41. Price Action Lecture (Intro to Intermarket Triads)

Market Analysis and Trading Insights

Overview of Current Market Conditions

• The speaker expresses hope that the audience has had a successful trading week, noting that the month has shown significant range with the Dow leading.

• Emphasizes that while index futures do not follow traditional yearly cycles, they respect the year's opening, which can be observed in monthly time frames.

Understanding Price Movements

• Discusses how different candles on the chart indicate price movements; some closed above or below previous candles, suggesting market behavior.

• Mentions choppiness in NASDAQ and encourages listeners to take notes for better understanding as they prepare to delve deeper into analysis.

Anticipating Market Trends

• The speaker highlights expectations of downside movement following significant swings in the market, particularly after observing specific patterns (SMT).

• Notes consolidation phases in price action and anticipates further weakening due to seasonal factors affecting trading strategies.

Seasonal Influences on Trading

• Introduces seasonality as an important factor outside traditional theories; emphasizes focusing on April's opening compared to March's closing.

• Explains that even if prices rise temporarily, underlying trends suggest continued expectations for lower prices based on historical patterns.

Analyzing Candlestick Patterns

• Observations about specific candlestick formations indicating potential market direction; highlights importance of recognizing these patterns.

• Clarifies confusion between weekly and monthly charts while discussing three-candle patterns that often signal seasonal tendencies.

Cross-Market Comparisons

• Stresses looking at multiple asset classes (like S&P 500 and NASDAQ), especially during transitions between quarters for more accurate predictions.

Understanding Precision Swing Points in Trading

The Importance of Precision Swing Points

• A precision swing point is crucial for analyzing market movements, particularly in the NASDAQ. As time progresses, the significance of these points will become clearer.

• Simplifying explanations can lead to misunderstandings; not all participants grasp the complexities involved in trading strategies.

Platform Development and Community Engagement

• Efforts are underway to enhance the trading platform by creating separate chat rooms and forums, which will help protect proprietary information from being cloned.

Analyzing Market Behavior

• The importance of liquidity above precision swing points is emphasized; recent price actions indicate significant market behavior rather than random fluctuations.

• Observations on weekly time frames show that prices opened above previous quarter closes but subsequently collapsed, highlighting critical trading patterns.

Correlation Between Indices

• The relationship between different indices (e.g., S&P 500 and Dow Jones) reveals discrepancies in their opening and closing behaviors, indicating a lack of symmetry that traders should monitor closely.

Market Trends and Predictions

• Identifying SMT (Smart Money Technique) swing points is essential for understanding market direction; specific candles play pivotal roles based on their positioning relative to others.

• Current economic instability and geopolitical issues suggest potential downward trends across various markets, including Bitcoin.

Learning Through Observation

• Emphasis is placed on self-directed learning; viewers are encouraged to analyze charts independently without excessive annotations to foster deeper understanding.

Imbalances and Market Structure

• Recognizing imbalances within price action is vital; gaps created during trading weeks signify areas where attention should be focused for potential reversals or continuations.

Sequential SMT Analysis

Market Analysis and Trading Insights

Current Market Conditions

• The speaker discusses the current market price action, indicating that it is not optimal for trading. They suggest waiting for consolidation before making any moves.

• Emphasizes that unless traders entered positions earlier, current stop-loss levels make it illogical to engage in trades at this moment.

Introduction to Intermarket Triad

• The speaker introduces a new concept referred to as the "intermarket Tri," which they believe is more valuable than traditional FX Triads.

• This intermarket Tri functions as a third asset that should correlate with others, specifically mentioning T-bond futures alongside Euro and Pound movements.

Correlation and Market Dynamics

• Highlights the importance of correlation between T-bond futures and currency pairs; discrepancies indicate potential trading opportunities.

• Argues that bond markets have a stronger influence on market dynamics compared to the dollar index, particularly regarding interest rates.

Weekly and Yearly Cycles

• Discusses how understanding weekly and yearly cycles can provide insights into market trends, using bond market behavior as an example.

• Suggests that observing lower highs in bond markets can serve as indicators for future price movements across other assets.

Practical Trading Strategies

• Advises against solely relying on traditional methods; instead, suggests using three charts focused on interest rate triads for better market gauging.

• Mentions upcoming discussions about commodities while emphasizing the need for effective strategies to understand price movements without stress.

Simplifying Price Understanding

• Introduces techniques aimed at helping newcomers grasp price action by focusing on specific time frames and cycles.

• Shares personal insights on how sequential SMT (Smart Money Techniques) can aid in identifying high-low ranges effectively.

Historical Context and Future Predictions

• Reflecting on past bearish sentiments towards GBP/USD (GU), the speaker notes their accuracy in predicting lows based on previous analysis.

Market Analysis and SMT Concepts

Price Action Observations

• The price failed to break above key levels in both the Euro and Pound, indicating a potential weakness in market momentum.

• A sequential Smart Money Technique (SMT) was observed between the Euro and Pound, which contributed to subsequent price movements.

• Notable price action included a break below previous lows, with consolidation following this movement, suggesting indecision in the market.

Key Dates and Events

• February 22nd marked an important date where a higher low was formed despite prices taking out previous lows, showcasing intermarket SMT dynamics.

• The discussion highlighted how SMT can outline significant patterns within price action across correlated assets like the Euro and Pound.

Importance of Highs and Lows

• Specific highs were identified as critical points for analysis; these highs corresponded with timeframes that indicated market strength or weakness.

• The failure of prices to close above certain highs suggested underlying weakness in the current quarter's trading activity.

Understanding Premium and Discount Levels

• Analyzing premium and discount levels revealed that while the Pound traded above certain highs, the Euro struggled to do so, indicating differing strengths between these currencies.

• Sequential SMT occurrences were discussed as predictive tools for future price movements based on historical data.

Trading Strategies Based on SMT

• Emphasis was placed on using closures to confirm sequences of SMT; understanding these concepts is crucial for effective trading strategies.

• Traders are encouraged to utilize lower timeframe SMT confirmations alongside higher timeframe analyses for better decision-making.

Future Market Movements

• The session concluded with insights into upcoming market behavior; traders should remain vigilant for new SMT formations as they indicate potential shifts in price direction.

Understanding Sequential SMTs and Their Impact

The Concept of Sequential SMTs

• Discussion on retracement and price movement, emphasizing the significance of sequential SMT (Smart Money Technique) in trading strategies.

• Highlights the effectiveness of sequential SMT, noting that many traders achieve success without drawing attention to their methods, which are often overlooked by others.

Insights on Trading Strategies

• Acknowledgment that there is no longer a need to discuss traditional operational procedures as traders have come to expect certain outcomes based on established patterns.

• Encouragement for traders to simplify their screens and focus on key indicators, suggesting that this approach can reduce stress and improve performance.

Future Developments and Community Engagement

• Mention of an upcoming scheduled live stream, indicating ongoing community engagement and support for traders.