Original subtitles

Okay folks.

Welcome back.

We're going to be looking at a amplification of what a block theory we're

specifically dealing with the mitigation block can, when we look at mitigation

blocks, what we're looking for is a.

Condition to the marketplace where the market has given clear indications

that it wants to break down or move higher in a step ladder formation.

Um, in other words, like selling rallies or buying declines, um,

drying declines in bullish markets and selling rallies in a bear market.

And when we look at the marketplace and we.

Price action in the form of resistance levels and support levels or

anticipated bearish, institutional reference points and anticipated

bullish institutional reference points.

We have to have a context in the marketplace behind our viewpoints.

Are we looking at the market that has a bullish scenario, or are we looking

for a market that has embarrassed area?

In this example, we're going to look at a market that has a bearish example.

Okay.

When we're looking at a market that is moving up into a potential

bearish resistance level, um, market typically will move up

and they move into a fault high.

It could be an old low, it could be a very shorter block.

It could be a.

Breaker that we'll learn more about, it could be a multitude of

things that would lead your opinion into the realm of resistance.

Okay.

But without going into great detail, what that may be, there's

multiple opportunities to frame that idea of being resistance.

If a resistance level is expected, or you anticipate some selling

pressure and potential outlines is indicated here at what we do

is we wait for price to indicate.

A confirmation that there are willing sellers up there.

If the market does show a repricing and rallies, one more time up to it.

What we're going to be doing is monitoring.

Does the market have a willingness to want to break down?

And eventually the market will show signs that it does in fact break lower.

Now, if you look at this specific pattern here, this is what is

referred to as an M pattern.

Because it looks like a giant M okay.

Well, when you have this pattern here, it's a failure swing with a

confirmation break in market structure that low right here is what you're

going to be utilizing to frame the context of the market structure.

So when that shift in market structure is seen here with a break below that old low,

that gives us confirmation that the market does in fact have participants on a large

scale, willing to drive prices lower.

And that's what we need.

As small traders.

We have to have the willingness to have the smart money indicate their cards.

If you will show or show their hand, do they want to send prices lower?

Or do you want to send prices higher in this case?

This is indicating that the market does in fact have

confirmation that it wants to go.

So, what we do is we look at this range from that short-term low up to that

short term high inside that range, there has been buyers, but the problem is,

is now those buyers are under water.

This short-term rally in price highlights, a specific institutional reference

point known as the mitigation block.

Once price posts, the market structure shift, lower your attention as the trader

moves to this specific, low in price.

Great there inside that low, what we're going to be focusing on is the

last down candle, because the last down is where the buying took place.

Right before that little short term rally up.

Since price broke below that low at a subsequent later time, which is really no.

Um, there's no role as to how long it takes before that low is violated.

We just note it.

And when it's broken, it's seen as a short-term support level, that's given

way with a bear's context behind it.

So when we see that we're seeing the evidence is that there are

smart money entities behind the marketplace, driving price, lower.

At first glance, it looks like, well, this is a missed opportunity.

But now what we do is that we focus on this low because that last down candle

will give us a bearish level to sell into.

When price drives back up into that old short-term low, we just referenced.

There's going to be three reference points that you need to be aware of.

The market structure shift is seen here.

We're retracing back into it.

Right there.

What three points are used at this moment, you have point a point B and point C when

price actually returns to the point of a reference, the long positions taken

from a to B price swing, we'll have an opportunity to liquidate or mitigate

their losses that were occurring.

During the price move from B to C, and this can result in new lower

price swings to see for retesting or a significantly lower price.

Move into a support level.

That's under the market price.

In short, this is an opportunity to sell whatever particular

market or asset classes.

As the market breaks lower, let's say you look at the chart

and this is what you see here.

It does not mean that you've missed an opportunity.

It just means that now you have a new opportunity.

That's unfolding.

Do the longs in here in that short term load that a short-term

high do they need to be.

We don't know for certain, but if you do have a belief, that price

is going to be moving lower, longer term, that there's an unrealized lower

support level or sell side liquidity that has not been tapped into yet.

We could be viewing this short-term rally in here as an opportunity

for a new selling opportunity.

We have another market structure shift.

So where's our focus given what was explained in the previous example,

where's our focus right now to trader why are we looking at a specific

level and what are we anticipating

that low rate?

Inside that low, the last down candle.

That's what we're going to be looking for price to reach back up into.

