Original subtitles

Welcome back folks.

This is less than 6.1.

Oh the January, 2017.

ICT mentorship, defining high timeframe PD.

Okay.

When we look at a chart.

Regardless of what timeframe we're looking at.

It, uh, there's two elements that come to mind as a trader.

Obviously we think in terms of support or resistance, or we think in terms

of a volume we're sold, we think in terms of purchase patterns, uh,

secondary, but, uh, generally we think of a price being valued too low or

too cheap or expensive or too high.

And the algorithm.

Has similar thought processes built into it.

And we look at it in the form of a premium and a discount

market for sake of discussion.

Just think of this red line at the top as a resistance and a blue level

on the bottom being supportive.

As price starts to move away from a level that would be viewed as too cheap

or support naturally our expectations as traders, we expect to see price

move higher when it does this, we're confirmed to see a response moving up

to a resistance point of some kind.

Now the problem is with retail trading and with technical analysis as a

whole by itself, it doesn't help.

Because every one of us could come to the conclusion that a specific

level above current price action would be a resistance level.

Some of us will see it as a, an old low day would be trading to some of

us would see in old high, some of us would see something else that would

equate to a resistance level now to remove all the ambiguity, you have

to have a mindset going into it.

This teaching is to teach you the air arche on the tools that

I use for framing the trades.

Now these same arrays are the same things that we've talked about since

the beginning of the mentorship, but we're going to prevent you from

having them in a disorganized fashion.

In other words, there's an air archi and how they are used

and how you look for them.

And price is price makes a retracement lower from a support level.

How far does it usually retrace back all of us, again, based on different

walks of technical analysis and different disciplines, we'll all

have our different conclusions.

Some of us would use a Fibonacci.

Some of us would use some fashion of support and resistance.

Some of us would use Elliott wave and ratios and harmonic patterns,

all kinds of things would come up.

By way of discussion.

If we were in a round table meeting where you're all sitting in the same

room together, we all have different opinions about how far it would retrace.

Some of us wouldn't even, even to expect expected to retracement.

Okay.

Some of us would not see this as a retracement, but a beginning

of an all-out reversal to trade below the old low that's.

The problem.

Every trader is plagued with when they come into this business, who's.

Who has the means of knowing with great deal of prognostication, what

is a support level and what is the resistance level and therefore, what

will propel price away from current market action, higher or lower?

Because the common adage is if I knew where price was going next, I

would need to know anything else.

I would make money.

That's not true because you would find some other way to lose

money over leveraging or, or.

Doing something different you shouldn't be doing and you'll break

a roll and you'll get emotional or psychological impact because of that.

And you'll end up blowing the.

So when we look at charts, we want to be viewing price in terms of, are we in a

premium or are we in a discount market, uh, earlier in the mentorship I taught

how you could do that, but we're gonna talk a little bit more in terms of how

to frame that on hard timeframe charts in the form of an air arche with the.

As price starts to retrace and then moves higher.

It hits a level of resistance.

Now for the sake of discussion, we're going to say, we collectively understand

what would deem a resistance level to, to remove all the, uh, secondary,

uh, discussions that we could have.

If we were a front in front of one another in the same setting, you know, a live

setting where we could literally shake hands and talk, all of us would have

an opinion about what would constitute.

Resistance level, but we're going to say that this level that's

noted as red, that is the commonly agreed bond resistance level.

The reasonable expectation would be to see price move away.

And the price does that.

Some of us would expect one more, try to get to that level, maybe

to go through it or to fail.

That's how I trade.

That's how I expect to see price react.

Some of us would not even expect that they would expect this one-time

punch up air and all the other, all.

This is the type of setup I like to see here.

Another pass towards that old high either.

It's going to give me a run-through or false break, or it's going

to give me a failure swing.

We talked about classifying institutional price swings.

That's what we'd done for that teaching here.

I want you to start thinking in terms of premium and discount on

higher timeframe charts, because the air arche on how you view this.

