Welcome back folks. This is lesson four of the February 2017 content for the ICT Mentorship. This month's topic is swing trading and we're going to be specifically teaching high probability swing trade setups in bull markets.
Okay, as a reminder, when we're looking at price, we have to think algorithmic and We have to refer to the PD array matrix, so without going into great detail, because of study purposes only, including this slide, because I don't know when you're going to be watching this video again. So be mindful that we're looking for these arrays in deference to the premium or discount spectrum. OK, bullish, monthly, weekly, daily, sequential.
OK, monthly charts. When you're looking at the monthly charts of the asset class that you're studying or doing your analysis on, what you're looking for is a discount array that has shown to induce buying, and it's going to be evidenced by price moving higher. In other words, we're looking for displacement off of a discernible discount array.
That means it could have been a bullish order block. It could have been an old low, an old high. It could have reacted after closing in a fair value gap or a void.
Or it could be bouncing off of a breaker. Okay, on the weekly chart, we're looking for the same thing, just on a lower time frame. We're outlining discount arrays, and we're looking for a discount array that has shown a willingness to induce buying.
And that's going to be, again, evidenced by price moving higher. The daily chart, much in the same way. We're looking for discount arrays.
to show evidence that there are buying in the marketplace that you're understudy and it's going to be seen with moving higher in price in all time frames down candles provide new support to price and little to no weakness is seen okay when the monthly is bullish in other words we have displacement prices already moved higher The weekly has done so as well, and the daily has done so. In other words, you can see displacement or a rally or an impulse swing on all time frames, the monthly, weekly, and daily. This is the procedure you're going to be looking to follow.
You're going to buy all daily bullish discount arrays. That is a bullish mitigation block, bullish breaker, liquidity void, fair value gap, bullish order block, rejection block, and or a old low or high. And you're going to be. buying four-hour bullish discount arrays that are equivalent to those that are listed here. Now, when the monthly, weekly, and daily are all indicating higher prices, that means it's making higher highs and higher lows.
It's an obvious uptrend. You're going to be looking for daily and four-hour discount arrays to trade at every single time it trades down to them. We're expecting, we're anticipating bullishness. We're anticipating an injection of buying volatility, so the expansion should be on the upside.
Now for conditions where the monthly has shown a willingness to go higher or displacement or impulse price swing has been seen, the weekly has shown an impulse swing higher as well. But now say the daily chart is under correction. We don't see an impulse swing higher. It's actually trading lower now.
What will we do in these conditions? Well, you're going to be buying daily bullish discount arrays at or nested in weekly discount arrays. So when we see bullish order blocks or if we see liquidity voids or mitigation blocks below current market action, they may occur at an area at a nested weekly bullish order block may be seen or a weekly liquidity void or fair value gap. So we're going to be looking for daily bullish discount arrays at or inside a level that will be seen from a weekly discount array. So we're going to be coupling the higher time frame levels.
They may be overlapping or having a confluence of levels. When the monthly and weekly are bullish, but the daily is correcting lower, all indications on the daily chart, it would look like probably a bear market or a steep correction lower. All we're going to be doing is in these conditions, we're going to be looking at discount arrays on the daily.
at or inside nested weekly discount arrays. And we'll buy four-hour bullish discount arrays at daily and or nested weekly bullish discount arrays. In other words, all this is saying is on the daily and the four-hour, we're going to look for bullish order blocks, bullish breakers, fair value guests below the market price, liquidity voids to close in on the range, basically an optimal trade entry. And we're going to be doing that at levels that are seen on the weekly chart.
And it may nest with an old daily discount array, but it doesn't have to. Primarily, we're going to be looking for a level in the weekly to trade at. When to avoid buying discount arrays on the daily? Well, if you see a daily post a higher high and then it's rejected. and it breaks down with its market structure, you're probably looking at a development of a bearish breaker, and you do not want to be buying against that type of condition.
So that would negate this bullish monthly, weekly, daily sequential. Okay, when the monthly is bullish and the weekly is correcting and the daily is correcting, We'll be still buying daily bullish discount arrays at or nested in the monthly discount array. That means there may be a monthly bullish order block that it's trading down into, or it's trading to close in a monthly liquidity void or fair value gap, or maybe trading back to an old high or an old low.
