BOS,CHoCH & INDUCEMENT In SMC | HINDI | BANKNIFTY| LECTURE~3

Introduction to Structure Mapping

Overview of the Lecture

• The speaker introduces themselves as Gwyar and outlines that this is the third lecture in a series on structure mapping.

• New viewers are encouraged to watch the previous two lectures for better understanding before proceeding with this one.

Key Points of Structure Mapping

• Structure mapping consists of three main points: Break Off Structure, Change of Character, and Inducement (IDM).

• The first point, Break Off Structure (BOSS), is explained as a critical component in understanding structure mapping.

Understanding Break Off Structure (BOSS)

Explanation of BOSS

• A diagram is referenced to illustrate concepts like higher highs and lower lows; however, IDM is not included initially for clarity.

• The concept of BOSS is introduced through price trends where prices rise and then drop, creating high points.

Price Movement Dynamics

• When prices create a new peak after breaking an old high, it exemplifies BOSS.

• Continuous breaking of previous highs during upward trends reinforces the definition of BOSS.

Characteristics of Upward Trends

Identifying Higher Highs

• In an uptrend, when prices break previous highs repeatedly, these points are identified as BOSS.

• This process continues as long as prices keep breaking their prior highs during upward movements.

Downward Trend Comparison

• Similar principles apply in downtrends where lower lows are established and broken; these also represent instances of BOSS.

Transitioning Between Trends

Understanding Trend Changes

• Prices may not remain in a single trend indefinitely; they can switch from uptrends to downtrends or vice versa.

• The moment when a trend changes direction is referred to as "Choke," indicating significant market shifts.

Deep Dive into Choke Moments

• An example illustrates how price movements create higher highs while maintaining safety at higher lows until a choke occurs.

Understanding Trend Changes and Continuation Patterns in Trading

The Concept of Higher Lows and Breaks

• The discussion begins with the observation that higher lows have not been broken, indicating a persistent uptrend. However, there is an expectation that at some point, the price will break this higher low.

• A break of the higher low during an uptrend signifies a "change of character," indicating a potential trend reversal. This moment is crucial as it marks a shift in market dynamics.

Identifying Trend Changes

• It is emphasized that only one significant trend change has occurred so far. After breaking the higher high, the price did not revert to an uptrend but instead transitioned into a downtrend.

• The speaker clarifies that once a downtrend has established itself after breaking the higher low, it does not revert back immediately; thus, traders should be cautious about calling for another trend change too soon.

Continuation Patterns vs. Turning Points

• The concept of "boss" (continuation pattern) versus "chock" (turning point) is introduced. A continuation pattern indicates ongoing trends while turning points signal potential reversals.

• Understanding these patterns helps traders identify when to mark trends accurately and recognize shifts in market behavior.

Analyzing Downtrends and Pullbacks

• In downtrends, lower lows need to be marked similarly to how higher highs are noted in uptrends. Recognizing these points helps traders understand if the downtrend continues or if there's potential for reversal.

• If prices pull back slightly before breaking lower lows again, it confirms that the downtrend remains intact.

Complex Market Dynamics

• The discussion highlights scenarios where prices may drop without breaking previous lower lows before moving upward again—indicating complex market behavior requiring careful analysis.

• Two distinct trend changes are identified: first from an uptrend to a downtrend and then back to an uptrend again. Each transition represents critical moments for traders to reassess their strategies.

Conclusion on Trends and Market Behavior

• The importance of recognizing both chocks (turning points where trends change) and bosses (continuation patterns where trends persist).

• Traders must remain vigilant as sudden spikes can disrupt established patterns; understanding these dynamics aids in making informed trading decisions.

Understanding Price Trends and Market Structure

Analyzing Downtrends and Lower Lows

• The price is currently in a downtrend, with established lower lows and lower highs. A break of the previous lower low indicates a potential shift in market behavior.

• The first significant lower low on the left side serves as a reference point (checkpoint), which is crucial for understanding future price movements.

• If the price continues to create lower lows, it suggests ongoing bearish momentum; however, breaking a lower high could signal a change in trend direction.

Identifying Checkpoints and Trend Changes

• A checkpoint occurs when there’s a transition from creating higher highs to potentially forming new patterns. This can indicate either continuation or reversal of trends.