If it does that we can be a seller at that moment as price drives back above it,

into that low we're watching price trade into that last down candle right before

it had that short term rally before.

Great at MoMA here.

We're looking to go short as price hits that last down candle

in the previous short-term low.

Where's your focus at this moment?

We're anticipating price to move down from this point here, which

is giving us a short opportunity to run the liquidity out below this

short-term low here and potentially as low as our higher timeframes for.

As price hits are longer-term support level or anticipated

bullish institutional reference point, which could be an old high.

It could be an old low, it could be a bullish order, block, many,

many opportunities to frame that idea, but whatever that is, that

forms your idea for support.

This is the objective that you'd be reaching for as price hits that.

Can we be collapsing our trade and moving to the sidelines,

waiting for new developments

when we had this.

In the marketplace.

What we're seeing is the classic support broken turns, resistance.

Every time price moves back to an old low actually happening is it's referred

to as buyer's remorse the buyers at the previous short term low that saw a short

term pop in their favorite and eventually saw the market break below that low.

They bought that when price gets back to that low.

The remorseful for buying it.

So they bail, but on an institutional level, the smart money understands

these short-term fluctuations and they can drive price on a short-term basis,

higher or lower through manipulation.

So if they're going to manipulate price on the short term, By having

large orders come in and push and bully market pricing around.

They're going to want to liquidate their positions because just like anyone

else, they don't want to incur losses.

So this gives them the opportunity to mitigate those losses.

Premium price highs are bought by less informed traders and sold by smart money,

which are you going to be grouped in?

Okay.

Folks, we're going to look at a quick example.

And draw your attention to a liquidity avoid in here,

and there's equilibrium that liquidity void bodies or body

end, or was the open and closed.

And we're going to highlight that reference point here, that halfway

point in this equilibrium, the ideas we broke this high back here, we're

expecting continuation on the upside.

Market trades higher,

but it shows a breakdown in here.

Okay.

In here this failure, swing break there.

Rumi looking at this low.

And I'm just going to draw horizontal lines in on the respective lows.

And this will be a new mitigation block.

When we dropped down into the lower timeframes, sell

off their sells off breaks.

This low here to the last down candle on this move here is the.

There.

So once price trades back up, that's a sell right in here.

You choose it.

Just overshoots it by a little bit, but nonetheless it breaks lower right here.

So now our attention is on this low.

Every rally, it sees lower prices needs to be mitigated.

Right here.

So if we treat back up to that low, that's a cell, right?

There is a cell I'm going to be aiming for a move back below this low,

ultimately down into our equilibrium of our liquidity void right here.

Well, it comes in at 11 48, 1 11 48.

Here's a short-term low.

Trades lower trades back up into the last down candle hits it overshoots

a little bit, but it's inside the body of the candle, which is what a

mitigation block represents price trades down below the last down candle here.

And we have another lower low here, so we can adjust that one

to that low there, right there.

Price hits.

Objective is going to be break below this low sales off, goes through it

and ultimately goes down into our mean threshold of the liquidity void.

So a couple of different things shown in here as an overlap study, one medication.

Let's take a look at a 30 minute chart on the same price action.

Here's a mean threshold and liquidity void.

Last down candle, right?

For the up move price hits it, sell it right there.

This is a mitigation block.

Everything that was used to drive price higher.

Once it's treated below here, it's on their water.

They're going to want to mitigate those losses at that candle.

Sell short this last day down the candle here is violated here at price trades.

Back up to it.

Here we can be a seller.

The buyer.

The whole entire candle is used, not just the bottom, but

we can be a seller down here.

It's going to be a short seller at 1 12 62.

And our stop has to be somewhere above the down candle in here.

Okay.

So that high on this candle comes in at 1 12 89.

So it needs to be above that informal stock.

So we could be seeing just a little bit of draw down here about 20 pips or so, but

never getting much above this downstairs.

Prey trades lower violates a very convincing breakdown here.

Last down candle, the low trades up and again, notice the body

of the candle is not violated.

This is hallmark characteristics of other mitigation block price rates up into it.

We were expecting prices below this low now and ultimately reaches down into

our main threshold or the liquidity.

Then ultimately I'll give you a view of what took place price

eventually started to move back up.

So hopefully this has helped you with mitigation blocks.

We will still talk more about it again in the PDF file for your December, 2016, ICT

mentorship study notes until next time I wish you good luck and good trading.