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ICT Mentorship 2023 - August 15, 2023 ES & NQ Futures Review
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ICT Mentorship 2023 - August 15, 2023 ES & NQ Futures Review

Market Analysis and Insights for August Trading

Overview of Current Market Conditions

  • The speaker reviews the daily charts for e-mini S&P and NASDAQ futures, noting a down closed day with trading at the low of a balance area.
  • Emphasizes skepticism about market movements in August, describing it as a fickle month that can be frustrating due to inconsistent market structure.
  • Defines an "outside day" where today's high exceeds the previous day's high while today's low is below the previous day's low.

Key Market Dynamics

  • Highlights that today's trading range is outside of both the previous day's range and the day before that, indicating volatility.
  • Observes price action moving into areas of inefficiency, suggesting potential resistance levels to watch during upcoming sessions.

Anticipated Price Movements

  • Looks for movement outside current inefficiencies during the London session; if prices rise back into certain wicks or treat lows as resistance, it may signal further downside opportunities.
  • Notes that lower prices are expected on ES (E-mini S&P), but any bullish sentiment would require trading above today’s high (245.20).

Caution in Trading Strategy

  • Advises caution in trading this month due to historical trends showing August as less favorable compared to other months, leading to hit-or-miss scenarios.
  • Suggests focusing on fewer trades during August when market setups do not present low-risk, high-probability opportunities.

Comparative Analysis: S&P vs. NASDAQ

  • Discusses differences between S&P and NASDAQ charts; notes long wick behavior on NASDAQ without forming an outside day like S&P did.
  • Points out relative equal lows in S&P versus lower lows in NASDAQ, indicating different market dynamics at play.

Future Monitoring Plans

  • Plans to monitor key levels upon waking up early next morning; emphasizes staying updated via Twitter for any significant developments or insights.

Technical Chart Observations

  • Analyzes hourly chart patterns showing sell-offs from inefficiencies; warns against assuming bullish reversals in bearish markets based on past ICT videos.
  • Describes how price traded down into shaded areas of inefficiency before attempting rallies within those ranges.

Target Levels and Expectations

  • Identifies 4412 as a target level for bearish moves on S&P; suggests monitoring this level closely if bearish conditions persist.

Market Dynamics and Price Delivery Analysis

Understanding Market Manipulation and Inefficiency

  • The speaker discusses the challenges of predicting price delivery with precision, especially during periods of market manipulation and thinner trading volumes, which can lead to greater volatility.
  • Observations are made about inefficiencies in the market that result in aggressive price movements, indicating a sell signal based on balance and efficiency metrics.

Analyzing Candle Patterns and Market Sentiment

  • The analysis focuses on candle bodies as indicators of market sentiment, where the position of these bodies can confirm or deny buy/sell pressures.
  • A bearish outlook is suggested as the market trades below significant rejection levels, hinting at potential continuation downward.

Session Expectations and Price Movement

  • There is an expectation for the London session to support a downward movement before any consolidation occurs in New York; this could set up for a retracement into short-term premium areas.
  • The speaker notes that while S&P may require more time to adjust compared to NASDAQ, it remains within a defined range reflecting inefficiencies.

Divergence Between Indices

  • A divergence is highlighted between NASDAQ and E-mini S&P indices; NASDAQ achieves higher highs while E-mini S&P does not, indicating underlying market discrepancies.
  • The importance of maintaining perspective across different time frames (hourly vs. 15-minute charts) is emphasized when analyzing inefficiencies.

Key Levels and Breakers

  • Discussion centers around key price levels known as "bearish breakers," which indicate strong selling pressure when prices trade back into certain ranges after breaking lower.
  • The concept of liquidity pools being purged is introduced alongside discussions about bearish order blocks affecting price action.

Importance of Backtesting and Real-Time Analysis

  • Emphasis is placed on identifying significant down-close candles as critical markers for future price behavior; understanding wick behavior versus body behavior is crucial.
  • The necessity for extensive backtesting to recognize patterns in static chart formats before applying them in real-time trading scenarios is discussed.

Market Analysis and Trading Insights

Understanding Market Inefficiencies

  • The speaker discusses the presence of inefficiencies in the S&P market, highlighting a bearish order block that indicates potential trading opportunities.
  • Emphasizes the importance of timing in trading, particularly during lunchtime macro periods when sell-side targets are approached.
  • Mentions a significant displacement to the downside observed on NASDAQ, indicating a need for clarity in chart analysis to avoid confusion.

Learning Trading Concepts

  • Acknowledges that learning complex trading concepts can be overwhelming for beginners; emphasizes that mastery requires more than just short video tutorials.
  • Stresses the necessity of hard work and dedication to achieve precision in trading strategies, contrasting this with simpler rule-based models like the Silver Bullet trade.

Advanced Trading Strategies

  • Introduces three specific models taught for free on YouTube, aimed at traders seeking deeper understanding and confidence in their trades.
  • Discusses how advanced knowledge helps traders identify bullish or bearish order flows and make informed decisions about holding positions.

Personal Reflections on Trading Performance

  • Shares personal experiences of feeling out of sync with market movements despite successfully extracting profits from trades earlier in the day.
  • Reflects on distractions affecting focus during trading sessions, illustrating how external factors can impact performance.

Chart Annotation Techniques

  • Explains the importance of annotating charts post-trade to enhance journaling and backtesting efforts for future reference.

Understanding Market Participation in August

Importance of Studying and Observing

  • The speaker emphasizes the significance of studying market trends rather than actively trading during August, suggesting that this month is more suited for observation.
  • A recommendation is made to "keep your powder dry," which means to refrain from making trades and instead conserve mental and financial resources for better opportunities later.
  • The potential psychological toll of volatile price action in August is highlighted, warning that traders may become exhausted or financially depleted by the end of the month.

Preparing for Future Opportunities

  • The speaker advises maintaining availability of funds and mental capital to ensure readiness for improved market conditions expected in September through November.
Video description

Government Required Risk Disclaimer and Disclosure Statement CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.