• Understanding whether the market continues after reaching these checkpoints is essential for predicting future price actions.

Transitioning Between Uptrends and Downtrends

• The concept of "boss" refers to continuation patterns within an uptrend, while "checkpoint" signifies points where trend changes may occur.

• As trends evolve, identifying higher highs and higher lows becomes critical until a structural break occurs that shifts the trend from bullish to bearish.

Marking Points in Downtrends

• In downtrends, focus shifts to marking lower lows and lower highs instead of higher points. Recognizing these markers helps traders understand market sentiment.

• A single checkpoint can signify a change in character within the trend, indicating that what was previously an uptrend has now transitioned into a downtrend.

Deepening Understanding of Checkpoints

• To further grasp checkpoints, it's important to recognize how they relate to higher highs and their corresponding swings.

• Valid checkpoints are determined by observing swings relative to newly formed highs; if prices drop before establishing new highs, those points do not qualify as valid checkpoints.

Understanding Boss and Chauk in Trading

Key Concepts of Boss and Chauk

• The "Chauk" point is identified as the left swing of a higher high after a drop, emphasizing that internal structures between higher highs and higher lows are not significant.

• The left swing of a higher high is crucial for determining the Chauk point; the right swing does not hold validity in this context.

• For a valid Boss, it is essential that the body closes above the previous high; if only a wick forms without closing, it invalidates the Boss.

Rules for Validating Boss and Chauk

• A body closure above the highest point of a wick is necessary to confirm a valid Boss; otherwise, one must wait for another candle to form.

• Both Boss and Chauk require body closures to be considered valid; wicks alone do not suffice for confirmation.

• If a candle creates a wick but does not close above it, then it cannot be classified as either Boss or Chauk.

Understanding Price Movements

• In scenarios where price trends upward despite expectations of downward movement, understanding why this occurs can clarify trading strategies.

• The concept of "Endorsement" (IDM - Internal Demand Model) explains how price movements can validate swings in both uptrends and downtrends.

Clarifying Confusions Between Concepts

• The first swing after an endorsement serves as an IDM which confirms higher highs; clarity on these terms helps avoid confusion during analysis.

• Distinguishing between external structures (main trends) and internal structures (minor fluctuations within those trends) aids in better understanding market behavior.

Marking Higher Highs and Higher Lows

• To mark actual higher highs or lows accurately, one must observe how price behaves around key swings—this involves identifying pullbacks correctly.

Understanding Price Structure and Confirmation in Trading

Price Movement and Structure

• The speaker emphasizes the importance of understanding price structures, indicating that prices do not move straight up but rather create swings.

• Internal points are highlighted as critical for understanding price movements, with specific reference to higher highs and higher lows.

• The speaker illustrates how prices fluctuate between high points and low points, marking these on a diagram for clarity.

Identifying High Points and Low Points

• Key high points (highs) and low points (lows) are marked directly on the chart to visualize the main structure of price movement.

• The concept of dot lines is introduced, representing how prices rise and fall over time through various swings.

• The speaker notes that three distinct swings can be identified within a higher high context, emphasizing the need to focus on left-side analysis.

Confirming Higher Highs and Higher Lows

• Confirmation of a higher high occurs only when certain conditions are met; simply moving upwards does not suffice for confirmation.

• An IDM point is defined as the first swing left of a confirmed higher high, which solidifies its status as such.

• The process for confirming a lower point involves waiting for price action to drop before making any assertions about it being the lowest point.

Tools for Marking Structures

• There is an emphasis on using tools post-confirmation to mark higher lows after identifying significant price movements (boss).

• A valid method is presented: marking swing highs or lows directly on charts based on observed patterns rather than assumptions about trend changes.

Time Considerations in Trend Analysis

• The speaker stresses that trends require time to develop; immediate conclusions should be avoided without sufficient evidence from market behavior.

• Clarification is provided regarding how internal structures confirm higher highs through previous swings while also addressing how lower points are validated by subsequent boss confirmations.

Understanding Price Movements and Market Structure

Internal and External Price Movements

• The concept of "swings" in price movements is introduced, emphasizing that prices do not move directly but rather through internal structures.

• A higher low marked after a boss (a significant price point) serves as a crucial checkpoint for understanding market trends.

