Original subtitles

Okay folks.

Welcome back.

This is lesson 1.4, defining open float liquidity pools.

Okay, we're gonna be looking at the Canadian dollar for this teaching.

Okay.

What you're looking at here is a chart of the Canadian dollar futures chart.

So the March delivery contract for Canadian dollar,

and this is the dollar CAD pear daily chart.

And we're looking at price.

Well we'd like to do is identify on a higher timeframe.

Where are the liquidity pools for the large funds?

Because the liquidity pools for the large funds is largely where markets will

want to reach for apart from long-term fundamentals on a intermediate term basis.

That means about three or four months, the large funds open float the liquidity

that's above old highs or below old lows.

That will be generally target.

Every quarter, how do we go about identifying which ones that we

should be focusing on right now?

We have to incorporate a technique called open float.

Nope.

It float is simply just taken in the last three months or taking the

last month and a half to the next month and a half in the future.

Uh, encapsulating that time.

And basically you're looking at.

Three months of data.

And by doing that, what we'll do is we'll give you a range to look for the

highest high and the lowest low on the daily chart, which will lead to, to

where the large funds liquidity pools are above and below the market price.

For example, let's assume for a moment it's August 1st and we can

look back and see where the highest high was in the last 60 days.

Over the last 40 days.

And over the last 20 days prior to August 1st, we can identify also the

lowest low in the highest high in the first 20 trading days to the right

of August 1st, then 40 days out, what's the high and low of that range.

And what's the high and low of the range.

60 days out from August.

When you have that range, 60 days, look back and see the A's cast forward.

That is open float.

You want to find the highest high and the lowest low in between

those two reference points in time

on a near-term basis, you can look back and see what the last 60 days

trading days range was high and low.

In this case, we can see the lowest.

And the highest here going forward, because we're looking at the look

back period here, casting forward.

Those levels.

We can see that eventually during the month of September, those highs that

were formed in the latter portion of July, 2016, they were in fact rated.

So the market was drawn to the, by stops on the fund.

At those July highs extending it out.

So we have 60 days look back and in 60 days cast forward, we can see what the

total open float is with the low end scene here in the high end scene here.

And see the market did in fact, eventually still dry forward reaching for the buy

stops above the October highs in 2016.

So if we're looking at the market like this, we can also identify

where significant short term and intermediate term highs and lows are.

If we look at the last range of 20 days behind us in 20 days, casting forward,

expecting a new hire, a new load.

Because no one can accurately depict the future forecast.

The future.

We have ideal times to look for in terms of intervals,

20, 40, and 60 days intervals.

Looking back for the most obvious by stops and cell stops.

Don't just look for the highest high in the last 60 days and the

lowest low in the last 60 days behind us or in the look back phase.

What we're doing is, is we're looking for where's the near

term high and low in the last 20.

Where's the short term high and low in the last 40 days.

And where's the intermediate term high and low in the last 60 days.

That same thing can be done.

Casting forward for looking at August 1st, 2016, we can cast forward 20

trading days and expect a range of high and low to form noting what that

high and low is on that particular range will give us the liquidity point.

That are on a near-term basis, the easiest ones from the market to reach for

when we're looking at short-term trades and day trades, that range is going

to be easy and helpful for you for intraday, scalps, and day trading.

When we look out 40 days, it gives us a little bit more of a short-term basis.

For defining the liquidity pools on the daily chart, looking for their last high

in the last low, in the last 40 days, that means the highest high and lowest

low buy stocks will be above that high and sell stocks would be below that low.

And now he see 60 days cast forward from the 1st of August would give us

the boundary point at which open float.

In terms of time, not in terms of price, but in terms of time.

So we are bracketing the market if you will, 60 days forward in time.

And we're looking at back in the past 60 days.

So we have 120 trading days of what would be called open float.

We're looking for the highest high and the lowest low net range, but every

20 days there's a high and a low for.

Now you about to experience a growth spurt.

One of the most powerful patterns I like to trade is the turtle soup, which is a

false break above old high, and a false break below an old well, the pattern that

I learned about that was taught in street smarts book, while I'm not teaching that

pattern here at a respect for the, the authors of that book, uh, the idea of a

false break above or below, um, based on.

The turtles trading pattern, which is a long-term trading pattern or system.

If you will, that allowed long-term trends to pay out the turtle

traders and turtle traders.

If you don't think they are, uh, Richard, Dennis put together a hodgepodge of

different walks of life, people all from different walks of life, for the purpose

of teaching them the concept of trading and he used the long-term training.

