ICT Mentorship - December Content

Lecture 3: Reinforcing Order Block Theory

Overview

• Focus: Bullish Order Block theory (reverse for Bearish Order Block)
• Key Concepts: Definition, Validation, Entry Techniques, Risk Management

Bullish Order Block

Definition

• Lowest candle or price bar with a down close
• Has the most range between open to close
• Located near a support level

Validation

• Occurs when the high of the lowest down candle is traded through by a later candle

Entry Techniques

• Enter when price trades higher away and returns to the high of the bullish order block

Risk Management

• Stop loss placement: just below the 50% of the order block
• Relatively safe stop loss: below the low of the bullish order block

Identifying Support Levels

• Use higher time frames (monthly, weekly, daily)
• Support can be an old low/high on a longer-term chart

Institutional Sponsorship

• Indicators of large institutional participation
• Focus on price action that indicates displacement

Order Block Entry & Exit

• Wait for price to trade back into the bullish order block
• Set alerts when prices are close to order block highs
• Use bodies of candles over wicks for focusing on order blocks
• Partial or full profit-taking when price moves above old highs

Liquidity-Based Bias

Bearish Scenario

• Monthly, Weekly, Daily charts show bearish trend
• Intraday charts (4-hour or less) retrace higher

Bullish Scenario

• Monthly, Weekly, Daily charts show bullish trend
• Intraday charts retrace lower
• Use bullish order blocks in this instance for buying opportunities

Refining Entries

• Monthly chart gives bias
• Weekly chart identifies levels
• Daily and 4-hour charts refine entries

Avoiding Bearish Order Blocks

• Do not consider bearish order blocks during bullish trends
• Use bearish order blocks only for taking profits or as targets

Trading Strategy

• Direction from monthly, weekly, daily charts
• Focus on buying during dips
• Take profits at run above old highs (external range liquidity)

Conclusion

• Use higher time frames for directional bias
• Wait for confirmation of institutional displacement
• Refine entries on lower time frames
• Focus on simplicity and understanding institutional order flow

This lecture aims to solidify understanding of bullish order blocks for trading, emphasizing the importance of institutional participation, higher timeframe analysis, and disciplined entry and exit strategies.