45. market analysis & Price Action

Introduction and Apology

Overview of the Session

• The speaker greets the audience and expresses hope that they had a good weekend. They apologize for a previous recording issue where only audio was captured, but note that it was still valuable.

• Friends of the speaker listened to the audio and found it informative, prompting today's session to update on discussed topics.

Economic Calendar Reflection

Key Insights on Market Conditions

• The speaker emphasizes reflecting on the economic calendar, stating that without significant market correlations (like sequential SMT), there is little to act upon in trading today.

• An introduction to miral trading concepts is provided, focusing on premium and discount executions in bullish market conditions. This includes recognizing when not to buy despite bullish trends.

Market Participation Guidelines

Strategies for Engaging with Forex Markets

• The importance of community engagement is highlighted; participants are encouraged to ask questions if they do not understand certain concepts due to life commitments.

• Mondays are noted as low probability days for trading unless high-impact news events occur, suggesting a focus on studying charts instead.

Upcoming Economic Events

Anticipated Volatility and Trading Opportunities

• Tuesday's high-impact news events during the New York session are expected to inject liquidity into the market, potentially creating more opportunities for traders.

• The significance of red folder news events from Forex Factory is emphasized; these events can create entry points or justify existing correlations in trading strategies.

Weekly Market Outlook

Expectations Based on Previous Trends

• A recap of last week's choppy price action regarding the dollar index sets expectations for increased volatility this week due to upcoming non-farm payroll data on Friday.

Understanding Market Dynamics: Premium and Discount Concepts

The Basics of Premium and Discount

• The discussion begins with the concept of premium and discount in market trading, emphasizing the importance of understanding previous week's high and low to identify current market conditions.

• Premium indicates that prices are expensive; traders should seek reasons to be bearish when in a premium state rather than simply assuming bearishness.

Analyzing the British Pound's Movement

• The speaker expected bullish movement for the British pound based on its position in premium and the presence of a fair value gap, which typically propels price higher until liquidity is breached.

• A notable point is made about gaps remaining open until liquidity is reached, indicating that there was no bearish confirmation from lower time frames during this period.

Market Conditions and Correlations

• Discussion shifts to low probability market conditions, where it was anticipated that both the dollar and euro would range while the pound would behave differently.

• Observations on the US Dollar Index reveal a bearish higher time frame pattern above 50% of its range, contrasting with bullish patterns observed for other currencies.

Price Action Insights

• Traders are advised to look for buying opportunities below 50% of last week’s range while recognizing that being above this threshold indicates premium conditions.

• Sequential smart money techniques (SMT) can complicate ranges but provide insights into potential price movements.

Higher Time Frame Analysis

• The significance of higher time frame patterns is reiterated; these patterns dictate expectations regarding price behavior within established ranges.

• Clarification on correlations between different currency pairs emphasizes how they should ideally move together under normal circumstances.

Conclusion on Trading Strategies

• Despite being in a premium state, trading strategies focused on higher time frame fair value gaps can yield better results as seen with the British pound's performance against the US dollar.

• The relationship between various currency movements highlights how actions taken by one currency can influence others significantly.

Understanding Market Correlations and Trading Strategies

The Importance of Time Frame Correlation

• A higher time frame, such as a 4-hour chart, is essential for identifying correlations between trading cycles, particularly between the London and New York sessions.

• Price movements are significantly influenced by interest rate trends, which often follow the dollar's performance.

Analyzing Weekly Patterns

• Blank weeks in trading charts indicate periods without significant price action or color coding, reflecting underlying market dynamics.

• Each quarter consists of 13 weeks; understanding this structure helps traders interpret market behavior during blank spaces on charts.

Trading Within Ranges

• During blank weeks, lower probability trades may occur if prices breach previous lows or highs; traders should be cautious.

• It’s crucial to wait for clear signals before entering trades; many traders may gamble when price action is unclear.

Upcoming Market Events and News Impact

• Anticipation of high-impact news events can lead to significant market movements; traders should prepare accordingly.

• Live trading sessions may be scheduled around key news releases to capitalize on potential volatility.

Liquidity and Price Action Analysis

• Traders should focus on significant price movements rather than minor fluctuations; drawn liquidity levels are critical for decision-making.

• High probability setups require clear displacement in price rather than random fluctuations; consistency in strategy leads to better outcomes.

Strategic Trading Approaches

• Successful trading involves aligning multiple factors: directional clarity, premium pricing, and correlation across different time frames.

• Fewer but more accurate trades are preferable over frequent low-probability entries; this approach enhances overall trading effectiveness.

Conclusion and Future Discussions

Understanding Personal Limits in Communication

The Challenge of Managing Interactions

• The speaker expresses the overwhelming nature of managing communication with a large number of people, indicating that their current capacity is limited.

• They emphasize the importance of mental well-being, stating they will not accept more individuals into their circle despite a long waiting list.

• The speaker highlights the necessity to prioritize personal sanity over social obligations, suggesting that too many interactions can be detrimental.

Reflections on Recent Content

• The speaker mentions returning later in the week and hopes listeners found value in previous discussions.