January 25, 2022 ICT Mentorship Lecture

Overview

• Topic: Internal range liquidity and market structure shift.
• Assignment: Review the chart shared on the community tab.

Chart Analysis

• Focus on 15-minute time frame of the E-mini Nasdaq 100 futures for March 2022.
• Key Points:
  • Old Low: Represents sell stops.
  • Relative Equal Highs: Represents buy stops.
  • If market trades down and hits sell stops, then rallies back, it indicates a takeover of buy stops.

Key Concepts

Market Structure Shift vs Market Structure Break

• Market Structure Shift: Refers to intraday movements and potential price legs.
• Market Structure Break: Implies a longer-term break potentially leading to multi-day moves.
• Focus on identifying intraday market structure shifts for trading.

Recognizing Liquidity and Market Behavior

• Fake Run Above Relative Equal Highs: Signals a potential market structure shift.
• Pay attention to:
  • Price levels around 14,600 – 14,820.
  • Use low and high structures to identify liquidity.

Algorithmic Trading Perspective

• High-frequency trading algorithms utilize market structure on lower time frames.
• Important Concepts:
  • Liquidity: Understand where sell-stop and buy-stop orders exist.
  • Recognize that price movements are driven by these liquidity hunts, not retail theories.

Order Blocks and Fair Value Gaps

• Order Block: Change in state of delivery (supply and demand dynamics).
• Fair Value Gap: A price area where liquidity is expected to be absorbed.
  • Example of setup for lower and upper fair value gaps discussed.

Intraday Trading Sessions

• Key Trading Times:
  • London session: 2 AM - 5 AM (NY time)
  • New York session: 7 AM - 10 AM
  • Afternoon trades: Generally optimal between 1 PM - 4 PM.

Internal Range Liquidity

• Internal range liquidity refers to short-term highs/lows necessary for price leg movement.
  • Exercise: Document stop hunts that lead to market structure shifts in your charts.

Homework Assignment

• Review intraday chart examples focusing on:
  • Stop hunts leading to market structure shifts.
• Annotate examples in a study journal to reinforce learning.

Final Notes

• Consistent practice and backtesting are essential for understanding market behavior.
• Encourage self-education by reviewing the provided materials and personal analysis.