But we're going to be getting our information from the monthly chart. So while the weekly and daily may look bearish, if the monthly still has its conditions that it showed a displacement higher, That means on a longer time frame, they're bullish. They've been buying.
All it's requiring is the weekly and the daily to retrace lower to get another long term buying opportunity. And that's what you'll be focusing on by looking at nested or monthly discount arrays, trading only at those buying at that level. And we can buy four hour bullish discount arrays at weekly and or nested monthly bullish discount arrays.
Avoid buying weekly discount arrays if the weekly has just posted a higher high and rejected that price high. And you're probably seeing a bearish breaker on a weekly chart. And you don't want to be trading in this monthly, weekly, daily sequential in that condition. OK, so let's take a look at this example. We're going to be looking at silver.
I'm going to outline some of these ideas and give you some examples on what this looks like for high probability swing trading. Okay, folks, we're looking at the monthly chart of silver. Now I'm going to take some liberty here because I'm pretty confident that the majority of you listening that are in this mentorship have been aware that I've been calling for silver to be bullish. Okay, I was expecting bullishness back in 2015 and also expected some bullishness around that 1600 level after the retracement that was seen in 2016. But with that said and noted, I want you to take a look at the monthly chart here. We're going to outline some things.
Now, I'm going to assume for a moment that you're going to permit me the liberty of discussing this without having to hide all of the price action. I'm going to hang my hat on the fact that I was already expecting these things and you know about it because I already talked about it in advance. So we're not going to have to do additional work in hiding things because… They were already in the content shared before the fact in terms of expecting higher prices on silver But when we're looking at silver, okay I want you to take a look at what we have done historically in the last 10 years or so we had a really big run-up in 2009 and 2011 and we saw price break away in here. We've had a really Huge surge in silver there price came all the way back down and closed in that area a little gap in here That's what price came down and hit Okay So we're gonna be mindful that we can see the historical reference point at which caused this low to form and why I was looking for silver to be bullish back then anyway, but is this our range or Determination or we in a market profile that's trending are we in a consolidation now, obviously there's been a rather large displacement, this swing high has been violated here, and this occurred back in 2016, April. So April broke that swing high here.
There was a nice big displacement higher. So there was a big move into silver in 2015 and we carried over into 2016. Price comes back down, consolidates, has another expansion here, trades all the way back up into these highs. Now we have created a range.
We have this low. to this high now we know all during this time period which we were bullish on silver nonetheless anyway so we have monthly breaking market structure big displacement in price we even took out another swing high back here so monthly is bullish okay even while it's all correcting lower here all these down candles this high being broken big displacement off the 1400 level and we broke market structure on this high here as well so we have a bullish monthly okay so we're going to outline a few things on this chart i'm just going to use horizontal lines here to save some time and make things easy to see all right so we have the 1560 level that last big down candle on here the actual high i'm going to be fair and let you know what it is the high comes in it $15.56. So if we're above price, we look for it to get to the nearest round number, which would be a $60 level. You can expect it to get down to $50.
The market price is above your level you're looking for. You want to be conservative and try to not expect that exact level to be hit. So we're having $60 level here. It could be $15.80. It could have been used as well, but nonetheless, we'll drop down into a weekly chart and see the importance of all that.
and we have our high back here so we have our low but we're going to stick at 1400 because that was the level it keyed off of and it's not that big of a difference in terms of where we're looking for we have a range defined here and i'm going to take the shaded area off because we've already arrived at we are in a trending environment because it's wanting to move higher it's not like sitting in this little tiny little consolidation here it really moved on the monthly So there's big money flowing into silver. It has been since 2015. Okay, here we are with the silver chart on a weekly basis. And here's that move away from that 1400 area. And here's our 1560 level, anticipating a move to that level for the monthly bullish order block.
But now look what we have. We have another level in here for the weekly. So you have one. two down candles right before a nice big surge in price. So this level begins at the high and we would use the opening on this candle as a conservative price point as well.
But we're going to be fair and just use the high and that also puts us below these candles bodies back here. We'll refer to that in a couple minutes. But look at the price how it comes down, hits this level here. Okay, right in here. Now think about what we're seeing here.
