okay folks welcome back this is lesson two of november or the third month of the ict mentorship okay we're going to talk about institutional order flow and what makes it easy to see and we're going to be building a little bit on what we just mentioned in the previous lesson and we'll be using that euro dollar example and here's that order block we showed earlier we showed in lesson one you see the open comes in at 151.987 and the low comes in at 51.45 and the low i'm sorry the high comes in at 5151 and 5143 so very sensitive there the idea is if we see this on a monthly chart okay we can go into the marketplace and anticipate an ideal scenario to unfold in this area here okay now i'm let's drag it up to the low because it ain't that big okay so we have that low to the opening price as we mentioned in lesson one we discussed that there was going to be a high probability of stops resting below these lows down here what i want you to focus on is look at look how the bodies of the candles basically merge at that same general area i want you to ignore the wicks okay ignore those and by having that in mind all below these lows in here there's going to be a large pocket of liquidity in the form of cell stops now if we're looking at the monthly chart like this and we think that there's going to be a high level of sensitivity up here why because it's already come up and closed in this range by coming up to this level here and if the market is most likely going to trade lower and seek the liquidity below these lows in here now again for your notes when we're looking at institutional overflow the idea is thinking like that market efficiency paradigm okay you're the market maker so what you're looking for is where is the maximum level of liquidity in relationship to where markets have traded from and where they are presently well the market has traded higher here so where's the highest level of liquidity from this point here if it's going to go higher it would be above here but we had this void that we closed in so the market has now rebalanced from a point at which they sold first it moved quickly away came back up and closed in that range that created by all these down black candles so in other words the market has delivered price going down it has to close in that gap by trading it on the upside so where forever wherever there is a black candle there must be a green candle the idea is you want to see where the market will reach for for its next level liquidity we have the run down here clearing out these stops market clears those stops and then once it clears those stops right below here in order all this movement over here all this running of stops yes it moves back to a order block but we're not talking about that now we're talking about how the market will seek liquidity the market will run up from this point here because it's already absorbed all the liquidity down here and yes just for completing the sake it's returned back to a bullish order block over here which is the down candle rate for the up move so the market's going to do what it's going to seek the liquidity on the upside so where does that reside next this up candle that's where they sold the last time and look we created another liquidity void all these down candles okay all black candles down okay so there has to be the market offering on the buy side they offered it on the sell side so that balance it it has to be green candles or up candles in this case okay i all my down candles are black and all my up candles are green so we have that same element just repeating itself here right here okay now obviously we always look at the middle of the up candle mean threshold and you can see how the bodies of the candle respect that there's always going to be this extra little outrun on price with the wicks okay and i've mentioned this in many many instances over the last six and a half years teaching forex online that you have to allow that erroneous price action where it will rat you know run farther than uh you probably would expect it to because of your broker okay so they allow them to open the spread up a little bit more so when price trades up it hits this area of liquidity now we're going to be expecting to see price trade too well the largest area liquidity was going to be resting below these lows right or this low rather look closely just like we showed over here with the bodies of the candles okay we're gonna look at the bodies of the candles here okay so classic technical analysis we'll say well this this wick is the low and what i teach is it's the bodies of the candle is where all the volume is the institutional volume there's a difference now the wick is always going to be directly related to retail okay retail stops because we're looking at a retail platform most instances you're going to see the wic is generally comprised of retail pricing the bulk of the bodies close to the interbank prices you're going to get so we allow the wix to provide us a erroneous price delivery or extreme price delivery but we want to do most of our analysis around the bodies of the candles so what does that mean it means that if we have the bodies of the candles defined here as the real low and allowing all this to be viewed as retail if we scrub that over here you can see how price trades just below the bodies of the candle as it would in terms of seeking the truest form of volume from an institutional uh order flow standpoint if we're not going to break the range on this run here and we'll teach about that in the mentorship but for now we expect it to close in the range here just as well we saw this up candle here this down movement price comes up and closes in its range here then it runs for the liquidity below here the point of what i'm showing here is once you understand where the market will most likely reach for and this is a monthly chart now we can take a step back and say okay if i can define the market in terms of and we'll say for instance say say we were lucky okay we were really plugged in we were studying and we felt that this market was topping out up here okay and we knew that once this low was violated here we would have a potential range of that clearing out this consolidation stops will be resting below that okay we would see reasonably expected to run through that we also know that we have a bullish order block right here now notice it wicks through that but the body of the candle this body's candle i'm sorry this candle