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ICT Charter Price Action Model 6.2 - Amplified Lesson
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ICT Charter Price Action Model 6.2 - Amplified Lesson

Understanding Seasonal Tendencies in the Dollar Index

Introduction to Seasonal Tendencies

  • The speaker introduces the concept of seasonal tendencies, emphasizing their importance as a roadmap for trading decisions.
  • Highlights that the dollar index typically experiences a low during the last week of September and the first week of October.

Analyzing Historical Data

  • Discusses the correlation between 15-year and 33-year seasonal averages, indicating strong agreement is significant for traders' attention.
  • Notes that bullish conditions may lead to a low forming around September 21st, while weaker years could push this date to mid-October.

Practical Application with Swiss Franc

  • Introduces an example using Swiss Franc's seasonal tendency, which also shows a high forming in late September into October.
  • Suggests that if the dollar strengthens seasonally, it should result in a rally for the dollar-Swiss pair in Forex.

Technical Analysis and Commitment of Traders (COT)

  • Emphasizes the need to analyze technical indicators alongside macro seasonal tendencies.
  • Mentions using COT data focused on commercial traders to gauge market sentiment accurately.

Steps for Analyzing COT Data

  • Provides instructions on accessing COT data through barchart.com after creating an account linked with Twitter.
  • Describes how to plot COT data specifically for commercials while excluding small specs and large funds for clarity.

Interpreting Commercial Positions

  • Advises on determining high and low readings from COT data over 12 months to find median values without excessive precision.
  • Recommends visualizing this information graphically using applications like Paint for better understanding.

Market Maker Models

  • Focuses on price action models related to market maker buy/sell strategies, particularly looking at bullish trends based on commercial positions.

Market Sentiment and COT Data Analysis

Understanding Market Sentiment Shifts

  • The market sentiment has shifted, indicating more selling than buying from March to July, despite a net long position being maintained. This discrepancy often confuses retail traders.

Misinterpretation of COT Data

  • Retail traders tend to overemphasize bullish or bearish positions relative to the zero line in COT data, which can be misleading. The zero line may not provide the clarity they expect.

Illusion of Perspective in Data Interpretation

  • A comparison is made to David Copperfield's magic tricks, illustrating how information can be skewed. Just as viewers were misled about the Statue of Liberty's disappearance, traders may misinterpret COT data due to limited perspectives.

Importance of Commercial Traders' Actions

  • Focus should be on commercial traders rather than small specs or large funds. Commercial traders typically dictate price action trends and are crucial for understanding market movements.

Price Action Model Insights

  • Observing net long positions can indicate potential bullishness in the market. The discussion emphasizes reaccumulation patterns and smart money strategies that guide trading decisions.

Seasonal Tendencies and Trading Strategies

Seasonal Trends in Forex Markets

  • The speaker highlights seasonal tendencies observed annually, particularly noting bullish trends for the dollar and bearish trends for the Swiss franc during late September into October.

Application of COT Hedging Programs

  • Utilizing a specific application for COT data reveals significant distribution in net longs over a 12-month range, providing insights into market conditions beyond traditional interpretations.

Analyzing Dollar-Swiss Pair Dynamics

Monthly Chart Analysis

  • Analyzing the monthly chart for dollar-Swiss reveals key price levels and liquidity pools above equal highs that could drive future price movements.

Market Conditions: Premium vs Discount

  • Current market conditions are assessed as either premium or discount based on recent price actions. A retracement is expected towards buy-side liquidity above previous highs.

Market Analysis and Trading Strategies

Overview of Price Levels and Imbalances

  • The speaker discusses the significance of the 9545 to 9550 price level, indicating it as a rough estimation for potential market movement.
  • Transitioning to a weekly chart, the analysis focuses on dollar Swiss equal lows, suggesting that prices should not continuously drop below these levels.
  • The importance of identifying bullish order blocks is emphasized; specifically, the down-close candle at 9547 serves as a critical reference point for potential buy opportunities.

Market Dynamics and Seasonal Trends

  • The discussion highlights the concept of liquidity resting above certain highs, indicating that there are unfilled orders which could influence future price movements.
  • A discount market condition is identified relative to previous highs and lows, with emphasis on how this affects trading strategies in relation to order blocks.

Institutional Buying Behavior

  • The focus shifts to institutional buying patterns; the body of down-close candles is considered more significant than wicks due to their representation of actual trading activity.
  • An explanation of market maker sell models illustrates how consolidation phases can lead to reaccumulation before upward trends.

