a change in the state of delivery occurs when bullish momentum suddenly shifts to bearish or vice versa signaling a potential Market reversal this shift presents an opportunity for Traders looking for higher risk to reward ratio trades in this video we'll explain what a change in the state of delivery is the rules you need to follow to apply it correctly on a chart and how to combine this Theory with other smart money Concepts to enter highquality trades so if that's something you're interested in make sure to hit the like button to show your support and don't forget to subscribe to our Channel if you're new here see you after the intro and [Music] disclaimer so what exactly is the change in the state of delivery CISD is a reversal pattern in which the Price's momentum shifts Direction suddenly in this example you can observe a clear bullish Trend these three candles represent the most recent bullish momentum which has broken above the latest Market structure this can also be referred to as the most recent buy side delivery we Mark the body of the first candle as a reference point for the beginning of this upward movement the structure is clearly bullish and after a short-term correction we anticipate the price to continue pushing upward however if the price suddenly drops and closes below the demand area show showing a complete reversal of bullish momentum this condition is known as a change in the state of delivery so what does this signify in terms of price action first it indicates that the breakout was actually a fake out designed to Target liquidity Above This Market structure level the buy side delivery triggered the buy side liquidity which was Then followed by a bearish movement to complete the market Maker Model A Break below the demand level reveals that buyers failed to support their long positions and sellers have now taken control this reversal pattern signals a potential shift downward in the market so how can we use this concept to enter a trade at this point our Market bias has shifted to bearish meaning we are only looking for opportunities to sell after observing a break and close below the origin point of the buy side delivery we know that what was once support has now turned into resistance this change in Market structure provides us with an important signal when the price pulls back to this resistance area it creates a great opportunity to enter a short trade since this Zone which was previously a support level now acts as resistance the chance of the price rejecting this level and continuing downward increases by entering a short position at this point we can take advantage of the bearish momentum giving us a highquality trade setup with a good risk to reward ratio it's important to be patient and wait for the price to return to this resistance area before entering the trade this increases the chances of catching a strong downward Ward move while keeping risk low the same concept applies to the bearish scenario a CISD occurs when price suddenly shifts momentum and breaks above the most recent sell-side delivery after sweeping the liquidity below a key low this indicates that sellers are no longer in control and a potential reversal is on the horizon once the price pulls back to the previous Supply area it offers a highquality entry point for a trade although similar the change in the state of delivery and change of character have some key differences change of character happens when the price breaks through a well-defined market structure signaling a shift in the overall trend change in the state of delivery on the other hand is more focused on a sudden momentum shift to the opposite side and can signal a market structure shift earlier than a change of character however it's important to note that not every change in the state of delivery pattern you see on the chart will lead to a successful trade especially if it occurs in the middle of nowhere with no clear structure or Contex Tex to trade CISD effectively it must align with other Market factors and conditions through back testing we have realized that CISD patterns are most effective when accompanied by specific conditions to ensure a valid CISD and to enter a highquality trade certain rules need to be followed so let's discuss the Key conditions that enhance the reliability of a CISD pattern rule number one rejecting a higher time frame key level as mentioned earlier the CISD is a reversal price action pattern and it's most effective when it occurs after the price has tapped into a higher time frame key Zone this is because key levels on higher time frames such as 4 hours daily or weekly have the power to influence the price movement significantly when the price reaches these zones and a CISD forms it indicates that the market is likely reversing at a crucial area making the pattern more reliable without this higher time frame Confluence the CISD could occur in an area where the market isn't likely to experience a meaningful shift reducing the trade's probability of success rule number two sweeping a liquidity pool a highquality CISD setup often occurs after the market sweeps liquidity from one side liquidity pools form around obvious equal highs and lows where Traders Place stop losses when the price sweeps these levels it triggers those stops engaging liquidity and setting up a potential reversal once this liquidity is taken out the price is more likely to RSE in the opposite direction making it an ideal condition for a CISD pattern to form this is a strong signal that the market has gathered enough momentum for the reversal increasing the validity of the setup rule number three volume and confirmation for a valid CISD setup it's important to see an increase in trading volume during the price action shift higher volume shows that more Market participants are involved which strengthens the momentum and confirms the pattern's validity entering a trade based on a CISD without volume confirmation can be risky as it may indicate a weak move with no real Market backing this increase in trading volume can often be identified through the formation of fair value gaps fbgs occur when there's an imbalance in price caused by aggressive buying or selling leaving gaps on the chart that indicate High momentum these gaps are a visual representation of heightened activity and volume in the market when you spot a CISD forming alongside a fair value Gap it provides a clear sign that institutional Traders or large participants are behind the move adding further credibility to the setup a price retracement into the fair value Gap can offer a high probability entry point the market often fills these gaps before continuing in the direction of the new trend by combining volume fair value gaps and CISD you can significantly increase the likelihood of a successful trade while minimizing risk Rule Number Four waiting for the pullback to the broken level after the price breaks through the origin point it's crucial to wait for a retest this retest serves as confirmation that the previous level has now flipped either from support to resistance in a bearish scenario or from