ICT Mentorship Core Content

2016
Contents
MONTH 1 ........................................................................................................................................ 7
EPISODE 1 – Elements To A Trade Setup – LINK ......................................................................... 7
The interbank price delivery algorithm ................................................................................... 7
The interbank algorithm ......................................................................................................... 7
Expansion ............................................................................................................................... 9
Retracement ......................................................................................................................... 11
Reversal ................................................................................................................................ 12
Consolidation........................................................................................................................ 13
EPISODE 2 – How The Market Makers Condition The Market – LINK ....................................... 15
Description of the market efficiency paradigm .................................................................... 15
Elements to a trade setup - detailed .................................................................................... 16
The interbank price delivery algorithm ................................................................................. 16
The interbank algorithm stages ............................................................................................ 17
EPISODE 3 – What To Focus On Right Now – LINK.................................................................... 19
The mindset you need to have ............................................................................................. 19
The interbank price delivery algorithm ................................................................................. 20
What you should be focused on right now ........................................................................... 20
Example on USDCHF ............................................................................................................. 21
EPISODE 4 – Equilibrium Vs. Discount – LINK ........................................................................... 25
Equilibrium ........................................................................................................................... 26
The Optimal Trade Entry [OTE] ............................................................................................. 29
Summary .............................................................................................................................. 34
EPISODE 5 – Equilibrium Vs. Premium – LINK ........................................................................... 36
EPISODE 6 – Fair Valuation - LINK ............................................................................................. 41
Fair valuation perspectives: .................................................................................................. 41
The mechanics behind .......................................................................................................... 43
What to consider when we are looking at price action ........................................................ 45
EPISODE 7 – Liquidity Runs - LINK ............................................................................................. 46
What is liquidity? .................................................................................................................. 46
High Resistance Liquidity Run ............................................................................................... 47
Low Resistance Liquidity Run................................................................................................ 48
EPISODE 8 – Impulse Price Swings & Market Protraction – LINK .............................................. 49
Impulse price swings............................................................................................................. 49

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 Protraction............................................................................................................................ 49
Daily market protractions ..................................................................................................... 50
MONTH 2 ...................................................................................................................................... 53
EPISODE 1 – Growing Small Accounts– LINK............................................................................. 53
What you need to avoid: ...................................................................................................... 53
What do you need to aim for? .............................................................................................. 53
The reality of reward to risk ratios: ...................................................................................... 53
What should you focus on initially? Compounding 6% monthly........................................... 53
EPISODE 2 – Framing Low Risk Trade Setups - LINK.................................................................. 56
How to frame low risk frame setups ..................................................................................... 56
Refining................................................................................................................................. 56
EPISODE 3 – How Traders Make 10% Per Month – LINK .......................................................... 59
EPISODE 4 – No Fear Of Losing – LINK ...................................................................................... 61
Why losing on trades will not affect your profitability ......................................................... 61
The market set up and framing the risk to reward multiples ............................................... 61
Justifying why losing trades should not have that much of an impact for your long term
profitability. .................................................................................................................................. 63
EPISODE 5 – How To Mitigate Losing Trades Effectively – LINK ................................................ 65
EPISODE 6 – The Secrets To Selecting High Reward Setups – LINK ........................................... 67
Big picture perspective ......................................................................................................... 67
Intermediate perspective ..................................................................................................... 67
Short term perspective ......................................................................................................... 68
EPISODE 7 – Market Maker Trap False Flag – LINK ................................................................... 69
False bull flags in price action ............................................................................................... 69
False bear flags in price action .............................................................................................. 69
EPISODE 8 – Market Maker Traps Of False Breakouts – LINK ................................................... 71
False breakouts above price consolidations ......................................................................... 71
False breakouts below price consolidations ......................................................................... 71
MONTH 3 ...................................................................................................................................... 76
EPISODE 1 – Timeframe Selection & Defining Setups - LINK ..................................................... 76
Timeframe Selection ............................................................................................................. 76
Defining setups for your model ............................................................................................ 76
Monthly chart ....................................................................................................................... 76
Weekly chart......................................................................................................................... 77

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 Daily chart............................................................................................................................. 78
EPISODE 2 – Institutional Order Flow – LINK ............................................................................ 79
EPISODE 3 – Institutional Sponsorship – LINK........................................................................... 80
How to identify it setups ...................................................................................................... 80
Example ................................................................................................................................ 80
Buy side liquidity................................................................................................................... 81
Higher timeframe price displacement .................................................................................. 82
Identifying institutional sponsorship .................................................................................... 83
The New York midnight opening price.................................................................................. 86
What to focus on .................................................................................................................. 89
EPISODE 4 - The Next Setup - Anticipatory Skill Development – LINK ...................................... 90
How to find the monthly trading range ................................................................................ 92
Examples............................................................................................................................... 93
Summary .............................................................................................................................. 96
EPISODE 5 - Institutional Market Structure – LINK ................................................................... 97
Institutional market structure – USDX SMT divergence........................................................ 97
Symmetrical market conditions: ........................................................................................... 97
Non-symmetrical market conditions .................................................................................... 98
Case study #1 ........................................................................................................................ 99
Case study #2 ...................................................................................................................... 100
EPISODE 6 – Macro Economic To Micro Technical – LINK....................................................... 101
Dollar index vs. 30-year treasury bond ............................................................................... 102
Analysis ............................................................................................................................... 103
10-year treasury bond vs 30-year treasury bond [ZN and ZB] ............................................ 104
EPISODE 7 – Market Maker Trap Trendline Phantoms – LINK ................................................ 108
Trendline phantoms – false trendlines ............................................................................... 108
Trendline theory ................................................................................................................. 108
Retail bullish trendline support .......................................................................................... 109
Retail bearish trendline resistance ..................................................................................... 110
EPISODE 8 - Market Maker Trap Head Shoulders Pattern – LINK ........................................... 112
Head and shoulders pattern ............................................................................................... 112
MONTH 4 .................................................................................................................................... 113
EPISODE 1 – Interest Rate Effects On Currency Trades – LINK................................................ 113
What smart money looks like in price in bearish conditions .............................................. 113

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 What smart money looks like in price in bullish conditions ................................................ 113
Rate interest triad ............................................................................................................... 114
ICT action plan .................................................................................................................... 117
EPISODE 2 – Reinforcing Liquidity Concepts & Price Delivery – LINK ...................................... 118
Internal and external range liquidity examples .................................................................. 118
Steps to follow .................................................................................................................... 122
EPISODE 3 – Orderblocks – LINK ............................................................................................. 123
Reinforcing orderblock theory [selecting and avoiding] ..................................................... 123
Liquidity based bias ............................................................................................................ 126
EPISODE 3.1 – Mitigation Blocks – LINK .................................................................................. 130
EPISODE 3.2 – ICT Breaker Block – LINK.................................................................................. 135
The bearish breaker block .................................................................................................. 137
The bullish breaker block .................................................................................................... 138
Example of a bullish breaker............................................................................................... 139
EPISODE 3.3 – ICT Rejection Block – LINK ............................................................................... 140
Bearish run on buy side liquidity [Turtle soup sell] ............................................................. 141
The bearish rejection block................................................................................................. 141
What does a rejection block really look like? ..................................................................... 142
EPISODE 3.4 – Reclaimed ICT Orderblock – LINK .................................................................... 144
Market maker buy model ................................................................................................... 144
The sell side of the curve .................................................................................................... 144
The buy side of the curve ................................................................................................... 144
What is a bullish reclaimed block?...................................................................................... 145
Market maker sell model .................................................................................................... 145
The buy side of the curve ................................................................................................... 146
The sell side of the curve .................................................................................................... 146
What is a bullish reclaimed block?...................................................................................... 146
EPISODE 3.5 – ICT Propulsion Block – LINK ............................................................................. 147
The bullish propulsion block ............................................................................................... 147
Example 1 ........................................................................................................................... 147
Example 2 ........................................................................................................................... 148
EPISODE 3.6 – ICT Vacuum Block – LINK ................................................................................. 149
Bullish vacuum gap – reversed for bearish vacuum gap. .................................................... 149
Summary ............................................................................................................................ 151

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EPISODE 4 – Liquidity Pools - LINK .......................................................................................... 152
What is liquidity? ................................................................................................................ 152
Run on bullish liquidity pool ............................................................................................... 153
Example .............................................................................................................................. 154
EPISODE 5 – Liquidity Voids – LINK ......................................................................................... 156
EPISODE 6 – ICT Fair Value Gap - LINK .................................................................................... 161
More examples ................................................................................................................... 165
EPISODE 7 – Divergence Phantoms – LINK ............................................................................. 169
EPISODE 8 – Market Maker Trap – Double Tops and Bottoms – LINK .................................... 175

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 MONTH 1
EPISODE 1 – Elements To A Trade Setup – LINK
A. Context or framework surrounding the idea.
a. Expansion.
b. Retracement.
c. Reversal.
d. Consolidation.

B. Reference points in institutional order flow.

a. Orderblocks.
b. Fair value gaps and liquidity voids.
c. Liquidity pools and stop runs.
d. Equilibrium.

Understanding those characteristics together will give you a greater understanding of how
smart money interprets price and how they influence the general populus or the speculative
uninformed money.

Fig. 1 – Market Efficiency Paradigm.

The interbank price delivery algorithm

The interbank price delivery algorithm is a price engine (artificial intelligence) which is done 90%
by algorithms.

The interbank algorithm

There are going to be times when the market goes sideways or consolidates [holding pattern].
When this happens, the market will be looking to create an expansion. All markets start from a
consolidation and move into an expansion. [Fig. 2]
That means there is an impulse move or an impulse price swing. After that impulse swing it goes
either in a consolidation again or it goes to a retracement. When the retracement happens, it goes
back down into another level of expansion. Or after the expansion it can go to a reversal pattern.
After the reversal pattern you will see another retracement and back to a potential consolidation.

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 These four conditions they interchange throughout the ups and downs and ebbs and flows of
the marketplace. You will only get one of those four conditions.
You just need to know where it is now, where it is likely to go and where it came from.

The consolidation begins with everything. All the moves that take place in the marketplace start
from a measure of consolidation because that is where the market is building orders. The market
maker keeps the market in a tight range or defined range until there is enough money on both sides
of the upper and lower end of the range that is being defined by the consolidation. Whichever one
has the highest amount of money to be absorbed, that is the direction it is going to move in. We do
not know which that is, but we wait for the expansion.

When the expansion occurs, that is when we get the clue as to what the market is most likely
going to be doing. And then we wait for either a retracement or another consolidation or reversal.
We always wait for that first expansion that gives us all the insight that we need to make a decision.
Sometimes it may expand so far that we cannot do anything with it. We must wait for the
retracement or the next consolidation.

Understand those four characteristics below of a trade setup because price is delivered by one
of these four conditions. It cannot be any other way.

Fig. 2 – The interbank algorithm.

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 Expansion
What is expansion?
Expansion is when price moves quickly from a level of equilibrium. It couples directly with the
tool of an orderblock.
What is the importance?
When the price leaves a level quickly this indicates a willingness on the part of the market
makers to reveal their intended repricing model.
If we are in a consolidation or point of equilibrium, if price were to move up quickly, that would
give us an indication of looking for a bullish orderblock. We do not want to chase price. We wait for
the price to come back.
What do we look for in price?
The orderblock that the market makers leaves near or at the equilibrium price point.

Fig. 3 – Expansion / orderblock coupling.

Fig. 4 – Consolidation and expansion example. GBPUSD, 1h timeframe.

11th of August to 16th of August 2016.

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 Fig. 5 – Consolidation and expansion example [zoomed in]. Same chart as previous.

There is a consolidation in the blue shaded area. It has a clear discernible high and low and the
equilibrium price point is directly in the middle of the high and the low end of that range.
Eventually the market will move outside consolidation. You can see that impulse move in that
tan shaded box. It moves away from the equilibrium price point and then all we have to do is go back
to the down candle right before that up move – that is the bullish order block. When the price comes
back down into that and hits it, that is when we would be buying.
***ICT had this chart on 30m timeframe. I cannot go below 1h so far back in time.

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 Retracement
What is a retracement?
Retracement is when price moves back inside the recently created Price Range.
What is the importance?
When price returns inside a recent price range this indicates a willingness of the part of the
Market Maker to reprice to levels not efficiently traded for Fair Value.
What to look for in price?
The Fair Value Gaps [FVG] and Liquidity Voids [LV].

Fig. 6 – Retracement / liquidity gaps and voids coupling.

Fig. 7 – Retracement example. USDJPY, daily timeframe. March to July 2016.

You see here the orange shaded area. We had a real quick sudden movement away from a price
level. And that quick and sudden movement creates what we call a liquidity void. In other words, as
the market drops aggressively like that, there are going to be pockets where the price was not
actually delivered on every available price level in that range. It moved too quickly. It skipped or
created gaps. We will wait as a trader; we will not chase price. We will wait and say “OK, there is
going to be either an indication that they are getting long and try to fill in that range or we can wait
for it to come all the way back up to it and fill in the liquidity void.” Once it hits it, then it will probably
resume going lower and that is what we are looking for in terms of a liquidity void.

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 Reversal
What is a reversal?
Reversal is when Price moves in the opposite direction that current direction has taken it.
So, if we are looking for reversals, we are directly coupling that with an ICT tool of liquidity
pools.
What is the importance?
When the price reverses direction, it indicates that the market makers have ran a level of stops
and a significant move should unfold in the new direction.
What do we look for in price?
The liquidity pools just above an old price high and just below an old price low.

Fig. 8 – Reversal / liquidity pools coupling.

Fig. 9 – Reversal example. Every X indicates where stops would be. USDCHF, 4h timeframe.

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 Consolidation
What is consolidation?
Consolidation is when the price moves inside a clear trading range and shows no willingness to
move significantly higher or lower.
What is the importance?
When price consolidates it indicates the Market Makers are allowing orders to build on both
sides of the market. Expect a new expansion in the near term.
What do we look for in price?
The impulse swing price away from the equilibrium price level that is found exactly in the
halfway point of the consolidation range.

Fig. 10 – Consolidation / equilibrium coupling.

Fig. 11 – Consolidation example. USDJPY, daily timeframe.

You see here where we have identified a range defined specifically by the bodies of the candles,
not the wicks. As you can see the price moves out in an expansive manner and then comes right back
down to equilibrium price point and then expands to the outside.

By understanding these specific characteristics and elements of trading, a setup, you will give
yourself framework to first learn how to practice and study price action and eventually work towards
understanding consistent setup discovery and by utilizing the time with me [ICT] on a daily basis, we
will be able to frame these characteristics and pull out specific elements to a trade setup by
repetition and by using. We will be able to do all these things in a manner where you are able to

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retain it, make it yours, you will be able to discover what type of trader you are going to be because
one of these characteristics is going to be your bread-and-butter condition.
Some of you will trust the equilibrium. Some of you will trust the order block. Some of you will
look for the void or the liquidity gaps to trade into. Some of you will have one or two of these
characteristics and you'll trade within those parameters, they will frame your trades. Some of you
will, eventually, grow into understanding all of them and be universal.
But don't think that you must have all of them well known and under your belt before you are
consistent, because you can just find one element as we described here. If we just find one for you,
you can start being consistently profitable in your trading. It only takes one set up. You know what
context or framework you're going to trade in. Couple that with an ICT tool and then wait for those
conditions. You're not going to get a trade every single day. But you can get a couple of them every
single week.
If you can look at four major pairs with one condition or criteria, you will find that trade every
single day. But that is not what you are trying to do right now. You are going to grow into that over
time but, for now, just go through your charts and try to look at all the examples that has already
happened in the left side of your chart and outline them individually based on the characteristics and
elements that we have identified here in this teaching.

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 EPISODE 2 – How The Market Makers Condition The Market – LINK

Fig. 12 – Market efficiency paradigm.

*** See the two circles as a pinion and gear. One smaller [pinion]
and one bigger [gear] linked together with a belt. The smaller one has
greater power and can move the gear.

Description of the market efficiency paradigm

We, as new traders, are collectively part of the “speculative uninformed money”. Whether we
acknowledge it or whether we believe it, we invariably come in contact with the understanding that
there is a “smart money” group of traders out there.
As new traders, speculators, investors, we may or we may not have the understanding that
there is a smart money entity. We, as the larger populus of retail minded trading, think we are the
driver of the marketplace. That is the façade of supply and demand, trendlines driving price, moving
average crossovers and we are led to believe that that is exactly what takes place.

Who is inside the “smart money” circle? The banks.

Who is in the “speculative uninformed money” circle? Everybody on social media, retail
accounts, gurus and teachers that have things that are selling (services).

The “speculative uninformed money” think that the shear vastness and size of them is much
more controlling in terms of where the price is going to be driven, higher or lower, because of the
buying and selling pressure that is equated to their involvement. That is a façade. We think that we
push price around. And we do not!
In fact, it is a small little group of traders. They are the ones that influence this entire
mechanism that we call “the markets”. The banks drive price whether you want to accept or not. The
banks are the liquidity providers. Everyone else is liquidity.