And he thought that buying a breakout about 20 day high holding for long-term

trends or selling short a 20 day low holding for long-term trends,

uh, while they had a lot of losing trades, their winners were monstrous.

It's a trend following system, which is what I teach that the large funds

are in the foreign exchange market.

They're long-term trend following because these markets are highly linked to.

Interest rate markets, which are under underlying fundamental

drivers for the marketplace.

Long-term trends are in fact fundamentally driven in currencies, but because the

system was based on buying on a breakout of the 20 period or selling below 20

period low, that breakout many times was false and in itself gives us an edge.

So if we look at every interval, 20 trading, Which is what

we have here at 20 40, 60.

You can encapsulate where the next high and the next low is on price and

where the highest and lowest low on each 20 day interval going forward.

And looking back you'll know where the buy starts and the sell stops are.

So that way you can take respective trades based on that.

Also, if you notice that the buy stops keep getting.

And rarely do the cell stops.

Keep getting hit by default.

It teaches you to institutional order flow is what bullish is looking for.

Higher prices.

It's keeps drawing on the biceps of other marketplace.

Conversely, if we notice that the cell stops keep getting ran out and very

rarely do to buy, stop, keep getting hit.

That tells us what for institutional order flow tells us that the

institutional or flow is bearish.

So therefore the banks are making a move on the large funds, liquidity below

the lows or running their cell stops.

Okay.

Moving forward one month, this is September, 2016.

The same thing is done here.

We've identified where the ranges in terms of the look back 60 trading

days from the beginning of September, and we have 60 trading days cast for.

We're gonna look for the lowest low in the last 60 trading

days prior to September 1st.

And that's this one here in the highest high in the last 60 days is here.

And again, we can keep noticing that the buy starts above old

highs, keep teeth getting taken out.

You can see that highs violated also in the month of September.

Moving forward.

We have October, 2016 look back period of 60 days.

And the cast forward of 60 days, we have identified our range or open.

The highest tie in the last 60 trading days prior to October 1st, 2016 is this

high here and the lowest low in our look back period of 60 days is here to open.

Float on a large fund level are referenced by these two price points.

The higher it's where the buy stops are and the lower is where the sell stops are.

So they're looking for.

The bus stops at Butler marketplace and they keep taking those by stops

out notice also in the first 20 trading days to the right or the future

from October, 2012, there's a load that forms in the Canadian dollar.

It takes the lows out in the form of the bodies of the candles made in

the last portion of September, the names of rejection and trades higher.

So we had one attempt here to clear out the cell cycle.

Moving forward, delineating our open float range for November, 2016.

You can see the look back period, 60 trading days, maximum 40 trading

days and 20 trading days, the highest high and the lowest low formed in the

last 20 and 40 and 60 trading days.

The lowest lowest.

Highest high scene here.

And again, going forward into November, we can see that that high

was in fact taken out on the upside.

So they keep taking the buy stops out and institutional order flow is

indicated as bullish casting forward.

One more time into December, 2016.

Looking back last 60 trading days prior to December 1st to

the lowest low is seen here.

Southwest will be resting below that and the large fund level and by stocks

will be resting just above the high.

Seen here notice also in the first 20 trading days after

December 1st, 2016, we made it.

And then price ran eventually up into creating another higher high, but blowing

at the buy stops above the November high, and then ultimately making a

run down into a lower low for January.

And it forms in the first four 40 trading days after December 1st, 2016

and going forward in time.

At the time of this recording, look back, period.

Last 60 trading days, you see the lowest low as seen here.

Highest high seen here.

We have already violated the lowest low.

So we've taken out the cell stops on a large funds level and.

We can look forward in time for a new price, like the retrace higher, and

then see if they want to take it lower because it's all indicating that they

want to take out the sell side liquidity.

Now let's take a look at the dollar CAD payer.

This is a daily chart and let's apply some of these ideas on the daily chart.

Okay.

You can see the bodies of the candles over here.

We did WIC down below.

1 30 50 level and retrace a little bit.

That's where the cell stops will be resting on immediate term

basis because we're looking at a daily timeframe, price events.

He does trade down there and takes those cell stops out of the

marketplace and quickly runs away.

Next area up here, the bodies of the candles.

You can see that Wix through it by stops will be resting

just above that large funds.

Have there by stops taken out here and they quickly rejected.

We have a low down here with the bodies of the candles sales thoughts will be

resting just to below that and we can see the market does in fact sweep down

there and take the sell side liquidity.

So what makes these false breaks and false breaks higher and lower?

So lucrative is the fact that we understand that large traders

in the form of a fun trader.

They have their biceps above these levels and they have their

cell stops below these levels.

