, if you're trying to apply it to intraday charts. Okay, so
145 00:25:37,530 --> 00:25:47,310 what am I, what am I saying here? Okay, well, in this example, we're going to talk about a fractal, okay? And this is going to give you a price swing, and
146 00:25:47,310 --> 00:25:59,010 we're going to more or less break it down and show you more insights on how price in itself works within a fractal nature. Alright, we're looking at, it
147 00:25:59,010 --> 00:26:10,620 could be any price, any commodity, any stock, it could be anything. But for now, we're just going to talk about this being a currency pair. Okay. So price is
148 00:26:10,620 --> 00:26:20,850 trading within a specific range. Okay. And we noticed that above where price is currently, this is a key resistance level, okay. One would expect if we're this
149 00:26:20,910 --> 00:26:31,890 close to it, price would eventually try to run up to that key resistance level. Now as price runs higher and approaches that resistance level, at some point, it
150 00:26:31,890 --> 00:26:42,120 will hit that level, we as traders, and technical traders, we would expect reasonably there would be a pullback or a bounce away from that particular price
151 00:26:42,120 --> 00:26:51,630 level. At some point price will come down in that retracement, okay, in swing low, make a small little short term low.
152 00:26:51,930 --> 00:27:03,120 When that takes place, we now have a new reference point for short term support. Okay. Now, obviously, if we have short term support here, and a key resistance
153 00:27:03,120 --> 00:27:13,080 level like that, a technical trader like we are, are aspiring to be when prices starting to bounce, again, on a short term basis, we could reasonably expect or
154 00:27:13,080 --> 00:27:25,350 anticipate another retest or run attempt to get back to that resistance level. Okay. At some point, it may get up there and blow through it, but many times it
155 00:27:25,350 --> 00:27:34,230 will fail to do that. Okay, and then start to come back down again. Now, here's where if you understand optimal trade entry, in which is basically 60 to 70% to
156 00:27:34,230 --> 00:27:47,670 a certain level on a price swing, if you see this, this could lower you into believing that this could be perhaps a bull flag. It could be perhaps another
157 00:27:48,090 --> 00:28:04,110 ABCD price extension, okay, or it could be a top Okay, we have to go back to that higher timeframe resistance level, that takes precedence that is the one
158 00:28:04,110 --> 00:28:15,840 that we have more emphasis behind not the short term little blips in the marketplace, okay. We expect sellers to be heavier in market than buyers. Okay,
159 00:28:15,840 --> 00:28:29,640 and we anticipate price to break below the low here. Okay, if we see that break below, okay, that's going to give us a shift in what market flow and market
160 00:28:29,640 --> 00:28:43,290 structure we're looking at a market that's breaking down if this low is taken out. Now, if price does break down lower and breaks through that now we are
161 00:28:43,290 --> 00:28:57,870 confirmed, we have a bearish market flow and a early market structure reversal Okay. So now, we could reasonably expect this higher timeframe optimal trade
162 00:28:57,870 --> 00:29:11,430 entry Okay. That would be the higher timeframe turning point. And now we can look for continued sell signals, okay. So we see here a very standard optimal
163 00:29:11,430 --> 00:29:25,800 trade entry top formation the market broke down okay. In itself, this is a fractal. Okay, look at this pattern right here. This in itself is a pattern that
164 00:29:25,800 --> 00:29:39,630 is applicable in fractal analysis. As price breaks down and moves further lower, okay, go back to the concepts that we just learned in part two of the trading
165 00:29:39,630 --> 00:29:54,570 plan development series. Range contraction, range expansion and trading range to trend trading rings the trend, okay, so consolidation, to trend consolidation to
166 00:29:54,570 --> 00:30:05,640 trend in this region here, even though we saw price movement, up, down, up Up down to make the optimal trade entry formation here. That's still a
167 00:30:05,640 --> 00:30:22,800 consolidation. See the range here? That's a consolidation, this move here is the trend, okay, or the price swing out of consolidation. So now, when price breaks
168 00:30:22,800 --> 00:30:32,400 down like this, what do we as technical traders expect to see another consolidation. So what's going to take place in the consolidation is going to be
169 00:30:32,400 --> 00:30:45,360 a bounce, it could trade up to another resistance level, okay, which would be an old support and price will eventually trade back into a consolidation. Okay, and
170 00:30:45,360 --> 00:30:58,770 we can now look for inside this consolidation, smaller, short term, optimal trade entry tops. Thank you, we have a higher time frame price leg that's
171 00:30:58,770 --> 00:31:14,520 already turned on a higher timeframe key support and resistance level. As price broke down, we are now in our minds focusing on lower level 515 one hour basis,
