Original subtitles

Welcome back folks.

This is ITT with a sixth installment of the eight teachings of September, 2016.

ICT mentorship.

We're gonna be specifically dealing with fair valuation in this

teaching and fair evaluation comes in the form of two perspectives.

Fair value in regards to equal distance of a high or low or what we would

call equilibrium or fair value for the perspective on valuation as regards to.

Market makers, and I'm going to cut mind.

Both of them.

They give you the perspective that you have to have when you look at price.

This is actually a chart that we mapped out in advance.

Talking about a lot of these very specific things here in

the week to have this tutorials production, September 24th, 2016.

Um, we called Australian dollar.

Based on the things that I'm going to cover here.

And I was aiming for 76, 65 as a weekly.

And you can clearly see here the market did in fact hit that.

What led to these ideas behind me giving these options side

objectives from an area down here?

Well, first you have to understand there's a lot of overlap from what

we just covered in the previous two sessions, that being equilibrium to

discount and equilibrium to premium.

Um, obviously if you're a buyer, if you want to be buying, you want

to be looking at a discount market.

That means trading in a lower third.

Of the current trading range that the markets, uh, presently or currently

created and its most recent impulse leg or impulse price line, the cells

are best taken in the most current trading range or impulse price swing,

upper third portion of that range.

Okay.

That's a premium market.

We're selling at a premium.

When the market returns back to an area of fair value, that is a

fair value for the market maker to either sell or buy in this case.

We're going to go over again, both concepts in regards to equilibrium

and the fair valuation for market-maker participation in price.

Action.

Swing here just making this high here to market broke down and it quickly ran away.

And this is what we call a liquidity void, where the market makes a sudden

movement lower and large ranges.

Very little Wix, very quick moment.

That is avoid.

That means the price spent very little time trading at these price levels.

And it was in a hurry to get down to this area here where it started

trading more efficiently, back and forth on both sides of the candle.

And ultimately having a retracement this range in here, as soon as we see pockets

of price action, where there's sudden movement lower, just like we saw a quick

sudden movement lower here, this up candle at the bottom of that, that's where we

start watching and measuring fair value.

And the down candle here.

Very next candle is up candle.

So we start looking at the range between this up candle in this up

candle between those two up candles.

There's what's referred to as a fair value gap.

Okay.

Fair value gap.

The reason why this is important is because there was no up candle or up

movement between the break of that low and the high of this candle.

It was all just straight down movement.

So nothing filled in this area.

Once price broke this low, left it open.

Basically it's like a gap.

The same thing occurs here.

When this up candle is broken here on this candle, once it started breaking

lower, there's a gap between this candle is low in this candle, body or WIC.

Okay.

So I defined it by the body and I like to use those.

The range in which it causes this Boyd.

Okay.

When price is below that this is going to be fair value.

Okay.

The market's going to want to come back to that because there

was very little trading in here.

Just like we said, there was a gap because there was no movement up in

this area here between this up candles low and this up candles high, this area

in price action only saw downloads.

Didn't have any up candle movement, only down movement.

All this down here is down candle price action, only big ranges.

So this is a liquidity void.

The fact that it creates it in big ranges and speed.

That's what defines it now because price moves so quickly in these areas.

Fair value.

Is established because there's going to be a willingness to want to see

price trade back up into these levels.

And here in closing all this, in other words, there's going

to be up movement later on.

It won't happen immediately.

Always.

Sometimes it takes a little bit of time sometimes depending upon the

timeframe you're looking at it, it may take a great deal of time, but

when price starts to move higher, we know that they will try to trade into

this range here and fill that in.

And.

That is where market makers view fair value now, equilibrium or fair

value in regards to equal distant, uh, range between high and low

of a defined high and low range.

That being, if we have this low here and this high here, if we define that, yeah.

Okay.

We have equilibrium right here, or 50% of that range from this high,

this high to this low here's equilibrium.

Okay.

Look at the bodies that it came.

We'll stay above that, but we have a lot of work around that equilibrium price.

That in that in itself is significant because it's showing you to the market

brand through a short-term high.

Once it ran through it, it came back down right back to the middle of the range

or fair value, which is equilibrium.

At this moment.

Price could stay in this consolidation for a period of time of any length.

We don't know how long price is going to stay in a

consolidation, but at equilibrium.

You need to refer to where the most recent price swing took place.

