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ICT Mentorship Core Content - Month 12 - Intermediate Term Top Down Analysis
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ICT Mentorship Core Content - Month 12 - Intermediate Term Top Down Analysis

ICT Intermediate Term Top-Down Analysis Weekly to Daily Foreign

In this teaching, the speaker shares his personal approach to analyzing the market. He starts with relative strength analysis and then moves on to commitment traders' readings. After that, he does a market sentiment analysis and breaks down the market in a technical fashion.

Relative Strength Analysis

  • The speaker starts with relative strength analysis.
  • Once he has what he believes are leaders or his watch list from his relative strength analysis, he goes into commitment traders' readings.

Commitment Traders Readings

  • The speaker looks for extremes in the readings of commercials.
  • Commercials usually make tops and bottoms in the marketplace, so if we can get their readings in the extreme basis, then we can try to trade in the middle where most of the move is made.

Market Sentiment Analysis

  • After commitment traders' readings, the speaker does a market sentiment analysis.
  • He goes through a couple of different things that arrive at market sentiment.

Technical Fashion Breakdown

  • Once he arrives at a market sentiment opinion, he starts breaking down the market in a technical fashion like we did with monthly charts.

Intermediate Term Analysis

In this section, the speaker discusses their approach to intermediate-term analysis and the steps they take to analyze the market.

Market Profiling

  • The speaker starts by analyzing the weekly market profile.
  • They look at whether the market is in consolidation or a trending environment.

Inter-Market Analysis

  • The speaker compares weekly charts of correlated markets to identify price action similarities and differences.
  • They look for positive and negative correlations with other assets and markets.

Market Structure

  • The speaker analyzes institutional order flow to determine bullish or bearish market structure.
  • They look for down close candles supporting price and up close candles being broken in bullish market structure, and vice versa for bearish structure.

PD Array Matrix

  • The speaker breaks down the PD array matrix on a weekly basis.
  • They use this information to calibrate key price levels for support, resistance, buy, and sell areas.

Relative Strength Analysis

  • If monthly analysis is not clear enough, the speaker begins their weekly analysis with relative strength analysis across all asset classes.
  • They determine what markets lead in strength by failing to make lower lows and lead in weakness by failing to make higher highs.

Commitment of Traders (COT)

  • The speaker looks at COT data to determine what commercial hedgers are doing.
  • This helps them identify potential tops or bottoms in the marketplace.

Trading Strategies

In this section, the speaker discusses his trading strategies and how he analyzes markets.

Commercial Net Holdings

  • The speaker looks for commercials to be at a 12-month or 6-month extreme in net holdings.
  • He also sorts markets that are at two-year and four-year extremes.
  • The speaker looks for signs that commercials are buying or selling a market.

Market Sentiment Reading

  • The speaker uses headlines from financial publications like Investors Business Daily, Barrens, Wall Street Journal, Bloomberg to get a foreign market sentiment reading.
  • He likes to fade the big story and look for when storylines start building in a consensus or sentiment idea.
  • The more emotionally charged or descriptive they are and the more that they occur generally builds in a sentiment idea.
  • The speaker hunts forums for retail thinking and further builds his sentiment opinion.

Technical Sentiment Indicator

  • As a technical market sentiment reading, the speaker uses Williams percent R indicator on a weekly chart in periods of 20, 14 period, and 10.
  • He looks for which one is most accurately depicting or overlaps with the previous important highs and lows.
  • When all three things come together (forums for retail thinking, what he sees in storylines/newspapers/Articles/CNBC), it builds his sentiment.

Market Profile Analysis

In this section, the speaker discusses how he analyzes market profiles.

Consolidation vs. Trending Markets

  • The first question he asks himself is what profile is the market in?
  • If it's under consolidation then expands they're likely to show evidence prior to breakout
  • If it's not in consolidation then trend might be reaching an extreme
  • If it is under retracement then look for signs of continuation of trade post-retracement
  • If it's trending, he looks for continuation trades to avoid top and bottom picking.
  • The speaker uses intermarket analysis while the market is under consolidation.

