Original subtitles

Welcome back folks.

This is lesson 6.20 January, 2017.

ICT mentorship.

We're dealing with trade conditions and set up.

Okay, I'm going to be outlining the 1200 PIP move.

We mentioned in the money management lesson number five.

And obviously it just a brief recap as a refresher, just in case you came back

to this lesson solo without going into 6.1, um, when we're looking at a premium.

And market are trading near a premium, and we have reasons to suspect that

I lower future prices in order.

Uh, we don't know how much time it's going to be needed to get to

that lower future price, but we're looking for a displacement in prices

and vice versa.

In this example, we're going to focusing on a buying opportunity.

When a market went to a deep discount on a monthly, weekly, and daily timeframe

and how we would use that insight to get to a higher premium future price.

And briefly, just as a quick, a real again, since this teaching's going to be

specifically dealing with the discount opportunity, buying at a discount

and aiming for a premium objectives.

Alright, focuses down here where mitigation blocks, bullish breakers,

liquidity voids, fair value gaps, bullish order blocks, rejection blocks,

and old lows or old highs are our focal point for entries on long positions.

The idea is we're looking for something down in this list of

arrays to target one of the premium.

Obviously professionally we'll be reaching for as a mitigation block.

That would be a first objective.

Then if there's a breaker of any kind, we would aim for that and we'd

have to weigh out whether or not there's eight significant force that

would drive it through a breaker.

And we'll talk about that.

Should we come to it in.

And then obviously you're looking for any range to be filled in for liquidity

void and aiming for fair value gaps in the premium range of the market.

And then we look for value gaps, bearish order blocks, and then

looking for a rejection block and, or old high and old historic low.

So we're looking for bullish PD arrays to buy into with the expectation of.

Selling it at one of the monthly premium arrays.

If we were looking at a verus example, which is what we're not

going to be doing here, but just for the sake of completeness, we

would be looking to sell short at a bearish PD era, aiming to cover.

That short position with one of the bullish PD arrays mitigation block

bullish breaker, liquidity void, or they get bullish order block rejection

block and or old, low or historic high.

So selling Edie premium and buying back at a discount

before we get into our actual example, I'm going to give you some.

Study points.

So we keep it in mind when you are looking at price, it's important to

keep this as one of the focal points.

When you're studying, when markets are at a premium or a discount, they're always

going to initially look to rebalance.

That means the equilibrium price point between the last recent range.

So even if it doesn't go all the way up to a deep premium, or down to a deep

discount, You can always reasonably expect it to go back to equilibrium.

And if that's all you aim for, if you, if you buy it a real deep discount

and just get back to equilibrium, you'll find a lot of trades like that.

If you're a big premium in the marketplace, you're at historic highs or

a annual high or three month, I, you got a real good chance of seeing the market

sell off back to some equilibrium price.

Point of the most recent trading range when markets are in pre.

Again, and if you're an equilibrium, you're gonna be focusing on the

market, potentially moving up into one of these monthly PDA rays that

possibly may be a shorting opportunity.

When the market's at equilibrium can anticipate a market, move

down into a monthly discount, any for one of the PDRs as an object.

So basically at equilibrium, you can look for either expansion

on the upside or downside.

Now you're going to be consulting the market structure on the monthly

chart to determine what side of the marketplace you're gonna be looking for.

So it's not indiscriminately going in there, rolling the dice and seeing,

well, I'm going to sell it short because at the middle of the range or I'm

going to buy it at the middle range, you have to look at some of the, uh,

the criteria around that price action.

No weekly ranges just as a complete approach or overview.

All of the same PD rays for premium and discount are the same and the

same as said for the daily chart.

So we're gonna go through the charts now and look at the Japanese yen cash price.

Okay.

We're looking at the daily of a cash price for Japanese yen.

This is seen@barchart.com and historically, uh, last year in

2016, we made a high in August and the market showed willingness

to want to start breaking down market structure at this low here.

This low became broken this moment here.

So market structure on a long-term basis on a daily chart had been broken bearishly

and we see this Trump election rally.

