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ICT Price Action Model 5 \ Algorithmic Theory
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ICT Price Action Model 5 \ Algorithmic Theory

Advanced IPA Concepts and Expansion Tool Setup

Introduction to Advanced IPA Concepts

  • The speaker introduces the topic of advanced IPA concepts, referencing model number five as a foundation for the discussion.
  • A brief overview is provided on how to set up the expansion tool, emphasizing its straightforward nature.

Analyzing Ranges

  • The speaker discusses delineating the Central Bank dealers range and Asian range for analysis.
  • Specific values are identified: a low of 11558 and a high of 11581, confirming that they meet the criteria for using the Asian range due to exceeding 20 pips.
  • The Central Bank dealers range shows a high of 1585 and a low of 1571, which does not meet the required 15 pips threshold.

Fibonacci Expansion Tool Application

  • Instructions are given on plotting the Fibonacci expansion tool from the lowest point to the highest point in order to analyze price movements.
  • Emphasis is placed on ensuring accuracy when placing FIB levels at significant highs.

Standard Deviations and Calibration

  • The speaker explains how standard deviations are calculated based on previous models' criteria, noting discrepancies in pip requirements between ranges.
  • A practical example is provided by copying lines from one day’s analysis to another while checking if they meet pip thresholds.

Utilizing Flout for Analysis

  • When neither range meets criteria, flout can be used; this involves applying standard fib retracement tools across entire ranges.
  • The midpoint equilibrium is highlighted as crucial for understanding market behavior during analysis.

Final Observations and Projections

  • Two days’ calibration results show close proximity in standard deviations indicating potential trading opportunities at specific price levels (11673).
  • Discussion includes strategies for stop sweeps based on swing highs with projections extending beyond typical thresholds (10, 20, and 30 pips).

Analysis of Market Dynamics and Trading Strategies

Blending Time, Price, and IPA

  • The discussion emphasizes the importance of precision in blending time, price, and Intraday Price Action (IPA) to identify trading opportunities.
  • Traders are encouraged to analyze a month's worth of data for currency pairs like Euro Dollar or Cable to discover overlaps based on specific criteria.
  • A focus on 15-minute time frames is recommended for identifying liquidity runs at short-term highs, which can indicate potential price expansions.
  • Emphasis is placed on conducting thorough research using 10, 20, and 30 pip sweeps for liquidity analysis across various currency pairs over four weeks.
  • The speaker notes that IPA operates methodically within these frameworks, leading to predictable market movements.

Insights from the Dollar Index

  • The dollar index shows anticipated price action with a calibrated low range between 9430 and 9440; actual movement reached a low of 9429.
  • Sensitivity in market numbers is attributed to careful chart analysis and understanding of order blocks within the dollar index framework.
  • The strategy involves targeting buy stops while being aware of sell stop thresholds if certain levels are breached during trading sessions.
  • Discussion includes the significance of wicks in determining bullish or bearish trends based on mean threshold breaks in candle patterns.
  • A detailed explanation follows regarding how equal highs at specific levels influence trading decisions moving forward.

Detailed Analysis Using Time Frames

  • Transitioning to a 15-minute chart allows for deeper insights into manipulation around equal highs prior to upward movements in price.
  • Identifying key levels such as around number 9540 helps traders anticipate runs above equal highs effectively.
  • Daily dividers are introduced as critical points for analyzing Central Bank dealer ranges that impact intraday projections significantly.
  • Focus shifts towards volume-based analysis using open/close prices within defined ranges to frame standard deviations for better predictions.

Calibration of Price Levels in Trading

Rounding Levels for Calibration

  • When calibrating price levels above 9553, the decision is whether to round down to 9550 or up to 9555. If anticipating a price sweep above, rounding up is preferred.
  • The rationale for rounding up to 9555 is based on the expectation that prices will reach this level, which aligns with strategic objectives rather than merely directional movement.

Anticipating Price Movements

  • The strategy involves anticipating a run above the calibrated level (9555), considering potential stop sweeps of 10, 20, and 30 pips above it.
  • A specific target of 9565 is identified as a key high point during upward movements, indicating where traders might expect significant activity.

Bearish Scenarios and Calibration

  • In bearish scenarios, if targeting lower levels like 9497 while being above current prices, calibration would involve rounding down to the nearest five or zero level (9495).
  • This approach illustrates how traders can adapt their strategies based on market conditions and anticipated price actions.

Utilizing Standard Deviations

  • Incorporating standard deviations into trading strategies helps define ranges; for instance, using a standard deviation of four from the daily high at 9565 enhances precision in projections.
  • Traders are advised to adjust exit levels by rounding down when taking profits early but expand ranges when aiming for stop sweeps due to their nature of reaching beyond previous highs or lows.