172 00:31:15,390 --> 00:31:26,130 optimal trade entries to look for what lower prices, okay, so by having this mindset going in, and trading during consolidations, we're essentially limiting
173 00:31:26,130 --> 00:31:38,460 our exposure to the market by only selling short. Oh, basically an established weak market. Okay. And we have a bias going into our analysis. So we're not
174 00:31:38,460 --> 00:31:44,730 going to be subjective and, and just be logged into you buying and selling buying and selling simply because
175 00:31:44,820 --> 00:31:54,750 the price is doing whatever it's doing at the time we sit down in front of our monitors. We're focused on one specific process and we have the higher time
176 00:31:54,750 --> 00:32:03,300 frame support resistance levels on our or on our side, we have the fact that we have broken market structure, market flows on our side. Okay, because now think
177 00:32:03,540 --> 00:32:17,100 just looking at this price chart right here if this is a currency market flow is still bearish until we take out this swing high. Before this swing high formed,
178 00:32:17,340 --> 00:32:27,570 market structure was still bearish until this swing high was taken out. Obviously, we keep making lower lows and lower highs. And we maintain a sell
179 00:32:27,720 --> 00:32:42,180 scenario in our trading, looking for shorter term. You know, words, lesser timeframe, fractal pattern of optimal trade entry tops, okay? Again, price will
180 00:32:42,180 --> 00:32:52,650 stay within this consolidation as price moves up inside of each one of these price legs. Every single one of these, if this is a daily chart, everyone needs
181 00:32:52,650 --> 00:33:03,240 smaller price swings in here. If you look at smaller timeframe charts, you'll see optimal trade entries on a lower timeframe near the highs and the tops.
182 00:33:03,630 --> 00:33:11,430 They're going to be there because it's fractal in nature. Okay, it's gonna be there, I guarantee you, we're gonna look at some examples. Cuz I know you're
183 00:33:11,430 --> 00:33:18,180 probably scratching his head. Okay, this is great you to show me a line chart, Michael, but I really want to see want to be able to digest what you're what
184 00:33:18,180 --> 00:33:24,630 you're showing me and I'm gonna get to that. But this is the theory. Okay, so we, we have to have this before we go into the price chart. Otherwise, this is
185 00:33:24,630 --> 00:33:34,620 just one look like I'm cherry picking. Eventually, price will move outside of the consolidation, and into a trending move again. So we move from
186 00:33:34,650 --> 00:33:45,690 consolidation, to trending move to consolidation to trending move. Now we have a complete fractal on the higher timeframe inside of this overall price structure.
187 00:33:46,500 --> 00:33:57,690 This pattern can be broken down into smaller sub units on the lower timeframes. And you'll see the same pattern you see here on the lower timeframes as well. By
188 00:33:57,690 --> 00:34:06,420 having this perspective, going into your analysis, having it on a higher timeframe first and then moving down to a lower timeframe, it helps with your
189 00:34:06,420 --> 00:34:13,710 daily bias. It keeps you on the right side of the market, generally unless there's a major market reversal. But hopefully if you if you're monitoring the
190 00:34:13,710 --> 00:34:21,660 macro view Anyway, you should be anticipating that anyone less is an act of God or something new. Unexpected takes place in rocks the market.
191 00:34:26,970 --> 00:34:40,770 Okay, so we have our fractal pattern here. It's a down swing in prices a swing that you can see in any timeframe. It's not limited to any specific one. But
192 00:34:41,550 --> 00:34:54,150 what would it look like in a real chart? Well, it just so happens that I'm looking at the cable and we're going to use today's example. So it's it's more
193 00:34:54,150 --> 00:35:01,440 timely. It's it's something that you can look at right now. I know some of you probably are watching this video. Probably years from the time I did the
194 00:35:01,440 --> 00:35:15,990 recording, but as of the moment I did this I screen captured what price was dealing and this is a 15 minute chart of the cable British Pound USD alright and
195 00:35:16,020 --> 00:35:28,710 if you look at this alright if you look at this we have a major resistance level here 163 price trades up to that much in the same way we are our crude example
196 00:35:28,770 --> 00:35:40,860 to the left shows price goes up comes down okay and then comes up and makes another attempt to get back to that resistance level but it fails and it gives
197 00:35:40,860 --> 00:35:54,780 you an optimal trade entry note this low right here and now the fractal example in the upper left that's that low that would shift everything to bearish okay
198 00:35:55,710 --> 00:36:07,230 that is broken here. So, now what you would be looking for is optimal trade entry sell patterns because now you are an established bearish market okay.