Into bearish order block, and then it sells off.

So we're gonna be looking at this move in here.

Okay.

And we're going to go over to the Forex chart now, just so you understand clearly,

cause a lot of you maybe knew, and maybe you're used to trading the futures market

or following the Japanese yen cash price.

But when we pair it with a.

Currency like the dollar index, the dollar index, it's the front currency.

And then the Japanese ends the second.

So that means if we're bearish or expecting lower prices on Japanese

and cash prices, the dollar yen pair is actually going to be inverted.

It's gonna go.

Because if Jeff, again, cash prices dropping, that means

dollar prices are rallying.

And if the dollar is the first in the name of the payer dollar yen, that means

when you're watching dollar yen price action, you're watching the advancement of

dollar versus decline of the Japanese yen.

Okay.

Here's a monthly chart of the dollar.

Okay.

And you can see how we've seen the market.

Have a really nice rally up in here.

This is going to be again, diametrically opposed to what we

expected or just saw rather on the cash price on the Japanese yen.

Now, as a reminder for some of you, um, we talked about the Japanese.

In the beginning months of our mentorship, and I gave you some study points and gave

some examples about, uh, this move higher.

And some of the levels that we saw at trade to, uh, the one 18, uh, for

instance, was one that was mentioned.

So if we look at what has happened and what's transpired, we're

gonna map out this, this monthly chart and we're gonna get some.

Some levels on here.

We have a high back here.

Okay.

And I want you to take a look at these equal lows.

Okay.

Niccolo's in here.

We're going to be expecting what to be their cell stops.

So while the market was dropping last year, we would be expecting

it to trade down into these levels.

Now what's this over here, these two down candles.

That is a bullish order block when you blend both of the bodies together because

it's two consecutive down candles.

Okay.

And then gives you your equilibrium price point in here.

Okay.

We'll take that off and rounded to the full 99 level.

So we have a range here.

We have a high end or premium and a low end or.

What makes us a discount level?

The fact that we saw price move away from it here.

Now this could be a discount level as well, but we want to go back

to where the move originated here.

We saw a big move away here that left a gap open.

So we saw the, the dollar yen leave a gap open here were prices

only delivered on the upside.

There was no down movement to counteract that up move that was seen here.

Okay.

Came down and closed in that little range.

Okay.

So price comes down and hits the fall.

Big figure 99.

Okay.

So we have a defined range up here.

This is premium on a monthly level.

This is discount on a monthly level.

So on this level down here, we will look to see a move below these wicks

in here, the body of these candles.

We saw it right in here.

This candle comes in at November.

2016, he went below the bodies of the candles in here that is

going to be a rejection block.

It cleared out the bodies of the candle on a monthly chart.

Rejected, sent it higher.

Okay.

We have a range up here.

We also have this down candle, which is a breaker.

Why is this a breaker?

Because we have an old high here.

Anyone that gets short, they're gonna put a buy stop risk resting rate above

that the market rallies above clears out.

There's buy stops here and then trades down through it.

Once it's down, candle is violated rate here.

It becomes a valid breaker.

If it trades down below and it comes back to it here, we have

it, maybe the middle of the body of the candle stand out in time.

It would give you a level of watch.

This is actually a weekly level.

We're going to see very clearly when we drop down into weekly.

Right.

But you also have noticed we have a gap in here, which I'm not going to add all

this on this truck that would make it way too busy, but we have a gap in here.

Price has only been delivered on the downside between this

candles low and this candles.

Hi, it's been delivered down here as a gap.

So that would be one reasonable objective to look for when price was rallying,

but what makes the buydown down here?

On a monthly let's change it over to a weekly.

Okay.

Here's the same dollar yen, just in a weekly format.

Okay.

And you can see here, we have an up candle right before the down move.

Okay.

That's a bearish order block.

So we're mapping that opening out over the here.

Okay.

And the reason why I'm using the openness candle, not the wick is because

there's an absence of a gap reason.

