TREND IDENTIFICATION • In Essence, the market is always Buying (Up) and Selling (Down). There is never stillness (except in closed markets or the spread hours). • The market is usually doing one of Two Things: • The market can be Trending – Uptrend and Downtrend. • The market can be Consolidating – Ranging, Choppy, Unclear. • The NO Overcomplication Rule: • The first thing you ask yourself in the morning: Is the market Up, Down or Sideways. • The market moves in Cycles! Oscillating between its Mean Value and Fear/Greed. TRENDING MARKETS UPTREND • An Uptrend is defined as Market Structure that is Breaking the Highs and Maintaining the Lows. • In simpler terms, a market that is making Higher Highs and Higher Lows. • The Previous (last) High (HH) should always Break, while the Previous Low (HL) should not be broken. TRENDING MARKETS UPTREND TRENDING MARKETS DOWNTREND • A Downtrend is defined as Market Structure that is Breaking the Lows and Maintaining the Highs. • In simpler terms, a market that is making Lower Lows and Lower Highs. • The Previous (last) Low (LL) should always Break, while the Previous High (LH) should not be broken. TRENDING MARKETS DOWNTREND TRENDING MARKETS DOWNTREND CONSOLIDATING MARKETS • A Consolidation is defined as Market Structure that is Failing to Break both the Highs and Lows (or just wicking them). • Ranges/Consolidations are very important, because this is where BFIs are cooking, exchanging and agreeing on their orders and deciding on the next move. • Spot how before every big move, there is always a period of Consolidation, a huge Liquidity Grab and then the real move. • Trading LTF Consolidations is very risky. However, a consolidation on 4H/D1, can be a trend on 15M, so that is tradeable. CONSOLIDATING MARKETS CONSOLIDATING MARKETS CONSOLIDATING MARKETS DETAILS: • Mark your Structural Points with the Highlighter Tool. • Beware that a trend is fully established after 2 Highs/Lows are created. • Always mark your SBs and trail back price to see where your LH/HL is. Mark it with a Line. • Learn to ZOOM IN on your charts and spot all the details. • Major/Swing structure is your main trend guidance. DO NOT confuse it with Minor/Sub-structure. • Minor structure forms within the major one (to be explored later). • Take note of Consolidations/Ranges. DO NOT trade them on lower timeframes than the 1H. • Practice makes Perfect! Understanding STRUCTURE is your first goal as a trader. Everything else builds up on top of it! • A gap in your understanding of Market Structure will really hinder you from understanding the advanced concept. • A mistake traders do is to jump on flashy SMC concepts, without having built the foundation. STRONG & WEAK HIGHS/LOWS • A strong High is a High that has broken structure to the downside and has created a new confirmed LL. (basically, a LH) • A strong Low is a Low that has broken structure to the upside and has created a new confirmed HH. (basically, a HL) • A weak Low is a Low that hasn’t caused any break/shift in structure – simply a LL. • A weak High is a High that hasn’t caused any break/shift in structure – simply a HH. • We trade Against/Away from Strong structure Towards the Weak one. • Simply, we buy from HLs and target the last HH. And sell from LHs and target the last LLs. • A Strong structural point will Cause a break of previous structure, which makes it strong. Why? • Because BFIs entered from there and they will likely Protect that High/Low. • Hence why, we can also call the strong highs/lows – protected highs and lows. As BFIs will not allow for price to go above/below, as they will go into Drawdown. (remember this is a theory! It’s not a fact that it’s like this) STRONG & WEAK HIGHS/LOWS STRONG & WEAK HIGHS/LOWS FAILURE TO BREAK = LQ STRONG & WEAK HIGHS/LOWS THE CONCEPT OF STRONG & WEAK HIGHS/LOWS MAJOR & MINOR STRUCTURE • The main determinant of Major and Minor structure are Timeframes! • Remember, price is the same. Timeframes are just a different representation