Market Dynamics During New York Open

  • Observations indicate that Thursday's New York session often leads to reversals; this pattern was noted on July 19th.
  • The analysis includes projecting levels based on previous day’s highs and lows while considering market behavior around significant timeframes like the New York open.

Confluence and Reversal Patterns

  • Multiple confluences are identified through mentorship teachings that guide traders in recognizing potential reversal points in the market.
  • A calibrated daily level at approximately ten pips above 9555 coincides with other indicators such as standard deviations, suggesting strong resistance or support zones.

Analysis of Cable Movement

  • Analyzing cable movements reveals low formations at critical times like the New York open; these patterns align with expected market behaviors discussed earlier.
  • The anticipation of sell stops below certain levels indicates ongoing strategic planning for upcoming trades based on historical data and observed trends.

Market Analysis and Price Action Insights

Understanding Price Levels and Gaps

  • The price action is currently flat, with a notable high at 3118. A breakout above this level is considered reasonable as the market transitions into a new day.
  • There is a small gap identified in the price action, particularly highlighted by a candle that closed before gapping up slightly and then dropping sharply without significant upward movement.
  • The open of a specific candle is noted at 3141, which aligns with current price levels. This will be marked on the chart for future reference.

Analyzing Order Blocks and Market Sensitivity

  • A one pip difference between the close of one candle ($29.98) and the open of another ($29.97) indicates sensitivity in price movements; typical analysis would treat these candles as part of a bullish order block.
  • On January 20th, prices dipped to $12996, just below an important one pip gap at $12997, demonstrating how closely prices can align with theoretical gaps.

Observing Market Reactions

  • After clearing equal highs, prices retraced back to previous levels during the London session, indicating potential rebalancing efforts within established ranges.
  • The high reached was 13141, coinciding with standard deviation metrics that suggest it’s near the end of daily trading ranges unless influenced by external factors like FOMC minutes.

Identifying Gaps and Order Blocks

  • Another gap appears during the London session where there was no body present after opening; this suggests further investigation into whether gaps are being filled or if they serve other purposes.
  • Emphasis is placed on using order blocks rather than wicks for determining target areas since they represent more reliable data points for market reactions.

Strategic Considerations for Trading

  • The discussion highlights how understanding order blocks helps determine entry points—whether buying at opens or selling at wick lows based on market behavior.
  • Traders are encouraged to analyze their charts for instances where order blocks have been violated yet still maintain certain thresholds without breaking lower limits.

Seasonal Trends in Currency Markets

  • Transitioning to broader market analysis, attention shifts to the Australian dollar against the US dollar within seasonal bearish tendencies while observing recent bullish activity in daily charts.

Daily Low as a Short Objective

Analyzing the Daily Low for Trading Opportunities

  • The daily low is identified as a target for short trades, contingent on achieving necessary confluences.
  • Focus is placed on setting up a short that breaks below this low, utilizing model number five and standard deviations to gauge potential movement.
  • A mathematical approach is employed by splitting the range between high and low to establish standard deviation levels for better precision in trading decisions.

Utilizing Fibonacci and Standard Deviations

  • Emphasis on finding confluence across multiple days rather than relying solely on one day's data; this enhances bias construction.
  • The strategy involves measuring from high to low, determining the 50% level, and applying Fibonacci retracement to identify key price levels.

Precision Elements in Trading

  • Smaller increments of standard deviations are preferred for more accurate trading setups; an understanding of acceptable error margins (3 to 5 pips) is crucial.
  • The next trading day focuses on using central bank dealer ranges and session timings (London and New York opens) to identify sell setups based on bearish bias.

Key Turning Points and Fair Value Gaps

  • Important highs created during London sessions are anticipated to lead into downward movements during New York sessions, with specific price targets established.
  • Standard deviation calculations help pinpoint precise entry points; variance within 5 pips is noted as acceptable when targeting specific price levels.

Execution of Trade Setups

  • Confluence factors are critical in establishing precise entries and exits during trading sessions, particularly within the New York Kill Zone.

Understanding Trading Models and Market Behavior

Analyzing Price Ranges and Confluences

  • The focus is on identifying price ranges between low and high points, looking for confluences with previous trading days to inform current trades.
  • Emphasis on recognizing potential market rollovers and continuations based on prior movements, particularly after significant moves away from established highs or lows.
  • Acknowledgment that mastering these techniques requires years of practice; traders should not expect immediate success but rather a gradual improvement through experience.
  • Model 5 offers benefits primarily for intraday trading strategies like scalping; higher time frame objectives can also yield successful outcomes without the need for extreme precision.
  • Markets operate under algorithms that utilize specific times for measurements, indicating that understanding market behavior is crucial rather than solely focusing on precise entry and exit points.

Utilizing Previous Moves in Trading Decisions

  • When considering short positions at fair value gaps, traders do not need exact price movements to validate their decisions; logical reasoning based on relative equal lows suffices.
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