body rather trades right into this candle here okay so that's all it's required to trade into order block now it's a monthly chart now so we can expect some expansion through and to run the liquidity over here look at all the wicks okay the wicks are no significant barrier in terms of institutional overflow we just know that there's going to be a large reason to expect stops resting below the wicks we're inside the wicks let's say that way but below the bodies of the candle okay so what we're seeing is we're seeing another area at which we have price trading from the buys of the candle we drag that over here you can see price trades into that area right in here as well so it's seeking the liquidity below all these bodies of the candle and the wicks and recapitalizing this order block here you see the bodies of the candle look at how it's respecting that all the bodies stay above this candles bullishness now we would reasonably expect to see price trading down to that level at that point if we see this willingness to want to be recapitalizing this bullish order block and we clear out the stops the next area would be what the seed price reached up into the void which is up here so we would see price want to reach up and capitalize this price level so we have an area at which institutional order flow is bearish until we get down to here then where is it going to do it's going to look for the liquidity on the upside this is the area which you would expect to see prices want to run up into so as price is rallying up this is all bullish so institutional overflow is bullish here then once it gets to this point here we're looking for what the stops below these lows here so we would see institutional order flow swing to the downside now notice what's happening again the bodies of the candles are violated with this down candle here we clear out the stops okay and again we mentioned that it's re-chasing back into this bullet or block from here where would we reasonably expect price to go up to again that's this bearish order block so you want to see price reach up to here so in this instance we would expect to see what price rally up into this area so all through here institutional overflow is bullish now i can keep doing this back and forth back and forth and show you example after example but what i'm showing you is from a monthly standpoint you take the information i'm showing you here and by example and again here's the bodies of the candle not the wicks it stabs through it to go below the bodies of the count it doesn't necessarily have to go through the wicks we only need it to reach below the bodies of the candle okay so while we have institutional overflow that's bearish when it's in the red area okay all we're going to do is internalize the marketplace like this so if we have it set up like this on a monthly chart all we have to do is break the market down into a weekly just changing it into a weekly chart okay so now we have the price shown in weekly basis all all through here we have the market in selling condition markets in a bullish market condition bearish market condition bullish market condition bearish market condition okay so now what we've done is we've mapped out this entire euro dollar from mid 2008 all the way to mid-2012 just by understanding what the monthly levels on institutional order flow will give us and understand those points of reference i showed you in september what to focus on because that's that's the recipe for all the trading you're ever going to want to do that's it that's the secrets okay but you have to find them on the higher time frame and arrive at where the higher time frame charts are going to seek liquidity because this is where the large funds have their money and where the large money is found on the fund level that's where the banks are going to reprice to it's not for the retail people because you're too small if we're selling or expecting bearishness in here okay this decline sees a retracement back up into and yes it wicks through it wicks through but the body of this candle is where you'd be looking to be a seller but this wick never violates this up candle so we have a bearish water block retreated to and expands lower price creates a down candle here right before this up move in in a time where expected institutional overflow should be seeing prices move up into that bearish order block great tears where you expect to see buying in an area at which bullish prices should be expected until it gets to this level here which is that monthly bearish order block be shown on a monthly chart then price would be recently expected to go lower to seek the stops below these candles down here the bodies of these candles and that's what you see here but look how the mark look how the market provides us an opportunity of real crystal clear uh delivery of price where we see price repelled it breaks down okay when does it become apparent it's going to go lower see this candle here here here here this last up candle that's the last green one when that candle is violated right there right here on this black one now you're going to be expecting price to expand on the downside price does it here trades a little bit lower then we have a small little retracement higher what's it trading back up into this down candle which is a breaker what's it breaking the highs here where initial sellers would be having their buy slot resting and then we clear those out and we go lower but this down candle is where they're going to populate new selling right there you can see that i'm selling it right here so they're mitigating the longs they use to buy the price higher they make they take those orders off and then you see the acceleration going lower all this area in here okay we have up candle down move retracement back up into what what is this bearish order block so with this bearish order block okay bearish order block right in here trades up into it and immediately sells off again what's institutional overflow reaching for it stops below here but why is this signal forming here why is this pattern forming because it's undoing the bias that was used here remember the down candle is a bullish order block and they should be buying there and it does look at this boom explodes this cell is unwinding the lungs that they put here everything is a hedge on in the bank level okay when you're seeing price move from one level to the next there's all buying and selling going back and forth