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ICT Market Review - July 06, 2022
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ICT Market Review - July 06, 2022

Mentorship Update and Market Analysis

Overview of Upcoming Absence

  • The speaker announces an unexpected event requiring their full attention, leading to a temporary absence from social media and YouTube.
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  • They will be unable to conduct both mentorship groups simultaneously due to this commitment.

Dollar Index Analysis

  • Discussion on the dollar index daily chart highlights a significant divergence pattern, indicating higher highs in price but lower lows in momentum. This suggests potential market weakness.
  • The target for the dollar index is set at 107.61, with caution advised as trading approaches this level; no further trades are planned for Friday if the target is reached.

Euro-Dollar Dynamics

  • The euro-dollar pair shows a three Indians pattern, indicating potential for lower prices after recent expansions downward. This aligns with observed SMT (Smart Money Technique) divergences between the two currencies.
  • Heavy distribution within a fair value gap suggests aggressive selling pressure targeting liquidity below key levels, particularly around 1.03403 where relative equal lows exist.

Market Structure Insights

  • A detailed examination of market structure reveals optimal trade entries and significant range expansions that align with previous analysis expectations, emphasizing bearish trends in play.
  • Observations indicate engineering of liquidity through price movements that create sell-side opportunities while also testing buy-side liquidity before dropping lower into morning sessions.

Correlation Between Currency Pairs

  • Notable discussion on correlated pairs such as GBP/EUR and AUD/NZD showcases SMT divergence where one currency exhibits higher highs while another does not, signaling potential trading opportunities based on these discrepancies.

Forex Trading Insights: Analyzing the Pound Dollar

Fair Value Gaps and Market Structure

  • The speaker discusses analyzing the Pound Dollar hourly chart, emphasizing the importance of identifying fair value gaps by drawing lines or rectangles to mark significant price levels.
  • A breakdown of market behavior is provided, noting that after a lower break, the market rebalances at an old low before targeting sell-side liquidity below that level.
  • The concept of distribution is introduced, highlighting how hourly imbalances and liquidity purging occur during specific trading sessions like London open Kill Zone.
  • The speaker explains market structure shifts, indicating displacement when prices retrace into smaller fair value gaps before breaking lower again in subsequent trading sessions.
  • Discussion on consolidating back into ranges between key levels (e.g., 1934), linking this to broader market indices like S&P 500 and NASDAQ.

Understanding Futures Contracts

  • Explanation of why September contracts are currently being traded; previous June contracts have expired, making September the front month for active trading until mid-September.
  • Clarification on contract months for index futures: March, June, September, December—only four per year with a rollover process as each contract expires.
  • Emphasis on understanding why traders focus on nearby contracts rather than earlier months due to lack of available options (no July or August contracts).

Daily Chart Analysis

  • The daily charts for S&P and NASDAQ are analyzed for imbalances and potential targets for trades throughout the week based on observed price action.
  • Notable differences between S&P and NASDAQ are highlighted; while both have been monitored for gaps over time, their current positions differ significantly from historical lows.

FOMC Impact on Market Behavior

  • Observations about unfinished business ahead of FOMC meetings indicate potential volatility; relative equal highs in S&P were cleared while NASDAQ had not yet reached its buy-side target prior to FOMC announcements.
  • Identification of sell-side imbalances linked to fair value gaps suggests areas where traders might find opportunities during volatile periods around major economic announcements.

Anticipating Market Movements

  • The speaker encourages viewers to understand market movements as part of a larger strategy rather than relying solely on hindsight analysis; emphasizes learning from real-time observations.

Market Analysis and FOMC Insights

Understanding Market Movements

  • The market trades higher before retracing into an order block, indicating potential price action strategies. This behavior is observed around the 3857.75 level, which represents an old relative equal high on the S&P daily chart that has yet to be traded.
  • There was a notable focus on unfinished business above the 3857.75 level, particularly as it relates to the upcoming FOMC meeting at 2 PM, suggesting traders should prepare for volatility during this time.

FOMC Strategy and Market Bias

  • A clear bias is necessary when approaching the FOMC; with unfinished business in S&P, buy-side liquidity becomes a likely target, aiming for levels of 3857 or higher as the session begins at 2 PM.
  • The strategy involves treating the start of trading at 2 PM like a new day; prior movements are considered irrelevant to set up for potential bullish activity following a drop into an order block.

Smart Money Accumulation

  • Observations indicate smart money accumulation without traditional indicators; this suggests that understanding market logic and timing is crucial rather than relying solely on supply-demand metrics. This accumulation occurs just below significant price points in anticipation of upward movement post-FOMC announcement.
  • The NASDAQ's previous performance indicates it has already surpassed its relative highs, creating a sympathy play where S&P needs to catch up by moving towards buy-side liquidity not yet reached while NASDAQ continues its upward trend.

Gold Market Considerations

  • Attention shifts to gold as part of broader market analysis; there’s speculation about continued strength in the dollar impacting gold prices negatively if certain liquidity levels are breached below recent lows. This reflects ongoing bearish sentiment until those levels are tested further downwards.

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Channel: The Inner Circle Trader
Video description

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.