• If the price moves upward from a certain point, it confirms a new high; however, if it drops directly, it indicates a potential shift in market structure.

Identifying Key Points in Trends

• The importance of identifying external points A and B is highlighted to understand minor structures within the market.

• Rules regarding internal demand management (IDM) are discussed, indicating how prices behave during upward trends by confirming higher highs.

Downward Trends and Lower High Confirmation

• In downward trends, the first left-side swing acts as an IDM point that confirms lower lows when broken.

• The process of confirming lower highs involves breaking previous lower lows while maintaining awareness of checkpoints.

Shifts in Checkpoints During Price Movement

• As prices continue to fluctuate, checkpoints will shift based on new highs or lows established during trading sessions.

• Understanding how swings work is essential for grasping the concepts of boss, choke points, and IDM effectively.

Rules for Confirming Highs and Lows

• It’s emphasized that both choke points and IDMs must be understood as left-side swings; right-side swings cannot confirm these points.

• Higher highs are confirmed only by left-side swings; right-side swings do not provide confirmation.

Closing Bodies in Bosses and Chokes

• For bosses and chokes to be valid, closing bodies must align correctly; this rule does not apply to IDMs which can still function without body closure.

• An example illustrates how price movement can validate an IDM even with minimal interaction at key levels.

Final Thoughts on Swing Confirmation

• The necessity for close proximity between current price action and previous swings is reiterated for confirming higher highs or lower lows effectively.

Understanding Market Trends and Swing Points

Importance of Swing Points in Trend Analysis

• The concept of lower lows is discussed, emphasizing that confirmation requires identifying the nearest left swing point before marking it.

• The speaker stresses the importance of understanding market movements through practice, indicating that concepts may not be grasped immediately but will improve with repetition.

• Left-side swing points are highlighted as crucial for confirming higher highs in an uptrend and lower lows in a downtrend.

Marking Higher Highs and Lower Lows

• The speaker explains why certain price movements were not marked as higher highs or higher lows until specific conditions (like IDM) were met.

• Confirmation of a higher high occurs only after the body closes above a certain level, illustrating the need for precise timing in marking trends.

• A detailed diagram is referenced to show how trends work, reinforcing the idea that proper marking relies on significant price actions.

Transition Between Trends

• The process of confirming lower lows involves identifying key left-side swing points and understanding their significance in trend changes.

• Distinctions between IDM (Immediate Demand Movement) points and choke points are clarified, explaining their roles in market behavior.

Practical Application of Concepts

• The speaker discusses scenarios where lower lows cannot be confirmed due to lack of preceding swings, stressing the necessity for clear market signals before making marks.

• It’s explained that once a lower low is confirmed by an IDM point, subsequent confirmations like lower highs depend on further price actions.

Final Thoughts on Market Structure Mapping

• Differences between choke points and IDM are reiterated to clarify their implications for traders when analyzing market structures.

• As trends shift from downward to upward movements, new structures must be identified to confirm ongoing trends effectively.

Understanding Valid and Invalid Pullbacks in Trading

Importance of Learning

• The speaker emphasizes the complexity of learning about valid and invalid pullbacks, urging viewers to stay engaged throughout the lecture for comprehensive understanding.

• The speaker expresses a lack of personal interest in teaching but acknowledges requests from viewers who are eager to learn after a long wait for new content.

Structure Mapping in Trading

• Discussion shifts to live chat interaction, focusing on how to structure mapping within trading contexts.

• The speaker introduces a structural framework for downtrends, explaining how price movements should be analyzed.

Price Movement Analysis

• Analyzing price drops and subsequent recoveries, the speaker highlights that certain swings have not been accounted for in previous analyses.

• Identification of significant swings is crucial; the speaker marks specific points where price has interacted with these swings.

Marking Lower Lows and Highs

• The importance of confirming lower lows through price action is discussed; confirmation occurs when specific conditions are met.

• The process of marking lower highs is explained, emphasizing that this can only happen after certain breakpoints are established.

Confirmation Points in Downtrends

• A detailed explanation follows regarding why certain lower lows may not be confirmed based on swing interactions.

• The concept of IDM (Indication of Market Direction) is introduced as a critical factor in confirming market trends.