We have the monthly breaking a short-term high and price rallying higher through, and the weekly starts trading lower in the same time that we expect the monthly to send price higher. So while there's a retracement lower on the weekly chart, while the monthly is bullish, We do is we wait for price to trade back down into a level that was discerned by the monthly. Okay, so while monthly is bullish, we're seeing weekly prices trading softer, and price comes back down into a weekly bullish order block, which is the last two down candles in here. So we can highlight that because now on a weekly chart, we can see this level becomes a valid order block.
We can keep that. Level at 1560 but just to keep things clear. I'm just gonna adjust as we go So we have this level here price hits it reacts Aggressively and then price trades all the way up into making that high and then we have since seen that monthly chart Correcting now just because the monthly charts correcting doesn't mean it hasn't changed its underlying bullishness, but look at the weekly chart The weekly chart is moving lower. So now we have a monthly, weekly, daily sequential where the monthly is bullish.
And the weekly is bearish, and it goes without saying that the daily would be bearish in here as well. But you would be expecting price to trade back down into a monthly level. So we have all these down moves in the weekly. The sequential says for monthly, weekly, and daily.
If the weekly is bearish while the monthly is bullish, you have to wait for price to trade back down into what? a monthly discount array that was the 1560 level that we identified price trades down into that 1560 level below comes in 1560 and rallies away notice also it trades down below an old low and rejection block below the bodies of these candles trades through it takes another short-term low here so there's sell side liquidity and a gap between price moving up from here, left it open because it didn't go down all the way to this level again on this low. So it closed in that gap and price surged away.
What we're going to do is we're going to look at in this time frame here from the formation of the high all the way down to this level here. We're going to drop down into a daily time frame, and we're going to use the monthly, weekly, and daily sequential. Okay, so we have the daily chart here.
You can see how it's been trading lower, lower, lower, lower, lower. And until it hits that monthly bullish order block, we don't see the reaction that we would expect for bullishness. But we did keep seeing lower prices here.
You can be a buyer, okay, on this. Regardless of it being correcting lower, okay, when the monthly is bullish and the weekly and daily are bearish, you're going to wait for your best opportunity to trade down into the monthly level. If the monthly is bullish and the weekly is bullish, okay, let's go back out to a weekly chart. Price is trading down into that monthly level and it's also inside of a... weekly bullish order block as well.
So now we have the monthly chart and the weekly chart in agreement. So now we can look at the daily chart when it's in correction or going lower. We're trading off of a weekly and or monthly nested order block to be a buyer on the daily time frame. And every time price trades down into the down candles on the daily chart, we can be a buyer because we have monthly and weekly in alignment.
discount array for monthly and weekly are supporting price or we anticipate that they are supporting price or that they will support price. So as price starts to make higher highs, okay, we note every down candle. Okay, and I'm going to do that now.
And this is just to illustrate when prices creating down candles you want to be noting them and what it'll do is it'll give you all of the now we have a new one from yesterday or thursday rather and we also have to note the openings of the candles Okay, anything more I think would be overkill. So we have our levels here where we'd expect to see bullishness and they're not zones Okay, they're specific price levels the openings and the highs on the down candles. That's what we're looking at So now at this moment, we're going to take our little shaded area off and we'll create another Shaded area right from this low and to present time. Okay. So now we're going to drop down into our executable time frame, which is the four hour.
Okay. So we have all of our daily highs on our down candle and the openings on those down candles. And the same thing is done now also on a four hour time frame.
And you're going to see how amazing. the precision is on this because what we've done is we've used the sequential for monthly, weekly, and daily and used those ideas with the PDRA matrix only buying on discount. And I'll show you what that looks like also by applying a tool. But look at all of the down candles, okay?
All the down candles right before a big surge in price. We're going to put it with horizontal lines in here so it just stands out and pops off the chart. Okay, we have this down candle. Price hits it, rallies. Two down candles in here using the bodies, not the wick.
Hits it, rallies. Okay, down candle right in here. Hits it, trades away, creates a new high. Okay, we have this down candle here.
