63. Advance lecture

Market Analysis and Expectations

Overview of Recent Market Activity

• The speaker addresses the audience, noting it is a bank holiday Wednesday and expresses hope that traders refrained from trading as advised.

• A recap of Monday's market movement is provided, emphasizing that the expected movements were observed.

• The speaker mentions low volatility on bank holidays, predicting minimal activity for Tuesday and Wednesday.

Key Concepts in Market Cycles

• Discussion on the importance of understanding market cycles, particularly highlighting the dollar index and its consolidation patterns.

• The concept of "low probability conditions" is introduced, indicating that price action lacks reliability when there are no sequential SMT (Smart Money Techniques).

Monthly Cycle Influence

• Emphasis on the monthly cycle as one of the most influential cycles in trading due to its recurring nature preferred by banks.

• Comparison between monthly and weekly cycles regarding their influence on trading days; higher time frames have more impact despite lower frequency.

Price Action Analysis

• Observations about liquidity below certain lows in current market conditions, specifically focusing on the Euro's performance.

• Explanation of why current quarter conditions are considered low probability for trades within Forex compared to index futures.

Manipulation Patterns

• Description of manipulation patterns observed during monthly cycles and how they affect subsequent price actions.

• A rule established by the speaker: after manipulation occurs at a higher time frame, traders should look to lower time frames for potential moves.

Market Focus Areas

• Identification of three primary markets being monitored: Forex Market, Index Futures Market, and Interest Rate Markets (bonds).

Understanding Market Cycles and Price Manipulation

Price Movement and Market Manipulation

• Discussion on lower time frame cycles and manipulation in higher time frame indices, indicating that the market is not ready for certain movements yet.

• Observations of price expansion into Thursday after a rise on Wednesday, followed by a subsequent fall due to sequential SMT (Smart Money Technique).

• Notable price behavior where the Euro fell below a specific low while another asset did not, highlighting divergence in market actions.

Intermarket Analysis

• Examination of price pullbacks and consolidation influenced by E-mini NASDAQ and S&P 500, emphasizing premium status.

• Introduction of gaps in price movement as significant indicators for future expansions; sequential SMT plays a role here.

Candle Patterns and Correlations

• Identification of different candle types (up close vs. down close), stressing the importance of correlation between assets like GBP, NASDAQ, S&P 500, and Euro.

• Sequential SMT highlighted through candle closures; emphasis on how these patterns can indicate potential upward thrusts in prices.

Precision Swing Points

• Clarification on precision candles versus precision swing points; understanding their roles in market reversals.

• Importance of symmetrical closures among correlated assets; asymmetry often leads to reversals.

Gaps and Monthly Cycles

• Focus on intermarket precision swing points as critical indicators for reversals within monthly cycles.

• Explanation of how gaps between candles can signify important shifts in market direction across different asset classes.

Specific Asset Behavior

• Detailed analysis of specific candles causing reversals; recognition that intermarket relationships are crucial for understanding price movements.

• Discussion about symmetry in gaps between Euro and GBP; significance placed on observing these patterns within the context of monthly cycles.

Understanding Gaps and Correlations in Trading

The Importance of Gaps in Trading

• The discussion begins with the concept of gaps created by price movements, emphasizing the need for immediate rebalancing after a gap occurs.

• A specific focus is placed on the significance of gaps at the 50% mark, indicating higher probability trading opportunities.

• The speaker highlights correlations between different assets based on their gap formations, noting that some assets have multiple gaps while others may have none.

Analyzing Candle Patterns and Order Blocks

• The analysis includes identifying candles that do not close properly, which can indicate potential order blocks.

• Sequential market structure shifts (SMT) are discussed, particularly how they relate to higher time frames and asset correlations like NASDAQ and currency pairs.

Correlation Between Assets

• There’s an expectation for major indices like NASDAQ and S&P 500 to rise when certain currency pairs are in discount, showcasing inter-market relationships.

• Observations about candle formations across different currencies reveal how gaps influence price action within correlated markets.

Fair Value Gaps and Price Action

• The concept of fair value gaps is introduced as critical points where price tends to react or reverse.

• A detailed examination of a specific gap's position relative to other market structures provides insights into potential trading strategies.

Practical Application and Backtesting

• Emphasis is placed on using Fibonacci retracement levels alongside gap analysis to enhance trading decisions.