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 Elements to a trade setup - detailed
A. Context or framework surrounding the idea.
a. Expansion = Judas Swing
b. Retracement = New York Session
c. Reversal = London Swing
d. Consolidation = Asian Range

B. Reference points in institutional order flow

a. Orderblocks
b. Fair value gaps and liquidity voids
c. Liquidity pools and stop runs
d. Equilibrium

Every day starts with a consolidation – Asian Range.

After midnight there is a manipulation that takes place – expansion in the form of a Judas
Swing. The Judas Swing is making the higher low in London. That is the London Swing for a reversal.
It is a run on stops.
Then there is another expansion move down into the New York Session. And then there is going
to be another consolidation – that is the New York consolidation going into the 08:00 – 08:30 news
embargo lift where there is going to be another injection of liquidity OR a reversal.
Then there will be another expansion.
And then we go into the London close which is another reversal condition.
The market goes into consolidation for the rest of the day.

So, we have a way of looking at these things and applying these concepts to the time of the day
and repeating characteristics.

The interbank price delivery algorithm

Daily Range Structure
• Price equilibrium – Asian Range
• Manipulation – this is always going to come by way of some news event, some news
driver wither at the time of manipulation or just before it. That is the Judas Swing.
• Expansion – in other words, after the higher low is formed, the range will start
expanding. It will go down into five o’clock in the morning NY time or go up into that
time window depending upon the daily direction.
• Reversal
• Retracement
• Consolidation

Example for a “buy day”

Considering a “buy day” it means that the Asian Range has a small consolidation and then
right after midnight, NY time, there is a drop down in price. That is manipulation making a false
move for the low. There is a range expansion, then it goes into reversal. That is classic London
open scenario where it shoots down, runs the stops and then it expands, again, into 5 o’clock in
the morning NY time.

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 Between 5 o’clock and 8 o’clock in the morning the market will go back into consolidation. Then
it will have a retracement between 08:00 and 08:30 in the morning NY time. Then it will either do a
reversal in NY sessions or another expansion move. The range will expand and make the rest of the
day going up into 10 o’clock or 11 o’clock in the morning NY time where it will have a reversal again.
That is London close. Then the market will go into consolidation ending true day at 19:00 on forex
LTDs.

The interbank algorithm stages

It all starts with a consolidation. Nothing can happen until consolidation. Consolidation
happens when the market is quiet. That is when the orders are building up in the marketplace. The
market makers will allow orders to build up above and below the range.
The next stage is always expansion. It is not consolidation to retracement. It cannot retrace as
it did not move anywhere. It cannot go from consolidation to reversal because it must come out of
the consolidation. When you see a consolidation or holding pattern, you have to think that the next
leg in price is going to be an explosive move or impulse like impulse price swing. You need to see
movement. By determining what the direction is relative to the conditions you are trading in, once
you are in the expansion stage, then you have a choice. It can retrace and come back to the
orderblock it left behind and then recapitalizes that and makes another leg up or down relative the
direction it has moved OR once it has moved in the expansion it can reverse. Once it reverses there
will be another expansion and it goes back into consolidation.

Criteria:
• It never goes from consolidation to retracement.
• It never goes from consolidation to reversal.
• It always goes from consolidation to expansion.
• From expansion it goes either to retracement or reversal.
• It does not do consolidation / expansion / consolidation.

It does a consolidation –> expansion –> retracement into an orderblock and recapitalizes it and
do the same direction of move when it made the expansion OR it goes from expansion to reversal.

Fig. 13 – The interbank algorithm.

The general structure is:

Consolidation in Asia –> Expansion –> reverse in London and make the high or low of the day.
Then expand.

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 Small consolidation in New York, retracement between 08:00 and 08:30 in the morning NY time,
another expansion move, reverse and back to consolidation.

That same thing happens with the weekly range:

• Sunday open –> consolidation.
• On Monday there is an expansion move.
• Reversal on Tuesday or Monday. And then there is another expansion move.
• Consolidation mid-week and it is going to reverse or retrace.

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 EPISODE 3 – What To Focus On Right Now – LINK

The mindset you need to have

It is imperative to know how we, as traders, are supposed to be viewing the marketplace.
We need to establish who is the victim here. There is always a victim. The perspective that
speculative uninformed money has is that they do not acknowledge that there is a smart money
entity that has “the right things always on, the market is rigged, controlled, manipulated or has any
influence over the long-term price delivery”. The uninformed money’s perspective is that the
indicators are the answer, and their perspective holds the belief that price moves by indicator’s
influence. And the influence of an indicator being overbought or oversold, that is what a precursor is
to a market moving higher or lower.

Fig. 14 – Uninformed money

perspective

There is a huge vast enormous new pool of liquidity coming to the marketplace every single day.
Even though there are new busted accounts all the time, the statistics tell us that 90% of traders lose
their money. Large funds are in the same category. Not every fund is profitable.
We, as informed traders, must hold the perspective of what a liquidity provider or smart money
view is on the marketplace. They put a spotlight on the aspects of uninformed money because that is
what makes the world go around in the marketplace. The smart money is there to provide liquidity,
but they are doing it at an exchange premium. They are putting in trades that are going to, most
likely, come back to either offset or neutralize for their interests. The smart money knows that there
is a large body of uninformed money out there.

Fig. 15 – Informed money

perspective

When we have a smart money

perspective in the marketplace, we use
their perspective as everybody else is liquidity. Price is delivered to engineer efficiency for the smart
money entities only. Liquidity is going to be in the form of buy stops, sell stops, pending orders above
and below the market highs that are most recently formed on your charts.

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 Fig. 16 – Smart money perspective
–> Everyone is liquidity.

Both groups have their individual

perspectives. The smart money has the
unique perspective of understanding, already, what the uninformed money is going to believe about
the marketplace and that gives them their edge. On top of that they are in control of price. Currency
is owned by the bank and the bank sets the price on the value of that bank note.

The interbank price delivery algorithm

To understand this, it is going to come by exposure. Exposure creates experience. That
experience is going to give you the understanding going into the charts seeing what they should be
doing with price, what you should be seeing in price. By seeing each individual component explained
in detail and context, each individual part or component of the whole will be able to dovetail nicely,
and you will be able to understand how everything fits together.

What you should be focused on right now

You need to have no previous knowledge brought in with this. Put everything aside. If anything
outside institutional order flow led to your profitability, it really was just coincidence.

Creating a daily price action logs with price charts.

• Daily chart – 12 months of price view. No less than 9 months view – that means 274 to
365 1D candles.
• 4h chart – 3 months of price action view – that means around 547 4h candles.
• 60m chart – 3 weeks of price action view – that means around 504 1h candles.
• 15m chart – 3 to 4 days price action view – that means around 288 to 384 15m candles.

Resist the urge to forecast price movements right now.

• Note where price shows a quick movement from a specific level.
• Note recent highs and lows that have not been retested.
• Note areas on the charts where price has left “clean” highs or lows. (i.e.: two equal
highs/lows that formed in close proximity to one another)
• Note what days the highs and the lows formed [weekly range]. You want to know what
time of day that occurs, what killzone. Is it the high and low of the week forming in
London? Or is it forming in New York? Will help to prognostication and what happens
going forward.
• Note the daily high and low every single trading day. Note when the daily high and daily
low forms for every individual trading day.

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Example on USDCHF
[the date range I noticed is from 7th of July 2015 up to around 19th of September 2016]
Clean chart – Daily timeframe.

Fig. 17 – Clean daily timeframe on USDCHF.

Noting the most recent highs and lows where the market has shown a willingness to repel from.

Fig. 18 – Most recent highs and lows noted on the daily timeframe on USDCHF.

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 4h timeframe
As you see there are more highs and lows coming to visibility by doing a lower timeframe
perspective. The above level noted on daily can be seen below on this 4h timeframe price action.

Fig. 19 – 4h timeframe on USDCHF.

On this timeframe you look for levels that are too clean, equal highs and lows in close proximity
to one another and you look for when the market has moved away quickly from a particular level.

60m timeframe

Fig. 20 – 60m timeframe on USDCHF.

You are going to be looking at individual days over the course of one or two weeks. You can get
the weekly range defined with the hourly chart and you can look at intraday highs and lows.
You want to keep this chart [or your chosen pair] in this format from all the other charts that ICT
will talk about further on. You need to create another chart so you will have two individual USDCHF
charts. Or any other pair you are interested in right now. They just need to be the same pair.

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 15m timeframe

Fig. 21 – Clean 15m timeframe on USDCHF.

The 15m timeframe will be naked with a lot of noise and does not give you any perspective
without any frames of reference.
Now take the course of action we talked about using the daily, 4h and 1h timeframe and do that
same thing with the individual 15m chart. You will only have to apply it on the last 3 – 4 days. Using
those reference points in the last 3 – 4 days on the 15m chart you are going to be looking at the daily
highs and lows.

Fig. 21 – 15m timeframe with notations.

The highs and lows are drawn out in time towards to where
0 GMT is. This is 8 o’clock in the evening time and ICT’s
timeframe on the platform he used.

Fig. 22 – 15m timeframe with notations.

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 If you notice why noting the previous day’s high and low [Fig. 21 and 22], if you look at
Wednesday’s data, the high that was formed on Tuesday, on Wednesday the price came right there
and ran through that. Notice it did not continue through that. It just went through Tuesday’s high,
and it sold off down to Tuesday’s low. See the green arrow.

Fig. 23 – The sell off down to Tuesday’s low.

Then look at what happened on Thursday. We had a price retracement up back into the
range that was created from Wednesday’s high down into Wednesday’s low. Thursday starts the
day with trading in consolidation, it rallies up, closes in the range that was formed from Wednesday’s
high and Wednesday’s low then it sells off moving just below Wednesday’s low and goes into
consolidation.

Fig. 23.1 – Wednesday’s retracement up inside the previous

day range and Thursday’s consolidation.

On Friday the market just goes straight up, rolls through Thursday’s high and creating a new
high prior to Friday. The weekly high was formed on Wednesday. It ran out all the stops and all the
liquidity that would be resting above Wednesday’s high. [Fig. 23 – look at the end of the chart]

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 EPISODE 4 – Equilibrium Vs. Discount – LINK
Focus on a simple question – If a trader believes that the market is going to go higher what
would frame that context? What would give the trader that conclusion to trust buying a specific
market?
The first thing you need is movement. If we are looking for buying opportunities, many retail
traders are looking for all these patterns and indicators-based ideas. I want you to focus primarily on
price. Price alone will give you everything you will ever need in terms of indicating higher or lower
price. It will give you the specific entries and exits.

Further on, ICT presents the USDCHF chart on 1D timeframe.

Fig. 24 – Marked USDCHF chart on the daily timeframe for equilibrium example.
February to August 2016.

On this chart he presents the highs and lows and marks its 50% with a Fibonacci tool.
Observe the very strong impulsive move away; it comes back, retraces, and then has another
strong impulsive move away – see the red dots.

Displacement
When we say “impulsive price move” or “impulsive price swing” going forward throughout this
mentorship, that is the indication that there has been displacement. That is when someone with a lot
of money comes into the marketplace, and they have a strong conviction to move price higher.
Impulse price swing
The first thing you want to see in price is impulsive price swings. And since we are primarily
looking for discount market = equilibrium, we first must understand what an impulse price swing is.

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 Fig. 25 – Impulse price swing example –
between the two red dots. See the low and the high
of that price swing [the red dots] – that is the price
swing.

Fig. 26 – The 4 candles.

We only require price to start coming down only

four candles no matter on what timeframe you are
on – one candle to the left, one candle in the center
[the highest one] and a lower candle to the right.
That is a swing high. Then you have to see the price
go lower.
When that happens, you must wait for the price to come back to equilibrium.

Fig. 27 – The equilibrium of a price swing.

Equilibrium
Equilibrium is a midway point of a price move.
As soon as we get 3 candles [the arrow in Fig. 26], then and only then we will start watching for
price to come down to the equilibrium price point – the 50% of a Fibonacci tool.
As soon as the price comes back to that level on a higher timeframe, we go down into a lower
timeframe and we hunt buying opportunities as the market is now at a fair value or fair market value.
If you get something in fair market value, obviously you are not paying a premium, but you are
not getting a discount either. It is still a neutral to bullish condition. That means you are not buying at
an inflated price.
As you see the price does rally again to its old institutional order flow reference point, which is
an old high [the 2nd red dot in Fig. 27]. It goes right above that previous high.

26
 Now the market trades off again and goes lower and we now have a new range. This means that
we place the Fibonacci on the 2nd high keeping the same low.

Fig. 28 – The newly created range.

We keep the same low as that price low has not been violated – the first red dot in Fig. 27. It
only retraced down to equilibrium and rallied back again. Then we wait for 3 candles – look where
the arrow is on Fig. 27. You have the highest candle and 2 more candles left and right of it. Do not
count Sunday candles because it is a non-event.
As the price goes back down into equilibrium, we do nothing but wait. As soon as the market
gets to equilibrium, we are now at fair market value, so the market is permitted now to be bought at
the banking levels because it is not at a premium based market. When the market hits equilibrium is
it now when we can start studying price on lower timeframes and look for entries.
Anything below equilibrium is now discount market. When the market goes below equilibrium,
they do not spend too much time below it and there is usually a very dynamic price move away from
that, especially if the context is bullish.
From the EQ zone we are expecting the price to move away.

A few more examples on how ICT draws the swings and waits for equilibrium to be hit.

Fig. 29 – The whole price swing. The arrow is the EQ zone.

USDCHF, daily timeframe. August 2015 to April 2016.

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 In the next charts we will see smaller price swings.

Fig. 30 – Price swing between the 2 red dots and then retraces down into the EQ or less.
USDCHF, daily timeframe.

We are counting this swing because, as you see in Fig. 29, the price showed a reaction wanting
to move away from an area we would expect it to move.

Fig. 31 – A new price swing. USDCHF, daily timeframe.

This is where we were expecting the price to react, and it did. See also Fig. 30. It gives us
another price leg. There is also an orderblock here, but this will be referred to later in the
mentorship.
As you see the price is moving away quickly from the EQ / discount / zone. And then, guess
what? The price creates another price leg where we can apply the Fibonacci to look for another EQ /
discount zone.

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 Fig. 32 – Another price leg. USDCHF, daily timeframe.

Does it stay in the EQ zone long? No. It rallies up, comes down one more time into EQ and then
aggressively moves away.

Every time the price makes an impulse price swing higher, we just wait for it to get back down.
There is no rush. We just wait.
It takes 3 candles. On the 3rd candle it can go to EQ and go below it - Refer to Fig. 26. You will not
rush. You will watch the price come down.

The Optimal Trade Entry [OTE]

You want high odds trades. You want high probability explosive price action moves in your favor.
That happens when it goes below EQ.
When it goes below EQ to a discount level, the market will not sustain discount prices very long
if the underlying pinning of the marketplace is bullish.
So, it gives you two things:
• Context to work withing when you look for buys.
• A relative strength study that is built in.
It should be sensitive, it should be dynamic price action move away from that EQ or less, more
specifically, below EQ.
That is where the Optimal Trade Entry idea came from when ICT was using the 62% to 79%
retracement levels that you see on the Fibonacci.

OTE Fibonacci levels

• 62%
• 70.5%
• 79%
Those levels are very sensitive and not because of Fibonacci’s sake, but because it is, really, just
measuring how far the current price range has been.

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 Fig. 33 – The whole range defined by the algorithm. See the red dots. USDCHF, daily timeframe.
August 2015 to September 2016.

Exactly as you now see this price chart, the price is in the range that has been defined by the
high and the low [the red dots]. That level of EQ still exists. Any buy conditions that occurs below the
EQ level are high probability.
That means you just measure every single impulsive price leg higher. Anything below the EQ,
which is the yellow shaded area, is in a high probability or discount market. When we understand
that, we can define every single price leg that moves up – impulsive price swing.

Fig. 34 – The EQ zone is in the yellow shaded area. USDCHF, daily timeframe.
August 2015 to September 2016.

When it moves higher, all we have to do is to measure the new EQ point which is created. See
the next example on Fig. 35.

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 Fig. 35 – The impulsive price leg. USDCHF, daily timeframe.

In Fig. 35 we can see the impulsive price leg. The 4th candle has to be down, it does, it hits EQ
and goes higher. Where does it go to? It goes above a previous high and then it trades back down.

Fig. 36 – Price hitting a previous high where the green shaded area is. USDCHF, daily timeframe.

In this case, the price trades to the EQ and then aggressively trades through it. This is a case
where the price failed to have a higher reaction. Sometimes you are going to lose money. It was a
stop hunt as the market took out the last low. If it does take the low out, what is it probably doing? It
is taking stops out so it should be a “turtle soup”. Turtle soup is a false breakout pattern from where
we should see a responsiveness that is aggressive and moves back higher as we see above.