Anticipating Market Movements

  • The speaker anticipates a rally in dollar Swiss based on seasonal tendencies observed in September and October, aligning with historical data regarding liquidity above recent highs.
  • Discussion includes how distribution cycles may not always follow expected patterns but can still indicate directional bias based on prior price action.

Short-Term Trading Insights

  • Moving into daily charts provides insights for short-term trades; equal high formations suggest potential liquidity pools that traders might target.
  • A detailed look at past price actions reveals smart money reversals and low-risk buy opportunities within established ranges.

Day Trading Strategies

  • Emphasizing day trading tactics, the speaker notes indecisiveness in markets but encourages traders to leverage existing narratives for entry points.
  • Specific examples illustrate successful trades where anticipated highs were reached shortly after being highlighted on social media platforms.

Price Action Reactions

  • Observations about price reactions following key trades show how markets often return to previously sold areas before continuing upward trends.
  • Traders are advised to monitor up-close candles as they represent support zones where buying pressure may resume after retracements.

Market Structure and Trading Strategies

Understanding Market Dynamics

  • Traders can mitigate losses on short positions by buying at strategic points, particularly after price dips into a defined range.
  • A fair value gap is identified when price retraces to run stops before expanding upwards; traders should take profits cautiously as market conditions may change.
  • The narrative remains intact despite minor market fluctuations, as long-term liquidity pools above equal highs are still in play.

Liquidity Pools and Price Action

  • Breaching a low does not indicate a structural break if the overarching narrative supports higher prices; this is crucial for understanding market behavior.
  • Buying external range liquidity involves capitalizing on sell stops, with careful management of positions to ensure profitability during upward movements.

Position Management Techniques

  • For swing traders, moving stop losses below defended lows helps manage risk effectively while allowing for potential upward movement.
  • Day traders should focus on the relationship between daily open and low prices, noting that significant ranges often form with small wicks downwards.

Integrating Trading Models

  • Blending macro elements like seasonal tendencies with smart money concepts enhances trading strategies; recognizing patterns aids in predicting future price movements.
  • Market maker models provide clarity in trading decisions; understanding these models allows traders to anticipate reversals and capitalize on them effectively.

High Probability Setups

  • Identifying high probability setups requires patience and adherence to established seasonal trends alongside commercial trader behaviors.
  • Successful trading hinges on aligning technical analysis with broader market narratives, ensuring all elements support the intended strategy.

Long-Term Trading Perspectives

  • Traders must remain aware of public sentiment versus actual market dynamics; misinterpretations can lead to poor decision-making.
  • Positioning for long-term gains involves buying at strategic levels while using previous lows as stop-loss markers to protect against adverse movements.

Technical Analysis Insights

Understanding Market Dynamics and Trading Strategies

Entry Points and Price Action Analysis

  • The discussion begins with identifying potential entry points for trades, emphasizing the importance of bullish order blocks. These can serve as short-term, swing trade, or day trade entries based on price action.
  • The speaker highlights the significance of liquidity draws in trading strategies. They suggest that traders should look for opportunities below recent lows to capitalize on market movements.
  • A concept called "turtle soup long" is introduced, which refers to a strategy where stops are run below certain levels, anticipating an upward acceleration in price following this liquidity sweep.

Market Structure and Smart Money Concepts

  • The analysis continues with a focus on daily up-close candles and how they relate to market reversals. The speaker notes that smart money is mitigating previous shorts while accumulating longs gradually.
  • There’s a discussion about reaccumulation after running equal lows, suggesting that traders should anticipate further upward movement after these stop runs occur.

Weekly Trading Patterns

  • Transitioning to an hourly chart analysis, the speaker discusses weekly trading patterns. They emphasize buying opportunities at the beginning of the week (Monday through Wednesday), particularly after stop runs.
  • The narrative includes observations about market structure not breaking down despite apparent resistance levels being tested. This indicates a misunderstanding by retail traders who may misinterpret these movements as bearish signals.

Stop Runs and Market Efficiency

  • The speaker explains how stop runs do not signify structural breaks but rather represent buying opportunities as sell stops are triggered. This leads to energetic moves upwards in price.
  • Further elaboration on weekly patterns shows consolidation followed by expansion phases within the market cycle, reinforcing the idea of strategic buying during specific days of the week.

Conclusion: Price Action Models

Playlists: ICT MMXM Lectures, ICT Charter Content
Video description

Government Required Risk Disclaimer and Disclosure Statement CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.