Market Structure Shift - ICT Concepts
Introduction to Market Structure Shifts
In this section, the speaker introduces the concept of market structure shifts and explains their importance in identifying changes from bullish to bearish or vice versa.
Understanding Displacement Candles
- Displacement is an aggressive move indicated by full-bodied candles.
- Look for fair value gaps to spot displacement.
- Aggressive moves breaking previous lows indicate downward displacement.
- Aggressive moves breaking previous highs indicate upward displacement.
Identifying Market Structure Shifts
- Market structure shifts indicate a change in trend.
- Look for displacement below previous lows (bearish shift) or above previous highs (bullish shift).
- Preferably, there should be a stop rate prior to the shift, creating a breaker formation and high resistance liquidity for a stop loss.
- Price engaging a higher time frame level prior to shifting structure is important.
Examples of Market Structure Shifts
This section provides examples of market structure shifts and how they can be identified using displacement candles and engagement with higher time frame levels.
Example 1: Bearish Market Structure Shift
- Previous day high and 10 o'clock marked out as reference points.
- Price engages with higher time frame level but fails to break the low.
- A new high is made without breaking the low, indicating no structure breakage yet.
- A sweep occurs, closing below the high, leading to big full-bodied candles reaching below the low.
- Liquidity sweep and aggressive movement below the low confirm market structure shift.
Example 2: Bullish Market Structure Shift
- Previous week's low marked out on S&P Futures hourly chart.
- Price makes an aggressive move into the area without immediate long opportunities until there is displacement over a specific high.
New Section
The speaker discusses the reaction of the market to removing a certain element and observes price movements throughout the week.
Reaction to Removing Element
- The speaker suggests getting rid of a certain element to observe the market's response.
- There is a positive reaction observed in the market after removing the element, specifically in relation to an order block and midnight opening price.
New Section
The speaker analyzes price movements on the daily chart of DXY, focusing on a daily fair value gap and potential structure shifts.
Daily Fair Value Gap Analysis
- Price reaches a low point within the daily fair value gap, indicating a potential shift in market structure.
- A high point is broken and closed over, confirming a market structure shift.
- The speaker expects price to continue moving higher from this point.
New Section
The speaker examines premium and discount levels, as well as order blocks, while looking for potential setups.
Premium and Discount Levels
- The speaker identifies premium and discount levels on their range analysis.
- A PD array and an order block are observed within this range.
- Price closes outside the order block before moving higher.
New Section
The speaker concludes by summarizing their approach to analyzing price engagement with higher time frame levels.
Analyzing Price Engagement
- The speaker looks for price engagement with higher time frame levels on lower time frames or that specific time frame itself.
- Price sweeping a low or high before closing over structure indicates a market structure shift.
- The speaker then looks for potential setups on that time frame.
Please note that the provided transcript is limited, and the summary may not capture the full context of the video.