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 In the next example we will see how the price has a run higher and does not come back down to
EQ. If the price does not come down to EQ, there is no trade. Do not worry about it.

Fig. 37 – Price does not come back to EQ. USDCHF, daily timeframe.

Now we look for the next price leg.

Fig. 38 – A new price leg is formed. See the red dots. USDCHF, daily timeframe.

We are ONLY focusing on inside the yellow shaded area where the discount portion of this
market is. The market is at a discount below the line that separates the yellow from white. The top of
the yellow shade is the EQ shown in Fig. 33 and Fig. 34. Anything below is discounted. So, the market
should be responsive at levels of discount.
Here the market exceeded the EQ zone of the new price leg presented in Fig. 38 and went into a
deeper discount.
If you look at the low swing inside the circle, you are looking at an Order Block. The down
candles right at the low of the swing. If you have two consecutive candles, the Order Block begins at
the top of the first candle. This is where we can switch to lower timeframes and look for buys.
***On ICT’s chart, there were 2 down candles in the circle instead of a long legged Doji candle
and the last bearish one as you see here.

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 The blue dots in Fig. 38 will show you 3 more price swings that can be measured for EQ. Now,
the 3 impulsive price swings, even if it is broken up in 3 legs, you still have to measure that because
that is the apparent price swing that is currently being traded in.

Fig. 39 – The new price leg incorporating the 3 swings. USDCHF, daily timeframe.

In Fig. 39 we study if there was a reason to be a buyer when the price hit the EQ. Further on the
price trades into a deeper discount and trades right into a bullish Order Block – the circle area. ICT
highlights the candle where the arrow is placed inside the circle in the image above. If you extend a
line in time from that Order Block [the green arrow] you will see that the price hits it on the OTE
level, does not spend too much time there and then it rallies aggressively and then it fills in an area
where price had already moved in quickly up into a bearish Order Block [the red arrow], area from
which you would look to take profits if you were in a long position from the OTE level.

If the market is going to go higher and it is bullish and it comes back below an old low, that is
generally a stop loss run.

Fig. 40 – the lows that were taken. USDCHF, daily timeframe.

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 Summary
We understand that that the EQ is the midway point of a range
We need an impulsive price leg higher. Once identified, we run the Fibonacci from the low up to
the high and then we wait for 4 candles. Once the 4th candle is lower than the higher one, we start
waiting for the price to get down into EQ. When it does that, we can go in and hunt for buying
opportunities on the lower timeframes. We blend in institutional order flow ideas like order blocks,
mitigation blocks, breakers, turtle soups and OTEs. Any of them can be applied for a buying scenario.
But if you ever see the conditions that are bullish, and a low is swept out [see Fig. 40], that is when
you anticipate a turtle soup. When we identify equilibrium, meaning the 50% level, when price goes
beyond 50%, it is at a discount.

The 62% to 79% deep discount area

When is it the highest probable degree of bullishness at a discount price? That is when you have
the 62% to 79% retracement level. That is the deep discount area we look for in bullish conditions
and why Fibonacci 62% and 79% levels work. Any other time Fibonacci is going to fail you all the
time. It is the foundation behind price action that causes these indicators to work SOMETIMES. Even
overbought and oversold indicators will work if you apply these ideas to them. Bullish divergence,
trend following, hidden divergence or type 2 trend following.

The market will not respond to an indicator

The ideas must come by way of sound price action understanding. If it is not there based on the
foundation that the price action is implying, then it is not going to work. You need to have the
underpinnings of the market being dictated by price action and not by mathematically derived or
crunching of past price to give you some prognostication. The market will not respond to an
indicator. The indicator is only reflecting a mathematical historical reference that something the
price already done. So, when we look at markets we have to define what these price ranges are. If we
are bullish all we are doing is waiting around for a price move. Remember the 4 candles. Once it gets
to equilibrium you can look for a signal.

The difference between equilibrium vs discount

The difference is that you want the price to go below equilibrium into the 62% minimum down
to 79%. When it does that, that is when you have the highest probability of bullishness while the
market is in a discount. Then you should see explosive price action to the upside. If you are using the
daily chart, you will be able to use this as a day trader, as a short-term trader, as a position trader, a
swing trader. Nothing has been changed in the delivery of what ICT looks for relative to bullish order
blocks, turtle soups etc.

What to look for

If we understand that we are bullish in the discount zone, we are looking for specific things to
happen. If you have this as a range to work within, what inside of the range are you really specifically
looking for?
• Look for specific reference points in terms of institutional order flow like a stop run – Fig. 40.
• If we understand that that is the occurrence that should take place when we the price is
down and we are looking for buy scenarios, if it goes below equilibrium and blows out a

34
 Fibonacci level and you take a loss, just find the low that was just blew out and then expect
the buy signal there.
• If we are using false breakouts below previous lows, what can you do to get out of a
profitable position? You look for a high and take profits once the market goes above a
previous high.

Fig. 41 – The deep discount 62% to 79% level.

What institutional order flow is?

Market makers and smart money will distribute long positions above old highs. It does not have
to be the highest high. Once it creates a high, they only allow the price to retrace to allow stops to
build up above an old high. That is how they engineer liquidity.
When engineered liquidity comes in the marketplace in the form of a buy stop protecting a
short position that someone put in the market, then they run price above it hitting those buy stops,
those buy stops become market orders to buy the market and they sell to those buy stops their long
positions they accumulated lower.

NOTE – The market moves in intraday price action om grades of 10 to 20 pips ranges
above a high to reach for highs. The same is for lows.

There is no magic in Fibonacci. The only thing it helps you do to is visually see what EQ is in price
and then below EQ where is a good price to enter at a discount. If it goes lower than the OTE
between 62% and 79% and your inline bullishness is there, wait for the turtle soup buy.
You do not need to have everything out there to come in alignment. You just need a couple of
things that make sense, and it has to start with EQ to discount for buys. You have to understand
things before order blocks, turtle soup longs, before OTE longs, before stochastic divergence. None
of those things work outside of understanding the central tenant of what a market is at equilibrium
or below at discount. That is a favorable buying market. Anything apart from that you stay away from
it. You wait.

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 EPISODE 5 – Equilibrium Vs. Premium – LINK
We will not spend so much time with this because everything is diametrically opposed to
equilibrium vs. discount teaching.

The first thing we look for in price is an impulse swing.

In Fig. 42 we can see 3 swings in the left side of the USDCHF chart. 21st of February to 22nd of
September 2016.

Fig. 42 – Price swings. USDCHF, daily timeframe.

Those three price swings actually make up one larger price swing which is an impulse leg or
impulse swing by its own.
When defining our ranges, the use of Fibonacci is useful in this case.

Fig. 43 – Same USDCHF chart, but with the Fibonacci levels on it. USDCHF, daily timeframe.

36
 Observe the high and the low and how the price did not came back up to the midway point.

Fig. 44 – The 1st price swing. USDCHF, daily timeframe.

Equilibrium has to be at least touched and then once it hits it, we watch the price to reach out
into the OTE area.

Fig. 45 – The 2nd price swing. USDCHF, daily timeframe.

The market hits the EQ price point and immediately sells off. This would be a missed
opportunity in regard to looking at EQ to premium. The reason why we want to focus primarily on
the 62% to 79% range to be selling short is because the market will be really pressed higher, and it
would be really overbought. There are going to be times when the market does give that scenario to
you, and you just have to let it go without you.

37
 Fig. 46 – the 3rd price swing. USDCHF, daily timeframe.

The market moves up to EQ, goes back above it into a premium market, and it goes right on
through OTE. When you see those conditions where the market trades above EQ and goes through
62% and 79% levels, it gives you a condition of what we saw in the previous teaching, called the
“turtle soup”. This means that the market is reaching for stops above the impulse swing high. If you
short from there you take profits below lows that are already established in the marketplace. See
the arrows in Fig. 46.

When defining ranges, you can also use all price swings from high down to low.

Fig. 47 – Another price swing. USDCHF, daily timeframe.

Remember it is the same thing we saw on the EQ to discount teaching. Once you see it bounce
up, you need 4 candles – that is the swing low. Once you see it form, you are watching that 4th
candle’s willingness to go higher, it does, and you simply wait. Watch what happens when the price
goes to EQ. If price goes through that, you are still watching the price and see if it reaches 62% to
79% level. In this case it touches 62%. In Fig. 47 [the black arrow] we can see how the price is

38
reaching into premium, taking out an old high taking out stops. Then it goes down and sweeps out a
previous low [the red arrow].

Five more examples on how to take the ranges. All on daily timeframe.
Here you will take profits below the low where the upper red arrow is and into the OB seen
lower.

Fig. 48 – Example 1. 79% level hit to the pip.

Fig. 49 – Example 2.

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 Fig. 50 – Example 3.

Fig 51 – Example 4. Turtle soup where the green shaded area is.

Fig. 52 – Example 5.

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 EPISODE 6 – Fair Valuation - LINK

Fair valuation perspectives:

• Fair value in regard to equal distance of a high to low [equilibrium].
• Fair value for the perspective on valuation in regard to market makers.
o Understand that there is a lot of overlap covered by the last 2 chapters,
equilibrium to discount and equilibrium to premium.
o If you are a buyer, you want to be looking at the discount market. That means
trading in the lower third of the current trading range that the market created.
o If you are a seller, you want to be looking at the premium market. That means
trading in the higher third of the current trading range that the market created.
o When the market returns back to an area of fair value, that is a fair value for the
market maker to either sell or buy.

Fig. 53 – AUDUSD, 4h timeframe, around 24th of September 2016.

The market broke down and then quickly ran away.

The orange shaded area is called a liquidity void [LQV] where the market
makes a sudden movement lower and there are large ranges, very little wicks,
very quick movement. The price spent very little time trading at these price
levels and was in a hurry to its lower area [right below the LQV] where it
started to trade more efficiently back and forth on both sides of the candle
and ultimately having a retracement.
As soon as we see pockets of price action [LQV] where there is a sudden
movement lower, that is when we start watching and measuring fair value.
Here ICT points at the bottom of the highest green candle and the high of
lower green candle.
Between those candles there is what we refer to as Fair Value Gap [FVG].

41
The reason why this is important is because there is no up candle between the break of that low and
the high of the pointed candles. You can also see the same area in the next image between the red
lines.

Fig. 54 – The area of the FVG.

The low specified by ICT is where the mouse cursor can be seen in
Fig. 54.

The same thing occurs further on in the LQV, between the red lines in Fig. 55, where there is
a gap between the high green candle’s low and the low green candle’s high or wick. In this case he
says he prefers the body of the candle.

Fig. 55 – The LQV area in the orange rectangle.

The range in which it causes this void, when price is below that, the LQV area is going to be
Fair Value. The market is going to want to come back to it because there is very little trading there.
The fact that it creates it in big ranges and speed, that is what defines it. Because price moves so
quickly in these areas, fair value is established because there is going to be a willingness to want to
see price trade back up into these levels and close in all this. There is going to be up movement later
on. It will not happen immediately always. Sometimes it takes a little bit of time. When price starts to
move higher, we know that it will try to trade into this range [LQV] and fill that it at a later time. That
is where market makers view fair value.

42
 Equilibrium or fair value in regard to the equidistant range between high and low of a
defined high and low range is significant because it is showing you that the market ran through a
short term high, it comes back down right back to the middle of the range or fair value, which is
equilibrium.

Fig. 56 – AUDUSD, 4h timeframe, range from low to high [red dots], the short-term high that
was taken out and the retracement into equilibrium.

At this moment price could stay into consolidation for a period of time we do not know. At
equilibrium you need to refer to where the most recent price swing took place. In other words, if we
are at equilibrium or at fair value, the market can go either way at this price level.
The easiest way to determine where it is its most probable direction is WHERE did market
structure break most recently. Did it break a swing high, or did it break a swing low most recently?
In Fig. 56 we can see a swing high being broken, price came back down into equilibrium of the
defined range [between the red dots]. Also notice that we are in the lower portion of the range
defined in Fig. 53. So, we are in a really low area where it would be deemed oversold.

The mechanics behind

• It broke a swing high.
• We have the LQV.
• Price moved back into fair value or equilibrium. It is fair value for the market makers to
build in long positions.
The down candle right before the move through the short-term high is a bullish orderblock [red
arrow in Fig. 56]. Price comes down into it, hits it and at the same time is hitting equilibrium and its
deemed fair value. It is fair value because the market traded back into an area where it should/would
be bought again.

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 Fig. 57 – AUDUSD, 4h timeframe. The price came back to fair value.

Here ICT presents the consolidation of the area marked with the red arrow, he shows the
consolidation that happened in the equilibrium area between the red dots. If that would have been a
turtle soup, the price would have reached lower faster, but it did not. It stayed in a sideways
consolidation. The price is hanging around fair value, it has one spike move lower, it does now break
the range and then it expands in the upside. Once it does the expansion the price starts to fill in the
LQV on the left.
After the LQV is filled, the next area of concern is above the short term high, and we are still
looking for higher prices because they went long in the lower green shaded area. If they are going to
sell their position, they will sell their position in a premium market. It is fair value to market makers
to liquidate their positions.

Fig. 58 – New specific area of fair value for the market makers to liquidate their position. It
makes it fair value because they bought at a discount, and they are liquidating at a premium.

44
 When price moves in defined trading ranges there is going to be equilibrium. Equilibrium is in
itself fair value. That means that the market makers are holding it in a consolidation. When that
consolidation gives way, the strongest move out of that consolidation on a higher timeframe chart
will give you a great deal of prognostication for directional bias.

What to consider when we are looking at price action

• The total range we are trading in.
• The equilibrium price point relative to the most recent trading range, high and low.
The easiest way to understand institutional order flow is to understand that markets move from
• Buy stops to sell stops.
• Sell stops to buy stops.
• Fair value to discount / discount to premium / premium to fair value.
It moves back and forth between those 3 reference points.

If you miss a move do not worry about it. Wait for the market to give you indications of where
fair valuation is. Then you will be able to anticipate the market markers’ next scale in or scale out. It
may be a liquidation of a long position that has been underway. That may give you prognostication
for a future move. It may be the inception of a new price leg while you are waiting for this area to be
re-traded to.
Think in term of fair value for the market maker. If they are going to go higher, where is it a fair
value for them to exit their longs? They do not want to liquidate their longs at a discount or on
retracements going lower. You look for expansions on the upside. When the price expands, they
should be reaching into an area of fair value for price to be liquidating smart money longs. That is the
only reason why the markets go up.

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 EPISODE 7 – Liquidity Runs - LINK

What is liquidity?
Liquidity refers to the degree to which a market [asset or security] can be quickly bought or sold
in the market without affecting the asset’s price.
When we look at price, it does not matter what timeframe we are looking at, time is irrelevant
for right now. The specifics about price action, as it relates to liquidity, we, as price action traders,
are looking specifically for reference points where we can hone in on where there is a high
probability of liquidity resting in the marketplace.
Liquidity relates to buy and sell orders.
When we are looking at price the idea is that we are not looking for specific patterns for the
sake of patterns. We are looking at where existing orders will reside. We are targeting areas at which
the market has already seen a willingness to go higher or lower.

In the case of [Fig. 59] we see a swing high, and the market moves lower.

Fig. 59 – Liquidity runs.

From the market maker’s perspective, we know that there are going to be buy stops or buy
liquidity above that high.
When we look at the lows, when the market moves away from these lows, we see that as sell
liquidity.
Identifying both positions on both of the marketplace we are going to teach a concept called
open float that is not going to be covered in this learning. Understand that there is going to be
liquidity above old highs and below old lows.
Understanding this premise when we view price action, it removes all the retail minded
perspective but heavily leaning on indicator-based ideas.
When we adopt those principles with study of price, it gives us the purest view of how the price
is delivered. We have no confidence or direct relationship to our directional bias on price except for
the price itself.

46
 High Resistance Liquidity Run
The market has a tendency to run out old highs or old lows, but it has a difficult time doing that
when the market has difficult conditions like seen in the Fig. 60 and Fig. 61

Fig. 60 – Difficult market conditions. Bearish.

For the highest high to be ran out, meaning price to seek liquidity resting above that old high, it
means that the price has to encounter a lot of resistance in the form of old lows and old highs.
The old lows are acting as standard resistance.
The old highs are acting as buy stop liquidity.
If the market is going to seek liquidity above an old high, how do we know it is going to stop
there and not go another level higher? To run all these buy stops it has to get through a lot of
resistance in the form of the old lows and highs just to get back to the old high [see the arrow]. This
is what we will call “High Resistance Liquidity Run”. When we trade, we are not looking for these
opportunities. This is the least probable trading conditions to look for longs.
It takes a very sharp economic market release, like Nonfarm Payroll or FOMC, to knock through
all of these levels of resistance to run that liquidity high.

Fig. 61 – Difficult market conditions. Bullish.