Weekly to Daily Presentation

In this section, the speaker discusses how he incorporates institutional order flow and intermarket analysis into his weekly to daily presentation. He also talks about how he defines the current market structure on a weekly basis and locates institutional focus points.

Incorporating Intermarket Analysis

  • The speaker uses intermarket analysis to support his bullish or bearish market structure determination.
  • If the Market of Interest has a bullish Market structure, he looks for positively correlated markets. If it's bearish, he looks for negatively correlated markets.
  • For example, if he has a bullish pound, he would like to see a weak U.S dollar technically. Conversely, if it's a bearish US dollar, he would like to see a strong euro dollar technically.

Defining Current Market Structure

  • The speaker defines the current market structure on a weekly basis by classifying every high and low relative to SMT ideas.
  • He compares each high and low with recent highs and lows to determine whether they are long-term or short-term.
  • Trade selection is made in the direction of the current market structure.

Institutional Order Flow

  • The speaker incorporates institutional order flow into his analysis by looking for premium arrays breaking in bullish markets and discount arrays supporting price reversals when it's bearish.
  • Premium arrays resisting price and discount rates breaking down are what he wants to see in bearish markets.
  • Both premium and discount rates are identified when analyzing selected price ranges.

Locating Institutional Focus Points

  • Once the speaker arrives at a portion of price action that he wishes to analyze, he breaks down the selected price range into premium and discount arrays.
  • Key price levels relative to these arrays on the weekly chart are noted as well.
  • He then defines PD arrays to arrive at key levels within that range on the weekly chart.

Weekly Bias

  • The speaker determines market sentiment based on three principal approaches and confirms his analysis with market correlation.
  • He selects a portion of Market structure to frame a trade within and defines PD arrays to arrive at key levels within that range on the weekly chart.
  • A directional-based analysis is arrived at by this time, which gets transposed over to the Daily.

Analysis of Australian Dollar on Monthly Chart

The speaker analyzes the Australian dollar on a monthly chart, identifying premium arrays and defining the range based on the low and high. They also discuss how to adjust the chart for June and transposing it to a weekly chart.

Premium Arrays

  • The rejection block is identified as well as old height knitted here as premium arrays.
  • On the upside, there are two premium arrays identified.
  • If this one breaks, then the next PD array would be up here.
  • There is somewhat of a fair value gap in here as well.

Range Breakout

  • Once this range has been broken from this low to this high, then this range is no longer valid.
  • The next range high would be up here if this high was to be broken.

Analysis of Australian Dollar on Weekly Chart

The speaker transposes the analysis of the Australian dollar from a monthly chart to a weekly chart. They identify all relative price action and confirm that there is no disparity between Aussie and dollar index markets.

Relative Strength

  • From a relative strength standpoint, there is no disparity in here so everything's confirming it.
  • We have weakness in the dollar as expected and strength in Aussie.

Bullish Order Block

  • We get higher move off of bullish order block from a monthly standpoint which is what this level is here.
  • We have a rebalance point we can take this order block now and refine it down to this level here.

Technical Analysis and Institutional Order Flow

In this section, the speaker discusses technical analysis and institutional order flow in trading.

Technical Analysis

  • The speaker analyzes a chart showing price trades down to find support at the bowl shoulder block and fair value gap on weekly.
  • A bullish order block is formed when an up close candle violates a down close candle.
  • Down closed candles become bullish order blocks when traded through.

Institutional Order Flow

  • The speaker incorporates institutional order flow into their analysis.
  • Price delivery shows institutional buying with low body candles opening and running away to reach for buy side liquidity resting above equal highs and range levels.
  • Support comes in with down closed candles, indicating institutional order flow supporting price moving higher.
  • The commitment shares report shows real institutional buying and selling.
  • The speaker highlights June as a time where they bought the low, sold into rallies, then bought back again at a low point.