• The speaker encourages backtesting strategies to identify effective patterns without relying solely on hindsight.

Understanding Price Gaps and Correlations in Trading

The Importance of Gaps

• Discussion on the significance of gaps in price action, particularly focusing on the absence of a second gap after a specific candle.

• Emphasis on using data from the same broker to avoid confusion when analyzing price movements.

Analyzing Price Movements

• Explanation of how price tends to fill gaps, with reference to higher time frames and sequential market structure (SMT).

• Insight into taking profit strategies when prices reach certain gaps, illustrating this with an example involving the British Pound.

Premium vs. Discount Pricing

• Clarification on premium and discount pricing zones based on high and low points in price action.

• Introduction to correlation analysis between candles, highlighting how fair value gaps can indicate liquidity levels.

Candle Analysis for Trading Decisions

• Description of using candle highs and lows as indicators for determining premium or discount status.

• Mention of observing correlations across different indices like S&P 500 and NASDAQ for better trading decisions.

Sequential Market Structure Insights

• Discussion about precision candles indicating potential pullbacks in market trends.

• Explanation of waiting for further confirmation through sequential SMT before making trading moves.

Liquidity Considerations

• Analysis of liquidity below significant lows, emphasizing the importance of understanding where price is likely to pull back.

• Reminder that expectations should align with observed market behavior regarding pullbacks within defined ranges.

Final Thoughts on Precision Candles

• Highlighting the importance of precision candles in identifying bullish or bearish trends based on their closing characteristics.

• Stressing that traders should wait for proper confirmations before acting upon signals from these candles.

Understanding Market Dynamics and Price Manipulation

Price Expectations in the S&P 500

• The speaker discusses expectations for price movements above previous highs in the S&P 500, indicating a drawn liquidity but expressing uncertainty about confidence in this expectation.

Precision Swing Points and Market Structure

• The concept of "Precision swing points" is introduced, emphasizing their role in completing market moves or manipulations. These points are critical for understanding market dynamics.

• A distinction is made between sequential SMT (Smart Money Technique) occurrences and precision swing points, noting that not all significant lows qualify as precision swing points.

Stop Loss Strategies

• The discussion shifts to stop loss strategies, suggesting the use of one standard deviation from prominent lows rather than less significant ones to manage risk effectively.

• Emphasis is placed on focusing on specific patterns like "three jabs," which indicate potential reversal opportunities based on market behavior.

Intermarket Analysis and Correlations

• The importance of intermarket analysis is highlighted, particularly how different indices (like NASDAQ and S&P 500) interact with each other during trading sessions.

• Observations are made regarding price manipulation during key trading sessions, specifically how precision swing points can signal reversals when combined with other indicators.

Candle Patterns and Trading Signals

• The significance of candle patterns alongside precision swing points is discussed. A high probability of price reversal occurs when these elements align correctly.

• An example illustrates how a low point can serve as a precision swing point within broader market contexts, reinforcing the need for careful observation of candle formations.

True Open Concept in Trading

• The concept of "true open" at midnight is introduced as a reference point for traders. It serves as a benchmark for evaluating price movements relative to significant candles.

Understanding Market Dynamics and Price Movements

The Importance of Chart Analysis

• The speaker emphasizes the necessity of analyzing charts to understand market setups, particularly focusing on liquidity draws.

• A specific candle analysis is discussed, highlighting that price movements are not random but rather high probability events based on previous patterns.

Correlation and Market Behavior

• The concept of correlation in trading is introduced, suggesting that traders should study correlations for a deeper understanding of market behavior.

• Intermarket relationships are highlighted, specifically between the US Dollar Index and the Great British Pound, indicating how these can influence trading decisions.

Fair Value Gaps and Precision Swing Points

• The significance of fair value gaps is explained; price rallies often occur within these gaps after breaking above key levels.

• The formation of precision swing points is crucial for timing trades accurately. These points help identify potential reversals in the market.

Timing News Events and Market Manipulation

• The speaker discusses how news events can impact market movements, stressing that traders should wait for precision swing points to form before acting.

• It’s noted that sometimes market manipulation occurs after news releases, which may delay expected price movements.

Understanding Symmetry in Asset Classes

• A discussion on symmetry between asset classes reveals that imbalances can lead to price reversals; this knowledge aids traders in making informed decisions.