Obviously, the opposite can be said when the market is the opposite of what we can see in the
above Fig. 60.
Those 2 figures are the element of price action that we want to trade less frequently in.

47
 Low Resistance Liquidity Run
Obviously, there are going to be times when the market really provides an opportunistic time to
take action in the market and trade with price action and have very little resistance in our trades.
A low resistance liquidity run would be in the form of something similar to Fig. 62.

Fig. 62 – Low resistance liquidity run. Buy-side.

If we see the market come off the old high and it comes down rather quickly, if there is a very
sharp one-way type direction, very little retracements of any kind, we see this as a low resistance.
Once the market breaks below an old low [red arrow], from that point until it gets through a
short term high [green arrow], the price begins its climb back up into the range that is created by the
low that was broken [red dot] and the short term high [green dot] once it is broken. This area of price
action is deemed low resistance.
Every time a new short-term high is formed before the old low [red dot] is retreated to or
retested as resistance and we get a buy signal after a retracement [blue arrow] we know that there is
going to be very little resistance for that move to go higher running out the buy stops just above the
short-term highs [blue dot].
We will start encounter high resistance liquidity runs as we get closer to the old low. So, the
probabilities start to fall off precipitously once we get back to the area at which the range is defined
in terms of low resistance. Then it becomes a high resistance liquidity run because the price moves
back into an area where the market moved in a range.
The expansion is the easiest way of trading when we can trade inside that range. Every time the
price creates a new short-term high, if we get a buy signal it will have a very little resistance to get
through the old high that it retraced from [blue dot]. We continuously look for those until the price
fills in that break of the old low [red arrow] where the market goes into what we referred to as a high
resistance liquidity run. Anything higher becomes high resistance liquidity run.

The exact same thing is available for the opposite of a buy-side.

Fig. 63 – Low resistance liquidity run. Sell-side.

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 EPISODE 8 – Impulse Price Swings & Market Protraction – LINK

Impulse price swings

Fig. 64 – Impulsive price swings. Every red line is a swing. GBPUSD, 15m timeframe.

When we look at price action, we need to be thinking in terms of impulse price swings
because inside the impulse price swings we can get a lot of detail. There are smaller more specific
impulse price swings that have a lot more influence over the marketplace in the form of a
manipulative move or market making manipulation.

Protraction
If we look at the similar ideas, we just illustrate with every impulsive price swing and then we
add to it time of day.

Fig. 65 – Daily divider. Every vertical line is at 0 GMT. 15m timeframe.

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 When we see this, we can look at time sensitive impulse price swings which is Market
Protraction. Market Protraction is time sensitive. It is an impulse price swing that is sensitive to a
time of day. There are three primary protraction market moves every 24h.

Daily market protractions

1. The first protraction [0 GMT - ASIA]
We will see one little movement away right at that delimitation in time.
• 1st arrow – price trades away from it, lower in this case, and then moves higher.
• 2nd arrow – price moves down and then it moves higher.
• 3rd arrow – price moves higher.
• 4th arrow – price moves higher.
This is all we are going to look out for that Asian session. ICT states here that he does not believe
that The Asian session is that influentially.

Fig. 66 – GPBUSD, 15m timeframe. The 0 GMT protractions. 9pm NY time in this case.

As you can see in this Fig. 67, the hours do not match so you must check yourself whether or not
the summertime hours have changed.
The image was taken from this site where I added
GMT, UTC, London and New York.
To understand exactly what the GMT and UTC are, I
have copy pasted this image on the right just to be easier
to understand if you have difficulties. When GMT is 0 or
12am, London time is 1am and New York is 8pm.
https://savvytime.com/converter

Fig. 67 – 0 GMT, UTC, London and New York time.

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 2. The second protraction [LONDON]
The other market protractionary state is in London. The lines we see here as 4am on ICT’s chart
are, in fact, the New York midnight – the bold lines.
• 1st arrow [London] – the market moves higher. This market move here is a
protractionary market phase where the market moves up, initially, at a specific time of
day, so there is an impulse price swing. It is designed to fake out the individuals that
chase initial move after midnight. If we see a movement higher and we are bearish, we
see that as a market protraction or a Judas Swing. It is a false rally to sell into.
• 2nd arrow [New York] – the 2nd impulsive price swing starts in New York. Here we
delineate 7am in the morning, NY time. We anticipate. If the market has moved lower in
London, we are going to be looking for a retracement higher. That impulsive price move
higher is market protraction. It is designed and intended for manipulation only. It is to
get traders to think that the market is making a new low in this case. It rallies up and
then it trades down.
• 3rd arrow [London] – the market drops, initially, right from the midnight candle, drops
lower and then rallies up. It seeks liquidity below the market clearing out lows [see that
EQL – red line] and then rallies.
• 4th arrow [New York] – New York session opening. The market goes into a
protractionary market state right after the 7am going into New York open. Small little
retracement and then the market trades lower.
• 5th arrow [London] – we see an initial rally after midnight candle and then it trades
lower.
• 6th arrow [New York] – at 7 o’clock in the morning the market goes into a small impulse
price swing higher. This is market protraction. Its intent is for manipulation. It is counter
direction. If the move occurs at this time of the day, if it goes higher, we think the
opposite direction. If the market has been going lower and after 7am the market is
going higher, we see that as manipulation or market protraction. The market is seeking
to draw in participants on the wrong side of the marketplace or reach for liquidity.
The New York protraction must happen after 7 o’clock New York time.

Fig. 68 – New York midnight price reactions. 15m timeframe.

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 The difference in determining impulse price swings and market protractions is the fact that
there is a time element applied to the small impulse swing after midnight New York time, after 7am
New York time and 8pm New York time. There is usually a protractionary market phase that enters
the marketplace, and it is a small little impulse price swing that is counter the major direction that
you are going to see after that specific time of day.
So, for session trading and session drills you can use this concept to help give you context and
build anticipatory price skills.

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 MONTH 2
EPISODE 1 – Growing Small Accounts– LINK

What you need to avoid:

• Do not try to rush to make massive gains in either pips or percentage returns.
• Do not open yourself to large risk in hopes of equally large returns or profits.
• Do not assume taking a small risk defined trades will not grow your account.
• Do not sacrifice trading equity for poor planning or lack thereof.

What do you need to aim for?

• Determine how to realistically anticipate a favorable reward to risk model.
• Learn to respect the risk side of the trade setups more over the reward.
• Identify trade setups that permit three rewards multiple to one risk or higher [>3RR].
• Frame good reward to risk setups that have little impact if unprofitable.

The reality of reward to risk ratios:

What will you need to see in performance for profitability?
Win rate Win ratio
75% 0.3: 1
60% 0.7: 1
50% 1: 1
40% 1.5: 1
33% 2: 1
25% 3: 1
For the 25%-win rate and 3:1 win ratio it means you are risking $1 to make $3.

What should you focus on initially? Compounding 6% monthly.

It only takes 20 pips per week.
It only requires 1.5% risk.
It only requires a 1:1 RR.

Account - $1000.
Risk per trade – 1.5% or $15.
Risk 20 pips from entry price.
Profit taken at 20 pips for a 1.5% return.
***I did the math and the numbers sum up into a
double account balance after 12 months as ICT states.

Where do these setups occur?

The setups that offer a 6% per month return, specifically, and are easiest to find, can be
identified by looking at your daily chart.
What to look for?

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 • The order block. Wherever there is a price point at which a move quickly moves away from a
level. If it is a move up we find that down candle right before the move goes higher. When
price moves back down into that down candle, we have a very good probability, especially
off of a daily chart that you are going to get 20 pips or more price swing.

The order block in Fog. 69 is highlighted with the 2 arrows. We are looking at the candle’s body
opening price. To the right of if there is a FVG.

Fig. 69 – AUDUSD bullish order block example on 1D timeframe.

Fig. 70 – AUDUSD example on 1h timeframe. Same chart as above, but smaller timeframe.

On the 1h timeframe, when the price hits that daily OB, we just wait. At this moment, as the Fig.
70 shows, the price is in turtle soup conditions. We are aware of the buy stops above the highs on
the 1h timeframe. We map out areas in which we can take profits BEFORE we even place the trade.
Further on, in Fig. 71 we see the market trading up through the down candle that is an order
block on this 1h time frame. Once the price goes ABOVE that down candle, we identify the opening
and the high of the candle. That is where the buy would occur. Considering the spread, the long entry

54
will be slightly higher. The stop loss will be BELOW THE MIDDLE of that down candle. If it wants to go
higher it will not go below the middle of that candle.

Fig. 71 – Long entry with confirmed price action.

Including the spread, the stop loss looks like in Fig. 72. Every line is presented as a 1:1 RR. Each
line is 20 pips in this case. After the 2RR is reached, the stop loss must be moved on break even and
you already took profits. You will trail the stop loss only when specific levels are reached.

Fig 72 – The long entry presented with multiple RRs, entry and stop loss. 5RR 1 hit, 1 shot.

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 EPISODE 2 – Framing Low Risk Trade Setups - LINK

How to frame low risk frame setups

What makes the setup worth taking?
• Selecting trade setups on higher timeframe charts is ideal
• Large institutions and bank analyze markets on a daily / weekly / monthly basis.
• Locating price levels that align with institutional order flow is key.
• Higher timeframe setups form slow and provide ample time to plan accordingly.

What can we do to lower the risk in the trade?

• The higher timeframe has more influence on price so we focus there.
• The conditions that lend to a trade setup on a HTF can be refined to LTF.
• Transpose the HTF levels to LTF charts.
• Refining HTF levels to LTF charts allows smaller stop loss placement and risk.

Refining
Here is the same previous AUDUSD 1h timeframe chart with lower risk. See Fig. 70.

Fig. 73 – 1h refining.

We have an hourly chart with a low being violated down into a key support level relative to a
daily timeframe. Buy stops are above the highs.
What if we are willing to buy lower and offer a lot less in terms of risk exposure.

56
 15m refining
I cannot go into a smaller timeframe; hence I will use the charts from the mentorship. You will
see that the price levels do not match precisely. You can check the charts yourself to get the extra
details if your platform permits you go on this timeframe in 2016.

Fig. 74 – 15m timeframe refining.

Everything here is very close to what we saw on the hourly chart. We have an old low, price
trades down below the old low into 0.7512 level. The green rectangle is the buy that could have been
made on the hourly timeframe chart.
If we focus our attention into the lower rectangle, we can see a turtle soup setup. We do not
require the price to go up above the green area before we start buying. So how can we reduce risk?
We take the bullish order block where the 0.7520 is highlighted, that is a bullish orderblock because
there is a candle that trades through it [above the blue rectangle], and now we can focus on the
midpoint of that candle. By doing so the risk is reduced, in this case from 20 to 17 pips.

5m refining
Even further reducing risk, we can take a look inside the yellow area and refine it on a 5m
timeframe.

Fig. 75 – The 15m timeframe to be refined on 5m timeframe.

57
 Fig. 76 – same chart as above, but on 5m timeframe.

Looking inside the yellow area.

Fig. 77 – price analysis of that area.

We have a down 5m candle that hits that bullish daily order block. That candle gets violated and
then we can start looking at that 5m down candle from its open or high down to the midpoint.

Fig. 78 – Zoom in on 5m. An order block is being formed. This arrow is the middle of the OB.

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EPISODE 3 – How Traders Make 10% Per Month – LINK

Fig. 79 – Trade example – AUDUSD, 5m timeframe.

Fig. 80 – Trade example – AUDUSD, 15m timeframe.

Fig. 81 – Trade example – AUDUSD, 15m timeframe.

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One shot, one kill trades return on investment expectancy.
When the 30, 50 or 100 pips are hit, partials are taken!

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EPISODE 4 – No Fear Of Losing – LINK

Why losing on trades will not affect your profitability

• What trading with fear of taking losses actually does to your trading:
o Staying concerned about taking a loss promotes fear-based decision making
o equity that is managed by traders that cannot take a loss – can’t profit long
term
o Losing is inevitable – fear-based decision making keeps focus on the adverse.
o Fear based decision making fosters trader paralysis or inability to execute
efficiently.
• White profits are achievable despite taking reasonable losses.
o the professional equity manager understands “losses are costs of doing
business”.
o Using sound equity management and high probability setups yields handsome
percentage returns.
o Trading scenarios that encourage potential 3:1 reward ratio provide initial
foundation.
o Defining trade setups that frame. 5:1 Reward to risk or more – efficiently cover
losses.

The market set up and framing the risk to reward multiples

The bullish order block.

Fig. 82 – The bullish order block.

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 Fig. 83 – The fair value gap.

Fig. 84 – The mean threshold.

Fig. 85 – Framing RRs.

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 Justifying why losing trades should not have that much of an impact for your long
term profitability.
Consider the numbers:

63
64
 EPISODE 5 – How To Mitigate Losing Trades Effectively – LINK

Fig. 86 – Lost trade example.

We assume that we took a loss of a full 2%. We take a look another look at the same trade and
reevaluate if it is still to be traded.
What we had in mind was what we had in Fig. 85 for RR framing. Now we take a look at the new
orderblock that forms. That is the lowest candle we see in the image below where the cursor is
placed. We see the price trading away through it. When it does that it authorizes any new return to
the order block as a buying opportunity.

The plot twist

On the 2nd trade, you will go long with half of the position size used on the initial loss. If the
initial loss was 2% of the equity base, this trade would be 1% of the equity base in risk.
If the 2nd trade is a loss and you are willing to get a 3rd trade, you will reduce the risk once
again from 1% to 0.5%

Fig. 87 – Potential long entries in the green shaded area. New OB formed that can be traded.

65
 Fig. 88 – 2% mitigated.

At this moment you will fully close the trade. Sometimes it is good to get back to even. If you are
late in the week, like Thursday or Friday and you get the opportunity to get that 2% back, take the
trade off, go flat into the weekend.

Fig. 89 – Position left open. 3RR.

If, by any chance you do not close the trade and allow the position to be open, at this moment
the stop loss will be placed at the 2RR point where you can no longer lose back below open profit of
the 2% loss. This way you do not permit the market to come back against you.
Once we get a multiple RR, meaning the 3RR, that is about where you need to take your profits
and square it off. So, either you take it of once you mitigate the loss entirely at 2RR, or you trail the
stop loss at 2RR if it goes to 3RR.
If you drop down your amount of leverage and your total risk, cut it in half.

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 EPISODE 6 – The Secrets To Selecting High Reward Setups – LINK
The secrets to high reward trading setups
• Patience
• Define trades environments
• Determine trade parameters
• Executable criteria
• Understand why it should pan out
• Experience for future reference
Focal point
It is crucial to understand that efficiency in trading comes by way of process-oriented thinking,
not by way of reactionary or impulsive thinking or rushing ahead to trade signals prematurely.

Big picture perspective

• Macro market analysis
o Inflationary market
o Deflationary market
• Interest rate analysis
o Higher rates
o Lower rates
o Unexpected change
• Intermarket analysis
o CRB Index – commodities
o USDX – US Dollar Index
Inversed correlated – if the Dollar Index is going up, usually the commodities market is going
down and vice versa.
• Seasonal influences
o Bullish seasonal tendencies
o Bearish seasonal tendencies

Whilst there are 4 areas of study, we need to primarily focus on at least 2 of these. All 4 of these
do not have to agree, but you need at least 2 of them to come to an agreement.

Intermediate perspective
• Top-down analysis
o Monthly chart analysis
▪ Key levels, intermediate long-term highs and lows, specific order blocks,
levels that show a clear indication of wanting to repel price higher or
lower.
o Weekly chart analysis
▪ The same as for monthly. Large managed funds do a great deal of
analysis on weekly charts. Most of their work comes by way of monthly
and weekly and they usually execute on daily charts.
o Daily chart analysis
At least 2 of these must be in agreement. You can have an idea on a monthly chart that frames
one of the 2 things that lead to your intermediate term perspective.

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 • COT data – commitment of traders
o Bullish hedging by smart money.
o Bearish hedging by smart money.
o Extreme levels historically – last 12 months and last 4 years.
At least 2 of these must come into agreement.
• Market sentiment
o Extreme market bullishness.
o Extreme market bearishness.
Out of the 3 areas from the Top-down analysis, at least 2 must be in agreement. The least
significant is the Market sentiment.

For the top-down analysis you have to have a level or an idea relative to the monthly, weekly OR
daily. You do not require two of those timeframes. You just need one.

Short term perspective

• Correlation analysis
o USDX SMT analysis.
o Correlated pair SMT analysis.
• Time and price theory
o Quarterly effect – every 3 to 4 months or so there is a new price shift.
o Monthly effect.
o Weekly range.
o Daily range.
o Time of day.
• IPDA - Interbank Price Delivery Algorithm
o Institutional order flow.
o Liquidity seeking.
o Market efficiency paradigm.
At least 3 areas from the Short-term perspective must be in agreement. Preferably at least
one from each.

