Welcome back folks. This is lesson 5 of February 2017's ICT Mentorship teaching swing trading and this discussion is going to be on high probability swing trade setups in bear markets. Okay, like we did with the bull setups, the PDA Ray matrix again is included here just as a Reference point. I don't know what time you're going to refer back to this video again That way it saves you some time going back and forth looking for it We're gonna be dealing with the premium side of the PDA rate matrix Okay, the bearish monthly weekly daily sequential Okay on a monthly chart premium array has shown to induce selling as evidenced by price moving lower On a weekly chart we see premium arrays showing the ability to induce selling and its evidence by price moving lower.
On a daily chart, a premium array has shown to induce selling as evidenced by price moving lower. So all three time frames, monthly, weekly, and daily, all showing a premium array driving price lower or resisting price. In all time frames, all candles provide new resistance to price and little to no strength is seen. Okay, when all three time frames are bearish, you're going to be looking to sell all daily bearish premium arrays.
And they're going to be in the form of an old high or low, a rejection block above the candle's bodies, a bearish order block, a fair value gap, a liquidity void, bearish breaker. any bearish mitigation block and you're going to sell every four hour bearish premium array. When the monthly is bearish, the weekly is bearish and the daily is bullish, that means there's a correction that's underway on the daily chart. You're going to sell daily bearish premium arrays at or nested in weekly premium arrays.
You're going to sell 4-hour bearish premium arrays at daily and or nested in weekly bearish premium arrays. You're going to avoid selling daily premium arrays if the daily has just posted a lower low and rejected. This is going to be seen as a bullish breaker. The monthly being bearish, the weekly being bullish, and the daily being bullish. You're going to sell all daily bearish premium arrays at or nested in the monthly premium arrays.
You're going to sell 4-hour bearish premium arrays at weekly and or nested in monthly bearish premium arrays. And you're going to avoid selling weekly premium arrays if weekly has just posted a lower low and rejected. This will be seen as a bullish breaker.
Okay, in this example for high probability cell synapse, we're going to be looking at the monthly, weekly, daily sequential with the euro dollar. Okay, we have euro dollar here on the monthly chart, and we have 18 months worth of data highlighted in here. And inside the 18 months worth of data, we're going to be looking at all the premium PD arrays, and we're going to draw out our up candles. with the lows.
So every up candle okay has its low noted and we're also going to note all of the opens on the up candles and we're going to drop down into a weekly chart. Okay, so now we have our monthly levels down on our weekly chart of the year dollar and now refine it to showing the weekly levels. Okay, so we have our weekly levels here with the low on all the up candles delineating a bearish order block. Take notice also that we're using the red trend lines to delineate the weekly bearish order blocks and we're also going to now delineate the mean thresholds of of the bullish candles prior to a down move, which is a bearish order block. Okay, so now we have all the mean thresholds of the bearish order blocks.
This one's here overlapping with a monthly order blocks open mean threshold of bullish order block in here, combining both the bodies. And we have the open on this candle here delineated and we're going to use one more reference point for this one right there Delineating the range from this high to this low the bodies only not the wicks and mean threshold right there Okay, so we're going to take the R levels now and move them down into a daily time frame. Okay, so now we have our daily chart indicating our monthly and weekly PD arrays in the form of bearish order blocks and the openings of those bullish candles.
So you can see the market did in fact trade up into an opening of a monthly bearish order block. that these heavy lines are. And the blue lines that are thin, they're going to be the monthly block on a monthly basis, the low.
So just keep in mind that the heavier blue lines, they're the openings on the bearish order blocks on a monthly basis. So the price trades up, closes in this little gap in here. Also gives a deep retracement. So in terms of the range between this high and this low, would this high be in the premium or the discount range? Clearly, it's in the premium range.
And price also trades to a weekly order block. It's bearish. Price hits it perfectly and trades lower.
Price trades up into a weekly order block as well here. Sells off. Price trades lower and comes all the way back up to a weekly order block. PD array. Comes back and retraces and rallies one more time.