Transitioning from Downtrend to Uptrend

• As the discussion progresses, the focus shifts towards identifying transitions from downtrends to uptrends and what markers indicate such changes.

• Key points are made about how gaps and body closures affect trend confirmations during these transitions.

Final Thoughts on Trend Confirmation

• The necessity for clear confirmation points before marking higher highs or lows is reiterated; traders must wait for definitive signals before acting.

• Concluding remarks emphasize that without proper confirmations, traders risk making premature decisions based on incomplete data.

Understanding Structure Mapping in Trading

Key Concepts of Structure Mapping

• The discussion begins with the identification of lower highs and lower lows, emphasizing the importance of marking these points accurately to understand market trends.

• A higher low is established when a price point creates a swing high, indicating a potential upward trend. This process involves recognizing previous swings and their implications on current market behavior.

• The speaker explains how structure mapping continues through both uptrends and downtrends, highlighting the need to mark significant points like higher highs and lower lows for effective trading strategies.

Confirmation of Market Trends

• Confirmation of lower highs occurs due to specific market behaviors, such as direct changes in trends without prior signals. This emphasizes the necessity for traders to adapt quickly to changing conditions.

• When transitioning from a downtrend to an uptrend, the last lower low serves as a crucial pivot point. Recognizing this helps traders identify new opportunities in rising markets.

Importance of Accurate Marking

• The speaker stresses that accurate marking of higher highs, IDM (Indecision Market), and other critical points is essential for successful trading. Misinterpretation can lead to poor decision-making.

• Confusion often arises from identifying swings correctly; thus, patience is advised while analyzing market structures before making trades.

Analyzing Swings and Liquidity Grabs

• The discussion highlights that not all identified points are valid IDMs; understanding liquidity grabs versus actual swings is vital for accurate analysis.

• It’s explained that if a swing does not close above or below certain levels, it may not be considered valid for trading decisions.

Final Thoughts on Structure Mapping

• Traders should focus on understanding which points represent true IDMs based on body closures rather than just price movements alone.

Understanding Swings in Trading

Introduction to Swings

• The discussion begins with a focus on understanding the concept of swings in trading, specifically addressing confusion regarding why certain swings are chosen over others.

• The speaker emphasizes the importance of learning what constitutes a swing, identifying valid and invalid swings, and outlines three key points for discussion.

What is a Swing?

• A swing is defined through an example involving three candles: the first candle sets a low, while the second does not break this low. However, the third candle breaks it and moves upward.

• The behavior of price movement is analyzed: initially moving up, then down, and finally back up again forms a valid swing.

• For a swing to be considered valid, it must close above the previous high after breaking liquidity from at least one prior candle.

Valid Swings Explained

• It’s crucial that at least one candle's liquidity is grabbed before closing above the previous high for it to qualify as a valid swing.

• The speaker clarifies that if there’s any confusion about what constitutes an actual swing, waiting for confirmation from subsequent candles can help clarify.

Identifying Valid Pullbacks

• Transitioning into valid pullbacks, six points are outlined to differentiate between valid and invalid scenarios in trading setups.

• An example illustrates how price movement can create confusion; understanding which parts are valid or invalid is essential for effective trading strategies.

Characteristics of Valid Swings

• Two methods for identifying valid swings are discussed:

• First method involves closing above the previous high after grabbing liquidity.

• Second method requires waiting for further confirmation from additional candles after liquidity has been taken from both highs and lows.

Conclusion on Swing Analysis

• The analysis continues with examples where price movements do not take liquidity but still result in significant swings when followed by confirming candles.

Understanding Valid and Invalid Swings in Trading

Overview of Swings

• The discussion begins with the concept of swings in trading, focusing on how liquidity is managed. The fifth swing is analyzed, highlighting the behavior of candles during this phase.

• The sixth swing is introduced, where price movement is observed as it closes below certain levels, indicating a valid swing.

Valid Swings Explained

• A total of six valid swings are identified. The speaker emphasizes that understanding these swings is crucial for effective trading strategies.

• Mastering structure mapping is essential before delving into advanced concepts like order blocks and liquidity zones.

Invalid Pullbacks

• An invalid pullback occurs when the price fails to take out the low of an inside bar candle. This indicates a potential misjudgment in market direction.

