Trading Lecture on Knife Catches, Deep Dives, and Time Frames

Key Concepts

Knife Catch Entry: When deep diving a level, the entry must be a knife catch, meaning it should spike down and then rebound quickly without hard closing.
Quick Wick: The move should wick down quickly and come back up immediately. Prolonged drips over multiple candles risk hard closing.
Single Candle Analysis: A single candle hard closing on lower time frames (1-minute) should be checked for confluence on higher time frames (3-minute, 5-minute) to avoid false moves.

Against the Level Chosen: Hard closes should be assessed against the level you're working with, not the deep dive point.
Multiple Time Frame Confluence: Look for the level in higher time frames to verify the strength of a level. E.g., a 1-minute level should also be checked against 3-minute and 5-minute levels.
Greediest Level: Identify the greediest level (lowest level in a downtrend) in both lower and higher time frames to understand the market's target.

Immediate Bounce: Successful deep dives typically result in an immediate bounce back, without lingering at the deep dive point.
Tested vs. Untested Levels: Analyze if levels have been tested before; tested levels hold lesser significance.
Fail and Die: Moves that fail to bounce back quickly after a deep dive often hard close larger time frames (3-minute, 5-minute) leading to a significant drop.

Scenario: A level deep dives but doesn't hard close multiple time frames (1-minute, 3-minute, 5-minute).
Confluence Check: Check for the same level across 3-minute and 5-minute; need all to hard close for a clear exit sign.
Bounce Points: Greediest levels act as major support and provide bounce points.

Scenario: Identifying higher time frame levels (e.g., 1-hour, 15-minute) that also align with lower time frame levels (3-minute, 5-minute).
Holding the Base: If the price holds the base of a move, the likelihood of higher time frame hard closes increases.
Time Frame Balance: Monitor intermediate time frames (3-minute, 5-minute) to predict larger moves.

Multiple Time Frames: Always check if levels hold or are broken at multiple time frames for better entry and exit decisions.
Time Frame Relevance: Understand the time frame confluence; a one-minute hard close should correlate with a three or five-minute close. This increases confidence in trades.

Immediate Reaction: The speed of recovery (knife catch and bounce back) is critical in understanding if a level holds.
Trend Lines: In addition to horizontal levels, trend lines and their intersections can act as deep dive points for rebounds.
Lingering Levels: If the price lingers around a level without an immediate bounce, it is likely consolidating and may break down further.

Hour or More: For significant moves, higher time frames such as hourly levels must be considered alongside minute-level entries.
Trend Continuation or Reversal: Levels on higher time frames give clues on whether a move will continue or reverse.

Deep Dives and Knife Catches: Essential for identifying quick reversals but should always be checked against multiple time frames to confirm validity.
Hard Closes: The key signal for exits in trading; always ensure confluence across time frames before making a decision.
Confluence across Time Frames: Combine multiple time frames to validate levels and understand market behavior better.