ICT Hedging Program Concept

  • The speaker introduces their unique hedging program concept that allows them to see whether institutions are hedging or buying/selling.
  • By splitting the 12-month range of highest and lowest readings in half, they can see ebb and flow patterns of commercial buying/selling behavior.
  • Looking at this information gives insight into when commercials are really buying or selling.

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Australian Dollar Forecast

In this section, the speaker discusses the bearish forecast for the Australian dollar and how sentiment plays a role in market movements.

Bearish Forecast

  • The fundamental Australian dollar forecast is bearish.
  • Seasonals are calling for it to rally, but it's directionless.

Sentiment and Market Movements

  • Smart money is against uninformed traders who follow crumbs laid out by media companies.
  • Media companies may be in cahoots to make things unfold a certain way through conditional programming.
  • Over time, building ideas can lead to widespread opinions that become market sentiment.

Sentiment Reading with Oscillator Williams Percent R

  • Applying a sentiment reading with oscillator Williams percent R on the Australian dollar.
  • Ideal long entry set at 80 and ideal short entry or sell set at 20.
  • Calibrating the 14 period for sentiment by justifying old lows back to 2014 and 10 periods.

Technical Analysis of Australian Dollar

In this section, the speaker discusses technical analysis of the Australian dollar using relative strength aspect, CRT, and ICT hedging program concept.

Relative Strength Aspect

  • Technically bullish because it's an extreme reading down here while sentiment was bearish.

CRT (Cot Report Tool)

  • Zero line above as bullish below is bearish when using natural use of cot graph.

ICT Hedging Program Concept

  • Use the 12-month range to go back 12 months.

Understanding Market Sentiment and Profiling

In this section, the speaker discusses how to understand market sentiment and profiling. He explains that market sentiment can be bullish or bearish, and it is important to understand the difference between public sentiment and smart money concepts. The speaker also talks about how to use seasonal influences, technical analysis, intermarket analysis, and PD array matrix to identify potential trading opportunities.

Market Sentiment

  • Market sentiment was bearish for the Australian dollar.
  • Visual depiction of sentiment being bullish because it's extreme oversold.
  • Diametrically opposed view when all of our smart money concepts overlap with news and seasonal influences.

Market Profiling

  • Consolidation is giving us clues that it's going to break out to the upside.
  • Retracement is expecting an expansion swing.
  • Dollar Index was supporting this up move by weakness in the part of the dollar.
  • Discount arrays are supporting price with buying coming in here.
  • Price has gone through and taken out the monthly rejection block and old high.

Short-term Analysis

  • All information will be transposed onto a daily chart for short-term analysis top-down approach in our third teaching next week.
  • Take what you've been shown here from a process from beginning to end.
  • Each specific time frame has its respective characteristics, apply certain tools to those time frames.
  • Time of day type things not required on these time frames monthly and weekly.
  • Next teachings next week will provide much more refined information about time of day and a lot more indicators and tools.

Conclusion

  • Use the information provided to build and flesh out what the institution should do.
  • Apply seasonal influences that the technicals should support because of the technicals in our repeating seasonal tendencies or seeing higher prices and lower prices Aussie dollar.

Anticipating Price Movement

In this section, the speaker discusses how they anticipated a price movement in March and were proven wrong. However, they were able to take advantage of a buying opportunity and make an explosive price move.

Anticipating Price Movement

  • The speaker was looking for a price movement in March but was proven wrong.
  • There was a retracement back, but it came down to a buying opportunity.
  • The price moved explosively after the buying opportunity.

Conclusion

In this section, the speaker concludes their discussion by summarizing the components used from monthly to weekly and now weekly to daily.

Components Used

  • The speaker uses components from monthly to weekly and now weekly to daily.
  • The speaker wishes good luck until next time.
Playlists: 2017 ICT Private Mentorship Core Content Month 12
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