Why is because we have a WIC here in the market traded down through here.

So this is two times.

This little area has been traded to, and it was blocked in with this candle's high.

So this whole little area in here wouldn't be viewed as a gap or a fair value gap.

It's it's been closed in because of the very bearish water block itself

had a movement lower initially.

So it's been passed through twice.

Their price comes up and closes it right to the opening.

But we also have, we have a gap in here for your, that you get.

Between this candle is low and this candle is high.

That would be an objective to reach for also, but I want you

to look at the weekly chart.

We're deep in a discount on the range and price shows a willingness to want

to rally and comes back down into the down candle right before the move.

This is a bullish shorter block.

You could be a buyer here, but we're focusing on that November long.

That's this move right here.

It's trading right back into and recapitalizing an old, weekly bullish or.

Let's see what it's done.

It's hit that right there perfectly and rallied away now on a weekly timeframe,

this bearish order block, which is the last up candle right before the down move.

This is what you could have on your charts as well.

And this is how you map out the conditions.

Basically that would be a reasonable objective.

Once price comes down and hits it just by.

Sure to hit that, but then we had this set up here.

So what's this, this is later on.

You don't really see this as an objective.

Once it's already been hit, this wouldn't be no resistance whatsoever.

So you can take that level, move it over to here.

That would be a reasonable objective on the upside closing in that range.

But now look at the bodies here.

See that equal bodied candles.

Above that we would expect to see a rejection block price

reaches through that as well.

Another rejection block candidate here, equal body candles.

We can expect to see that as an upside objective, as

price continues to treat her.

Here.

And then we have that fair value gap up in here.

We're priced as long as we deliver on the downside, that would be an objective over.

If you can see that I'm not going to move this line all around.

And then finally all the way up here to the bearish or block, which is the

last off calibrate for the down move.

So we have a discounted premium using the monthly and weekly charts.

Now let's go down into a daily time.

After I add one more, little thing to this.

We also have this last down candle right before this by occurred.

So right in here, we're gonna map that out with a different color.

So that way we can see the air arche between the weekly and the daily.

Uh, let's use a different color, that little bit darker, maybe a

little, little too dark for some of your personal taste, but we're

just going to deal with that one.

We are going to go over to a daily chart.

Okay.

And you can see here, the darker area is a weekly bullish.

This is the lower weekly order block.

And this is the higher weekly order block price comes down and hits

that and actually touches both.

It gives you the return back to lower weekly.

What are blocked.

It's bullish to trade two times into a higher order block and the weekly

chart and the lower of the two bulls shorter blocks and price rallies away.

And through right here on this November.

Same thing.

When you start seeing here on the daily, we see a old high here.

We see an old high here.

We have equal highs in here.

We have relatively equal highs here as well.

We have a fair value gap in here,

this high and this low, which is what that would have been on

the weekly chart, by the way.

And then we have the last up candle right in here that low comes in at 1 18 55.

So 1 18 55.

So you see how price has reached up into premium level over here.

Now, important thing is, is if we don't see any retracement to come back

into four daily bull shorter block, or, um, or if we saw, for instance,

um, let's say it like this zoom in, we have this down candle right here.

Okay.

Price rallies away from it.

Every time you.

In an uptrend, you want to focus on the down candles because that's where

institutions are going to buy either.

They're buying at the time of the down candles creation, which

is usually always the case.

And then if it comes back to that same down candle at a later time,

they will, they will buy more.

At that time we have three consecutive down candles in here, right in here.

Okay.

The order block really begins at this candles.

Not this last one.

You can use that one, but if you want to be ultra ultra tight on your stops, but

you really going to be using the opening on this candle because it's the highest

open of the three consecutive candles.

So that's this candle right here.

Open comes in at 1 13 28 and this candle.

It's open was 1 13, 26.

It was only two pips below it.

And you can see, look at the, the movement off of that level.

1, 2, 3 times you got a ball and caught that last piece.

Now that's not a long-term session trading mind you, but it is what

you'd be focusing on to see more upside per pressure on this move.