Every 20 trading days, there's going to be a new liquidity pool formed.

It's going to be on the buy side.

And on the sell side, you just have to identify where those ranges are.

In respect to terms to where the most obvious sweet high swing low is form,

and then frame that going forward.

Whereas the next 20 days, high, low, whereas the next 20 days, high lucky

going out, but looking back in the last 60 days and looking forward.

And the future is 60 days gives us the range for open float, the highest high and

the lowest low in that range of 120 days.

That's what the large fund macro is.

In other words, where they're aiming for the large fund by stops or sell

stops, they're going to be derived at looking at worth of range high

and low is on the last 120 days.

60 days backwards.

In time and what the next high and low, if it makes it higher high in the next

new 60 trading days, we don't know where that high is going to be in the future.

We don't know if they're going to create a higher high, or if it's

going to make a lower, low, we just monitor as price creates new price

swings, higher highs and lows.

Where are we in relative terms to the last 60 trading days?

Are we making a higher.

Then the H the highest high, or are we making a lower, low and the

lowest low in the last 60 days.

And we look forward 60 trading days into the future, and we keep moving

that basis forward each new month.

We're looking for we'll eventually arrive at the institutional order

flow by default, you can see where they're running the market they're

taken out by stops continuously, rarely if ever taking out sales.

What's telling you that they want to press the market higher.

They keep grinding against those large funds.

So if it's seen as the opposite, where we keep seeing the south stops,

keep getting ran out and very real.

Do the buy stops, get taken out.

Institutional order flow is bearish.

So therefore, as long as we can continuously see

the market making new lows.

We keep watching that range of the last 60 days.

And where are we in relationship to that?

Are we above it or below it?

If we're above it, we have to continuously keep seeing by stops, get taken out.

If you start seeing cell stops get taken out, we're probably making a quarterly

shift in the reverse has said if we're below the last 60 days, And if we're

below that last 60 days, low, we're really oversold we're in a deep discount market.

And if we start seeing by stops getting hit and very rarely new,

we now see south stops getting hit.

We're probably be forming a market structure shift, or quarterly shift

for a new direction in the marketplace.

And you can see that in fact is what happens here with the Canadian.

So let's take this information and go back to the futures market

and take a look at some things.

Now, obviously this is going to be the price action of the futures contract,

which is going to be inverted from what we see when we're studying the dollar index

versus the Canadian dollar, because that payer starts with the us dollar first.

That means when that market is going higher as a payer, that means that dollar

strong and Canadian dollars is weak.

If the dollar Keds going.

Lower.

That means the dollar index is weak and the Canadian dollar is strengthening well.

In this case, we're looking at the futures contract of the Canadian

dollar, and I want you to look at the same reference points we

just showed in the previous slide.

We're just going to do the opposite in the futures market.

Let me see the bodies of the candles being ran out here in

December, and then quickly rejected.

We can see the bodies of the candle made in November, gets rated in

December and quickly rejects.

And it runs for what the bodies of the candles here.

We're running the Ohio where by south we'll be arresting and

that's where we're at presently.

But prior to that big run-up off of that 73 52 73 65 level.

Take a look at this right here.

I gave you a teaching with the Australian dollar and I showed you how we can use

these quarterly shifts to take place and open interest off of support resistance

ideas on a hard timeframe basis.

When we're looking at higher timeframe charts, we are

identifying clues and seeking.

Evidences that we can see that they are about to make a move

on one side of the marketplace.

We understand what's making that short-term fluctuation could be

largely attributed to just running the stops on funds, large fund

traders, buy stocks and sell stops.

But it's not always that the markets are moving based on very,

very long-term fundamentals.

And as it relates to higher timeframe charts, but every three

months there can be a manipulation.

Phase in the marketplace that still can be a catalyst for us to be a trader

taking high probability entries and looking for high, probably exit points.

And by looking at where the logical fund level traders buy stocks and

sell stocks would be, and looking for evidences that the market is

showing participation by smart money.

I E banks, if the market's trading down to a support level at 73, 80 to 73

16, We have a clue here that wants to market started trading lower from the

7,500 to 74, 60, 74, 40 level to 7,400.

And then once we got below 73, 80 level, um, by that point open interest

had already tanked and you can see clearly here, that's a huge drop.

It's a massive drop.

You only need a 15% decrease to have a massive.

Indication that there is big, huge, um, institutional sponsorship behind

the move that you're expecting.

If open interest is declining, what they're saying to us is they

are not willing to be offering, sell side liquidity to buyers.

They don't want that.

So they're scaring those individuals by dropping the market really quickly and

open interest declines rapidly, open interest, only declines as an evidence.