Is going to help you, whether you're a day trader scalper position

trader short-term trader with the expectation of lower prices, how

far we expect to see price go down?

Well, the first impulse leg, and then retracement, then as a second

leg, higher hitting that resistance level, that secondary impulse leg.

That's probably going to be a good reason.

Expectation for support level.

Now it could be a bullish order block.

It could be a, uh, an old short-term high in there on a lower timeframe.

If this was a monthly chart, uh, at that low, there may be a daily short-term

high that would create a, a support level that can't be seen on a monthly chart.

So when we're looking at these higher timeframe charts, just understand

that there's going to be levels that exist inside of larger price swings.

You may not see, unless you go down to the lower timeframe.

Now, when I say lower timeframe, I'm only referring to the daily because a hard

time for me analysis is all we're focusing on here, nothing below the daily chart.

So for assuming that this is a monthly chart and we're looking at

price, the expectation is, is okay.

Well at that old low, we would expect to see some lower timeframe support level.

And then again, it could be the monthly bullish order block.

It could be a week.

Bullish shoulder block, or it could be a daily short-term high.

You may not be able to see it inside that, that little wall there.

But nonetheless, when we look at price swings back and forth on a chart, whether

it be monthly, weekly, or daily and even lower timeframes, you have to understand

that there's swings that exist and support levels and resistance levels

that exist in the lower timeframes.

That may not be so apparent using these hard timeframe charts that is not.

What you base the majority of your trades on what you're really doing

is you're gonna be using the monthly chart and the weekly chart to frame

the context of what that market should be doing using these PDA rays.

So if we watch price and it continues to trade higher here,

where, where would you reasonably expect to see price trade to that?

Short-term little swing low at the failure swing.

That's going to be what the potential mitigation.

It means any orders that were used to go long, but failed to make another pass

at that old high they're underwater now.

So they're going to look to mitigate those losses and cover their long

positions and go short potentially, or just get out of the trade.

But smart mind just doesn't cut losses.

They know what they're doing.

They scale in scale out in the hedge.

So this would be another selling opportunity.

The market seeks liquidity below the low and below the second impulse swing

prior to the run into resistance.

So it seeks liquidity below the marketplace.

Once it takes that liquidity out, it can drive all the way down to that

old support level, but generally it doesn't, it will retrace again and

pick up more orders back at an old.

Where we'd see another opportunity to sell off and take out to liquidity below

a short-term load that was just created.

And back down to a logical area of support, the expectation would be what

the C price bounce price does this.

When price starts to retrace.

Again, some of us, if we were all in the same room, we would

expect to see that price low, to be violated in a new, low created.

Sometimes that'll happen.

Sometimes it won't.

This failure swinging here could be used, set up another long

opportunity for price rallies in the here's the million dollar question.

The understanding is how price moves from one level to the.

But predominantly it's moving from a level of discount to a level of premium from a

level of premium, to a level of discount between the red line and the blue line.

They are extremes in the middle.

That's classified as equilibrium or.

Buying imbalance is seen.

Moon price gets above equilibrium or up into that red level,

which would be resistance.

Selling imbalance would be when price gets below equilibrium and

down into the blue line or what would be just drived as discount.

So where would you expect to see price go next?

That's what you're always faced with.

When you sit down in front of the charts.

This discussion, we're going to use the common ICT tools as far as,

uh, set up parameters in the form of the way they form on charts.

In other words, the order in which they form and how they use

them based on wherever you're at, in terms of the marketplace,

we're using this teaching.

As a foundation, that's going to lead us into a better

understanding of this example.

We showed, we were discussing money management for the January content.

So less than five, that example for the dollar yen pair for a long-term

position trade, this idea will be used as an example on framing PDA

rays on higher timeframe charts.

But before we get into that teaching for six points, We have to do the

foundation to understand what we look for and why we expect it to unfold.

Like we would

okay.

Again, using our thought process of premium, which would be the red line and

discount, which will be the blue line.

When you look at charts, you want to see where a price has

moved away from an old time.