In other words, if we're at equilibrium here or at fair value of the market

can go either way at this price level, the easiest way to determine where it's

most probable direction is, is where did market structure break most recently?

Did it break a swing high or did it break a swing low most recently?

Well, there's nice swing low in here of any significance, but there is a swing

high up here that it broke through here.

So when we made this low price ran through it.

Clearing, not these highs.

Regalness up candle price coming back down into equilibrium.

Do we define the range from here to here as you're looking at price, you always

want to get a feel for where you're at in regards to the most current trading range.

Also notice that we are in the lower portion of the range

defined by this high and this low.

So we're in a real low area where it would be deemed over sold.

So we have a range concept blending with the fact that we're moving back into

the middle of a smaller consolidated trading range with a market structure

break of recent high in here broke to high, and it came back to equilibrium.

So the highest probability in terms of direction is going to

be going short or going long.

Well, obviously it's going to be going long, but the mechanics behind it was.

That the fact that we broke this swing high, we had this void in here.

Okay.

We had weakness in the dollar, which we're not going to talk so much about

correlation between dollar based, uh, analysis of the world, and specifically

dealing with price action along here.

But what led to this bullish movement and Aussie dollar this

week was the fact that we moved back into a fair value or equilibrium.

So that way.

It's fair value for the market makers to build in long positions

or build a net long book.

That means they're building accumulating long position.

The down candle rate before this move up through a short-term high,

that is a bullish older block.

So price comes down into that headset at the same time, it's hitting it

equilibrium and it's deemed fair value.

It's fair value because the market traded back down into an area where

it would still be bought again and where it should be expected

to see buying pressure come in.

We don't want to buy it up here because we've already broke a swing high.

What are we doing up there?

We would be, we would be buying it.

That's not what you want to do.

So you're going to blend a couple of things.

When you're looking for high probability setups to get fair valuation, you're

going to be looking at the current range from high to low in this area right here.

We're in the lower end of that range.

So we have a lot more upside to building a premium, like we just

discussed in the previous tutorial.

Okay.

Market will go to a premium.

Okay.

The market's buying at a discount.

Okay.

And it's an equilibrium.

Is it fair valuation because we're in the low end of the range from this

high to this low, and we have all of this open price action rate in here.

So the market's going to want to come up here and close that in.

It doesn't have to come all the way back up to this candle's low,

which is a bearish order block.

This up can the right for the day.

All this isn't needed to give us a directional bias.

We have a swing high in here where we know what's going to

be resting about that by stops.

So we know that there is a strong likelihood that because we're in

the low end of the total range, which is this low to this high.

So this is the parent price.

In this high, to this low, we create a short-term load.

It was higher.

We broke through a swing.

Came back down into equal distance of the high to the low E as equilibrium.

We are now at fair valuation, for what?

For longs to market makers can build a net long book at this price level.

Now, if they're going to do that, they're going to a book for fair value above the

marketplace, where they can do what sell their positions at a fair value for them.

Up here.

If traders are buying this chasing price, are they buying at a fair value?

No.

To buying a premium, remember that we just discussed in regards to equal

equilibrium to premium the range from this high to this low we're above 50% level.

And here we're in that upper portion of the optimal trade entry

or 62 to 79 cents Tracy and level, I'll show you what that looks.

The low to the high

79% chasing level, 70.5 62% trace in level two.

The market goes right up into 79% retracement.

So we're in premium here.

We're uh, we're below equilibrium here.

So we're at a discount down here relative to the rent.

Down here.

We're at discount.

Okay.

In terms of looking at the, the low to high, this is where the premiums built in.

If we reverse it

and look at the range and opposite terms, defining it from low to high.

We're below the 7, 9, 7 placement level.

So we're really at a deep discount, really, really deep discount because

we're below equilibrium relative to the range high and the low, or even

below the 79 cent treatment level.

So in terms of really being suppressed in terms of the total range high to

low, we are at a deep discount in the middle of a current small little trading

range from this high to this low.

So we're at equal distance price management of high, middle, low,

and end to total end or lower one third of the range of the

parent price swing that we see.

Right in here.

Okay.

Even if you didn't see this high to low as the parent price swing,

this price swing high to low still gives you the same context, just

in a slope on a smaller scale.

So you have high to low we're in a lower one-third here, and we're deep discount.

Here's equal distance or equilibrium we're below it.

So we're a.