That the smart money are not wanting to be heavily short, high open

interest is a indication that there's a big, massive liquidity, uh, program

that's been offered for buyers.

The bank is offering that as risk.

They're holding the risk on that, but if open interest declines while the

market drops off precipitously, and it goes into a support level, because look

at what's happening in November, 2000.

The Canadian dollars future contract.

It rallied from around 73, 80 up to 76 40, which is a very respectable range.

Price comes back now runs the bodies of the candles that was

formed as a low in November, 2016.

Price comes down again, looking for another shift in the marketplace.

It runs out the sell stops below the 73 80 level with an old

low, remember we looked back in.

Higher timeframe, institutional order flow, reference points, liquidity

pools, water blocks, fair value gaps, equilibrium, all those price points

we used and learned in September.

We look for those in our higher timeframe charts.

We're seeing a liquidity pool in the form of a cell stop resting around 73 80.

They make that run and on low open interest at a support level, they are

indicating that there's going to go up.

If the futures contract for the Canadian dollar March contract delivery is

indicating that there's very low open interest at a support level at a time

when it stops have been ringing up a little marketplace, that's indicating what

potential strength and you can see the price action that transpired after that.

Rather explosive price move, looking for a move from 73 80 all the way up to the 76.

So 300 pips move up from one specific level that could be easily derived by

looking at the evidences that we've shown here in his teaching using open

float casting forward 60 days, casting forward 40 days, casting forward 20 days

notice also every 20 trading days, the high and the low becomes very obvious.

You can start circling these as you create new high.

Every time, there's a new hire high note that, and then wait for the

price to come back down to an old 20 day low study that every 20 day Hein,

every 20 day low is going to have buy stocks and sell stocks, resting

above the highs and below the lows.

If you do this as an exercise going forward, you'll see clearly what

side of the marketplace it's seeking.

If it keeps taking out the buy stops or the whole.

The market is doing what it's moving higher.

That means institutional overflow is on the buy side.

You don't want to be selling short and there's conditions.

If the market is taking out the sell side, liquidity, continuously and

rarely ever taking out the highs of the price action, that means that

institutional flows indicated lower.

And you want to focus primarily on being short until we get an

obvious change in direction.

How would that happen?

Well, if you go and you start trading to the lowest low in the last six

years, Well, we're probably going to be very, very deeply, uh, oversold and

we're going to be in deep discount.

Even if the price only bounces a little bit on a hard time for like this, it

can bounce, you know, a great deal.

It could be over 150 200 pips sometimes, and then eventually roll over.

Uh, fashion and keep going lower.

You don't want to be caught on the wrong side of the marketplace,

trading on a hard timeframe chart and not see the evidence is that

it's given you and trade accordingly.

You have to have all these things in mind looking for where the liquidity

is and the easiest way to do it and to make all this very simple, because

it could be very easily complicated.

And I'm sure it probably complicated in many of your minds.

What you're looking for is a revolving continuous range of 120 days.

And you, whatever day you're looking at, you look back 60 and you look forward 60.

So there's 120 days there and you're constantly monitoring.

Where's the highest highs and the lowest low in those, in that range.

And that's where the buy stops and the sell stops are going

to be on a large fund level.

The.

Look back phase is where the hard stops are going to be.

That means where the actual buys and sell stops are going to be

above an Ohio and below an old low.

But if we are looking forward studying new price action, as it occurred,

You need to be mindful of where you are in the last 60 days range.

Are we near a high or are we near a low?

And that's also going to be indicative of where we see the next quarterly shift.

If it's going to be continuously moving higher and higher and higher and keeps

taking out by stops eventually, unless we're on a one-sided parabolic price

move, which we'll teach about generally, you don't see too many of those.

Uh, the market generally moves from range.

And using this concept, it will be very beneficial to you because

you can see where the near term that means to 20 period high and

low in terms of trading days.

And I'll say that again, the next near-term move is going to run on

near term buy stops or sell stops.

That means the last 20 days range, what's the highest high and lowest

low that's the near term open float.

The short term open float is what's the highest high and the

lowest loan will ask the 40.

And the intermediate term open float is going to be the highest highs

and lowest low in the last 60 days, knowing where you are in that range.

And what side of the marketplace keeps getting taken out.

We'll give you clues as to what the next shift in price is going to be.

Once it starts to break down, you know, you're going to have a significant

price move and you can trade that accordingly, even on a daily timeframe

where you don't have to go down to a lower timeframe for entry, you

can execute purely off of the daily.

So we're going to build on these ideas as we go through the rest of

January until next time, this concludes this teaching, which good luck.