resistance to support in a bullish scenario entering on the pullback improves your risk to reward ratio and gives you a clearer signal that the reversal is valid by following these rules ensuring the CISD occurs at a key level watching for volume confirmation and waiting for a retest you increase the chances of identifying highquality trade setups with strong potential for profit now that we have explained what the CISD pattern is and the rules required to apply it effectively on the chart let's take a look at some real chart examples to see how these Concepts work in practice but before we continue if you're looking for a platform that keeps you updated with financial news and fundamental analysis we recommend fast bull one of the leading trading websites offering unique tools to keep you ahead of the market fastb provides an accurate economic calendar real-time Market data and a 247 trading question and answer service that allows you to receive free expert opinions and Analysis helping you sharpen your strategies with professional insights additionally Fastow has recently launched an exciting trading contest offering incredible prizes for the winners so if you're interested in participating in this exciting contest and benefiting from powerful trading tools check out the link in the description here we have the euro dollar on a 15-minute chart we can see a beish market structure where the price has recently broken below a key level that had acted as support multiple times if we analyze the latest impulsive movement that caused this break we not a strong bearish momentum shown by the creation of a fair value Gap this suggests that sellers have successfully broken through the support level and taken control of the market from a price action perspective if we get a pull back to the former support now turned resistance we can anticipate a rejection potentially leading to further downside movement however What followed was a strong bullish move with fvs that broke above the resistance area this sudden shift in momentum signals a change in the state of delivery and a potential reversal additionally this breakout appears to be a fake out designed to Target the liquidity resting below these equal lows so how do we approach this market now according to our trading plan we Mark the opening of the candle that started the bearish order flow as a key level when the price returns to this level we anticipate a rejection and look to enter a long position however before entering we need to zoom out to a higher time frame such as the 4-Hour chart to get a better understanding of the overall market conditions and confirm the bigger picture let's zoom out and analyze the 4-Hour chart to better understand the market conditions and see if this reversal aligns with the broader trend on the 4-Hour chart we can observe that the price has tapped into a key level a small reaction to a higher time frame key level can signal a major Trend change on the 15minute chart with that said the higher time frame analysis confirms the upward movement seen on the 15-minute chart our higher time frame Target could be this level of Market structure just ahead of the current price now let's return to the 15minute Chart according to our trade trading plan we can set a buy limit of spread size above the origin point with a 2:1 risk to reward ratio our stop loss will be placed somewhere to protect against Market fluctuations this is how we can apply the CISD pattern alongside multi-timeframe analysis and other price action strategies to enter a highquality trade however no matter how promising the trading setup looks the market can always move in unexpected ways that's why it's crucial to have a solid risk management plan in place this ensures you can protect your capital and take advantage of profitable opportunities when the market turns in your favor here on the Aussie dollar 15minute chart this area has acted as support multiple times traders who went long likely placed their stop losses below this support area which means there is a large amount of liquidity gathered beneath this level now let's see what happens next the price breaks through this area with strong bearish momentum the fair value Gap created during the move suggests that the price has finally managed to break through the barrier signaling a push lower however the price immediately returns to the range forming another bullish fvg this scenario reflects a complete change in the state of delivery from bearish to bullish it shows that the breakout was actually a market maker engineered move targeting liquidity below this key level with the sell-side liquidity swept it's now time for smart money to go long aiming for the buy side liquidity located higher up now that we've identified the direction we want to go long but the question is where should we place our buy limits according to our trading plan the start of the last bearish move could serve as support and a good entry point for a long position Additionally the fair value Gap formed during the pullback could also act as support whichever entry point we choose the stoploss should be placed below the fvg for protection we will Target the recent highs as our take-profit levels now let's see what will happen next this is a perfect example of how the change in state of delivery can be identified on the chart and how it differs from the change of character a change of character occurs when the price breaks through a strong Market structure signaling a shift in the Market's overall direction this shift can happen slowly or suddenly with strong momentum but the key factor is the break of an important structural level indicating that buyers or sellers are taking control on the other hand the change in state of delivery focuses more on a sudden shift in momentum where price transitions from bearish to bullish or vice versa unlike the change of character which can take more time the CISD is identified by the Quick Change in price Direction and is confirmed when the price breaks the origin of the last movement in essence CISD gives an earlier signal that a potential reversal is occurring often before the larger market structure confirms it combining CISD with liquidity Concepts such as liquidity sweeps and fair value gaps further enhances is the quality of the trade setup for instance when a CISD occurs after liquidity has been swept from one side of the market it signals that the market has gathered enough liquidity to reverse making the trade even more reliable this approach allows you to enter positions with higher confidence as they are aligning their entries with both momentum shifts and key liquidity Levels by understanding both Concepts CISD and chock and using them alongside liquidity analysis you can refine their strategy and improve chances of entering highquality trades with better risk to reward ratios guys don't forget to back test this strategy and see how it works for yourself if you enjoyed this video please give it a thumbs up as it really helps support us in creating more content like this thanks for watching and we'll see you in the next episode