So fair valuation for the market makers to build a book long would be

so many overlapping factors there.

They could be building long positions or accumulating long positions here looking

for what liquidity above marketplace.

That means where above these highs that initially it just sold off of,

then you have to buy stuff to vote here.

So the market runs through that takes, those stops, runs through

this short-term high here.

And then what is it?

Goes into consolidation.

Now, if it's a turtle soup and it wants to go lower after blowing out

by stops, it should go lower quickly.

It doesn't do that.

It's staying in a sideways consolidation.

And in fact, during this week actually gave life sessions,

explaining how this market was point pointing to higher prices.

It went back into consolidation, which means it's going back into.

It's building equilibrium.

Okay.

So equilibrium is building again in that small little range.

So you define the high and the low right there.

And look how much price axis spends around the middle point

at equilibrium price point.

Okay.

So it's hanging around fair value.

Okay.

One spike move lower.

Doesn't see price go lower.

Any in any significant it doesn't break the rain.

And it expands to the upside.

Once it expands the upside, it starts filling in all of this.

Again, this is another area of fair value.

The market's fair for those long positions for the market maker

that had already Akili along.

So one it's good.

This is a good area in this shaded area and extend this out in time.

We're here.

All of this is a good place for them to sell the longs that they started.

The helium down here.

Look how much time they whipped back and forth in that range.

All these wicks.

Okay.

They're selling, they're selling the sound, all the positions.

They have accumulate here, accumulated here and down here on

the initial rundown into the support.

Once this range has closed in the next area of concern is

above this short-term high.

To avoid filled in right here.

It's filled in.

So this is no longer an area of interest now.

No more.

Now we still look for higher prices.

Why would we still look for higher prices?

Because they went long here.

Okay.

So if they're going to look to sell their position where they look to

sell their positions at discount prices or premium premium, but the

premium price that speculators would trade at by buying and chasing.

It's a premium to price chasers.

People that feed off the desire of being at a price to move

it's already been moving higher.

It's fair value to the market maker to liquidate their positions at this small

little pocket between this Lowe's is up candles low, and this candle's high.

So we can now create a new specific area of fair value.

For the market maker to liquidate their long positions in here, right

in here to draw that out in time.

That's what you see here.

Price coming right into the bottom of that candle hits it perfectly

to the pit bodies of the candle are still deep inside the shaded area.

For fair, fair evaluation.

What makes it fair is because they bought it at a deep discount.

And they're liquidating at a premium it's fair for them.

The acuity here, and it's fair for them to liquidate.

See market makers have to deal in terms of valuation for

their lungs and their shorts.

And they have to do that same valuation for their exits on

both sides of the marketplace.

So when we see inefficiency in price, like we see here with these candles only

going down, no up movement, only going down here, no up moving in it until later.

All of this area, they're scaling out their positions that they accumulate down

here, here, here, when price moves in defined trading ranges, there's going to

be equilibrium, equilibrium isn't itself.

Fair value.

That means the market makers are holding it in a consolidation.

When that consolidation gives way.

The strongest move out of that consolidation on alarm or a hard timeframe

chart will give you a great deal of prognostication for directional bias.

So what I mean by that is if we look at price, I want me to

take a look at it like this.

We can look at price like.

From this high, down to this low.

To have a range defined there.

Okay.

The market's in this range here, consolidates, it goes right back to

equilibrium, hangs around equilibrium dips down below the equilibrium.

So even if we're monitoring this range from this high to this low we're

below the equilibrium price point.

So are we at a premium right here or are we at a discount where the discount

traders on a retail level, they're going to see this as a selling point.

They're going to love it.

Because they're going to see this high, to this low coming up to

62% retracement level McNamara.

I said in the last two sessions is not enough.

Let's look simply looking at Fibonacci.

You can get tripped up and fed Nazi.

If you don't understand what price is actually telling you.

So getting short here is not what you want to do, even though he'd

seen price and movement going lower.

It's only coming down to an area of fair value for the market

makers to accumulate loans.

In the area of discount.

So you're having an overlap of three things.

You're looking at total range from this high, to this low, or this

high to this low we're in the lower portion or one third of the range.

So we're in high probability for a discount market to be in effect.

You're also below the equal, uh, price point for equilibrium

between the low to this high.

So it's consolidating your that, but it, now it went below it.

So we are in an area where the market makers can buy, especially

if you combine that with areas of institutional order flow.

