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!