Now notice it's trading through or deeper into a monthly bullish candle, which is a bearish order block. So it's trading up into and it's also overlaying inside here with a weekly bearish order blocks mean threshold. So all the dashed lines that are red, that's the mean threshold of a weekly bearish order block. It's hard to see it in here, but it's in there overlapping with the opening on a monthly bearish order block as well. Price trades up into it, sells off, comes back one more time, hits that level again, trades off one more time.
comes back up, trades into a previous weekly order block level, just extend it out in time. Let me do that now so you can see it for clarity's sake. Okay, perfect delivery of price. Price trades down.
One more time, hits this weekly order block level as well, perfectly. Trades down. Another weekly order block level in here, trades through it, opens right at that level. expands away from it and aggressively moves towards this old low, trades through it, comes right back and hits this low. Remember a PD array can be an old low, trades up to old low, up to a now a daily bearish order block, which is the last up candle rate for the down move.
So we have a new level we can apply. Okay, so we have a daily bearish order block right here, price hits it. trades away, comes back up.
Notice this rally up in here, access resistance, trades lower. It seeks, every time price moves lower, it's seeking a discount PD array. In other words, anything that would be bullish, like a bullish order block, a liquidity void or gap below price, a rejection block below the bodies of the candles, an old low.
All those ideas that would be viewed as a discount or a buying scenario, that's what price will be looking to seek to find as a downside objective. And eventually price makes a low and it starts to move higher. We're not talking about trend reversals in this discussion, so we're going to just delineate this marker here. Just for the sake of discussion, we'll just say you took another opportunity to go short here and it stops you. Just so that way there's no argument about being.
cherry picking. We have all of our levels from the monthly, weekly, and daily on our daily time frame. Monthly and weekly levels transposed to the daily.
So our executable time frame is the 4 hour. So what we do is we look for all these levels to be moved to our 4 hour chart. Okay, so we have our 4 hour chart here of the Eurodollar. And this was the highest of all the peaks before it started trading lower.
We have a big range between this high and this low. And we're going to take a look at that in terms of our low and our high. And we are in a premium area here above equilibrium.
So we are on a selling side of the marketplace. Also note that it's also occurring at a mitigation block. A down candle rate probably not move. that were below we traded back up to. Let's remove our Fibonacci expansion.
Okay so we can have a horizontal line added at this candle's high and it takes you right to that level here. Notice there's no down candle here it's all just ranges it's just extreme ranges for the void but we have one little down candle right here right before that move. So price trades through that comes back to it as a mitigation block.
So there was one little pass in here where they did try to get some of the longs off that they would have had here. That would be underwater before it took off and went lower. This was their opportunity to unload those longs that were used to drive price up to these levels.
And they mitigated those longs here. So you can see that that level is indicated here. OK, so we've changed this to a short little line in here indicating. a four hour mitigation block.
We're going to start looking at all the up candles prior to the down moves. I'm going to zoom in. Okay, so we have these last two up candles in here.
That could be a potential bearish order block. We have this last up candle here that hits that same level it left back here. That becomes a potential bearish order block. Okay, and this one here becomes a potential bearish order block.
All these candles in here, they're up moves going into this decline. Bearish order block. Okay, we have a bearish order block there.
Bearish order block here. You can see that would have been a loss if it was executed on. Okay, so we have a bearish order block here.
All three of these candles together is one consecutive candle up right before the down move. That's a potential bearish order block. Trades up into it.
Also trades into this little one here, but I'm not going to have that in here just to keep the charts clean. Okay, we have one, two, three candles trading up before the down move. Potential bearish order block trades into it here.
This is an overlap right here. This candle right there. That last one. So when price trades away from it, this right here could have been traded as a bearish order block and it would have been a losing trade there.
Price trades all the way back up. into an area at which here becomes a Bare shoulder block right there gives you a little bit of move then eventually comes back that would have been a stop out we have This area up here an old fractal high right there Price trades to it here. Bearish order block starts to sell off.
We have another opportunity presented here. Okay, last up candle right before the down move. Didn't quite get to it there.