Once you had already been in it every down candle here.

Okay.

Price trades through it here, and it comes back down to a heat rate.

In that moment, right there, adding the spread.

You could probably get another position on there.

Uh, but more, more likely.

This is one as well.

You have a down candle, the price trades through it.

Come back down into this candle.

What is the high on that candle?

High comes in at 1 11 39.

The low on this candle comes in at 1 11 36.

So that's definitely an opportunity for you to get in and get new longs on.

So having these levels.

From the monthly and the weekly on it gives you context to what to reach

for on a lower timeframe daily when you're executing long-term trades.

But more importantly, not that I could show it here, but if we would have

lost, say for instance, this candle here and always it traded down below

it, we could look for another return to this order block here as the high end.

Not down this deep, but we could expect for, to trade back down

here and give another bite.

And what I mean by that?

Any bullish order block, or any supportive role from a PRA on a daily

chart, if it is bullish, but it fails to give you a buy signal or support price

to next level you drop back to is a.

PDA Ray.

So you're gonna be looking for something bullish to support

price on the weekly chart.

If the weekly chart PD array has no support and it breaks, then you'd

get back to the monthly support.

So because you're trading off a long-term perspectives and higher

timeframe charts, the retracements can go through what you see on the.

The daily isn't going to support a monthly retracement.

It just isn't going to do it sometimes is it's going to give way it's going

to break through and it's going to pull all the way back to what you

would otherwise not see unless you were looking at a monthly chart.

So by having the monthly PDRs on your, on your charts and looking for them

also on the weekly chart and having those levels on both monthly and weekly

on your daily, now it's not going to be on your executable timeframe chart.

Okay.

But you should always have in your platform to asset that that you're

or the market you're trading, you should have these monthly, weekly

levels on, regardless, even if you're a day trader, because it's going to

surprise you how many times it has great impact or significant impact

even in day trading or short-term.

Swing trading.

You're going to definitely need it.

Uh, but position trading is absolutely crucial.

You definitely need it here because it's going to frame what trades you're

taking and it's going to provide you support, support structure in the form

of supportive resistance or natural support for price to find new buying and

or new resistance to find new selling it.

The takeaway from this.

If you're following the market on a daily chart, just because there's a

bullish order block or a void that gets closed in, or it fills in a

gap and that supposedly is bullish.

Uh, it doesn't mean that it's going to keep price up from that point.

Price could come back on a daily chart and retrace rather.

See, this is a one-sided market delivery here.

The market's been priced in on one side.

They completely keep running it higher, higher, higher, up to a logical level,

which was that weekly bearish or block the Mo the market moved from a

discount all the way up to a long-term premium notice on the daily chart,

understanding or block theory, you could see that as a viable upside objective.

For those that simply look at the higher timeframe, weekly four levels.

The key off of this is a logical area, cause it's very clear and distinct.

It's the last up candle right before the down sharp move.

So that's just going to be your bearish order block.

The opening on that candle comes in at 1 18 61.

The high, it comes in on this candle at 1 18 66 that's precision.

And that's really, really tight for a weekly chart.

It's hard to deny precision in that case there, because

it's as simply is irrefutable.

So when we look at price, every one of these new, uh, these ranges

in here, they're all tradable.

So even if you don't have the wherewithal to hold all the way

through to get to the deep premium.

You can get a premium here on this range.

This is a premium from this high down.

These highs in here down to that low is a premium, but as you go through and

deeper, this is where the last, last opportunity for the highest premium

and unloading along from that lounge down here and these discount area.

So moving from hard timeframe charts to the daily, monthly, and weekly levels,

moving them onto your daily chart.

That's obvious, this is transposing hard timeframe, support, resistance ideas.

Okay.

But we're using the PDA res in terms of understanding institutional order flow.

But the main takeaway is if we lose a level that's arrived at only on a

daily chart, you could drop back into the levels that seen on a weekly chart.

And I'm going to show you what that looks like.

Now, if you look at just the horizontal line, All right.