You will need 7 things to build high reward trades:

• 2 from the big picture perspective.
• 2 from the intermediate perspective.
• 3 from the short-term perspective.
It is not execution, it is not entry, it just gives the framework that makes that trade high
probability or high reward.

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 EPISODE 7 – Market Maker Trap False Flag – LINK

False bull flags in price action

• Not all sudden price rallies that move into short-term consolidations are bull flags.
• In major bull trends or in HTF distribution levels price will post false bull flags.
• Retail traders will see a classic ”continuation buy pattern” but many times it will result
in a reversal.
• Understanding higher timeframe charts and premium markets will assist in identifying
potentially false bullish flags.
Price does not move based on any kind of pattern whether it be an order block or mitigation
block or breaker or even classic chart patterns.

False bear flags in price action

• Not all sudden price declines that move into short term consolidations are bare flags.
• Immature bear trends or in HTF accumulation levels price will post false bear flags.
• Retail traders will see a classic “continuation cell pattern” but it will result in a reversal.
• Understanding higher timeframe charts and discount markets will assist in identifying
when these are potentially false.

Bull flag and bear flag price action – examples taken from Google.

Fig. 90 – Bull flag. Fig. 92 – Bear flag.

Fig. 93 – More detailed flags with extra info.

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 Fig. 94 – A classic bull flag. AUDUSD 15m timeframe.

In the next image, ICT shows in the turquoise area, which is the bull flag area presented in Fig.
95, that the price is actually inside of a bearish orderblock highlighted with the red lines and, also, in
a premium market above equilibrium and inside the OTE. By this I understand the reason of why at
the start of this chapter, he said that “understanding higher timeframe charts and premium markets
will assist in identifying potentially false bullish flags”.

Fig. 95 – Price being shown inside a bearish OB and above equilibrium, in OTE on 1D timeframe.

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 EPISODE 8 – Market Maker Traps Of False Breakouts – LINK

False breakouts above price consolidations

• This condition generally manifests in primary bearish markets.
• At some measure of Equilibrium in price, the market will move into a trading range.
• Neophyte traders or breakout traders will bracket the trading range in price with orders.
They will have buy stops to break out on a buy above old highs or sell stops below the
old lows to sell short a break below the old lows.

False breakouts below price consolidations

• This condition generally manifests in primary bullish markets.
• At some measure of Equilibrium in price, the market will move into a trading range.
• Neophyte traders or breakout traders will bracket the trading range in price with orders.

Fig. 98 – EURUSD, 15m timeframe. It highlights where the sell and buy orders are.

From a market maker’s perspective, we look below the marketplace when we have lows in the
form of sell stops. We are going to focus, now, primarily on a buying environment. Everything is
reversed for bearish situations.
When the market breaks below a consolidation, those sell stops are used to pair long orders.
Who is buying those sell stops? Smart money. Above the consolidation or above the highs, as you can
see in Fig. 99 below, rests buy stop orders. As the market moves away from the sell stops being run
out, they are going to expand price up to the liquidity zone above the old high, so those buy stops are
used to pair long selling. In other words, they are going to scale out their long positions or take some
profits.

71
 Fig. 99 – The consolidation’s low being swept and price trying to reach the other side of the
consolidation. 15m timeframe.

Eventually the market will go into another area of consolidation. The market drops below that
trading range to take out the sell stops below the consolidation – see Fig. 100.
As soon as this happens, the thought process should internally be going on inside your mind like:
• They have already shown a willingness to take the sell stops below 1.0855.
• Now they have rallied price above the 1.09 big figure.
• We have retraced a little bit, so if they are taking the market below this short-term
consolidation, they are probably going to run the price higher, so where would those
objectives be?
• What is resting above that old high? Buy stops.
• So, after taking the market below a consolidation and our understanding and expectation is
that the market is bullish, they are taking the market below the consolidations to run sell
stops out. The only reason why they are going to do that is to absorb those sell stops to be
counterparties to their longs.
• When smart money is long, how do they look to exit their positions and book a profit or
hedge? They have to get out in a place where there are willing participants to buy. Buyers
are always above the highs – breakout buyers or buy stops on short positions. That is where
liquidity is.

Fig. 100 – Drop below consolidation. Zoomed in image of Fig. 99. 15m timeframe.

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 Further on, price runs above that old high and now we have 2 areas at which the market makers
have booked long positions. Now they are pricing in a buy model. As the market moves higher, they
will liquidate some of their positions to hedge and also they are going to liquidate positions that
those traders on the bank level are actually speculating for profit.

Fig. 101 – Position liquidating process. 15m timeframe.

Fig. 102 – Highlighting equal highs. 15m timeframe.

Fig. 103 – The equal highs being liquidated. 15m timeframe.

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 Above the old high there is liquidity. We do not always look at the old highs. We can consider
the wicks, but primarily all the volume is seen in the candle’s body. So, the liquidity will rest above it.

Fig. 104 – Price goes below the consolidation. 15m timeframe.

If they took the stops below 1.0895, they are going to look to run price higher in the form of
1.0940 or higher.

Fig. 105 – 1.0940 is being swept as the price moves right above the candle’ body.
EURUSD, 15m timeframe.

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 At this moment there is a larger trading range – the last gray area. The blue area is the where
the old buying was done at 1.0895. Nothing has changed and the model is still bullish. Price moves
just lower to 1.0885. With that movement down to that level, now the liquidity rests above the old
high in the red shaded area around 1.0945.

Fig. 106 – The higher newly formed trading range with sell stops above old high.
EURUSD, 15m timeframe.

The easiest way to determine if we're in a bullish market profile is to observe the pattern of
sell stops running below a consolidation and the market subsequently running higher to trigger buy
stops. Contrary to what some textbooks suggest with their simplistic trendline approach, it's
important to consider where orders are being placed and the market's efficiency paradigm. When
there are market consolidations followed by breaks below that consolidation and subsequent
upward movements, it signals that sell stops are being built below those consolidations to prime the
market. Therefore, it's important to analyze these patterns to make informed trading decisions.

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 MONTH 3
EPISODE 1 – Timeframe Selection & Defining Setups - LINK

Timeframe Selection
• Monthly charts – position trading – this is the basis for long term position trading.
• Weekly charts – swing trading – 1 or 3 trades withing a 3 months period.
• Daily charts – short term trading – the best chart there is because it gives you a long-term
perspective and the near-term banking levels. Also gives the framework to do a lot of
analysis for short term trading. It gives the benefit of a higher timeframe but not to a degree
of weekly and monthly. It gives reference points in terms of institutional order flow, stops,
liquidity voids, fair value gaps.
• 4h of less – day trading – related with time of day.

Defining setups for your model

• Trend trader – trading only in the direction of the monthly and weekly chart direction.
• Swing trader – trading the daily chart intermediate term price action.
• Contrarian trader – trading reversal patterns at market extremes. This does not mean that
the market will reverse completely at that moment. It does not require capitulation. An
example is the daily timeframe going above a monthly level from which you can sell short.
• Short term trading – trading the weekly ranges for 1 – 5 days in duration.
• Day trader – intraday swing trading with exits by 2pm New York time.

Monthly chart
That's the long-term price action reference for the largest price
action swings in trading.
Trading setups take a great deal of time to form on this timeframe
but when they unfold, they tend to unfold over many months.
Due to the length of time the Shard requires to present the setup,
trading in the direction of the most recent setup can yield low risk and
high reward conditions.
Swings can be several hundreds of pips over a long period of time
to unfold.

Fig. 107 – EURUSD Monthly chart.

Let’s consider that we open a chart and this is what we see. Exactly the chart from Fig. 107.
We just need to know where price has moved away from and if it was a great deal of magnitude.
In this case it was a big move away from the consolidation we can see at the top. When we see this,
our eyes must go immediately the last up candle because we understand that the smart money is
going to sell in up moves. They sold in that up candle, kept it in a range and finally it broke down
below that up candle’s low. We understand that we missed the boat and we are looking at the chart
for the first time. As traders we can say “we know that if it gets up to that candle’s low, we are going
to have a trade and we are going to define that trade by way of that specific up candle’s low”.

76
 When the price reaches back into that bearish order block, we
have 2 instances where we can see where prices on a monthly chart
broke down, we can see the bearish candle that was violated on the
upside [red line] and then it returns back into that down candle so we
can see bullishness in the form of a bullish order block, and we can
observe the willingness to potentially expand up into the bearish order
block.
The question is: When the price hits that blue line, the bearish
order block, what would price likely trade to next? Obviously, we can
expect to see price trading lower.
Fig. 108 – Price reaching
back into a bearish OB

BUT WHY LOWER? Below the lows there are going to be sell
stops. Who would have sell stops below that low? Large funds.
Observe the last candle on this chart and how aggressive is taking
out the lows. Observe, also, that that price needed 13 months to reach
back up into the bearish order block and 6 months to take the lows.

Fig. 109 – Price unfolding

and taking out the lows.

Weekly chart
This is the same price swing, and we are looking
now at the weekly chart. Intermediate term here, it is
a lot more detailed compared to monthly.
We can see, obviously, when the market trades
back into the previous institutional reference point of
the down candle right before moving up [that is the
left side of the upper line], that candle is a breaker.
There is a selling opportunity when the price breaks
below the breaker and then comes back up.

Then it expands and goes lower and consolidates

again. It goes lower and it gets back up into a bearish
order block. Another opportunity to sell off and
expand into the low where liquidity is resting.

Fig. 110 – Weekly chart with

breakers and bearish order blocks.

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 The weekly chart is the intermediate term price action reference for the intermediate price
action swings in trading. Trading setups take a great deal of time to form on this timeframe, but
when they unfold, they tend to unfold over many weeks. Due to the length of time this chart requires
to present a setup, trading in the direction of the most recent setup can yield low risk and high
reward conditions.
Swings can be several hundred pips.

Daily chart
The daily chart is the short-term price action reference for the short-term price action swings in
trading. Trading setups take a little time to form on this time frame but when they unfold, they tend
to unfold over 1 to 3 weeks. Due to the length of time this chart requires to present a setup, trading
in the direction of the most recent setup can yield low risk and high reward conditions. Swings can be
50 to 300 of pips.
We know that the range is defined from a known high to a known low. The high is where that
bearish order block was on the monthly chart and the low at which we are aiming for is the low seen
on the monthly chart and that means the equal lows.

Fig. 111 – Daily chart – turtle soup setups.

On the daily chart we look for OTEs, order blocks, stop runs [turtle soups as seen in Fig. 111]

78
 Trading ideas are refined further by breaking down the monthly chart into a weekly chart and
then breaking down the weekly chart into the daily chart.
We look on the daily chart for the market to seek liquidity above old highs. Notice how every
single time the market takes out a short-term high just by a little bit and quickly accelerates on the
downside. This is taking place because they are absorbing liquidity on the buy side.

The turtle soup setup

If you cannot see the turtle soup setup, no problem. See it in hindsight. The market has already
moved down. When it trades back up into that breaker you can go short.
OTE setup
Pull the fib from high to low and you will get a 79% retracement level, OTE, get short!

Fig. 112 – Where the examples above were explained from.

ICT trades only the order blocks, stop runs and liquidity voids.

EPISODE 2 – Institutional Order Flow – LINK

I first watched this episode and you better watch it yourself. It is a price action reading on
EURUSD. Too much information to detail it here. I might re-take it and actually write it.

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 EPISODE 3 – Institutional Sponsorship – LINK
The criteria for the setups to be high probability is that we have to have institutional
sponsorship.
Institutional sponsorship is the willingness to protect an underlying price swing that has a high
probability of unfolding. Is the impact of large institutions coming in to fund the side of the
marketplace that you anticipate seeing it run towards a particular side of the marketplace.

How to identify it setups

• Institutional sponsorship in long setups
o Higher timeframe price displacement – reversals, expansion or return to fair value.
o Intermediate term imbalance in price – move to discount or sell side liquidity run.
o Short term buy liquidity above the market – ideal for pairing long exits to sell to.
o Time of day influence – London open for the low of day or New York session low
formation.

We look to sell high, but we have to find buyers that want to buy higher from us. The criteria is
that we have to look for short-term buy liquidity above the marketplace. It is going to be layered buy
stops throughout the marketplace because there is all kinds of trading that goes on – long term,
swing trade, short term, day trading, scalping – and you have to look at the higher timeframe for that
short term buy liquidity to give us a framework to see if there is, in fact, institutional sponsorship in
your setup. You will see these characteristics come to fruition by studying the time-of-day influence.

• Institutional sponsorship in short setups

o Higher timeframe price displacement – reversals, expansion or return to fair value.
o Intermediate term imbalance in price – move to premium or buy side liquidity run.
o Short term sell liquidity below the market – ideal for pairing short exits to buy from.
o Time of day influence – London open for the low of day or New York session low
formation.

Example
We are looking at a daily chart on USDJPY. It
shows price dropping down below an old low where
sell stops would typically be pooled. The aggressive
trader can, at that time, look for LTF to show similar
price action in the form of a low being violated and a
long can be taken.

Fig. 113 – USDJPY – 1D timeframe.

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 What is the first thing that comes to mind for you as a trader? What should you be focusing on?
[refer to month 1, episode 3]. If we anticipate the market going higher after a run below the old lows,
we start looking for where this market can go to.
Now, as you can see a few more candles formed on the USDJPY chart and also the OB, we can
anticipate some sensitivity and protection of seeing the price NOT go lower. We should see
characteristics of institutional sponsorship. That means they are buying again.

Buy side liquidity

The highlighted high has a high probability of buy stops resting above it.
Inside the liquidity void and above the old high we have what we call Buy Side liquidity [BSL].

Fig. 114 – USDJPY –we can see a bullish OB being formed and BSL.

Eventually the market moves higher taking out

the BSL and fills the LQV.

Fig. 115 – BSL taken.

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 Higher timeframe price displacement
By itself you may not have caught that trade. You may not have seen this trade. You may not
have seen it as it is described here because, obviously, we have the benefit of hindsight.
What we have to look for is higher timeframe displacement in price. This is what we have in Fig.
116. That means there is clear evidence that there is a large entity entering the marketplace and the
reason why we know that is because if this is a daily chart, daily charts are not going to move that
dynamic without sponsorship behind – banks, large institutions or big equity traders. The reason why
we are focusing on daily charts is because that is where the banks are trading off of. Those levels are
key to those institutional level traders.

Fig. 116 – HTF price displacement. USDJPY – 1D timeframe.

So, when we see this, we have to go back where did that movie began. Everything has to have
an origin. It has to have a root price level at which we can classify as an institutional sponsorship
level.
That comes in the form of this orderblock, that last down candle. We are using the body of that
candle, not the wick. The wick is part of the previous candle’s body as well.

Fig. 117 – Price comes down and hits the OB.

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 Identifying institutional sponsorship
To identify institutional sponsorship in a particular segment of price action, you need to see
immediate dynamic response. If it is lethargic, if it is not willing to move right away, that means that
there are no institutional orders in that area.
Therefore, if you are in a trade and you see that lackluster activity, the first thing you should be
thinking is to reduce risk, cut the position in half or completely close the trade. You can always re-
enter at another time. Do not marry the idea.
Focusing on the orderblock, that is where the institutional sponsorship begins.

At this moment we have 2 criteria:

• HTF price displacement and
• Price trading back into a discount - returning to fair value, an area where it was bought last
time.

Questions:
• Where is the short term buy liquidity? If you would buy here as a market maker, where
would you sell the positions? Above swing highs where BSL rests.

Fig. 118 – Price reaching into BSL.

As the price hits that level, what is it doing? It is pairing orders with buy stops. It means that the
BSL is gone. So, what is the next level of institutional order flow that suggests where price may go to?
Into that higher BSL area.
If we see this, institutional sponsorship should protect price from ever coming back down into
the area where the red line is.
If we were trying to buy in that bullish orderblock area and the ultimate objective would be to
take out profits in the upper BSL area and we would grade the swing from low to high, this should be

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the EQ point where the price is now. At this moment we do not expect the price to get back down to
that red line area because we already saw the price trading those 3 levels from the image below.

Fig. 119 – 3 price swings.

Now we have the market structure breaking on a very intermediate term basis with that high
being violated.

We have a down candle and the price has already moved to the middle of it where the mouse
cursor is.

Fig. 120 – The midpoint of the down candle.

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 Next, we are going to look at that whole thing in the form of a 4h chart.

Fig. 121 – 4h chart showing price fractals.

Price came down and hit the daily OB, then it traded below the low it previously created, and it
rallies of. See the last 2 green candles.
What is actually occurring when the last 2 candles drop? It
is dropping price at a HTF level, a specific level or going into a
higher timeframe support level.
What does it create when it does that? A bullish
orderblock. It is down price/candles at an anticipated level of
support.
Each time the market goes up and takes out a level of BSL, we do not collapse the trade entirely,
we do not look for reversal patterns, we do not look for divergence and indicators.
We are looking for a willingness to keep moving higher.