in between those two range extremes range extreme down here range extreme up here then there's another range extreme here another range extreme here and the range extreme here okay so in between these two extremes there's going to be hedging there's going to be bookmaking where the the bank can have a net bearish book here and be making money as it's going lower but they have to be buying too and while they still may see price going here and selling they have to take the orders off that they use over here that are long and that's true that's why you're seeing that unwinding right here everything is going to be on the opposite side go over to the left side of the chart and you'll see whatever they did to go long they're going to take that off on the sell side okay which is the basis of a micro maker cell profile which is what this is consolidation return to consolidation accumulation accumulation smart money reversal low risk short and redistribution another redistribution and the market reaches below the consolidation here taking out those stops once the stops are cleared out they're going to look for another layer of institutional order flow for the opposite side okay so that's going to be in the form of the return back to this bearish order block which we've shown on the monthly chart the market trades up into that level here but between the point at which it hits here and once it creates the run on the stops over here we would be in a bullish institutional overflow environment so we would expect to see the market trade back into down candles to be re-bought in other words new buying should be seen there this down candle right before the up move you can see the price in here two candles wicked down into this candle right here from the high down to the middle of a candle it wicks into it here and this is kind of hard to see it but that candle's low comes in at 21.51 so 21 51 is below this candle's low so it's down here and you can see that's what i'm highlighting right there's the low and it's inside this down candle so it's buying and explain expand price out higher then we have it retracement okay price retraces trades into what this up candle so what's this they sold here at last up candle is they sold why they sell there to drive price below these lows in here so there's your uh your run on stops so the up candle they used right here to get sellers below the marketplace with their sales stop why would they want the sellers because their sales thoughts become marketers to be a buyer counterparty too so it's the sell stops below these lows they will activate them and buy them smart money will buy it up once price trades through that it'll come back down and trade right back into the last up candle why are they doing that because the shorts that they have on they have to take those off and mitigate them so this wick down to the body is a mitigation block so price comes down hits that level here the shorts that they use when price was going up remember smart money sells as it goes higher then he drove it lower right to run the stops price trades through that candle right here but their orders are underwater now as it's up here so when price comes back down trades in that same range from the high down to the body of the candle they can take those shorts off and buy them and then you're going to see explosive price action why because it's going to be buying a cover on shorts that are here and then buying more for new net long position and you'll see expansion aggressively and you see that here so now you have down candle right before the up move in a time when institutional overflow suggests prices should be bullish while we're in that shaded area price trades down into the bull shoulder block new buying should take place and expand up now when we've seen buying down here or would expect buying in here the reasonable expectation would be to see price straight up to this up candle first that's your first objective then above this high for stops and then expansion up into closing in this range here into this bearish order block which is this last up candle comes back down buys bull shoulder block expect it to run through here and then back up into the mirror uh monthly bear shorter block and it does that handsomely here sweeps it out and then we can see what price break down again how do we know it's gonna be bearish because it breaks the last up candle at an area where we would expect to see bearishness breaks it here comes right back up at the bottom of this up candle retrades to it you can be expecting downside movement in price price starts to break lower one more time retrades back up into this bare shoulder block for good measure breaks down now it's going up it's going to go lower trades up one more time works that same bear shoulder block here finally gives up the ghost and trades back up into this high here price rate trades lower reaches for the liquidity below here below the bodies of the candles over here over here by reaching down and then ultimately reaches below these lows and back down into the bowl shoulder block right over here which is what we're seeing here so if you start with your monthly and you break down into the weekly chart we can go down to a daily chart now you see a lot more definition on the daily chart bullish candle which is the bears order block because price drove lower retrades right back into the bearish order block right here body's respect in the middle of that up candle sell-off market creates a bullshotter block rallies through clearing short-term highs retreats back down to the last down candle bull shoulder block rally down candle propulsion candle rallies up small little drop down hits the exact high of that candle here high comes in at 2802 [Music] the low and this candle comes in at 27.95 into this body's candle i'm sorry scandal's body rallies all the way up into bear shoulder block now again we're in a blue shaded area so while on the daily chart it's dropping lower lower lower lower lower lower the institutional overflow on the monthly is telling you to get ready for a buy so we get down to these levels in here expect to see some buying but we have to wait for price to want to show a break above a short-term high we see that short-term high violated here so now we know buyers are in the market again wait for it to come back down into that monthly bullish order block we see it traded in here but now look what happens this down candle here