We have this old high back here, equal highs.

When you use that.

I don't see what that looks like on a daily.

We have another one here, right there,

and we have another one right there.

And all this consolidation is down.

Move here.

The candle, making a swing low in here.

We're going to look at that as some early scaling in long, they were buying here.

They're buying in here.

They're buying in here.

They're buying in here.

They're buying in here.

They're buying in here.

They bought in here and boom, you see that big move.

Long-term hedging.

That's what you're seeing in here.

Every time there's a down candle and then a subsequent.

You know that they bought and that's the footprint.

They can move to market by doing that.

And every time they do that, it allows new scaling in for them and

their positions are large and he can't get them all on one time.

So if we go out to the daily again, you can see there's

that order block right here.

And here's that order block here, that level trading right down here.

Now it's not going to be right to the point.

Okay.

We're right to the PIP, if you will, but you can see how these levels draw

your attention to where a future order block on a daily timeframe may occur.

So it gives you an opportunity to kind of like to anticipate when the next

down candle should occur in terms of price, not time, but around the time

of this price, hitting this, you want to be focusing on when there's air down

close on the daily chart, because that's going to be new buying opportunities.

Especially if you have a higher timeframe premium level, that's still unmet.

So, hopefully this has given you some insights about how you can

use the PDRs in a context from moving to monthly to a daily.

If I want to be specific and make sure that you've drawn something of

value out of it is not because we can take higher timeframe levels and

transpose them onto a daily chart.

That's not the point.

It goes beyond that.

If we lose a level, if we lose a order block, for instance,

like we see, um, Okay.

We saw price trade down and it moved up.

So this could have been a bull shorter block price came down here.

Why did it go up?

Might've come all the way down here.

It went through this down Canada to go right back into, which

is a higher weekly order block.

It wasn't until we saw the election of Donald Trump.

That's what this big whipsaw move was when he took out the stops here

and it had to trade all the way back down to the lower weekly bullish

order block, which is what this is.

Now I'm showing you on a daily chart.

But this level is all on that lowest weekly bullshitter block.

So again, you can see how this low here it was violated, but it went down to the

most logical area on the weekly chart.

So the daily chart was pushed aside in the values that's attributed to using daily

timeframe that wasn't sufficient enough.

The banks went back to recapitalizing a level on the weekly chart.

And that's what this whole move is here.

Usually when you see these big surges higher or lower in price, and you're

watching it on a daily chart, or if you see it on the lower timeframe,

you just can't understand what's going on quickly, go out to a weekly

chart and you'll see what they've done or what they're reaching for.

And then many times what everybody else gets afraid of to go back into if they

got knocked out and take a loss, like for instance, say, you say you bought that.

Maybe you bought this low here as a old well, and you bought

it as sell stocks name ran out.

Okay, great.

Thought it started see some money and it all of a sudden

this boom, you get knocked down.

If you go and look at the weekly chart, you can see that all that was as a

return back to that weekly order block.

And if it was starting to trade back up to this level here,

it could be a buyer again.

Cause you know that they went down to the weekly order block and

there's nothing to worry about.

All he did was recapitalize a longer term.

And it's all it was, this is a return back to a Polish or

block on a weekly timeframe.

So if you lose a level on a daily, don't be concerned, just go out

to our weekly chart and you'll see what they're reaching for.

If you can't find it on the weekly chart, which is probably unlikely.

But if you can't go out to a monthly chart and you'll probably see much

clear where they're trying to push price, the algorithm is going to work

predominantly on a daily timeframe.

But if the levels are already worked in the.

And already absorbed all of the potential liquidity because it's

already been trading to them.

It will go out to that larger open float, and that usually will

dip you into the weekly ranges.

So when you see the market move into the weekly objectives or the levels

that we identify with these PDRs.

Then you'll know that you're probably going to have a really significant price

mover because of the weekly level, those large funds banks and institutions.

They're all going to dog pile on those levels because they're significant

in their long-term and they're poised to make moves like this.

So until next time I wish you good luck and good.