As the price takes out that first level out, those buy stops are gone. It is missing the liquidity in
the form of buy stops above that short term high. What we are expecting to see is the price
continuously to higher to the next level of buy stops that comes in the way of the old highs. Do not
lose sight of the buy stops above that higher high.

Fig. 122 – Price, eventually, hits all the BSL levels.

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 The New York midnight opening price
We are looking at a 4h chart of that price swing. We are going to look at institutional
sponsorship throughout the entire price swing.

Fig. 123 – 4h price action.

Here is the 1h chart. Notice the reactions from the blue line segments. Look closer.

Fig. 124 – 1h price action with blue line segments.

Those blue lines are one of the coolest things ICT discovered about price action. Not only is it
indicative of what future price direction may be, but it also gives us prognostication for future setups.
It gives us a future prognostication for where setups may unfold at a later time.

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 Fig. 125 – Zoomed out chart. 1h timeframe.

The levels of the short-term highs were added, same as in Fig. 121. Every time you see that little
gray horizontal line segment, that is going to be the old highs from this chart above.

Fig. 126 – Zoomed in chart. 1h timeframe.

The blue lines are delineating the opening price at midnight in New York. If we suspect that the
price is going to be bullish, we can look at the opening price at midnight in New York. If we are
expecting a price move higher, what we see in the form of institutional sponsorship is price when it
goes below the opening price at midnight in NY should be accumulated. We are not concerned of
what happens when the price goes above it. We want to see what happens when the price goes
below it.
In this bullish case the price goes lower, then it rallies.
The vertical red line is the beginning of the move.
The higher line at the bottom of the chart is the run below that previous low as the 4h shows.

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 Fig. 127 – NY midnight opening prices.

Look at the red arrow. It is a down candle right at the opening price. When we find the opening
price, we are going to be looking for a down candle. That down candle should be seeing capitalization
of new longs. We see that come to fruition when the down candle is violated.

Personal addition
The left side of the chart also has the price below New York midnight opening time, but we need a reason to trade it.
There is a bullish orderblock, that is why the black line is drawn-out in time and highlighting the price hitting it. It just
happened 2 days later.

Fig. 128 – Midnight candles and orderblock candles.

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 Price is being attracted by the old highs. Retails will see that as resistance and will go short, they
will find reason to hold the short, you can also see the price retracing just a bit lower, but the price
keeps going higher.

Fig. 129 – Midnight candles and orderblock candles – it is the upper side of the chart previously
presented. 1h timeframe.

Think about where these ordeblocks are forming. You are referencing old bullish orderblocks
from the previous day or, maybe, three sessions ago. You can buy old bullish orderblocks because
they are going to recapitalize them. THAT is institutional sponsorship. They are defending specific
levels because they are interested to see the price go above that old higher high where they are,
ultimately, looking to take out all of their long positions.
When you are looking at price action, everyone is asking for what is the orderblock to use. It
starts with where the market should go.

What to focus on
Focus on down candles right before up moves, up candles right before the down moves,
liquidity voids, old lows to be violated and then rally off of them [turtle soup buy], or an old high to
be rallied through and then rejected and trade softer [turtle soup sell].
Every orderblock that was referred to here, is linked to a London or New York session and they
are happening from the previous day or from a couple days ago.
The orderblocks should be capitalized again because there is an underlying interest for the
market maker to see the price going higher. They are not going to allow too much retracement. But if
it retraces it is going to go in logical areas in the form of bullish orderblocks or running and old low.
The lows can be an old New York session or London session low. They will take out the sell stops
below the lows and then rally up.
The same thing happens with bullish orderblocks. You want to be focusing on the London
session and New York session and using these down candles in those previous sessions to give you
buying opportunities.

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 EPISODE 4 - The Next Setup - Anticipatory Skill Development – LINK
One of the skillsets ICT teaches is the monthly chart. Remind yourself that the monthly charts
are only going to move with a great deal of money behind these price swings. Retail cannot move the
price.
Think about the OHLC of every single candle on a monthly chart over the last 3 months. Have
the OHLC delineated. Find the most recent down candle, place a line on its body and prior to that
down candle, what up candle exists above it that has at least a low that is higher than 1.3144? Mark
its low ignoring the wicks.

Fig. 130 – Monthly chart of USDCAD highlighting the OHLC of the most recent down candle.

Fig. 131- The first up close candle that has the low higher than 1.3144.
The trading range is now defined.

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 Fig. 132 – The up-close monthly candle highlighted with the red vertical line on the weekly chart
and a bullish orderblock on weekly timeframe. USDCAD.

The vertical red line is the lowest up candle from the monthly chart. The two down candles,
where the horizontal orange lines are, is a bullish orderblock. To the right of the orderblock we can
see the price hitting the monthly level a few times and then expanding higher.

Fig. 133 – USDCAD, weekly timeframe. Highlighting the monthly bearish orderblock.
The upper horizontal line is the same as the one in Fig. 131. It is the opening price of the month.

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 Fig. 134 – Same chart as previous, but on 1D timeframe delineating the weeks individually.

How to find the monthly trading range

If you look at your monthly charts and you define where you are now in the range, all you have
to do is to find the most recent down candle and the most recent up candle and there is your range.
• If you have a market trade up into an up candle, you find the last down candle, the most
recent down candle.
• If you get the market trade above a down candle, you wait for a return back to that down
candle to trade up into the last up candle.

Fig. 135 – Monthly trading above a down candle and reaching back to the down candle.

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 Examples
USDJPY – monthly chart
We have the most recent down candle and we delineate the opening price. Ignore the wicks.
Prior to this down candle you need to have a candle that has its low higher than that candle’s high.

Fig. 136 – Delineating the candles and creating the range.

USDJPY - weekly chart

Dropping on the weekly chart we see the price trading below the monthly opening price twice.

Fig. 137 – USDJPY, weekly timeframe. Price reaching down into the monthly opening price and
down into the bullish orderblock.

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 USDJPY – daily chart
The body of this down candle is larger than this candle here, so the first candle is the beginning
of the bullish orderblock. The mean threshold of the bullish orderblock was not even challenged.
The wick down reaching the orderblock was printed during the US elections in 2016.

Fig. 138 – USDJPY, daily timeframe highlighting a bullish orderblock.

NZDUSD – monthly chart

We see the most recent down candle and the last up candle. No information shared about the
green line.

Fig. 139 – NZDUSD, monthly timeframe highlighting the most recent down candle and the last
up candle. Also, here the price moved away from the last up candle [the last 2 black candles moving
lower].

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 NZDUSD – weekly chart
We see the price rejecting a bearish orderblock. Below there is a FVG. The downside objective is
the lower line previously marked on the monthly timeframe.

Fig. 140 – NZDUSD, weekly timeframe.

NZDUSD – daily chart

At the top we can see a daily bearish order block from which the price has already moved a
great distance. The middle line is the bearish orderblock seen in the previous weekly chart. When
price reaches above that weekly OB, it can be refined with daily areas.

Fig. 141 – NZDUSD, daily timeframe. Minimum expectation to trade into are highlighted on the
lower part of this chart.

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 Summary
We are using the monthly chart to give us our bullish and bearish orderblocks and define our
range and then we will look for lower timeframes to get closer to the market and refine our risk. Use
the higher timeframe monthly chart, find the most recent up candle and the most recent down
candle to have a range. Define that range in terms of where the most recent order flow has sent
price. Was it violating a down close candle which gives that permission to become a bullish
orderblock or has price broken an up candle by violating its low which, then, activates that as a
bearish orderblock? You simply look for the contrary orderblock on the monthly chart. You take
those levels and you find them down into a weekly, daily and down to an hourly chart and you can
see that there is a lot of plethora of opportunities with all these different pairs. It gives you context
to look into the marketplace with a specific mindset, not just waiting for a neon sign to jump off at
you.

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 EPISODE 5 - Institutional Market Structure – LINK
• What is the institutional market structure?
o The analysis of the correlated assets or the relationships to inversely correlated
assets.
o The purpose is to determine what the smart money is accumulating or distributing.
o Currencies are easy to analyze with institutional market structure with the USDX –
the dollar index.
o Every price swing should be studied to determine if the market symmetry confirms it.
• How do we identify institutional market structure in forex?
o Compare every price swing in the USDX with the foreign currency you trade.
o As USDX trades higher, expect a lower price swing in foreign currency pair.
o If USDX or a foreign currency fails to move symmetrically – smart money is actively
trading.
o As USDX trades lower, expect a higher swing in foreign currency pairs.
o If USDX or a foreign currency fails to move symmetrically, smart money is actively
trading.

Institutional market structure – USDX SMT divergence

SMT – Smart Money Tool/Technique.

Symmetrical market conditions:

• When the USDX makes a lower low.
• Foreign currency makes a higher high.

This confirms current price action and the underlying “trend” is likely to continue.
The idea of stalking reversal patterns on this condition is not high probability and should be
avoided.

Example
We are looking at the likelihood of that old low on USDX to
be violated and if we see it violated and at the same time we see
a higher high in foreign currency, which confirms the down
move in the dollar index. Even though it trades back above a
short term high, that short term high is going to be just a run on
buy stops. Then the dollar index will most likely resume lower.
This is one of the ways when you can go into the
marketplace and anticipate a turtle soup setup.

Fig. 142 – Symmetrical SMT

divergence.

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 • When the USDX makes a higher high.
• Foreign currency makes a lower low.

This confirms current price action and the underlying

“trend” is likely to continue.
The idea of stalking reversal patterns on this condition is not
high probability and should be avoided.

Foreign currency
Once the dollar index makes a higher high and the foreign
currency makes a lower low, that run above the short-term high
on foreign currency is going to be, in many times, a run on buy
stops and then you will see another sell-off making a lower low.
Dollar index
When the market trades below that short-term low, it is
going to gather up sell stops to pair new buying with and then it
will most likely trade higher and make a new higher high.

Fig. 143 – Symmetrical SMT divergence.

Non-symmetrical market conditions

• When the USDX makes a lower low.
• Foreign currency fails to trade higher than the previous high.
This does not confirm current price action and the underlying “trend” is not likely to continue.

The idea of stalking reversal patterns in this condition is

highly probability and could be reasonably considered.

That lower low on foreign currencies indicates that the

dollar index is most likely going down below a previous low to
wipe out the sell stops, accumulate new buying and then rally
up.
If the dollar is going to rally, then it is going to be downward
pressure in foreign currency and it has already shown itself in
the form of weakness by having a failure swing in the foreign
currency making a lower high.

Fig. 144 – Non-symmetrical SMT divergence.

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 • When the UDSX fails to make a higher high
• Foreign currency is making a lower low

This does not confirm current price action and the underlying “trend” is not likely to continue.

The idea of stalking reversal patterns in this condition is

highly probability and could be reasonably considered.

This shows that the USDX is failing to make a higher high.

That means there is an underlying weakness.

And then there is a lower low seen on foreign currency

pairs. They are going down below a previous low to accumulate
all the sell stops on foreign currency pairs, then they will rally the
market higher. The USDX will sell-off, which will support foreign
currency long positions and the underlying weaknesses indicated
with the USDX making a lower high fuel those market moves.

Fig. 145 - Non-symmetrical SMT divergence.

Case study #1

Fig. 146 – GBPUSD and USDX, March to July 2016

I used the orange areas to highlight the time range.
When GBP made the high, USDX made HH, not a LL

We are looking at daily charts on GBPUSD and USDX. Notice the higher high on GBPUSD on
23rd of June 2016 and the higher low on USDX. For a symmetrical market we should have seen a
lower low on USDX, but instead it made a higher low. So, we have a non-symmetrical SMT
divergence. This is USDX SMT bullish divergence in this case. That means we are seeing underlying
strength in the dollar index and buy stops being taken out on GBPUSD.

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 The underlying strength of the USDX allows us to look at that 93.8 to 94 as a future bullish
orderblock. Once the void is filled in we know there is strength in the USDX because there was an
unwillingness to see that lower low form as we say the higher high form in GBPUSD.
The dollar index is being accumulated on the long side. Otherwise, it would have been
permitted to go lower. If we see that and a foreign currency pair shooting higher, that is NOT by
accident. It is a manipulation.

Case study #2
We can see here that the GBPUSD made a higher high and the USDX did not make another
lower low. This indicates dollar strength and it is accumulated on the long side as the GBP is being
distributed.
A bit left on the GBP chart we can frame another level for a turtle soup or a false break above
an old high to run buy stops.
If the dollar does not go lower, it is because of pricing. It is being kept while the premium is
being built on GBP. When you see “strength” and “breakouts” on FX always double check them with
the dollar index. If you do not see that, then you know that the false breakout on the upside in the FX
market is all sucker play. It is retail candy land as everyone is looking to go long on those false
breakouts in FX while the smart money is focused on the dollar having an unwillingness to go lower
how it does in this case.

Fig. 148 – GBPUSD and USDX in SMT divergence.

As you look at this, observe how long it is in terms of giving us an intermediate to long-term
perspective in what direction the market is going. If they are going to keep the price at a higher price
on USDX and not blow out the previous low or the previous low, we see the unwillingness to hold
GBP price high and they quickly drop it lower. They have distributed and the retail is “holding the
bag”.
When accumulated long positions start moving higher on USDX, every time there is a
retracement we expect to see another expansion on the upside.

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 EPISODE 6 – Macro Economic To Micro Technical – LINK
Looking at daily charts. ICT uses this as a barometer to help him determine where the long-term
trend of the marketplace is going. We are looking for an insight to give us a 3 to 6-month outlook of
where currencies may be heading.
One of the things ICT looks at is the interest rates and for this he is looking at the bond market.
The 30-year treasury market will give us the insights for interest rates on an intermediate to long
term basis. [long term is 3-6 months].
Every 3 to 4 months there is a quarterly shift that takes place. Whatever the market condition is
now, in 3 to 4 months there will be a shift. It is either a reversal or it is an extended period of
consolidation. Every 3 to 4 months we look for a change in direction. If we can get a feel for what the
market is wanting to do, whether it wants to trade higher or lower, then we can have a pretty good
basis of what the interest market is going to do.
ICT, further on, will present the following chart with the dollar index at the top and treasury
bond market at the bottom.

Fig. 149 – Dollar index and treasury bond market for June to November 2016 time period.

IN TRADINGVIEW I FOUND THE TREASURY BOND MARKET AS “ZB” AND CLICKED THE FIRST ONE.

Description and ticker for the 30, 10

and 5 year note.

Fig. 150 – The Treasury bond market – ZB in TRADINGVIEW.

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 Dollar index vs. 30-year treasury bond

Fig. 151 – Same chart as the one ICT shows, but in TRADINGVIEW. June to November 2016.

Between July and August 2016 there was a high that was formed in the bond market. ICT
mentioned at that time [maybe in his mentorship, Twitter or YouTube community] that the debt
market is going to have a major decline and the same will happen in the bond market, more
specifically will happen across all the debt instruments. This implies that the interest rates are going
to go higher. If interest rates are going to go higher that is going to allow the dollar index to go
higher. But when interest rates are going higher, that means that the bond market is going to drop.
As the bond market rallies, that is a lowering of interest rates and when it drops down in the futures
market for the bond market, that is an increase in interest rates. The 30-year treasury bond is the
benchmark for the mortgage rate.
When the bond market is creating a high, at the same time the dollar index is making a low. In
the last week of June 2016, we have the dollar index making a low and the market failed to make a
lower low at the same time that the bond market was making a higher high. [see lesson 5 on SMT
divergence].

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 Analysis
1. This underlying change in trend is seen in the dollar index with the failure to make a lower
low at the same time the bond market made a higher high.
2. The market traded softer as the same time all the way into the last week midway of August
we saw consolidation in the bond market.
3. Then we saw a movement higher in the dollar index and at the same time we were seeing
weakness in the bond market. This means that the interest rates are increasing.
4. Now we have the dollar index pulling into a down candle [bullish orderblock], so we can
expect to see prices moving higher on the dollar. This will send the bond market lower.
5. When we see this rally up in the bond market, it is returning back to an up candle which is a
bearish orderblock and it sells off again.
6. This sell-off in 30-year accelerates the buying in the dollar.

Fig. 152 – Detailed explanation of the dollar index vs. treasury bond. Daily chart.
The wick down on DXY in November 2016 was during the US elections when Donald Trump won.

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 10-year treasury bond vs 30-year treasury bond [ZN and ZB]
Look at the SMT divergence that we have in these 2 charts. Then we will look at the currency market
and see how this assisted us.
This is a long term to intermediate term concept. It is aimed at giving you the next 3 to 6 months
outlook on where the currency should be going.
1. Look at the 10-year treasury bond making a higher high.
2. At the same time the 30-year treasury bond making a lower high and went lower.
3. Then we saw the last week of September going into October a higher high formed on the
10-year while we saw a lower high formed on the 30-year. Immediately we saw another
decline in both markets. This is an increase in interest rates.

Fig. 153 – 10-year treasury vs. 30-year treasury SMT divergences [ZN vs ZB]. Daily chart.