And it's dropping down from an area of premium and where

it's it's too, it's too high.

So the evaluation is going to be reduced and dropped lower.

So repricing takes place and the market goes down and the price goes lower as

a result of it until it gets to a point where it's too much of a discount, then

there has to be a premium built into it.

The algorithm will do this moving price back and forth, back and forth,

back and forth until again, something of significant impact comes into the

marketplace and dries the market.

One second.

And it creates a strong imbalance.

Otherwise the market's just going to gyrate back and forth,

looking for liquidity based on premium and discount conditions.

We'll assume for a moment right now in the market prices.

Okay.

And we can clearly see that the market in recent times had a clear

discernible level of resistance and a clear discernible level of support.

Now that can come in the form of bullish and bearish shorter blocks, or it

could be just old highs and old lows, and we'll just use all highs and lows.

As an example for this discussion, your expectation is, is right now

prices at a level where it should.

By all standards move lower because it's at a classic viewed resistance level.

We don't know how long that time is going to be required before the

market does in fact, submit to our expectation and see a lower price.

So that timeframe, okay.

That part is what you're always going to have to submit to time is a murderer.

It's a killer for traders, unless, you know, That some of these ideas are going

to paint out for a long, long time.

You're going to do a lot of things psychologically and emotionally

that you wish you wouldn't have done because you haven't submitted

to that time aspect of trading.

There's two elements in trading.

You have to submit to time and price when they both agree with

one another and you have waited for that agreement to come to fruition.

That's where profitability and opportunities.

So we're looking at price and we have no idea how long time is going

to be required of us to wait before the displacement takes place.

But eventually our expectation is we'll see lower prices down to a level of.

And that's what we're expecting or forecasting as a future price in between

these two pref reference points again, time and price is what's essential.

You have to submit to the level of time, which no one knows how much time

is going to be required before your setup pans out or goes to profitable.

Price is what you're studying.

You're submitting to time throughout the process, but while you are in the trade

or expecting this to unfold, studying it, you're submitting to the price.

You know what?

You're not trying to force your will on price.

You're analyzing price to see what it is that it's telling you in

terms of institutional order flow.

Is it justifying your expectation that it wants to go down to that discount level

or some bullish or block to buy back off?

And cover a short position, or it could be a whole load at once to run below that

future price could be a number of things, but for now, we're just going to aim for

an old low between the market price today and the future price that you anticipate

or forecast lower in the future.

There's going to be zero opportunity for it to be a straight line.

In other words, you're not seeing that diagonal line in

the way the market trades.

It just doesn't do that is always some give and take that takes place.

So.

Uh, understanding where certain arrays occur in that process will help you.

Number one, stay with the trade idea, not be shaken out of it and have the

confidence to hold until the objective is met or your stock gets taken in.

It's simply moving to the next opportunity.

The opposite is seen when you're looking for a bullish scenario,

everything's just reverse.

You expect that market price to be in the future at a premium.

In other words, it's going to be harder than it is today.

Again, you have no idea how long time is going to be required to get to

your future price or forecasted price.

And you have to submit to that the measure of time that is an unknown you can't

know for certainty, how many days or how many hours or how many months it will be

before that price has actually arrived at.

But you also have to be studying price and again, monitoring and studying

the, the PD arrays that occur in price action that leads to supporting your

expectation on institutional order flow.

That would drive price up into that premium level.

The understanding is that price will move from a discount to a premium

because the discount can't stay discount.

Very long.

Price is going to be established by whoever is selling it.

Who, who stands there.

A profit off of it.

Well, the central bank is going to be in the business of adjusting price.

So if we know that they are in control of price, ultimately by way of steering

sentiment in economies, through the delivery of an interest rate long-term

to stimulate or to suppress an economy for our country, we have to view

the market in terms of technicals to align ourselves with these ideas.

So if we see a level of.

Our expectation is okay.

Where is the evidence that this thing will go to a premium market?

Where's the premium market.