It rallies through, creates a new high, trades down into it, but sell side liquidity would be where? Back here. So it wouldn't hit your stop or high guy and you have to frame the trade around those ideas. Again, this is swing trading folks.
It's not day trading. So we have a level that's traded at this point here. It rallies.
Does it create a new high? No, actually fails. So now we have to wait for price to trade back down into what?
The daily. Look at the reaction here. Remember those little hyphenated lines? They're not elongated horizontal lines I'm showing you here with the blue lines. The blue lines I'm highlighting there are 4-hour.
These little hyphenated or shortened trend lines, they're the daily bullish order blocks or down candles at the highs or their openings. Look how price trades down through. The bullish order block that would be seen on the four-hour here, it violates it here. But what does it do?
It only comes back down to what? The daily. Look at the sensitivity there.
Boom, explodes. Okay. Price rallies up, consolidates a little bit in here, and then rallies away. So now once we have this rally through, look what it's done.
It's broke a high. Okay. So it's confirmed that it has done what? It's broken a high. So therefore, there's real buying going on.
So now we can go back and look at the candles in here. On a four-hour basis, we have one right there. Okay, but it doesn't get down to it, but it does trade back down into the daily bullish order block.
And that's what we see there. Price hits it, rallies away. We have a small little bullish order block right there, the last down candle.
Price comes down, hits it here, rallies away. and it creates a higher high. So now we're going to look for what? We're going to look for the down candle prior to this high being broken up. Go back down.
What do you see? You see this down candle right in here. And it's also a order block on a daily basis.
So price comes down, hits that level, and then boom, we get that surge. This was that last little bit on Friday. And that's why I told you I thought that we'd get to that 1800 level on silver.
And that was the catalyst for it all. OK, now you can see quickly why I do not share my charts like this every single time I do analysis, because when I do my analysis, I have this number of lines on there. Now, obviously, as you go through and you start moving away, I mean, you wouldn't have this or this or any of the other levels below it.
You can keep your charts rather clean and keep the most close proximity levels on your chart. But. By having these levels in mind, you know where the price may reach for. And when you go back and you watch all my old stuff, even back when I was on baby pips, when I was saying that I was expecting a certain level to be sensitive, it was all of these types of things being employed.
Now, again, I'm taking liberty here in saying that I can talk about this market like I am doing here. And for someone that has never had any exposure to me or hasn't been paying attention to me in the last year or so about silver being bullish, this would look like… Cherry picking hindsight, all that business. OK, but we've talked about silver. I actually gave you on a daily time frame when we do our recaps and daily entries.
You can actually see me drawing the levels here saying I want to see price stay above that level here. And, you know, we had a level here that I noted. I said I want to see price stay above that. And all these levels are in your charts. And when we talked about silver, we looked at eighteen hundred.
I was talking about eighteen hundred for a while. I also talked about being interested in being a buyer at sixteen hundred months and months ago. You know, and even though we traded down to a low of. 1566 look at the sensitivity if you look at the 1600 level look at 1600 I mean, that's pretty much the buy and you see that big big move up. So you know $10,000 worth of profit potential there if you're if you're looking to be a buyer at that 1600 and took present levels now if you look at the metals market in the futures contracts uh 1800 was actually hit it actually went above it i think it's 1802 i think it was the intraday high on friday so when we take our setups off of these ideas okay what we're looking for is okay we have a range at which we want to see price trade from and we know that there are levels on the monthly and there's levels on our weekly chart and there's levels on our daily chart and we key off of those and reduce the risk with the 4-hour chart, but when we're looking at price like this and it's trading off that level here We have to go and refer back to our range Okay, so we have our range up here high in the low which we anticipate seeing bullishness and rally away Price shows that willingness to rally but as we look for price to go higher Not only are we buying every down candle or we'll buy below an old low, like price trades down below an old low in here.
That's a discount array that's buying below an old low. So you pick up sell stops in the form of a counterparty for you as a buyer and price runs away from that. So you're always looking for where the short term lows are, where price could dip down below it and buy that. And there's no real order block playing here.
So as price drops down, it's natural to expect. this whole scenario. That's why sometimes you'll hear me say, I think that we're probably going to sweep down below an old low. Like for instance, what I talked about for Friday's intraday price action for the British pound USD pair.