So right away we know that there should be an accelerated buy or rally in the 2nd week of
September 2016 and in the last week of September 2016 for the dollar.

On the dollar index in the first week of September we can see the low we would expect because
we saw in an increase in interest rates as a result of the sell-off with the divergence between the 10-
year and 30-year bond market. In the last week of September 2016, we saw a rally away from that
point as well.

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 Fig. 154 – Dollar index on daily timeframe.
If we see that in the dollar index we should see rallies in the USDCHF pair.

Fig. 155 – USDCHF, daily timeframe. First and last week of September 2016 rallies.

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Fig. 156 – USDCAD, daily timeframe. First and last week of September 2016 rallies.

Fig. 157 – EURUSD, daily timeframe. First and last week of September 2016 selloffs.
Here we see the price doing the opposite.

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 Fig. 158 – GBPUSD, daily timeframe. First and last week of September 2016 selloffs.
Here we see the price doing the opposite.

It is a macro perspective using macroeconomics principles – interest rates – and then utilizing
that down to a micro technical. So, from the month of September 2016 start looking for reasons to
be a buyer for all the dollar-based currencies that start with the USD first in their name. This is why
EURUSD and GBPUSD are selling off. If you check the USDEUR and USDGBP the charts will be
inverted.
This helps us to build an idea about where the market should go because of the underlying
fundamentals. We do not have to go through fundamental reports to do all that. We can rely on the
interest rate markets – the bond market and the 10-year note. Couple that with the dollar index and
no one can take it from us.

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 EPISODE 7 – Market Maker Trap Trendline Phantoms – LINK

Trendline phantoms – false trendlines

• Diagonal trendline support
o The market begins to make higher highs and higher lows.
o The market appears to have an imaginary diagonal line and it seems to repel price
higher from.
o Retail traders will extend these imaginary lines into the future and attribute support
theories to it.
o When price hits the extended imaginary line connecting higher lows, retail buys at
that moment.
• Diagonal trendline resistance
o The market begins to make lower highs and lower lows.
o The market appears to have an imaginary diagonal line and it seems to repel price
lower from.
o Retail traders will extend those imaginary lines into the future and attribute
resistance theories to it.
o When price hits the extended imaginary line connecting lower highs, retail shorts at
that moment.

Trendline theory
No basis – just opinion.
This is ICT’s perspective that there is no basis on the trendline theory in the form of diagonal
support or resistance. The trendlines make perfect sense because we can see it in the past and all the
books give us perfect examples where all works. But when you try to use the trendline idea, which
lows do you draw connections to, which highs do you draw connections to, and all of a sudden you
see that it is not as easy as you think it is.

Does price have an awareness of the point of trendline support or resistance?

Price has no awareness of your trendline. It does not respect what you have on your charts.
Price only respects where the actual liquidity is in the marketplace. And because they cannot see
you, because you are small, the marketplace sees where the large pools of liquidity are. That means
in buying interest and selling interest that is already in the marketplace in the form of protective sell
stops, protective buy stops OR new buy stops for long entries or new sell stops for short entries. That
is the only thing that makes the price move. It is going to be hinged and framed on the context of
who is in play right now. Is it going higher based on their book or is it going lower?
We do not subscribe to down sloping trendlines or up sloping trendlines to formulate ideas in
which we find support or resistance based on that idea.

Do banks associate “value” or prognostication on the basis of a trendline theory?

No, they do not. The reason is because it is so subjective. You are associating future price
movement to a level that has not been traded to yet, you are doing it on connecting two reference
points in the past that do not have any bearing on what the future price is going to do. The banks do
not care about what you are scribbling on your charts. They are not aware about that. They are
aware of the sentiment that shifts and builds around those levels because it is going to be many
times being replicated on the fund level.

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 Funds will get beat up. That is the basis of trading. Large traders are the prey. That is where the
markets go. They go for their orders, not for our little orders. Because we have learned to trade like
the fund traders we are, many times, casualties of that war between smart money and large funds.
That is the business model that goes on. Large funds are cannibalized at reversals but they are
permitted to facilitate long-term trends when the markets are in that environment. Trendlines are
not the key to it.
Is the very nature of trendlines flawed at its core?
Yes, it is. It gives too many dangling carrots in from of the trader’s eyes thinking that this is going
to be that easy setup, so, therefore „let me go in here and short this resistance trendline” or “let me
buy this diagonal support trendline”. Many times our charts will paint these beautifully disguised
opportunities that are impossibilities.
Knowing this, how can market makers capitalize on this fallacy price analysis?

Retail bullish trendline support

• Market maker trap – sell scenario
In periods when price is making higher lows and higher highs, the use of trendline “support” will
be adopted by retail traders.
The influx of weakhanded or less informed money at an area or price level provides liquidity for
the market maker.
The chart may appear bullish but the underpinnings are, in fact, the opposite. The retail crowd
will buy at a moment when price will be devoid of support. Price will collapse and leave the retail
trader long with drawdown in the trade.

When that 3rd touch of up trendline is seen in price action, many times ICT gets dialed in
expecting the high that forms between the low and the 2nd time that hits the trendline and the 3rd
time it hits the trendline, that high in between, he aims in that high for a bearish orderblock OR he
will allow price to just poke its head above that high for a turtle soup setup especially if the higher
timeframe he uses for analysis indicates that we are not in a bullish environment. The lower
timeframes will, many times, paint these beautifully illustrated uptrend diagonal support lines.
If the trendline looks so obvious, that is a trap.

Fig. 159 – Up trendline.

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 Retail bearish trendline resistance
In periods when price is making lower lows and lower highs, the use of trendline “resistance”
will be adopted by retail traders.
The influx of weakhanded or less informed money at an area or price level provides liquidity for
the market maker.
The chart may appear bearish but the underpinnings are, in fact, the opposite. The retail crowd
will sell at a moment when price will be devoid of resistance. Price will rally and leave the retail
trader short with drawdown in the trade.

Between the high formed at point #2 and #3, the low in between those two points, ICT is going
to be aiming for a reason to be a buyer down there. If the higher timeframes are indicating that
higher prices are most likely going to be in the near term and we are trading a higher timeframe
support levels based on orderblocks or institutional order flow, ICT is looking for that low between
high #2 and high #3 for a bullish orderblock at that low. OR he will accept a break just below that low
for a turtle soup long entry or, basically, a run on the sell stops. Many times the market will break
through.

Fig. 159 – Down trendline.

For the 2nd point of the

trendline, when the market rallies,
we are going to look for a move up
and above that 2nd high because
that is where a lot of the buys stops
will be. The same thing applies for
the bullish trendline as everyone
will have stop losses below #2.

Fig. 159.1 – Targets

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Price is delivered to engineer efficiency for smart money entities only.

Fig. 160 – Market efficiency paradigm.

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EPISODE 8 - Market Maker Trap Head Shoulders Pattern – LINK

Head and shoulders pattern

• False top in price
o Generally, price will form these genuinely at intermediate or long-term highs.
o Due to low understanding of most retail traders, they seek this classic top pattern on
lower timeframes.
o Many times at a significant low in price, but they marry the pattern.

Fig. 160 – A standard head and shoulders pattern.

• False bottom in price

o Generally, price will form these genuinely at intermediate or long-term lows.
o Due to low understanding of most retail traders, they seek this classic bottom
pattern on lower timeframes.
o Many times at a significant high in price, but they marry the pattern.

Fig. 161 – A standard inverted head and shoulders pattern.

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 MONTH 4
EPISODE 1 – Interest Rate Effects On Currency Trades – LINK
• Smart money accumulation and distribution – fundamentally speaking
o Interest rates are the single most influential driving force behind market moves.
o Understanding interest rate shifts and changes can assist you in selecting trades.
o Technical analysis of key interest rates can unlock professional money movement.
o Interest triads provide a visual depiction of smart money accumulation and
distribution.
• Interest rate triads
o 30-year bond – the key long term interest rate.
o 10-yeart note – intermediate term interest rate.
o 5-year note – short term interest rate.
o Overlaying or comparative analysis on these 3 interest rates unlocks price action.
o Failure swings at opportunistic times can validate institutional order flow.
These 3 interest rate markets are all futures markets. By looking at the price action of these 3 in
relationships to one another, it will unlock a lot of the things that, most of the time, evade you when
you are looking for price action setups.

What smart money looks like in price in bearish conditions

It has to be some diametrically opposed view. You have to start by looking at a base asset, or
benchmark. In bearish conditions the base asset or benchmark would be making higher highs.
The smart money distribution can be seen by comparable assets that are closely correlated that
are making lower highs. This occurs because the smart money is distributing while the base asset is
moving higher. The less informed traders will be looking at the market making higher highs and
attribute that as underlying strength so, therefore, the market should keep going higher. But if the
general market averages start making lower highs that indicates their smart money distribution and
it is not new buying. It is just sending the price higher but distributing.
When the underlying base asset is moving higher the reason why that heavy distribution is
taking place is because they are selling it. They do not want to hold on for higher prices.

What smart money looks like in price in bullish conditions

You have to start by looking at a base asset or benchmark. In bullish conditions the base asset,
or benchmark, would be making lower lows. In smart money accumulation there will be seen with
that condition being met with higher lows. For example, assuming that the base asset is the DJI and it
could be making lower lows and the less informed traders would attribute that as underlying
weakness and, therefore, the stock should be going lower. But by a closer look we will see that some
stocks are not making lower lows and that is showing a graphic depiction of smart money
accumulation because those stocks will be making higher lows. This occurs because if they are
heavily buying, the price will not be permitted to go lower because that is the basis of supply and
demand. If there is a steady demand on something, it does not go on discount, it goes at a higher
price.

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 The base assets/benchmarks:
• Dow Jones Industrial for stocks.
• The dollar index for currencies.
• CRB index for commodities.

Fig. 162 – Bearish [left] and bullish [right] smart money conditions.

Rate interest triad

• 30-year bond – the key long term interest rate.
• 10-yeart note – intermediate term interest rate.
• 5-year note – short term interest rate.

Overlaying these 3 markets will highlight when accumulation and distribution in the interest rate
market takes place from a smart money perspective.
The tree interest rates should confirm each higher high or lower low at moments when the
USDX is at a significant price point.
Failure swings highlight smart money participation in the markets and trading opportunities are
validated.

Let’s look at the following image. For instance, the top can be a graphic
depiction of the 30-year treasury, the 10-year or the 5-year. There is no
demand on either of these 3 being the failed lower low. You just need one to
break that pattern of moving lower. Invariably will show the smart money
participation in the marketplace. Because large volumes will be moving by way
of their entries and exits, it causes that real supply and demand factor to take
place in pricing. So, therefore the model will show underlying strength in one
of the interest rates. In other words, they will not make a lower low.
The one on the bottom, obviously, makes a lower low just like the one on
the top, but the one in the middle that is highlighted in blue, that is
representing a failure swing, so when that happens what we are seeing is an
interest rate shift. There is going to be a shift in the marketplace and this
occurs at a moment when you are identifying a potential institutional order
reference point in the USDX that confirms that particular idea.
Fig. 163 – Graphic depiction of the
above named interest rates.

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 For instance, if you are looking for a bullish orderblock on the USDX, you would see the opposite
of this indication here. You will see a higher high, probably on 2 of the interest rates but a lower high
on one of them. This would confirm the bullish orderblock for the USDX.

Fig. 164 – ZBH17 – 30-year treasury bond market. 90m timeframe.

We see a failure swing. When we see this failed swing, by itself it does not mean anything. But if
we are looking for things to justify a long [buy] on the dollar and we see a lower high on the 30-year
bond market, then we go to the lower timeframe, the 10-year bond market.

Fig. 165 – ZNH17 – 10-year treasury bond market. 90m timeframe.

Now we are looking at another opportunity comparing the same highs and here the highs are
relatively unchanged. Almost the same height, more like flat to neutral. It did not make a lower high
in comparison and it did not make a considerable higher high, either.

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 Finally, in the 5-year treasury bond market we can see that there was clearly a higher high
formed.

Fig. 166 – ZFH17 – 5-year treasury bond market. 90m timeframe.

The short-term 5-year curve made a higher run.

The medium-term 10-year curve had an unchanged high.
The long-term 30-year curve had a lower high.
By itself this highlights that there is a shift in the interest rate market.

Interest rates are the single most influential driving force behind market
moves.

I have found the 5-year treasury bond market as “ZF” in Tradingview.

Fig. 167 – The 5-year treasury bond market as ZF.

If we understand that we are seeing a divergence between the actual underlying 5-, 10- and
30-year interest rate markets, we do not go into looking at the bond market just for these types of
scenarios. We have to have a predetermined idea of what the market we are about to trade should
see in terms of bullishness or bearishness. This brings us back to the USDX.

The same reference point in time between the 5th and 8th we saw that the dollar index went
lower and made a lower low and it traded down into a significant price level.

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 We are seeing a significant divergence between the lower low on USDX and that of the 30-
year treasury bond failing to make a higher high as it should have made comparably.
When price moves into previous levels of institutional order flow, we must anticipate
dynamic movement.

Fig. 167 – The dollar index. 90m timeframe.

ICT action plan

• Use the point of focus taught in the first month of the mentorship.
• When price action trades to a focus point like the following below, refer to the interest
rate triad and USDX to confirm smart money is behind your trade idea. If there is no
obvious indication that they are moving large funds, pass on the trade idea and look for
new ones that do.
o Orderblock
o Liquidity pool
o Liquidity void or FVG
If you are looking to be a buyer of the dollar, the interest rates market will show you the
divergence presented above. The interest rates should be moving all higher if the dollar is moving
lower. But if we see a bearish tone on the dollar index, you will see the interest markets doing a
lower low, another one making a lower low, but eventually one of them will fail to make that lower
low. That means that it will validate the sell signals that we are getting in the dollar index at a bearish
orderblock, for example.

This lesson gave you an insight on how to validate the orderblock, liquidity pools, liquidity voids
and FVGs. You want to look behind the scenes and get closer to the underpinnings of the
marketplace because the smart money is going to make a very clear fingerprint when they are in.
This is going to be seen in a shift in the interest rate markets and this validates the setups.

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 EPISODE 2 – Reinforcing Liquidity Concepts & Price Delivery – LINK
• External range liquidity
o The current trading range will have buy-side liquidity above the range or high.
o The current trading range will have a sell-side liquidity below the range or low.
o Runs on liquidity seek to pair orders with pending order liquidity – liquidity pools.
o External range liquidity runs can be low resistance or high resistance in nature.
▪ As a trader you want your trades to be in low resistance conditions. This
means that you do not want any resistance in your path or profitability.
• Internal range liquidity
o When current trading range is likely to remain – liquidity voids will fill in – gap risk.
o When the current trading range is likely to remain – fair value gaps will fill in – gap
risk.
o Orderblocks inside the trading range will be populated with new buy and sell orders.
o Market maker buy and sell models will form inside trading ranges.

Gap risk is nothing more than when the market quickly reprices to a level where there was very
little or no trading. In other words when we see liquidity run to closing in a range where there is only
one candle, a long candle, usually that is a gap fill. So, whenever you are in a long position and you
have a big gap underneath, that is gap risk.

Internal and external range liquidity examples

Now we're going to look at the internal and external range liquidity and the difference between
the two and how we can utilize both.

Fig. 168 – USDJPY, monthly timeframe with notations.

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 After the price cleared that old high, we would expect some measure of retracement. When
the retracement occurs, what we are looking for is where is the most logical area for it to pull back
down into? We would expect price to get back into the candle with the big wick for a short-term
bounce. But in this case the price stalled a bit above and then went through it, comes back to retest
the same level [the upper line] and ultimately comes down to clear the equal lows.

Fig. 169 – Price clearing the equal lows.

Now, at this moment, what is the next level of liquidity as it has already traded below the
equal lows? Consider the following swings and liquidity zones.
The same chart above becomes like this:
• The extremity red lines – the new range. What is above and below = external liquidity.
• Inside the range is internal range liquidity where the orange line is.
• But considering the range being between the equal lows and the high, the candle that
poked below the equal lows, went in the external range liquidity of the smaller swing.
We expect the low to be given up and run the stops.

Fig. 170. A smaller swing with external range liquidity between the red dots.

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 Once the stops are taken, we have a new trading range.

If the price is going to go higher above the last high, we look for areas of liquidity between that
high and the low that was created when the stops were taken.
• We know there is an up candle, we mark the open price with a line and extend it in time.
• Something else we can see on this chart is the FVG. So, if the price is going to reach higher,
we can expect to see the market want to reach into it. If the price gets above the up candle,
we can expect the price to reach into the FVG.
Those all things means that we are aiming for the internal range liquidity of the newly formed
range AFTER the price took out the stop losses. Ultimately it could trade as high as the low of the
highest candle [blue dot].

Fig.171 – Identifying liquidity areas and FVG in price movement.

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Next, we are switching from monthly to weekly timeframe.