Where's the resistance at where's the higher level that I would want to see

at trade two between the market price you're at right now in that future.

Again, it never happens in a straight line there's time that you have new

understanding of exactly how long it's going to be, but there's also an

element of price that you have to study.

In other words, just because you think it's going there, it

doesn't mean it's going there.

It could go halfway there and fail and go lower.

Nonetheless, what we're going to do is I'm going to outline now the arrays

and keep them in a specific order.

So that way, you know, wherever you're at in terms of market price, what you would

expect to see or what you're looking for.

Okay now w what should I be looking for in a roadblock?

Or should I be looking for a gap?

You w what should I look for right now?

That's what this teaching's going to do.

Okay.

For a monthly chart.

Okay.

What you're going to do is you're going to look at the current

trading range that it's in.

Okay.

So we're gonna assume that you outlined the marketplace in terms of old

highs and old lows on a monthly, and that's the easiest way of doing it.

There's other ways you can do it, but for now, we're just going to outline it in

the context at the most recent trading range that the market has moved from

an old high to an old low, that would be our premium and discount definition.

In between these two reference points, halfway point, this is always going

to be referred to as equilibrium now, equilibrium between where you think

price will go, because it's been there before and where it's at right now,

relative to an old high and old low that's the current trading range.

And I'll give you an example, what that looks like when we go into lesson

6.2, but for now I want to lay the foundations for what it is you look for.

The first thing above equilibrium in the form of an array is

an old high and old low.

You want to be looking for that above equilibrium.

The next thing that you'd be looking for, and this is in the order of importance.

Okay.

Old, high, old loyal, then the next thing you'd be looking for as

a rejection block rejection block would be just above the candles.

Not the Wix.

So the actual high and low is the wick, but then the next area of

importance is the rejection block.

That would you be just above the candles, body and the bearish order

block, a fair value gap, liquidity void, bearish breaker, and the mitigation.

Put another way.

If we were at equilibrium and we were moving away from a premium level or

at resistance, in other words, price already dropped down and we anticipate

price going lower down to a level of support or monthly discount we would be

looking for above current market action.

Again, assuming that we're at equilibrium right now, we would start

looking above current market action in the past and left side of our chart.

Where's the nearest mitigation block.

There may not be.

Okay, check that off.

Where's the nearest barest breaker.

There may not be one of those either.

Okay.

Check that off.

But if there is one, then you would reasonably expect to see

price trade up to that price point.

Then expect some selling to go lower and once it moves below equilibrium,

then you would be all set to go to the monthly discount or support.

But let's assume for a moment, a mitigation block isn't there

and the breaker isn't there.

What would you look for next?

Okay.

Well, the next order of air arche is liquidity void.

Is there a range that needs to be closed then?

Again, that may not be so clear.

Check that off.

No problem.

The next thing is there a fair value gap again, that might not exist?

Go to the next thing, bearish order block.

It's probably going to be there.

Chances are, it's very strong.

It's going to be there.

So what did this give you?

I gave you the hierarchy and what you look for.

The mitigation block is going to be first considered before you

get to the bear shorter block.

Cause the bears water blocks can be really high up in the premium

mitigation block is going to be level.

Mitigation and breakers are basically mitigation blocks, but

generally mitigation blocks can occur lower than breakers, small

little bounces in bear markets.

Would it be a mitigation block?

Basically a bearish Spreaker will keep your ability to get to a bearish order

block, which will be resting higher up in the premium when an old highs taken

out that down candle right before the second highs made, taking out an old time.

Or turtle soup.

In other words, that down candle, if it's retreated to, that's going to

be a bearish breaker, that's going to keep you from seeing most likely

high probability that it won't allow you to get to a bear shorter block.

So whenever you see bearish breakers just don't expect the

bearish order block to be hit.

Okay.

Cause it's going to most likely keep price lower, cause that's going to be the

most dominant, um, array of all these.