rallies away it comes right back down into it now on a daily see the daily here hits that bullish order block and then look at the react look at the reaction it expands quickly now we have this down candle draw that out in time buy it here buy it here rally's up this down candle key filing institutional overflow the highs 3436 the low is 3423 right into this down candle again buy it again boom explodes keeps going higher and higher higher goes into consolidation every new buying finds a down candle you go right back to the previous down candle here buy it again rice price rallies again price dips back down into what this down candle here buy it again the down candles in here all one order block halfway point through that right there boom buy it again rallies through keep in mind of the monthly and weekly order blocks as we're seeing it again in here you see the response boom it rallies that's why you don't see anything over here notice there's no bullish order block in here there's no any any kind of point of which you would see oh that's this is what that would be no it's found on the weekly and the monthly that's why you see this response here price rallies away comes back down trades into bearish candle which is a bullshotter block and then this one really did it traded right into uh below 4626 into this order block right here and rallies again you can see the shaded area we had again from the monthly and rallies again explodes up into monthly bearish order block glasstop candle right here this one when it violates that does it here expect to see bearishness wait for it boom it breaks so when price breaks down you're going to be waiting for a return back to a either a breaker or a bearish order block or you can look for a stop run on an old high so we're in an area where we expect the seed markets continuously moving lower on the daily chart we can be using all these old lows to see price reach for them or expand down so institutional overflow is suggesting lower prices especially from the monthly and the weekly now we're in a daily chart time frame when the institutional overflow should be weak or bearish when the market creates a return back into a monthly order block here it becomes a mitigation block on the daily chart because now we're unwinding what was used to be bought here which is a breaker what is it breaking this old high that's where we're seeing it right here you can clearly see it happening here on the daily chart but it was seen on the monthly and on weekly all through here all through here in this red area every single time the market creates a new bearish order block or if it creates a run above old highs we see the old highs here runs through them sell off old highs in here runs above it sell off hold high here runs above it sell off and we also have bearish order blocks last stop candle right for the down move sells off last up candle before the down move retraced back to it sells off blast up candle even in this sloppy mess right through the body of the candle right there boom now we're in a bullish area on institutional overflow and you would expect to see all these levels which are being found on the monthly in the weekly look at the sensitivity that you see on the daily now we have this last down candle here wait for the up move price trades into it here and it's on a higher time frame order block down candle here as well buy it again buy it again price explodes look at the sensitivity right there again this level was arrived that on the monthly and weekly and look at the responsiveness you're seeing price and what's it reaching for liquidity above the old high and a better shoulder block on the monthly so what you're doing is what institutional order flow is it's the seeking of large institutional liquidity and it's going to be found on the monthly and the weekly and you see that being traded into on the daily that's why i tell you on the daily chart and again this is what we're looking at daily the daily chart will always seek the fund level institutional overflow in other words the stocks that are found on monthly and weekly charts you're going to see all your signals to have the greatest magnitude the biggest moves that take place are always going to be found on that monthly and weekly basis because that's where all the large whales are okay when i say whales i'm talking about big funds large funds okay and when they have money at risk that's where the market's going to go because that's orders that they can counter party with the banks cannot counter party with you and i we're just not big enough even collectively we're not big enough but the funds because they're controlling billions and billions of dollars and they're that's where the money's at so if you can find the levels on the monthly weekly chart keep them on your on your daily chart you'll be able to see all these major shifts in price that sometimes jump off at you after the fact and you wish you would have known they were coming now you know how to see them by transposing them from the monthly to weekly into your daily chart if you do your trading around these levels you will see every significant price swing that they ever transpires on price you'll see them coming before they get there and you'll also know relative to institutional overflow where the stops or liquidity is above the marketplace when you're ready to buy it or when you expect a bullish scenario to unfold you'll already know where the market should be reaching for should it take off and start trading higher when it goes up to a level of resistance or some kind of bearishness before you even sell short you're going to know where it's going to be reaching for which is the cell stops below the recent lows or a bullish order block and by having that idea how the market will continuously look and seek liquidity it's not our liquidity it's not our stops it's looking for it's looking for the stops found on the monthly and the weekly and daily because that's where the whales reside that's where the large funds reside and that's what pushes price around understanding that that's why the market will go to these levels because it's wanting to take those participants either out of the marketplace or draw them in as counterparties to their intended purpose either being a buyer counterparty to sell stops or to be a seller counterparty to buy stops and that's the nature of institutional order flow so with that guys i wish good luck and good trading