We have a bearish order block right here. Hits it. Sales up a little bit, trades down into a monthly level, trades one more time up to it, trades back down to the monthly level again. We're in a range bound consolidation, so you have to look outside of the range for where the stops would be.
That's back here and below here. So when price trades above it, we have an old high, and we'll add that as a horizontal line. here and we'll change that to a black line just to keep things distinct.
Price trades above the old high. Remember that's a premium PD array. An old high. False break above it.
Sell off. Price trades down. We have a potential bearish order block in here. could be short of that okay and price sells off we have a up candle right before the down move in here right there that's a potential bearish order block right there and then we have another up candle break for this down move this moves away from this rally here that could be a potential selling opportunity Right here. We have one more in here.
These last two candles right before the down move. Bear shoulder block. Sell it back in here.
We have a fair value gap right between here. This is a potential selling opportunity right there. As soon as it goes up into that area we can sell it.
And we have another bearish order block right here. And then price trades down, finds a low, starts coming up. We could look for a selling opportunity at this level here, right there.
And you could be selling short here, and this would be a stop out. So you can see there's a lot of potential entries that were profitable, but there are a few that you could have taken that would have stopped you out and resulted in a losing trade. We're focusing only on the sell side. So when we get up into this area here, we're up into a higher level premium. Price hits an old area of monthly and weekly PD arrays.
Okay, we have a breaker in here. Two down candles right before it takes out old highs. Price trades back up into that breaker here. Spends a little bit of time on the month. 4 hour for it expands it goes lower then we have our one two Candles up for the down move too tiny of a body and it's also encapsulated inside this last up candle No, we're just little green candles bodies is basically this it's inside of this up candle So we don't look at that as a bullish order block We used a big beef your body candle and that would be seen here.
Okay price trades up into a bearish order block and also we're seeing the weekly levels coming to fruition in here price trades down to a monthly level look at the consolidation around that monthly level and then subsequent weekly level multiple little bearish order blocks in here I'll let you study that on your own And we have another bearish order block in here. Right there. Right here.
We have another bearish order block here. But we can also use this last one here. That's the real reference point.
Right there. Last big candle before the up move. starts to come down.
So here's your reference point there. And we have one more here that could have been used as a short that could have eventually led to a losing trade. Right there.
And we have the market trading at an old low as a PDA. on a premium basis old low here trades to it there and we get back up into the weekly and above a monthly pd array last up candle for the down move hits it trades into a bearish order block there trades lower Again, these are swing trades that could be two weeks to one month, but you have to take some profits at a logical area as well. So you have equal lows here on a four-hour basis. So shorting from this level here, let's test an idea here for a moment. Let's say, for instance, you were shorting here.
To get below these lows over here. That's 245 pips just to get below these lows over here and it moved a range of 289 pips. That's basically what you're looking at here, that white shaded area. That's the setup.
And the move finishes on February 16th of 2012 and begins on February 13th. So it's a three day trade, not quite a swing trade, but it did pay out a pretty good payout, just didn't fit the time criteria. And then we have the market trading back up into a monthly order block level and becomes a weekly order block level as well.
At a later time, you see the sensitivity at those levels again over here. Weekly levels, weekly levels in here as well. Trades back up into a. bearish order block in here, sells off, spends a lot of time at a monthly level and a subsequent weekly level that's overlapped in here and then breaks away, trades down into an old low, taking out that low right here with this run, trades back up into our weekly levels. And here, the trade rate back up into mitigation blocks here.
False break above short-term high. Trade's lower. Consolidation and expands again, taking out the sell side liquidity below the marketplace or a discount PD rate. Spend some time around a monthly level and expands away and price seeks to go lower. Last two up candles, wait for the down move.
This candle becomes a valid break of a bearish order block. Trades back into that range here. Mean threshold of both the bodies of these candles together. Price sells off. And notice how all up candles provide resistance.