There is a liquidity void that would be viewed with there's no breaker, and

you can close in that range and it may take you off into a fair value gap or

a bearish order block, but breakers by themselves, even though they're

low end on this list, that's the first thing you're going to encounter because

if you're at equilibrium and price has already been moving away from the

resistance level, you're looking up now for any potential areas to resell at.

First, when you look at, as the mitigation block or bear Spreaker, and if there's

neither of those, you look for liquidity, void the trade up into the closing that.

Warfare value gap to close in.

They may not be any of that.

Then you would expect to see the bear shorter block to be traded to.

Then that would be your selling opportunity because you're at a

premium and you go to a logical area where institutional order flow would

kick in new orders would capitalize and into selling into if there isn't

an obvious bearish order block.

Okay.

Um, and there's very little times that's like that, but we will

talk about that when we get into entry techniques and concepts.

But if there is a lack of bearish order, block, a understanding and what

you're looking at currently in market action, because there may be a lot of

wicks, something like that may occur.

Um, then you would look for a rejection block, which will be

just above the body of the candles.

Do we expect that to be ran out and then you'd be really high on the

premium there and then ultimately a whole, whole entire run on the.

That would be, uh, an expectation now I have here old high and all.

Well, what, w w why would the low be there?

Well, if you're on a very low end of a downtrend on a hard timeframe,

monthly chart, you may be rallying up to a old low, and if it gets

to that old low, even though.

It's an old load in, in terms of price.

It's really high up in the premium.

If it's been rallying a considerable amount of time

and price to get to that level.

So retreating to an old, low that's resistance, classic understanding, but.

It may need to run on an old high as well.

So basically all you're doing is, is you're you're, you're scaling the

grade of how much important you're going to have on each one of these.

So again, in summary, I want you to understand what I'm talking about here.

We're not just listing the things we've talked about in previous teachings.

Okay.

I'm putting them in an order of significance when you're at equilibrium

or if you're moving up from discount.

Okay.

Expectations are to look for very first thing you look for

in list as prices going up.

The first thing you're looking to see to encounter, is there any mitigation

block that I've got to consider?

Because that's the first objective.

It could be a selling point, then it's a bear.

That could set the tone for another leg lower or stop any

rallies on a bullish idea.

Then the next idea, if you're bullish from a discount, or if you're expecting

a new selling opportunity, say you're at the equilibrium price point, anything

below the premium, the expectations.

And when you're looking at the F in price for areas where price may go

up to it's in this order from the lowest up nobody's from mitigation

block, all the up to old high in.

That's the order you would expect to see them.

Now, the order of importance, I know it's the highest of the premium array is

the old high in old, low that's that's.

As high as you can get, then you have rejection blocks.

Then you have bear shorter block, fair, fair value gap.

And then liquidity, void, bear, Spreaker and mitigation block.

You're going to be looking up.

And the first thing you're going to encounter is the first thing

on the bottom of this list.

And then you start working your way up that list.

The farther you go up in this list, the more deeper you go into a premium

market, certain arrays in here will keep you from seeing the next higher array.

In other words, the next.

Institutional order reference point that's listed in here.

If you get to a breaker, chances are, you're probably not

going to go higher than that.

You won't generally get up into close to that void.

If there's a breaker below a liquidity void that liquidity void may stay open,

basically that range may stay open.

So they kind of like it's in the order of importance as a trader,

when you're below premium and looking higher up for prices or expecting

prices to move higher, that mitigation block, you know, that's the lowest.

Likely one you're gonna expect to run into first.

It doesn't mean that there's one in price action, but you start from that

expectation first and you look for it.

It's not there.

Okay.

What's the next thing you've been looking for?

The bear Spreaker.

If it's not there.

Okay.

Then I'm okay to expect that void the close in debt, but

there may not be a void.

It may have been a really systematic and efficient way that it traded lower

and that won't be any void there.

So next thing is there, is there a gap that would draw price up into it?

If there's no gap, then you go right to the.

Okay.