• The importance of taking out lows for confirming valid pullbacks is reiterated; failure to do so results in invalid setups.

Inside Bar Dynamics

• Inside bars are discussed as they relate to multiple candles forming within a single range. Understanding their high and low breaks is critical for identifying valid movements.

• If an inside bar does not break its own high or low, it cannot be considered a valid pullback.

Further Analysis on Pullbacks

• Moving forward, the analysis continues with examples where price action fails to validate pullbacks due to insufficient movement relative to previous candles.

• It’s emphasized that if an inside bar's low isn't taken out by subsequent candles, it remains invalid.

Conclusion on Swing Validity

• As the discussion progresses, various scenarios are presented where swings fail to meet validity criteria due to improper candle closures or lack of significant movement.

• The speaker concludes that recognizing these patterns helps traders avoid invalid setups and enhances overall strategy effectiveness.

Summary Insights

• A recap highlights that all identified pullbacks were deemed invalid based on specific criteria related to candle behavior and market structure.

• Emphasis on distinguishing between actual swings versus perceived ones underlines the necessity for careful analysis in trading decisions.

Structure Mapping: Where to Start?

Understanding Structure Mapping

• The discussion begins with the importance of knowing where to start structure mapping in trading. A clear starting point is essential for effective analysis.

• It is suggested to zoom out on the chart completely, avoiding excessive zooming in, to get a broader view of market trends and movements.

• Many traders learn about structure mapping but struggle with identifying the correct starting point. The lowest point of a significant drop should be noted as a reference.

Identifying Key Points

• The speaker emphasizes recognizing the lowest point during a market decline, which serves as an anchor for further analysis.

• After identifying lower lows, it’s crucial to observe swings on the left side of the chart for additional context regarding price movements.

Analyzing Market Trends

• The concept of IDM (Internal Demand Model) is introduced, highlighting its significance in determining valid points based on previous candle highs and lows.

• Traders are advised not to overthink gaps; instead, treat them as single candles when analyzing upward or downward movements.

Continuing Structure Mapping

• To continue structure mapping effectively, one must transition from higher time frames downwards while observing significant price drops or rises.

• Depending on market conditions (upward or downward), traders should start their analysis accordingly from either high points or low points.

Practical Steps in Structure Mapping

• Emphasis is placed on marking key points accurately rather than making arbitrary decisions without proper context.

• Traders are encouraged to identify lower lows and mark them appropriately within their chosen time frame for clarity in future analyses.

Evaluating Previous Structures

• When assessing past structures, it's important to find another lower low and IDM that can provide insight into current market behavior.

• If no IDM exists below certain levels, those structures may be disregarded for more relevant data points that align with current trends.

Conclusion: Mastering Structure Mapping Techniques

• Recognizing patterns such as gap downs and their implications helps traders understand market dynamics better.

Understanding Market Trends and Structure Mapping

The Concept of Trend Change

• Price movements indicate a trend change, with gaps suggesting potential reversals. Understanding these shifts is crucial for effective trading.

• Mastering structure mapping allows traders to identify price drops accurately, recognizing order blocks and extreme points that influence market behavior.

Identifying Key Points in Trading

• The highest point reached by the price serves as a critical reference for identifying liquidity grabs and marking higher highs in the market.

• Valid swings require body closures above previous highs; without this confirmation, swings may not be reliable indicators for trading decisions.

Mastering Structure Mapping

• A clear understanding of structure mapping helps traders discern actual higher highs and lows, determining the direction of ongoing trends or potential changes.

• Addressing common doubts about swing selection is essential; clarity on why certain swings are chosen enhances trading strategies.

Advanced Trading Conditions

• Inside bars can represent poor conditions but may still be valid under specific criteria, such as liquidity grabs from previous day highs.

• Recognizing when to take trades based on structural criteria is vital; understanding daily high liquidity concepts aids in making informed decisions.

Practical Application of Concepts

• Utilizing various blocks (mitigation, breaker, rejection, vacuum) provides multiple entry points for trades during downward movements.

• Ignoring less reliable swings while focusing on significant ones increases the likelihood of successful trades; only select optimal setups based on established criteria.

Encouragement for Continuous Learning

• Engaging with educational content fosters growth among dedicated learners aiming for profitability in trading.