MMXM Mentorship Episode 3: Failure Swings

Understanding Failure Swings and Liquidity

Introduction to Failure Swings

• The lesson begins with an overview of failure swings, defined as a swing high that does not surpass another swing high or a swing low that fails to exceed another swing low.

Low Resistance Liquidity

• In bullish scenarios, a bearish failure swing occurs when a high fails to break the previous high. Conversely, in bearish conditions, a bullish failure swing happens when a low does not surpass the previous low.

• The market typically experiences opposing failure swings effortlessly, likened to "a hot knife cutting through butter."

High Resistance Liquidity

• High resistance liquidity is identified on the opposite side of structure; for example, a low that exceeds a previous low but then rejects is termed as a high resistance low.

• When aiming for bullish trends, it’s crucial to identify these rejection points as they indicate potential areas of support.

Market Maker Models

• A depiction of market maker buy models illustrates where failure swings should form; targeting these can help identify draw on liquidity.

• Once in discount territory, traders should focus on drawing into premium while monitoring for signs of bullish order flow.

Application in Trading Strategies

• The discussion transitions into market maker sell models where identifying low resistance liquidity becomes essential for understanding price movements.

• Observing how highs are run and subsequently rejected provides confirmation of potential bearish order flow.

Practical Examples and Analysis

• Analyzing charts like the S&P 500 futures helps illustrate concepts such as discount and premium levels alongside identifying key failure swings.

Intraday Chart Analysis of E-mini S&P 500

Understanding Market Maker Buy Model

• The discussion begins with an analysis of the intraday chart for the E-mini S&P 500, referencing a market maker buy model depicted through candlesticks.

• A draw on liquidity is identified at the highs, alongside a higher time frame discount array represented by a daily discount fair value gap.

• The price action shows a rejection from low resistance liquidity and indicates movement towards bullish order flow while remaining in discount levels.

Euro USD Monthly Chart Insights

• Transitioning to the Euro USD monthly chart, premium and discount levels are established based on swing high and swing low ranges.

• A recent interaction with a higher time frame premium fair value gap suggests potential rejection points for selling opportunities.

Daily Chart Analysis for Selling Opportunities

• On the Euro USD daily chart, confirmation of bearish order flow is sought through high resistance liquidity runs that indicate price rejections.

• Observations reveal failure swings where prices fail to take out previous highs, leading to lower trading actions targeting low resistance liquidity.

Identifying Low Resistance Liquidity

• The analysis highlights relative equal lows as significant draws on liquidity, termed as low resistance liquidity.