But the main thing is if there's a breaker, forget about closing in

the void and forget about getting up to that gap because the breaker's

going to take precedence over everything on this list when you're

below it, in terms of market price.

If we were anticipating move lower into price into a discount or into

a support level, we would expect the very next PD array to be a.

Mitigation block now, again, that may not appear in price.

If there is no mitigation block, you would expect to see the

next PD array in the form of.

A bullish breaker.

And again, this may not occur or should be seen in price action, but

this is the order in which you would expect to see as prices going lower.

Looking in the past to the left side of your chart, you'll be

focusing on whether or not these arrays appear in price action.

Their importance is again, is listed from equilibrium, the expected

order of how they're going to be in the price action in form of a.

The first one you would anticipate seeing as a mitigation block bullishly then a

bullish breaker, then illiquidity void.

Now, if there is a bullish breaker, now again, a bullish breaker is a up

candle between two swing lows and the most recent swing low would be lower.

No much.

You're seeing a stop run in the past and the high that swing hide

it, it forms between the two loads.

That up candle is going to be your bullish breaker.

So when price comes down, then at the Bush of candle, it'll find some support.

If you see that in price action, chances are, if there's a liquidity void in

price, it won't go down to fill that in.

It can, if it overtakes the barrier, but if it has a breaker anticipate

price, not going below the breaker and leaving the void intact

again, assuming there is no break.

And there is no boy, but there is a gap and they may be at liquidity

void, any gaps sometimes that can occur too, but you would anticipate

price reaching down into a fair value gap, which is this a common little

gap where pricing only been delivered all months out of the marketplace.

And then the next array would be the bullshitter.

And again, without the breaker, you would expect the void to be filled

a gap, to be filled, trade down into the bullshitter order block.

Then below the order block would be a rejection block, which is just below

the most lowest candle and its body.

In other words, if it has wicks long wicks below it, we're only

gonna be looking for a mood just below the bodies of the candle.

And that would be rejection block.

And then ultimately the deepest form of discount would be in the

form of an old, low or trading down to it in a historic high.

And like we said, when we were talking about the premium market, when prices

trade up to an OHI, it can also trade up to a very old longterm low.

And that would both be in the form of a resistance level.

So when we look at markets like this, what it does is it gives us a frame.

You can see here, the monthly premium arrays.

These are going to be focused for primarily bearish premium array

trading, and always you're going to be using these areas at which the frame

of trade or look for bullish targets at these levels for monthly discount.

You're bullish, discounted rate.

These are your bullish discount arrays, and you would be looking for these

four bearish targets or looking to get long at any one of these based on

the current conditions in the market.

Now, the same thing as seeing Elsa for the weekly chart, the weekly

chart, you're gonna be looking at the same thing from equilibrium up.

The first thing you would expect to see when you're expecting higher prices.

Are we going to run into a mitigation?

They are Spreaker.

If there's a bear Spreaker, you probably not going to go higher than that.

But if there is no breaker, you look for a void to close in.

Or if you're a value gap, if there is no fair, fair value gap or avoid

price could just simply trade right up into the bear shorter block.

And if there is an idea that suggests that there's possibly not a strong

bearish order block there, we would look for rejection block, which is

a move above the candles bodies.

If there's long wicks that top, that market.

And then ultimately I run above the old high or return to a historical low,

the same things we just outlined for the monthly is seen for the weekly,

both premium and discount, the same Iraqi and how you would expect to see

these arrays occur in price action.

This is the way they are seen.

And obviously the same thing is said for a daily chart, nothing's

changed the same error exists.

If we're at equilibrium.

And that's the current market action price and we're expecting lower prices.

The first thing we want to look for in the left side of our chart, is there any

mitigation blocks or a bullish breaker?

If there is anything less than that breaker probably won't be

considered or retreated to the breaker has precedence over everything,

both bullish breaker and bear.

So Ronald, take a look at an example of all this information with our dollar

yen example that we mentioned briefly in lesson number five, money management

was hard time from analysis using these ideas in 6.2, that lesson will

actually give it real practical example.