I expected that low to be violated and rejected and we'd see higher prices. While it didn't get all the way up to the actual highs, it did give a nice bounce intraday, which is all based on the ideas that I'm showing you here. You have to have an understanding of where price should be drawn to.
And we're seeing that on the monthly chart for silver. And on the weekly chart, we saw our levels react. And when we see this, we have to keep in mind that there's going to be the premium arrays where you have to aim for.
In other words, they're going to be catalysts for you having resistance in your trades coming to profitability. And this is why we had this level over here, 1799. I think it was 1798, wasn't it? Yeah, 1798 was the level. It hit that on Friday beautifully.
We have a liquidity void in here. Price trades up into closed in that. That's what I was the first objective.
OK. And then after this, we have a little bit more of this void in here. But now think about what we have done.
We have to consider what what negates our trades if we see a breaker. So we have a down candle right before another higher high. Then it's rejected. So. We have this range in here, this low.
That's the reason why I called this level here, because if you look at the low, it comes in at 1797. Even if it monkeys around, just expands a little bit, which is what I was looking for the 1800 level for. But it's that level and this level here. And that's why I was drawing that line out, because this is a breaker in here.
It made a higher high and failed, rejected and broke down. So we only look for this initially to go higher. Now, We'll wait and see if the daily chart has a willingness to go higher. And if it does, then we'll know that we're probably going to be looking for the 19s, 20s, and 22s, and then they're going to keep on going higher.
But we would use the monthly and weekly premium arrays to arrive at what the next level would be. But while we're trading off of the daily and or 4-hour, each one of these charts back in here, when it bounced, you have this liquidity void that you would be looking to see filled in. And that closes in at this candle's low.
right here because it's the last up candle right put down move so that's where the selling really started happening at that point you see price hits it essentially right here and then pauses creates a buying opportunity again and then price comes down into that candle here here all in the range of this body And then rallies away. And one more time dips into it here and then moves away. Now, it took several months for this this metal to trade up to that level.
But that's swing trading. It's not overnight. It's not intraday.
It takes several days. That's why we have a time horizon of two weeks or longer, but preferably two weeks to about a month. That's about usually when you'll see these trades pan out.
So hopefully this has been a little bit more insightful. than just talking about things in general terms like the teachings. I know some of you are just chomping at the bit. You just want to have practical application, but you can't have practical application without having theory. So I'm using examples in markets I already called beforehand, and I'm showing you how I use this stuff going into this particular pairs and these metals and told you why I believe they were going to go to that level.
Now you have the background behind it. What was the catalyst behind it? And what you do is you go through your charts and you note all of the the discount arrays, and you look for those buying opportunities to get you in sync with what you saw on the monthly and the weekly and the daily. And you can reduce down to a four-hour chart for swing trading and really refine all of the levels down to a smaller timeframe. So it keeps your risk small.
Even if you are off the trading desk intraday, in other words, you have a job or running a business, you can use a four-hour chart. Okay. Just check your charts a couple of times a day, and you only have to check it like an hour before the kill zones. And then you have all kinds of opportunities where you can reduce the risk or look for liquidity pools to key off of, and you don't have to really be a day trader. But it's not necessary, though.
You can just trade right off the four-hour chart and be fine with that as well. Okay, I'm going to show you how you can apply a tool in MT4. You're going to go to Fibonacci, Expansion.
You're going to click on that, and we're going to measure our range so we can keep it in terms of our defining of a PD array matrix. So we have our low up to our high, drop it right on the high, and you're going to drag that back down into the low you just pulled from. Okay, so you have the 100 level, the high, and the 0 low, which is the low. You're always going to draw it this way. It's never going to be inverted like you could do a Fibonacci and all that business.
Like a retracement type thing. That's not how you do this Okay What you're doing is is you're anchoring from a low up to a high and drag down the second line back down to that Anchor point. Okay, so it's going to look like this every time a small little Triangle if you will to the right.
