January 2017 ICT Mentorship Long-Term Analysis Lesson 1.1

Introduction

• Topic: Implementing Macro Analysis using Quarterly Shifts and Epta Data Ranges.
• Focus: Foreign Exchange Market (Forex), but concepts apply to all asset classes.

Main Concepts

Market Randomness vs. Control

• Random Market Hypothesis: If markets were random, no one could consistently have an edge.
• Controlled Market Hypothesis: Markets are 100% engineered and controlled, especially in Forex.
  • Evidence: Precise forecasts of price levels to the PIP.
  • Conclusion: Zero randomness; markets are systematically controlled by an algorithm at the Central Bank level.

Quarterly Market Shifts

• Occur every three to four months.
• Applied universally across all asset classes.
• Markets need to regenerate interest and urgency regularly.

Analyzing Macro Level Price

• Analyze price using monthly, weekly, and daily time frames.
• Recognize intermittent price swings regardless of primary market direction.
• Strategies:
  • Position Trading:
    • Expect deep retracements and take partial profits.
    • Re-enter positions to capitalize on the trend.
  • Directional Awareness:
    • Market shifts every three to four months may indicate consolidations or retracements.

Use of Epta Data Ranges and Quarterly Shifts

• Focus on Smart Money
  • Understanding how large funds allocate money and mimic their actions.
  • Use daily charts for this analysis.
• Buy Programs:
  • Expect a series of successive 'up' days in the market.
  • Look for liquidity above recent market highs.
  • Understand underlying vs. benchmark:
    • Manipulation differences help identify buy programs using the price movement of a currency and its benchmark (e.g., USD Index for Forex pairs).
• Benchmarks and Underlying Dynamics:
  • Analyze scenarios where the benchmark and underlying currency pairs exhibit specific highs and lows indicating strength and accumulation.

Detailed Example: Dollar Index and Euro Dollar

Dollar Index Analysis

• Monthly and Weekly Time Frames:
  • Delineate calendar starts (January 1 to January 1).
  • Create a structure and draw vertical lines every three to four months.
• Daily Time Frame:
  • Identify Shifts: Look for reference points within the last 60, 40, and 20 trading days.
  • Institutional Order Flow:
    • Recognize highs, lows, liquidity pools, order blocks, and gaps.
    • Future Anticipation: Cast projections forward 20 to 60 days to anticipate shifts.

Quarterly Shift Example

• Process:
  • Start at the beginning of the most recent calendar month (e.g., Dec 1, 2016, for analysis starting in January 2017).
  • Identify high and low points in the past 60, 40, 20 trading days.
  • Determine institutional order flow.
  • Cast Forward: Project market behavior and look for a setup within 60 days.
• Dollar Index Example:
  • Breakdown of forecasted market behavior steps from December 2015 to 2016 based on observing previous trends, data ranges, and market shifts.

Special Notes

• Bearish/Bullish Indications: Evaluate institutional reference points and determine expected market reactions.
• Application to Smart Money: Analyze distribution and accumulation patterns for accurate forecasts.
• Daily Chart Use: Recognize patterns indicating market shifts and institutional actions.

Conclusion

• Quarterly Patterns: High probability of market shifts within approximately three to four months periods.
• Practical Application: Use of historical and projected data to estimate market trends.
• Homework: Apply concepts on personal charts to gain familiarity and deepen understanding.

Important Tips

• Record daily for accurate references and avoid missing details.
• Revisit and review recorded sessions to reinforce understanding and apply learned concepts.
• No Emails for Now: Hold off questions until the end of the month as further content may address them.

Next Steps

• Prepare for the next session focused on Epta data ranges and session flow.
• Review notes and apply analysis techniques on your own charts.

Good luck and good trading!