That's what we're looking for. We're looking for ideas that all green candles are basically resistance levels. Okay, when price is trading back up into them.
we should see that operate as resistance. Even if they end up getting broken at a later time, they still provide the measure of resistance that we would look for for institutional sponsorship. For instance, these two candles over here, price trades up into it here, right there. That's an opportunity to sell short.
And look at the move there. I'll just take a look at that one. So getting short there with a range of 536 pips. The low forms on June 1st, 2012. The move begins on May 21st, 2012. So you can see there's a pretty significant trade there. Trading again using the ideas monthly, weekly, daily, and then to 4-hour.
We see our levels here. on a daily time frame. That's what these black lines are.
Price trades away from this last up candle. Rate for the down move. Trades back up into it here as a bearish order block.
Trades lower. And price seeks the move below this low here to get the discount PD array. Up candle. Rate for a down move. Should act as resistance.
It does in here. And here's a potential equal high. Price trades back up into that. We could look for that to be a sell-off. Starts to sell off, but then comes down just into a four-hour bullish order block, closing the range.
That's all it gives it, and then it finally starts to trade higher, and it's outside of our range for study. I want you to take a look at all of the levels in here that provide potential setups. How much of a range we saw from these price points now? This is a four-hour basis Okay, look at all the sensitivity on these levels now if we drop back up to a daily chart, you'll see the setups actually become less frequent but more stunning in terms of responsiveness. Okay, so you can see all of the opportunities in here on these levels and these 4 hour opportunities, these would get you in sync with the higher time frame daily and or weekly.
But all of the sensitivity around these levels are all each individual unique setups. And while not every single one of them are profitable, the vast majority of them are. And they provide you an opportunity to be a short seller at logical levels. And if you keep your focus on the monthly and weekly levels, notice how you get far less opportunities to be short.
But look at the responses of them here. All these dark blue levels in here. Okay, and then you have the weekly levels as well. Very stiff resistance, very stiff resistance in here, layered resistance in here, and weekly and monthly layers of resistance. And you have the daily level we just outlined over here.
That's what that is. Okay, and you can see there's a lot of opportunity for pips, but when you drop down to a four-hour time frame, They give you a more refined entry point where it lessens your risk and it gives you closer to profitability. So just like we showed on the bullish side of buying with high probability setups or swing trading, the same thing is said on the sell side. You're just looking for the monthly, the weekly, and the daily, 4-hour, all those levels that go in concert with one another to overlap, to converge.
The more levels that converge around a specific price level, the more likely it's going to probably be sensitive also. But you want to focus primarily on the monthly and weekly levels because they're going to be the big, biggest catalysts for big moves. And I'm going to take everything off the chart here with the exception of the monthly and weekly levels again.
And I want you to take a look at how much impact it has. You can see all of the weekly levels in red and all the monthly levels in blue. Very significant price swings, bearish order blocks, many times trading at that level.
Again, weekly levels can be retraded to, monthly levels can be retraded to several times because they're higher time frame. Why do we permit higher time frame levels to be traded to multiple times? Because larger orders and larger positions are built on monthly, weekly levels.
So it may require them multiple passes into that level to capitalize that particular price level for bearish scenarios or building in bearish positions. The consolidation in here has been retraded to here as well, back up into a weekly order block and monthly order block layered in here. And then a responsiveness off of this level, monthly level over here, and coupled with the weekly. permitting some measure of trading through it. In other words, we're not looking for precision always on a monthly and weekly basis because there's going to be a larger order block there.
So we could be trading into the mean threshold or it could be using the low. That's why we have to consider if we have a layered area of levels on monthly and weekly you have to be expecting potential for maybe getting stopped out but not forgetting the whole idea of the trade or what frames the idea that this market should go lower and take the next set up because if you don't do that you end up missing the move and then you end up looking back say I Wish I would have it one more time and again reaching for old lows here You see also with weekly levels and finally expanding to the downside So hopefully this has been insightful to you guys in Regards to how you take the levels from the monthly weekly and daily and transpose them to the four-hour chart to look for setups. We're going to build on this model in Lesson 6 and 7. Finally, with the Million Dollar Swing Trading Model in Lesson 8.