73. Intro to precision breaker

Market Analysis and Price Action Insights

Overview of the Week's Price Action

• The speaker greets the audience and sets the stage for discussing last week's price action, indicating a need to address certain topics despite reluctance.

• Emphasizes that their analysis is based on engineered volatility, which occurs 75% of the time, highlighting the importance of timing in market movements.

Key News Events Impacting Price Action

• Discusses how high-impact news events influence weekly price highs and lows, suggesting traders should look for both upward and downward movements during these times.

• Notes that with no significant news on Wednesday or Friday but an important event on Thursday, Monday and Tuesday are expected to show volatility.

Trading Strategies Based on Market Conditions

• Advises caution when trading on days following major news events due to lower probability outcomes; highlights that Monday will still present tradeable opportunities.

• Outlines a basic trading strategy: if there’s bullish momentum from Friday to Monday, traders should buy; conversely, they should sell if bearish.

External Factors Influencing Market Volatility

• Mentions two high-impact news events scheduled for Tuesday (core sales and retail sales), predicting potential disruptions in price action due to external political factors involving Trump.

• Indicates that ongoing political issues could lead to higher timeframe reversals in market trends over weeks.

Analyzing Currency Pairs: USD vs. GBP & EUR

• Highlights previous targets for liquidity runs in GBP and EUR while noting discrepancies in data across different providers.

• Suggests using specific measurement techniques when analyzing liquidity runs; emphasizes the importance of clearing significant price levels before expecting reversals.

Monthly Cycle Observations

• Describes smaller boxes representing monthly cycles within the broader context of market analysis; stresses looking for sequential patterns before making trades.

Market Analysis and Trading Insights

S&P 500, NASDAQ, and Dow Performance Overview

• The S&P 500 during Q2 failed to break below Monday's low while the NASDAQ also did not break below Monday but traded lower. The Dow, however, broke below Monday's low.

Understanding Sequential SMT (Smart Money Technique)

• A sequence of SMT occurs on average two to three times within a trading pair. This indicates potential trading opportunities based on market cycles.

• Each cycle typically provides two to three opportunities for trades; most often, there are just two opportunities in a cycle.

Risk Management Through Cycle Awareness

• If trades occur in Q2 and then again in Q3, it suggests that no further trades will happen until expansion or consolidation takes place. This knowledge aids in better risk management.

Price Action and Swing Points

• Symmetrical movement is expected between the S&P 500 and NASDAQ; opposing swing points indicate potential price reversals.

• Typical behavior shows that swing highs and lows should not oppose each other at the same time; this can signal a reversal.

Weekly Cycle Precision

• In weekly cycles, significant price movements often occur during the last hour candle which acts as a precision swing point.

Breaker Levels Explained

• The last down close candle before an upward expansion is identified as a "Precision breaker," crucial for understanding market movements.

• The term "Precision breaker" is used to denote specific candles where significant buying occurred prior to price increases.

Correlation Between Indices

• Observations show that when prices fall through a breaker into premium territory but return while in discount territory, it indicates strong correlations between indices like the S&P 500 and NASDAQ.

Importance of Doubling Theory

• Doubling theory reflects fractals of time across different months rather than being confined to quarterly analysis. It emphasizes how past performance influences future expectations across shorter time frames.

Understanding Precision Swing Points in Trading

What are Precision Swing Points?

• Precision swing points are defined as specific candle formations that indicate potential market reversals. They can be identified on various time frames, such as 15-minute and hourly charts.

• It's crucial to differentiate between real and fake precision swing points; real ones are characterized by their reliability and formation after sequential SMT (Smart Money Technique).

• Traders should explore different time frames to identify layered precision swing points, which enhance the probability of successful trades.

The Importance of Wicks

• Initially, traders were advised not to focus on wicks when analyzing price action. However, understanding their role becomes essential when discussing precision swing points.

• Real precision swing points often occur following a sequence of SMT formations, making them more significant than mere wick closures.

Analyzing Price Action

• A closure is important for confirming reversals but is less critical if a valid precision swing point exists. This highlights the importance of recognizing these key levels.

• Layered precision swing points across different time frames provide stronger signals for trading decisions compared to isolated signals.

Utilizing Precision Breakers

• A precision breaker serves as a support or resistance level derived from higher time frame analysis. It plays a vital role in identifying fair value gaps in the market.

• In one asset, the precision breaker can act as either support or resistance while also serving as a magnet for price movement.

Conclusion and Future Insights

• The speaker emphasizes the importance of mastering price action reading skills to improve trading outcomes. Consistent practice leads to better decision-making during trades.

• Upcoming sessions will continue to build on these concepts, with expectations set for market behavior based on previous patterns observed over several months.