So if you're looking to buy, what would you be looking for an area

to run out, but low the stops.

In other words, sell stocks below and elbow.

We don't see so much of that happening here.

It doesn't need to do that.

It's only returning down to this down candle, which is a bullish or block a down

candle before the market moves higher.

That's where market support really relax.

Um, we're not really realizing resides in okay.

Uh, up candles for the market drops down that up candle is exactly where

resistance is an institutional basis.

So that's where selling occurs.

So when we see price action like this, we can define things in terms of fair value

in relationship to how the market makers are going to perceive price the way they

value price in terms of the current.

Range that it's trading in the same way.

The algo delivers price.

Where are we at in proximity to the current total range?

We have a nice impulsive price, swing high to low.

Here we are in the lower portion of that range.

Here we have built-ins by stop.

The boat is high above this high here, above this high here, and

we have value, uh, evaluation gap.

Okay.

If you're a value gap, market's going to want to come back up there

because it's spent very little time.

In this area, it was all down movement.

All down movement.

No, no buying was actually occurring in here.

No buy-in was occurring in here.

It was all on the south side one-way flows.

So the market ran up into just to close in where only selling

took place and no real buyers.

So now when price comes back up to that level and they shoot it up

there like that, that's going to make a run on stops above the swing.

And we're just gonna close in the range between this up candle and this up

candle here, which is a fair value gap.

So when we're looking at price action, it's a couple of things

you need to keep in consideration.

The total range of trading in the equilibrium price point relative to the

most recent trading range, high and low.

And we defined several of them here.

We did this high to this low with this high and this low and this high in this.

So we have multiple things lining up with the fact that for fair value sake,

the market has a deep discount here and it's most likely going to trade higher.

And we have reference points that we can look for where

the market makers should aim.

But ultimately this is the fair value get that they wanted to get back up into.

And the reason why the basis was me calling 76 65 for the week was I want to

get just below where I ultimately think it's going to go and the level at which.

If we look at the high,

the low comes in at 76, 75, and I want to be about 10 pips or so before the actual

level I think is actually going to be hit.

I want to be getting out of this a little bit before that.

And one more instance of the things I talk about before it happens in

the charge and why those things actually materialized in price.

To price returns back to fair value, fair value.

In the perspective of the market maker, not fair value in the scope of buying.

This is a premium.

Okay.

Remember that market efficiency paradigm.

I started you all with how you perceive the marketplace is not how retail

is going to seek the proper price.

They're going to see this as the market's going to probably keep

going up because it's been going up.

Well, this is an area of distribution.

You want to be thinking accumulation down here, re accumulation distribution,

scaling out all through these areas in here, because you don't know if it's

only gonna come up that little bit, that, that range over here in the shaded

liquidity boy, you don't know if it's going to fill in that and then go lower.

So when you buy things now in here at deep discount, you have to scale some of

it out, but the beginning basis points.

Okay.

Valuation in terms of the market makers, you have to look at the

total range, look at where the market has moved away from quickly.

And those areas of liquidity, voids, and liquidity, uh, uh, pools above all

highs here and here and here there's bad.

That is going to be fair value for the market maker to distribute long positions.

If we were looking at a sell position, we're a short position.

We will be looking for areas in which we're the market in the past

has moved up a great deal speed.

And we would be looking for lows where stops would be building up below it or

liquidity pools in the form of cell stops.

We would look for the lower end of the most recent range for valuation.

So that way you would know by looking at things with that market

efficiency paradigm, you're not looking at things like retail.

You're looking at it in the scope of, okay, I am the bank.

Um, I'm making a book here.

What's the most efficient price levels for me to unload my lungs or unload my shirt.

Physicians.

We've already mentioned it so far in the teaching, just for September, the

easiest way to understanding institutional order flow from the beginning.

Starting point of it all is understanding that markets move from buy stops and

sell stops and sell stops to bias.

And it moves from fair value to discount, to discount, to

premium, to premium, to fair value.

It, it moves back and forth between these three reference points.

Are we at a discount?

Are we at a premium or are we at fair value?

All those things combined together, they give you the clues as to what we're

seeing in terms of the market-makers, uh, accident or the accumulate.

Are they manipulating cardio, distributing all those factors.

We're going to be bringing those closely knit ideas into a

more easily understood premise.

When we look at price, we'll be able to see these things unfolding

in, in advance, and you'll be able to see what should take place.

