79. Price action lecture

Understanding Market Dynamics and Trading Strategies

Overview of the Trading Week

• The speaker reflects on the training week, emphasizing the significance of Tuesday as the first trading day with impactful USD news events.

• Discussion about market highs and lows for various assets is introduced.

Key Focus Areas

• The importance of monitoring the "true weak" is highlighted as a tool to gauge market direction.

• Emphasis on focusing primarily on S&P 500 and NASDAQ for trading setups, prioritizing high-probability scenarios.

Liquidity and Market Manipulation

• Explanation of how Monday's liquidity influences market behavior, leading to distribution rather than manipulation.

• Anticipation of potential manipulation on Thursday due to prior distribution patterns observed on Tuesday.

Price Action Analysis

• Analyzing FX price movements; expectations set for price behavior around major news events.

• Observations regarding limited movement in Euro and British Pound since Monday, indicating potential for expansion.

Advanced Concepts: Pi Range in Trading

• Introduction to using Pi (3.14) in analyzing candle ranges over time, suggesting a unique approach to understanding price action.

• Discussion about specific candles within the Pi range that indicate significant trading points or correlations.

Sequential SMT and Fair Value Gaps

• Explanation of sequential SMT (Smart Money Technique), where prices trade below previous lows before expanding again.

Understanding Price Movements and Liquidity

Internal Liquidity and Price Expansion

• The discussion begins with the concept of price absorbing internal liquidity within a gap, leading to aggressive expansion in price movements.

• The speaker highlights their accurate predictions regarding index futures, noting expected expansions and retracements within a defined range.

Analyzing Swing Highs and Correlations

• A swing high is identified as broken, emphasizing the importance of recognizing these points for market analysis.

• The speaker discusses expectations for price behavior: either breaking above a high before falling or forming a "cracking correlation" through two stages.

Sequential SMT and Liquidity Sweeps

• Sequential SMT (Smart Money Technique) is introduced as crucial for understanding market shifts; it must involve multiple stages.

• A significant liquidity sweep below previous lows is noted, indicating important market dynamics that influence future price actions.

Market Dynamics on Specific Days

• The timing of market movements is discussed, particularly how certain events occurred on Tuesday after significant liquidity sweeps.

• Observations are made about sequential SMT levels aligning with expected price drops followed by rallies due to cracking correlations.

Gap Filling and Market Structure Shifts

• The process of filling gaps in pricing is explained; this involves trading at least a percentage of the gap's range before subsequent drops occur.

• A distinction between filled gaps and unfilled gaps is made, highlighting their implications for potential shorting opportunities based on lower time frames.

Correlation Analysis in Price Movements

• The relationship between different price movements across markets (e.g., S&P 500) is analyzed to identify correlations that signal future trends.

• A focus on how specific candles closing above certain lows indicates correlation shifts that can lead to higher prices following gap fills.

Fair Value Gaps and State Changes

• Discussion centers around fair value gaps closing above previous levels, marking changes in delivery states within the market structure.

Market Structure Analysis and Community Insights

Understanding Market Structure Shifts

• Discussion on the importance of price action and market structure, highlighting that limit orders placed at certain levels can lead to frustration when prices do not return to expected levels.

• Noted a significant closure above a specific level, indicating potential bullish sentiment in the market.

• Introduction of hidden SMT (Smart Money Technique) market structure shifts, emphasizing the sequential nature of these shifts and their relevance to trading strategies.

Community Engagement and Learning

• Acknowledgment of community feedback regarding the volume of educational content provided, with some expressing concerns about information overload.

• Recognition of community achievements as members share their trading successes and certificates, fostering a collaborative environment for learning and growth.

• Emphasis on the value of skilled individuals within the community sharing setups consistently, contributing to collective improvement in trading skills.

Preparing for Upcoming Market Events