199 00:36:07,650 --> 00:36:18,210 Everything you do from that point on should be looked for selling okay even your scalps okay? If you're an intraday trader look for smaller short term optimal
200 00:36:18,210 --> 00:36:29,250 trade entry sell signals okay. Focusing on one pattern in fractal in nature you can find several opportunities in this example alone that gives you optimal
201 00:36:29,250 --> 00:36:47,040 trade entries. For instance this optimal trade entry that we see here when it broke this example of market flow changing to bearish this swing high has to
202 00:36:47,040 --> 00:37:00,990 break before it becomes bullish again price moves lower trades up and inside here just this small little timeframe moving in here is a small optimal trade
203 00:37:00,990 --> 00:37:12,420 entry in here and sells off look at this high here to this high here I mean this low here, do you see how price trades down up into an optimal trade entry and
204 00:37:12,420 --> 00:37:26,850 then look at the sell off see that look at this high here in this low here in this high here? That's optimal trade entry. Okay. Look how many times it gives
205 00:37:26,850 --> 00:37:42,210 you optimal trade entries just in that small section of time. See this high here to this low here price trades down comes all the way back up. Optimal trade
206 00:37:42,210 --> 00:37:53,700 entry sells off again. Look at the price structure here it trades down comes back up optimal trade entry again sells off. You see how by using a higher time
207 00:37:53,700 --> 00:38:06,090 frame premise. You can use fractal fractal analysis to keep you on one side of the market keying off of one specific approach to trading in this case being a
208 00:38:06,090 --> 00:38:25,170 seller and it will keep you more or less you with the right bias Okay. Now notice the high to low here. Okay this high to this low. This is one price lake
209 00:38:25,530 --> 00:38:36,780 or one major dominant price swing then we had a major retracement deep in here. Okay? If you go and look at these high here to this low we have a optimal trade
210 00:38:36,780 --> 00:38:51,300 entry. Okay. So now think about it. We use the fractal pattern here in this leg here, but now zoom out and don't look so close. In other words if we move maybe
211 00:38:51,300 --> 00:39:07,320 to an hourly chart you would see this high to this low up to this high as a fractal pattern and sync capacity it shows here okay. So this high to the low
212 00:39:07,740 --> 00:39:20,310 would be more or less established in an example of being this high this low. And this low to this high would be crudely exampled by this low to this high. So
213 00:39:20,310 --> 00:39:26,310 watch what happens the same concept is now going to be applied with this price swing from high
214 00:39:26,970 --> 00:39:40,230 to low to high. This is the low market structure breaks down here. Okay, see this low? It breaks right there. So now what do you do? You look for optimal
215 00:39:40,230 --> 00:39:55,380 trade entry shorts. Here's your high trades down to a low starts to run up. What do you expect optimal trade entry? high low. Here's your retracement down. Look
216 00:39:55,380 --> 00:40:10,230 it happens again. See this high to this low also Trade entry down. Okay? Same thing here very short term, high, down to low. And in here, this is where we
217 00:40:10,230 --> 00:40:23,790 start to see what a breakdown did not fulfill. Look what happens here. See what's to happen we have this high turn. So now we have a probable change in
218 00:40:23,790 --> 00:40:36,660 direction, where now market flow has shifted to bullishness. So this, this fractal is now a replication of this price swing. So if we look at this high to
219 00:40:36,660 --> 00:40:49,770 this low in terms of pit magnitude and odds, the price swing, it's replicated in terms of distance in the words this range from low to high is essentially the
220 00:40:49,770 --> 00:40:52,920 same thing you see here, this high to this low
221 00:40:59,880 --> 00:41:12,660 market turning points. Alright, we talked about market flow, and we talked about market structure. But without having it understood on the actual individual
222 00:41:12,660 --> 00:41:21,330 candles or bars. You know, it can be a little unnerving to some folks that are just starting to watch this and scratching their head thinking, you know, what,
223 00:41:21,360 --> 00:41:32,100 what am I supposed to be looking for? Well, regardless of what time frame you're looking at, okay, if you have a pattern that is looking for a sell scenario,
