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ICT Mentorship 2023 - Market Review & August Trading Concerns
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ICT Mentorship 2023 - Market Review & August Trading Concerns

Market Analysis and Dollar Index Insights

Overview of Recent Price Action

  • The discussion begins with a review of the recent price action in the dollar index (DXY), noting a drop below relative equal lows.
  • The speaker expresses interest in buy-side liquidity above these relative equal highs, indicating potential upward movement.

Daily Chart Observations

  • A rally occurred after taking out sell-side liquidity, leading to new long positions being established.
  • The bullish sentiment on the dollar is emphasized, predicting weakness in indices and continued downward movement in Forex.

Four-Hour Chart Analysis

  • The analysis highlights an old daily fair value gap and its interaction with two down-close candles, suggesting a potential trading range.
  • There’s mention of lower lows reaching into consequent encroachment, indicating market behavior around key levels.

Euro Dollar Dynamics

Weekly Chart Insights

  • The speaker references previous weeks' volume imbalances that suggest euro dollar prices may gravitate upwards.
  • A reaction to this imbalance is noted as the market trades lower back into an old weekly inversion fair value gap.

Potential Market Movements

  • There's speculation about whether prices will fall below the weekly inversion fair value gap and treat it as resistance before moving lower again.

Daily Euro Dollar Trends

Volume Imbalance Effects

  • Discussion on how precision at volume imbalances can lead to significant market movements, including breakaway gaps.

Institutional Order Flow

  • Mention of institutional order flow entering into a fair value gap but not fully engaging with it, leading to aggressive downward movements.

Four-Hour Euro Dollar Analysis

Market Behavior Patterns

  • An overview of how the market breaks aggressively lower while interacting with various price ranges and gaps.

Focus on Future Movements

  • Emphasis on monitoring price actions around bearish order blocks and their implications for future trends.

Hourly Euro Dollar Developments

Trading Patterns Observed

Market Analysis and Trading Insights

Current Market Conditions

  • The market is currently experiencing consolidation after a rally, with attention on key lows and the weekly inversion fair value gap.
  • A bullish outlook on the dollar index is crucial; without it, executing outlined strategies may be challenging. Focus remains on levels around 108.35.

Weekly Chart Overview

  • The S&P has shown inefficiencies post-rally, indicating potential bearish movements below certain gaps that were previously considered bullish.
  • August is highlighted as a month to exercise caution in trading due to its unpredictable nature; traders are advised to avoid heavy trading during this period.

Risk Management Strategies

  • Traders should remain nimble and avoid significant leverage or funded account challenges in August, as market conditions can lead to unexpected losses.
  • Many traders have reported difficulties navigating the market this month, reinforcing the need for careful risk management.

Technical Analysis of Indices

  • Discussion of propulsion blocks indicates that if prices close below certain thresholds, it could signal a shift towards bearish sentiment.
  • Anticipation of downward movement into sell-side liquidity is expressed despite not reaching mean thresholds of propulsion blocks.

NASDAQ vs. S&P Performance

  • The NASDAQ's recent performance shows weakness compared to previous months; down close candles indicate potential failure points in current structures.
  • Observations suggest that while the NASDAQ leads downward movements, the S&P shows reluctance to follow suit aggressively, indicating differing strengths between indices.

Future Outlook

  • A focus on shorting opportunities within the NASDAQ is recommended based on observed trends and price actions over recent weeks.

Market Analysis and Trading Insights

SMT Divergence Observations

  • The NASDAQ is noted to reach levels faster than the S&P, indicating a significant SMT (Smart Money Technique) divergence. This divergence is highlighted by comparing candle highs between the two indices.

Volume Imbalance and Market Behavior

  • A volume imbalance is identified as the market trades into it, spending time in that range before breaking away. This imbalance acts similarly to a breakaway gap.

Importance of Comprehensive Learning

  • The speaker emphasizes the need for comprehensive study of their books and core content lessons to fully grasp the trading concepts being introduced.

Bearish Order Block Analysis

  • The last up-close candle is labeled as a bearish order block, viewed through a lower time frame lens. It represents both an inefficiency high and an older block.

Market Structure Shift

  • A shift in market structure occurs when price action takes out short-term lows, marking significant changes in trading dynamics with multiple factors influencing this behavior.

Price Action Dynamics

Sensitivity of Price Levels

  • Key price levels are described as very sensitive thresholds that influence market movements significantly. Traders should study these levels closely for better insights into price action.

Comparative Runs on Indices

  • There’s a notable difference in sell-side runs between the S&P and NASDAQ, with S&P showing buy-side balance outside efficiency while NASDAQ reflects different dynamics.

Mean Threshold Concept

  • The mean threshold (M.T.) concept is introduced, where half of an up-close candle's wick serves as a critical reference point for subsequent price actions.

Market Trends and Influencer Perspectives

Uncharacteristic Market Behavior

  • The current market behavior is described as uncharacteristic over 30 years, showcasing erratic low-high patterns requiring nimbleness from traders.

Social Media Influence on Trading Sentiment

  • Many social media influencers were resistant to bearish sentiments during this week, leading to increased focus on short positions by the speaker based on prior analysis.

Trading Strategies and Future Outlook

Twitter Insights and Updates

  • The speaker encourages following them on Twitter for timely updates and insights regarding trading strategies but notes they will be inactive after November 2023.

Narrative Through Candle Bodies

  • Analyzing candle bodies reveals narratives about market direction; specific levels are highlighted for potential future movements based on previous trading behaviors.

Market Analysis and Trading Insights

Daily Chart Observations

  • The daily chart is being analyzed with a focus on transposing daily and weekly annotations to lower time frames, ensuring clarity on market movements as it trades aggressively down into sell-side liquidity.
  • Acknowledgment of the classic descending trading ranges; however, the emphasis is placed on actual trading actions rather than hindsight analysis.
  • The speaker aims to predict market behavior before it becomes apparent in the charts, highlighting the importance of foresight in trading strategies.

Hourly Chart Dynamics

  • Discussion of e-mini S&P's price action showing aggressive breaks lower after reaching buy-side liquidity, indicating significant market movements.
  • Previous day's highs were consistently taken out, which prevented short-term traders from capitalizing on potential moves throughout the week.
  • Similar patterns observed in Nasdaq's one-hour chart, where price action reflects balance between buy and sell sides while navigating through relative equal lows.

Fair Value Gaps and Price Action

  • Examination of fair value gaps indicates that despite some erratic price action, there are still tradable opportunities available within these fluctuations.
  • Commentary opened with insights shared via Twitter about anticipated trades into four-hour fair value gaps and specific low points for sell-side liquidity.

August Trading Conditions

  • Warning about unfavorable trading conditions expected in August; even if setups appear clear post-commentary, caution is advised due to historical trends during this month.
  • Emphasis on waiting for better market conditions typically seen in September through November instead of rushing into trades during August’s unpredictable environment.

Managing Trading Psychology

  • Traders are encouraged not to exhaust their resources during August but rather observe market behavior without impulsive decisions that could lead to losses.

Preparation for Growth: Setting Goals and Organizing

Importance of Self-Reflection and Goal Setting

  • Emphasizes the significance of self-reflection, particularly through journaling, to understand personal growth and historical challenges faced.
  • Suggests that this month is ideal for preparing goals for the upcoming fall season and evaluating current progress in personal development.

Enhancing Learning and Organization Skills

  • Recommends dedicating time to learning, refining skills, and improving organization in note-taking and time management.
  • Encourages revisiting notes from previous videos as a study method while maintaining a relaxed approach to learning.

Anticipating Market Volatility

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.