Okay, so we have several levels in here indicated And I'll show you what they look like go into the expansion properties and this is how they are You have the 0.3 Fibonacci extension 30, the 1 level, which is going to be the 100 level. Okay, you just double-click on the area. If you want to make any changes, change it to whatever you want to classify it. 0.20, 0.80, 0.90, 0, and 0.5, which is equilibrium. And if you ever want to just add a level, you're going to click on that, type in the level.
numbers that this gave you and type in over here what you want to use as your descriptor and then okay and there you go okay so we have the equilibrium price point here everything north or above it would be the premium pd arrays and from equilibrium below down to the zero level is your discount pd arrays focusing on you the range defined here that way you can then work out where your premium arrays are and where your discount arrays are so let's do that here you can see how all this stuff outlines price pretty efficiently okay we're going to make this now you don't need to do this i'm just showing you to illustrate graphically because i know some of you need to see these types of things to make it you know easy to understand so you have basically our pd array matrix in actual price you can see how price comes down into the 30 level that is basically a deep discount the deepest discount is 20 and i don't like to see anything less than 20 and premium at 80 deep deep or very expensive if you will premium at the 90 level and i don't like to see any new longs in these levels here and I don't like to take any new shorts down here. So if we take our chart and move it on over to after we take off our levels now we can go into The weekly now notice what this has done for you. Okay, you have all of these retracements lower lower lower lower Okay on a weekly time frame.
You have a small little bullish order block right in here. Okay, did it pop a little bit? But it didn't make a new higher high.
Why? Look where we're at. We're in the premium side of the marketplace on a monthly. So our range defined on a monthly basis up here, bullish order blocks are not going to be as favorable as if they were down here. Down candles comes down into a hits it by the algorithm is allowing price to get down into a discount.
So traders. on an institutional basis can pile on their longs, then price will expand and go into a premium. If we look at the marketplace in terms of the weekly, okay, and we look for price to come all the way back down into a level of that 1560 level, remember I had that on a monthly basis, that weekly order block here, even if we weren't looking at the monthly, you can see the importance of having this in your charts or at least having it understood in your charts.
You don't have to draw it out. Initially, you may need to do this. You put lipstick on your charts to show like this.
But over time, you will see clearly you'll need to do it. You'll know where the premium and discount spectrums are in relative terms to the current trading range you're working. But look at the market trades off of this level. Now, it took it to get down into discount to do this.
And price rallies up. rather aggressively. Now we're back into the premium side of the spectrum.
We can go down to a daily time frame also. And this is okay. You can see how price responds again off the order blocks that are inside of the discount spectrum and all of the order blocks on the premium side of the range. You can see how they, while they did.
cost a little bit of buying opportunities in here they have small little pops they are not as strong as they would be is a trader taking them down inside of the lower end of the spectrum for the discount side so you're looking for the the range at which price traded in and when you're up here the buy side is going to be hard to pan out but the bear shorter blocks You can see those actually have a lot of influence on price while we're in the premium side. But then when we get down to the discount side over here, a bearish order block over here doesn't do anything to hold that price because it's in a discount. So the algorithm will just keep pressing through.
And that's what you want to be seeing. You want to be seeing all bearish order blocks or up candles right before down moves. You want to see them being broken as potential resistance points just giving way.
And every down candle providing support. So hopefully this has been insightful to you guys and helped build some ideas about swing trading. I'm going to give you the sell side of the marketplace in lesson five. And then we're going to go into actual setup type scenarios where this is just the framework and how to interpret when price is really poised to move in a swing traders mindset. But if it isn't doing these types of things, you can't just go in here and take an order block or buy a low.
Once it's been traded below it and assumed it's going to be a swing trade, swing trades are by definition very rule based. They're not ambiguous. OK, sometimes day trades can be rather ambiguous.
There's going to be a lot of things that can flip back and forth intraday because it's a noisy time frame. When you're looking at these monthly, weekly and daily levels, there isn't a lot of them. So therefore. everybody that's been waiting for these levels to be traded to on an institutional basis.
That's why they're so sensitive, because everybody is waiting for that same level institutionally. And when they all pile in, who are those players? They're the very dogs that make this market run. And all we want to do is be a flea on their back and be a part of that move. So if you watch and wait for these monthly, weekly, daily levels, when they occur, it's hard not to make money doing this.
So hopefully this has been insightful to you guys. Until I talk to you next time, wish you good luck and good trading.