ICT Mentorship Core Content - Month 03 - The Next Setup - Anticipatory Skill Development
Understanding Institutional Order Flow in Trading
Introduction to Anticipatory Skill Sets
- The session focuses on anticipatory skill sets, particularly using the monthly chart for trading.
- Emphasis is placed on utilizing institutional order flow to identify new trading setups.
Monthly Chart Analysis
- Monthly charts reflect significant price movements driven by substantial financial backing, primarily from smart money rather than retail traders.
- Retail traders lack the capacity to influence prices significantly; thus, understanding where large orders are likely placed can lead to profitable trades.
Key Candle Elements
- Traders should analyze the open, high, low, and close of each monthly candle over the past three months for all relevant currency pairs.
- This analysis helps delineate reference points that can be transposed onto lower time frames for clarity in trading decisions.
Identifying Ranges on Monthly Charts
- Identify the most recent down candle and its corresponding up candle above it to establish a trading range.
- The process involves pinpointing specific highs and lows of these candles to define potential entry and exit points.
Transitioning to Weekly Charts
- Once ranges are established on monthly charts, they can be transferred to weekly charts for more refined information.
- A vertical line marks the transition between months, aiding in visualizing price action relative to previous down candles.
Bullish Scenarios and Price Movements
- Activation of bullish order blocks occurs when price moves through two down candles; this indicates potential upward movement.
- Observations suggest that price may continue rising towards higher levels based on historical data from monthly candles.
Daily Chart Insights
- Daily charts provide additional context with vertical lines marking each month’s opening prices; significant responses occur at these levels.
- Historical analysis reveals objectives based on previous down candles which guide expectations for future price movements.
Conclusion: Defining Trading Ranges
- To effectively trade using monthly charts, identify current positions within defined ranges by locating recent down and up candles.
Understanding Bullish and Bearish Order Blocks
Identifying Key Candles and Ranges
- A down candle must be preceded by a higher up candle to establish a bullish order block.
- The relevant high for the up candle is noted at 104.35, establishing a reference point.
- The trading range between 106.28 and 103.26 indicates a potential movement of approximately 300 pips once the price trades above the down candle's high.
Analyzing Price Movements on Different Time Frames
- Price action below 103.26 during significant events (like US elections) suggests testing of bullish order blocks.
- Observations on daily charts reveal that the body of the last down candle is larger than previous ones, marking it as part of a bullish order block.
Trading Strategies Based on Market Structure
- The mean threshold of the identified down candle remains unchallenged, indicating strong support levels during market reactions.
- Following price dips into established bullish order blocks can present buying opportunities as prices rally away.
Monthly Chart Insights
- Historical highs are referenced to set objectives for future price movements, with expectations of reaching around 300 pips plus in certain pairs like Kiwi Dollar.
- Recent candles are analyzed to identify bearish order blocks, which help define potential downside targets.
Risk Management and Trade Setups
- Current price actions suggest potential downside objectives near 69 or even lower towards 67 based on bearish structures observed in daily time frames.
- Establishing bearish order blocks allows traders to refine their strategies using lower time frames while maintaining awareness of broader market contexts.
Top-down Approach for Trading Decisions
- Utilizing monthly charts helps define ranges through recent up and down candles, guiding traders in identifying key levels for entry or exit points.