And it's very encouraging to see your study in these individual components.

Start to flesh out and have a greater understanding about price action.

In closing fair value is not fair value in the realm of retail it's in the realm of

fair value of liquidating or accumulating from the market makers perspective.

Fair value in discount is fair value for buys from market maker.

Buying fair value in premium is fair value for market makers.

Either establishing new shorts or exiting on scaling out long positions

discount, the low equilibrium in the lower ends of the range.

That's a discount market.

That's an area at which the market makers can buy or look

to cover their short positions.

Do not look at the marketplace in this retail mindset that

we're all trained to do.

W we had the same, well, we drink.

It's the same regurgitated stuff, but it's wrong to understand how

these markets are, are delivered to us in the form of price action.

When this price is delivered to us, it's not random.

It's very specific of where it wants to go, why it wants to get there.

That's what we're, that's what we're giving you in this mentorship.

It's very specific, detailed perspectives that are generic.

They repeat themselves over and over again, and because they repeat

themselves and because they're the same.

Phenomenon take place almost on a daily basis.

There's nothing for you to fear.

If you mess it up and you don't get the trade to pan out, right.

Or if you miss a move, do not worry about it.

Wait for the market to give you indications of where fair valuation is.

Then you'll be able to anticipate the market makers next scale in or scale out.

It may be the liquidation of a long position.

That's been on their way that may give you a prognostication for a future.

It may be the, in the inception of a new price leg while you're waiting

for this area to be retreated to we'll build on this idea for now.

But I want you to think in terms of where we at relative to the most

current range, are we in the lower end?

Are we near the low of that current range?

And are we working around an equal distance equilibrium price point between

a recent high and low by defining price in current trading ranges like

this, you'll be able to see where the market makers will expand the price.

So when there's expansion, you know, prior to that expansion,

there's been, what is consolidation?

So as you study more examples of when markets are in consolidation,

you'll be able to tell.

Forecast the next movement out of the consolidation.

We don't, we don't play the breakout game.

We anticipate the breakout.

We know that the indications through price action will give

us clues as to what side of the marketplace it's going to break out.

And when we get into commodities, we'll have actually a great advantage

of that without using open insurance.

But for Forex, you don't need it so much.

You can still see it in institutional work.

So I'm going to close this teaching here with the promise that we're

going to come back at the end of this series of eight sessions in your

notes that will accompany your months.

Summary you'll have great detail of a specific like notes and things that

you need to be aware of as it relates to fair valuation, uh, liquidity.

Points, uh, liquidity gaps, all those things.

We'll be building more foundation on that.

And in month, two waxy Gillan to how the find these things, not just giving you one

chart's perspective and, and basically, uh, you know, trying to teach the whole

thing in one, one chart, it can't be done.

So you need examples of it.

You need to see it, uh, called for in advance.

Like we did this week.

Not so much why.

Um, into this great detail, but I gave you the areas of what price should reach for.

We talked about the area here.

We talked about this void here.

Um, and obviously we only would need to talk about the highs because

we understand that that's where the bus stops are going to reside.

So think in terms of fair value for the market maker, if they're going

to go higher, where is it a fair value for them to exit their loans?

Okay, it's fair.

It's a fair value for them to do so.

They do not want to liquidate your lungs at a discount or

on retracements going lower.

You look for expansions on the upside.

When they expand my price expands, they should be reaching into an

area of fair value for price to be liquidating smart money loans.

That's the only reason why our markets go up.

That's the only reason why price is allowed to be delivered at higher prices

because the market makers, the banks have books on their books that are

net long and it's in their interest.

As the price higher, it doesn't matter how many of us buy the price

is going to be set by the bank.

And they're going to do things to line their own pockets and not yours.

So it takes a perspective shift.

And it gets back to that market efficiency paradigm.

I started you with in this mentorship that you have to view things from the

smart money's perspective, not what retail should be dealing or what retail is doing.

If you do that, you're gonna, you're gonna miss the actual clarity that

comes through looking at price action, studying it through a contrary and

perspective, saying, okay, this is what the retail minds should be thinking now.

And by contrasting that with what you see in the charts, prepare value,

liquidity gaps, liquidity, voids, liquidity pools, all these things.

The market's going to seek that liquidity and run against the

less informed crowd's opinion.

So at that, I'm going to close and wish you good luck and good trading.