of price, providing either less or more details. • Major/Swing /Confirmed/Strong structure is found on the HTFs. • For me, HTF is 4H. For you, it could be Daily. For others, it could be 1H. The market is “fractal” (same patters, different TFs). • Minor/Internal/Complex structure is found on the Middle Timeframes. • For me, MTF is 15M. 4H 🡪 15M. • Structure is literally everywhere. What makes a huge difference is knowing what to look for and on which timeframes. • It’s important to understand the HTF Direction and Major Structures and then trade Minor Structure inside the Major Leg (both counter and pro trend). WHAT IS COMPLEX PULLBACK/CORRECTION? • Complex pullback = Minor Structure! It is what forms within the Major Structure/Leg. • We have Minor structure that forms with the trend – continuation trades with the HTF trend, as it is making the push. • We have Minor structure that forms on the Pullback phase, after a new HH/LL is created and the market is pulling back for new HL/HH – pullback/correction trades against the HTF trend. (those are more risky, lower probability and hard to trade). MAJOR & MINOR STRUCTURE MAJOR & MINOR STRUCTURE MAJOR & MINOR STRUCTURE EXERCISE MAJOR & MINOR STRUCTURE EXERCISE MAJOR & MINOR STRUCTURE EXERCISE TRADING RANGES • The market is constantly moving in-between P/D (Premium & Discount) ranges. • It goes from Expensive to Cheap and vice versa. • Our aim is to know what is Cheap so we can Buy and what is Expensive so we can Sell. (buy low, sell high) • Trading Ranges exist on every timeframe (from Monthly to 1M). It’s the Fractal Nature of the market. • Our main Ranges are usually drawn on our HTFs. 4H ranges/Daily ranges. • The same concept can be applied to 15M or any timeframe, in order to increase probability significantly! • Remember: 4H ranges will always trump the 15M! D1 ranges will trump 4H. W1 >D1; M1 >W1, etc. • Specific instruments DO NOT pullback often to Equilibrium. They are momentous, so they do around 30% pullbacks. PD RANGE • In order to draw a Range, we will use the Fib Tool. • All you need is 1, 0.5 and -1 stats on the Fib. Keep it Clear!! PD RANGE PD RANGE MSS | TC | SB MSS FORMATION • Market Structure Shift – This signifies a Failure to break above the Last HH/ LL and a shift of structure. Indicates first signs of a potential reversal. • Highest probability when it occurs at S&D zone. • It is not a very high probability pattern, as the Major HL/LH might still be in-tact! Better wait for the major to break! MSS FORMATION • MSS undesired outcome – Pay attention where the Major HL/LH!! • The probability increases if the Major HL/LH also break after the MSS. • The probability increases if you wait for this formation at HTF Zones. MSS MSS MSS TREND CHANGE • Trend Change (TC) – This signifies the first signs of a change of trend. (remember, it takes 2 HH/LL to confirm a trend) • In an Uptrend, it is the break of the last Major HL (the one that broke structure). • In a Downtrend, it is the break of the last Major LH (the one that broke structure). • Body Close or Wick as a break? I personally use Wicks.You can use Body Closes above/below structure. TREND CHANGE STRUCTURE BREAK • Structure Break (SB) – It signifies a break of the last HH or LL. If there is SB, then structure is confirmed and becomes strong. • SBs appear in already Trending Markets or after the initial TC or MSS. They signify intention that the market will continue in the direction it breaks through. DETAILS • Start by Building a Story! • When you open a blank chart, it’s all confusing. Take your time, analyze the Major Structure, mark it up, analyze the minor, etc. • With time, your analysis can take you just 2 minutes. • You will see TCs everywhere. Are they all equal? NOPE! • We are only looking for TCs at S&D zones and potential HL/HH or HH/LL for counter-trend trades. • The higher the timeframe, the stronger the TC. • TC on each timeframe has a task. 4H – direction. 15M – minor structure. 1M – entry alignment.