224 00:41:32,550 --> 00:41:45,720 okay, you're looking for a sell scenario, there are several opportunities to use price to get you into a move. Okay, and for instance, we're gonna take this is a
225 00:41:45,930 --> 00:41:54,720 turning point for a sell as price runs up, and we're going to be assuming that this is a resistance level open here of some kind. And maybe this is a five
226 00:41:54,720 --> 00:42:03,420 minute chart. Okay, you zoom down to a five minute chart into that resistance level and a time of day when you would expect the turn to take place for
227 00:42:03,420 --> 00:42:12,420 instance, in London. And we see the price run up okay, on this one, one kilohertz is going to represent in this example a five minute candle, then we
228 00:42:12,420 --> 00:42:23,910 see the lower candle here form. So now we have a five minute swing high. Now price will come down, okay, and it may even come up here. Now, what does this
229 00:42:23,910 --> 00:42:41,700 look like? This would be what an optimal trade entry sell signal, okay? In here, okay, in here, we have another short term, swing high. This is a high with two
230 00:42:41,700 --> 00:42:50,730 lower highs on sorry with the two lower highs on either side of it. So if you see this pattern, okay, in this whole range, this whole range could be as little
231 00:42:50,730 --> 00:43:04,890 as five pips. 10 pips, okay? You could be selling right here on this candle at market, okay, or you can use a break below this candle here on a sell stop.
232 00:43:05,430 --> 00:43:16,740 Okay, so if you if you break down here, so be selling on a stop or selling at the market, okay, or using this low here. Okay, because we have a low with a
233 00:43:16,740 --> 00:43:26,760 higher low on either side, this is a swing low, we can use this low as a indication to sell on a limit at this price or higher. So, for example, we'll
234 00:43:26,760 --> 00:43:37,980 say this is the cable, and this price is 161 50, we could have a limit order to sell at 161 50. And on this candle, right here, once we see this candle close,
235 00:43:37,980 --> 00:43:48,540 and this starts to open up here, entering a limit order at 161 50. To sell would fill you on this candle, and then we would expect an anticipate price to break
236 00:43:48,540 --> 00:43:56,820 down below this low. And when we see that, that's what you expect to see in market turning points and then you can you look for range expansion to the
237 00:43:56,820 --> 00:44:09,990 downside. And then manager stops above the respective storm the highs up here as well. Okay, obviously the same thing applies is reversing it. If we are
238 00:44:09,990 --> 00:44:17,280 expecting bullishness in the marketplace, we're going to assume that there's a support level down here. We wait for again, this is a five minute chart, we
239 00:44:17,280 --> 00:44:27,990 could see a low with two higher lows on either side of it here and price runs up. Okay, and eventually it starts to come back down again in here. It doesn't
240 00:44:27,990 --> 00:44:39,420 have to do this. Okay, you could just use the previous swing here. And if it breaks that, obviously that would be what you're looking for. But you want to be
241 00:44:39,420 --> 00:44:46,350 getting in before the expansion takes place you want to be getting in when prices on a tear tart, you're starting to run. You want to be in before that you
242 00:44:46,350 --> 00:44:53,640 want to be in the accumulation phase like we have here. This is a consolidation. You want to be in that. Okay. So if we do get opportunity where it comes back
243 00:44:53,640 --> 00:45:03,210 and gives you a smaller short term, optimal trade entry in here, that's ideal. Okay, so you can use the swing high here. Buy on a stop above this high here or
244 00:45:03,240 --> 00:45:12,900 you can put a limit order at this price or lower. Okay to get in long and then obviously you're using the swing low in 30 pips, 20 pips, whatever your risk
245 00:45:12,900 --> 00:45:22,380 manager is going to permit you for the trade to do your, your long setup. And then obviously you anticipate once you get in the move, you anticipate expansion
246 00:45:22,380 --> 00:45:31,230 and then when you start seeing these short term swing highs break out, okay, then you have what you expect to see in in your trade and then hopefully, you'll
247 00:45:31,230 --> 00:45:34,560 reach for your upper objectives in price for your profit taking