72. Market overview 14/7/2024

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 initial reluctance.

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

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

Weekly News Impact on Trading

• Notes that there is no significant news on Wednesday or Friday but highlights Thursday as a key day for potential volatility.

• Mentions that Monday's trading will be influenced by an afternoon news event post-New York session, affecting market predictability.

• Advises traders to follow bullish or bearish sequences based on price action from Friday to Monday.

Anticipated Market Volatility

• Points out two high-impact news events scheduled for Tuesday (core sales and retail sales), which could lead to significant market movement.

• References political events involving Trump that may create additional volatility in the marketplace due to heightened uncertainty.

Liquidity Runs and Market Dynamics

• Analyzes liquidity runs concerning the US dollar against the Euro and British pound, emphasizing careful observation of wick formations in charts.

• Suggests using different data providers' indices to measure liquidity effectively when analyzing price movements.

Monthly Cycle Observations

• Discusses monthly cycles in relation to price action, indicating specific weeks where traders should expect sequential movements before making decisions.

Market Analysis and Trading Insights

S&P 500, NASDAQ, and Dow Performance in Q2

• The S&P 500 failed to break below Monday's low during Q2, indicating a potential support level.

• The NASDAQ also did not break below Monday's low but traded slightly lower before moving up.

• In contrast, the Dow broke below Monday's low, suggesting a different market sentiment.

Understanding Sequential SMT (Smart Money Technique)

• A sequence of SMT typically occurs two to three times within a trading pair; this is an average observation.

• Each cycle generally provides two to three trading opportunities; most often it will be two opportunities.

• If trades are executed in Q2 and another in Q3, it implies limited further trades may occur—leading to either expansion or consolidation.

Price Action and Swing Points

• Symmetrical movement is expected between the S&P 500 and NASDAQ; discrepancies indicate potential reversals.

• Opposing swing points (high vs. low) occurring simultaneously signal that price may reverse direction.

Weekly Cycle Dynamics

• Precision swing points are crucial for understanding weekly cycles; they often align with liquidity runs in the last hour of trading.

• The last down close candle before significant price expansion serves as a key reference point for traders.

Breaker Levels and Market Reactions

• A "Precision breaker" is defined by the last down close candle prior to upward expansion; this concept differs from traditional definitions of breakers.

• This Precision breaker indicates where buying pressure was established while prices were consolidating before rising.

Discount Levels and Fractal Time Theory

• When price returns to a breaker while in discount, it suggests strong market correlations across indices like the S&P 500 and NASDAQ.

Understanding Precision Swing Points in Trading

The Concept of Precision Swing Points

• Precision swing points are defined as key levels in trading that indicate potential reversals. They are formed based on the behavior of price candles.

• Real precision swing points can be distinguished from fake ones; the former are characterized by their reliability and formation after sequential SMT (Smart Money Technique).

• It is essential to analyze multiple time frames, such as 15-minute and hourly charts, to identify these precision swing points effectively.

Importance of Wicks and Closures

• The discussion emphasizes not focusing solely on wicks when analyzing price action, especially before understanding precision swing points.

• A closure at a precision swing point is more significant than just observing a wick; it indicates higher probability for reversals.

• Even without a closure, the presence of a precision swing point increases the likelihood of a successful trade compared to scenarios lacking one.

Layering Time Frames for Better Insights

• Layered precision swing points across different time frames enhance trading strategies. For instance, combining 50-minute and hourly time frame insights can yield powerful signals.

• Understanding how to read these layered points is crucial for effective trading decisions, particularly when working with index futures.

Utilizing Precision Breakers

• A precision breaker serves as either support or resistance in trading. Recognizing this level helps traders understand market dynamics better.

• Price accumulation within a precision breaker indicates potential turning points where sequential SMT aligns with other indicators.

Practical Application and Future Sessions

• Traders should focus on reading price action accurately to improve their performance consistently over time.

• Continuous learning and adaptation are emphasized; traders should remain engaged with upcoming sessions for further insights into market behavior.