Fig. 172. USDJPY, Weekly chart showing the price reaching into the FVG we saw on the monthly
timeframe. Replay mode was used.

Every time the market creates a trading range going lower, you want to mark off the previous
high and the new low. When the price trades back up, you are trading inside that range. If you trade
short at a bearish order block which is the last up candle, that is going to be a return to internal range
liquidity, but you are going to be looking for external range liquidity exit on, which is the stop below
the low.

Fig. 173 – USDJPY, weekly timeframe.

If we are in sync with the marketplace and we know what direction the price wants to go
and, for example, we are looking for it to go higher relative to the monthly chart, anytime the market
comes down below a short-term low, we can be a buyer of that on short term external range liquidity

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or buying up stops with the expectation of the range will continue to go higher seeking internal range
liquidity in the form of that fair value gap.
Understand on the higher timeframe where the market wants to go and you’ll be able to
frame a trade as you go on the daily timeframe.

Fig.174 – USDJPY, daily timeframe.

After the OB was hit, we can observe the market creating new highs and breaking the
previous highs. On this daily timeframe, that is a run-on external range liquidity. But on the monthly
chart it is still internal range liquidity because we are still just inside of a large monthly range.
You are looking to buy with internal range liquidity, at a bullish orderblock inside the
previous range and try to take profit at an old high or above it while you are in sync with a higher
timeframe directional bias based on institutional order flow. If we do not see any ranges that creates
new buying opportunities we can target the lows. Just find the swing lows and wait for price to trade
through them. When it happens, they are picking up orders for new longs.

Steps to follow
• Monthly or weekly – determine where the market is most likely to go to. If we are bullish on
monthly or weekly, we will be looking for buy signals on the lower timeframes as daily, 4h
and 1h. We will look for bullish orderblocks or turtle soup longs with the expectation that
any short-term highs on those timeframes to be hit. Let’s assume we are looking at an hourly
chart and the underlying direction of the asset is bullish on the monthly or weekly. If the
price retraces back into a bullish orderblock and the distance from the OB to the previous
high is 20 pips, that would not be a good trade. We are looking for around 40 pips or more.

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 EPISODE 3 – Orderblocks – LINK

Reinforcing orderblock theory [selecting and avoiding]

• Bullish orderblock
o Definition - it is the lowest candle with a down close that has the most range
between open to close and is near a „support” level.
o Validation – when the high of the lowest down close candle is traded through by a
later formed candle.
o Entry techniques – when price trades higher away from the bullish orderblock and
then returns to the bullish orderblock candle – this is bullish.
o Defining risk – the low of the bullish orderblock is the location of a relative safe stop
loss placement. Just below the 50% of the orderblock total range is also considered
to be a good location to raise the stop loss after price runs away from the bullish
orderblock to reduce risk when applicable.

A supposed support line, in this case, can be in the form of an old low on a long term or higher
timeframe chart. It can be an old high where price has moved above recently and now trying back
down into it. Basically, it is a simple support and resistance ideas, but use it on higher timeframe
charts lie monthly, weekly or daily.
Once you identified a support level and price could trade to it or through it, it does not make a
difference, we are waiting the price to show us indications that smart money is involved.
When we have this down candle we are
already assuming that this may be a bullish
orderblock. We do not know that until at a later
time another candle trades through it. When
the down candle’s high is violated with a new
candle and it trades through that high, now we
have a validated orderblock. This candle
validates the down candle as a bullish
orderblock. At this moment if the price trades
back down once that down candle or suspected
bullish orderblock’s high is violated we can now
highlight that candle’s high and even in the very
candle that broke the down candle’s high, if it
trades back down to that down candle’s high or
the bullish orderblock’s high, that can be a re-
traded price that which we could day trade off
of or enter our longs early. In other words, we
do not have to wait for a later time for it to
trade back down to this level.
Fig. 175 – Bullish orderblock validation.

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 Eventually the price will run away. At this
point if you did not enter at the re-trade of the
bullish orderblock’s high, wait for the price to
want to pull back. Now we have indications
that there has been displacement in the
marketplace. This is the evidence that you have
institutional sponsorship behind the move.
Large funds or institutional traders have the
capacity to move price. Now we are
anticipating the price willing to re-trade back
down into the orderblock’s high. At this
moment we can set alerts on the high
[preferably on the candle’s body, but the wick
can also pe picked].
During this waiting time you will
formulate an idea of what you are going to do
in terms of risk, how much you are going to put
on the trade when you buy and where you are
aiming to get out of the market with a profit.
Fig. 176 - Institutional price displacement and
anticipated pullback in orderblock's high.

Eventually the price will drive down into

the orderblock’s high. If you are in front of the
charts, that is when you enter the market with
a long position. If you have a limit order, you
will add a few pips, 5 for example, for the
spread. Sometimes the price will get a bit
deeper and that is OK.
What we are looking at is, in fact, internal
range liquidity. When trading inside the range
we are looking for an expansion up into a
known level of external rage liquidity. That is
where we are taking of some or all the position
where buys stops are.

Fig. 177 - entering long position at

orderblock's high with limited spread.

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 In terms of risk [stop loss], we take out
attention back down into the bullish
orderblock. We identify the entry at the open
of the down candle [buy point] and we focus
our attention on the midway point of that
candle. That is the mean threshold. Ideally the
best orderblocks will not see price trade down
below the midway point of the entire body of
the candle. Do not use the wicks.
The protective sell stop [stop loss] will be
placed below the bullish orderblock’s low or
below the closing price.

Fig. 178 - Risk management and entry point

at bullish orderblock's midway point.

Eventually the price will trade up and

through the old high. When that happens, you
are taking partials or the full position off
depending om how big the moves was. This is
pairing long exits with willing buy stops. This is
bullish orderblock trading in a nutshell.

Fig. 179 - Bullish orderblock trading and

partial/full position exits at new highs.

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 Liquidity based bias
• Bearish scenario
o Monthly – bearish.
o Weekly – bearish.
o Daily – bearish.
Intraday charts, 4h and less, will be correcting or retracing higher. This is where you anticipate
the market to enter a premium and seek a buys side liquidity to sell to.
Protective buy stops raids or returns to bearish orderblocks or fair value gaps and/or filling a
liquidity void. Each offering a potential low resistance liquidity run – shorting for a target under a
recent low. You want to be primarily looking to see what near term on daily chart is.
• Bullish scenario
o Monthly – bullish.
o Weekly – bullish.
o Daily – bullish.
Intraday charts, 4h and less, will be correcting or retracing lower. This is where you anticipate
the market to enter into a discount and seek a sell side liquidity to buy from.
Protective buy stops raids or returns to bullish orderblocks or fair value gaps and/or filling a
liquidity void. Each offering a potential low resistance liquidity run – buying for a target above a
recent high. You want to be primarily looking to see what near term on daily chart is.

The high to sell from can be yesterday’s high, last week’s high, last month’s high, intra-week high.
The low to buy from can be yesterday’s low, last week’s low, last month’s low, intra-week low.

We are now examining the dollar index on the monthly timeframe. Observe the naked chart and
attempt to identify what was discussed at the beginning of this lesson.

Fig. 180 – Dollar index, naked chart, monthly timeframe.

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 The upper part of the chart appears as follows, and for a more detailed view, we will zoom in
on the upper right area.

Fig. 181 – Dollar index, zoomed chart, monthly timeframe.

Reading the chart from left to right, we can observe the following:
1. We have equal highs.
2. There is a level of support.
3. A candle violates the last down candle after reaching the support, confirming the presence of
a bullish orderblock.
4. The price re-trades back down into the orderblock.
5. Following the retracement of the first orderblock, there is another validation of an
orderblock, as indicated by an upward candle that surpasses the high of the previous candle.
Subsequently, the price re-trades back down into the most recently formed order block.

Transitioning to the weekly timeframe, the chart maintains the same notations as before.

Fig. 182 – Dollar index, zoomed chart, displaying the weekly timeframe with notations from the
monthly timeframe.

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The monthly chart can be refined when analyzing the weekly timeframe by implementing the
following adjustments on the chart.

Fig. 183 – Refined chart, weekly timeframe.

As you can see, the differences are relatively minor. The same analysis and reading as
previously discussed still apply in this refined chart on the weekly timeframe. It is crucial to be
mindful of where the month begins, identify the confirmation of the orderblock on the higher
timeframe, proceed to the lower timeframe for further refinement, and then execute your trading
decisions accordingly.

Next, we will transition to the next lower timeframe, which is the daily chart.

Fig. 184 – Daily timeframe of the dollar index.

As you might have already observed, the notation we previously had appears scattered due
to the refinements made on the higher timeframe.

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 So, you can see how dynamic it is to work from the monthly levels to the weekly levels,
refining them, and waiting for a confirmation that there is a displacement by smart money and then
simply waiting for those levels to be re-traded back into. You can refine these as small as you want by
going as low as a five-minute chart.
You are looking for the direction of the monthly, weekly, and daily timeframes to get a
directional bias. Only focusing on those higher timeframe directions, those orderblocks are the ones
that you buy. Those orderblocks will keep you away from taking focus on the bearish orderblocks
because while bearish orderblocks, or the last up candle before the down moves that you see in
price, those are good objectives to take profits at. If you hit a bearish orderblock during a time when
profit taking should take place, you may not get that run above an old high. You may end up having
to take profits at that bearish orderblock and then wait for Asia and Frankfurt and then London to
retrace a little bit and then drive through and then you will see that run on a new higher high for
capturing external range liquidity.
When time of day is not in effect, you do not even consider the bearish orderblock. You
might expect them to pause and consolidate. You are looking for them to drive the price through and
old high to absorb external range liquidity because they are going to take profits at a higher price,
not just at an old high.

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 EPISODE 3.1 – Mitigation Blocks – LINK
When we look at mitigation blocks, all we are looking for is a condition of the marketplace
where the market has given clear indications that it wants to break down or move higher in a step
ladder formation.
When we look at the marketplace and we frame the price action in the form of resistance and
support levels or anticipated bullish and bearish institutional reference points, we have to have a
context in the marketplace behind our viewpoints. In this example we will be looking at a bearish
scenario.
When we are looking at a market that is moving into a potential bearish resistance level, the
market typically will move up into an old high, old low, bearish orderblock, a breaker etc. We will
wait for the price to indicate a confirmation that there are willing sellers up there.
If the market does show repricing and then rallies one more time up to it, we will monitor and
observe if the market has a willingness to want to break down. Eventually the market will show signs
that it does, in fact, want to break lower. What we see here is an M pattern. This is a failure swing
with a confirmation break in market structure.

Fig. 185 – The M pattern with a confirmation break in market structure.

That low is what we are going to utilize to frame the context of the market structure shift
[MSS]. When the MSS is seen with a break below the old low, that gives us confirmation that the
market does have participants on a large scale willing to drive prices lower.

Fig. 186 – The mitigation block [MB].

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 What we do is to look at this range, the green area, short term low to short term high. Inside
that range there has been buyers. The problem is that the buyers are underwater. This short-term
rally in price highlights a specific institutional reference point, known as the mitigation block.

Once the price posts a market structure shift lower, our attention moves to this specific low in
price action. Inside that low is the last down candle. That is the point where the buying took place
right before that little short-term rally up. Since the price broke below that low we know that there
are smart money entities behind the marketplace driving price lower. The last down candle
highlighted in the green area below will give us a bearish level to sell into.

Fig. 187 – Bearish level of selling.

When the price drives back up into that old short-term low there are going to be 3 reference
points that we need to be aware of, highlighted in the next image as points A, B and C. In short, this is
an opportunity to sell whatever particular market or asset class this is.

Fig. 188 – The reference points to consider.

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 Let’s say we look at the chart and this is what we see. It does not mean that we missed an
opportunity. It just means that we have a new opportunity that is unfolding.

Fig. 189 – Unfolding opportunities.

Do the long in this area need to be mitigated? We do not know for certain. But if we do know
that the price is going to be moving lower, longer term, that there is an unrealized lower support
level for sellside liquidity that has not been tapped into yet, we could be viewing this short-term rally
as an opportunity for a new selling opportunity.

Fig. 190 – New opportunities for short entries.

We have another market structure shift and we will focus on the last down candle before the
short-term rally. If the price reaches back into it we can be selling at that moment as price drives
back above it.

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As the price hits that last down candle and the previous short-term low, we can be selling.

Fig. 191 – MSS and price reaching back into the last down candle.

When the price hits that level as presented above, we now have a short opportunity.

Fig. 192 – Short opportunity.

Eventually the price hits the support level. When it does, we collapse the trade and take profits.

Fig. 193 – Price hitting the highlighted institutional reference point.

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 When we have this, what we see is the classic “support turns into resistance.” Every time the
price moves back to an old low, what is actually is referred to as a buyer’s remorse. The buyers at the
previous short-term low that they say, the smart money short term pop in their favor, then
eventually the market breaks below that low they bought from. When the price get back at the level
where they bought it, they bail out the position. On the institutional level, the smart money
understands these short-term fluctuations and they can drive price on short term basis higher or
lower through manipulation.

Fig. 195 – Classic support turns into resistance.

Premium price highs are bought by less informed traders and sold by smart money. Which are
you going to be grouped in?

Fig. 196 – Where the uninformed money buys and the smart money sells.

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 EPISODE 3.2 – ICT Breaker Block – LINK
We are going to assume that we are watching price and it trades lower and creates a short-term
low. Eventually, when that short term low is violated, and trades down into a support level we view
that initial drop down below the previous low as a potential false break or turtle soup long. Below
short-term lows there are going to be sell stops and our expectation is to see if the market wants to
get back above that short term low. Initially it might come up and flirt with that same old low and
give an indication it may want to view that as a resistance price point. We are more inclined to see if
it wants to show a real significant price move higher.
Eventually when we see that, it is going to be in the form of a market structure shift [MSS]. It
takes out the high or the short term high. That high is what we focus on.

Fig 197 – A market structure shift.

Wait for price to come back into that old high. When it trades there we see that as real support
because there are going to be orders inside that high that will be looking to be mitigated. The entities
that went short at that high will want to take those positions off and, maybe, get in sync with a new
leg higher in price.

Fig. 198 – The real support level.

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 As price moves away, that confirms the breaker and then we wait for higher objectives to be
met in price action.

Fig. 199 – Bullish breaker.

We are focusing on the high in between the two lower lows. One low has to be traded below
and it is going to run out the sell stops. We focus our attention on the short-term high that is in
between the two lows. We use that as a resistance level that is broken and that will become support.

Similar ideas apply for a bearish situation.

Fig. 199 – Bearish breaker.

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The bearish breaker block is a bearish range or down close candle in the most recent swing low
prior to an old high being violated. The buyers that buy this low and later see this same swing low
violated will look to mitigate the loss. When price returns back to the swing low this is a bearish trade
setup worth considering.

Example
We have an old high that is traded through
and rejected. It runs the stops above the old
high. Those buy stops are now neutralized. We
focus our attention at the swing low that
formed between the two highs. We see a
market structure shift; the price returns back to
the swing low and that is the bearish breaker.
We look for another low to form with a new leg
in price moving lower.

Fig. 200 – The bearish breaker.

What to look for

We are looking for an old high to be run
out or for a false breakout above an old high.
This raid on stops indicates that buyers are
trapped long. We know this is true when the
market quickly does a repricing lower after
buy stops were taken. That is a confirmation
that we are potentially seeing a new breaker
forming.
The low that is violated once the market
structure breaks down will be viewed as a new
selling opportunity, especially when it trades
back up to the low that serves as the bearish
breaker.

Fig. 201 – What to look for in a bearish breaker.

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 The bullish breaker block is a bullish range or an up-close candle in the most recent swing
high prior to an old low being violated. The sellers that sold the low and later see the same swing
high violated will look to mitigated the loss. When the price returns to the swing high this is a bullish
trade setup worth considering.

Example
We have an old low that is violated
taking out sell stops below that old low. The
swing high is what we are going to look for
the bullish breaker, but we have to wait for
the price to break through that swing high to
confirm that there has been a run on stops
and that old swing high will reside a bullish
breaker.
As the price trades back down to that
swing high we would be buying that with the
expectation that there is going to be a
mitigation that is taking place. Those sell
orders that they use to drive prices down
below the old low, they would be under
water here so are going to want to take those
positions off and add more longs. That is the
bullish breaker.
Then we would expect to see and anticipate Fig. 202 – The bullish breaker.
a range expansion to the up side.

What to look for

To tell that we have a breaker in
formation or a confirmation, the raid on sell
stops indicates that sellers are trapped
below the old low. The range expansion that
takes out the short term high in between the
two lows [this repricing higher after sell
stops are taken] is a confirmation that the
market is a run on stops below the old low
and the old high that is violated that
supports a market structure shift for
bullishness; The break of the swing high
supports the market structure being broken
higher and any retracements from this point
on will be viewed as a new buying
opportunity.
Fig. 203 – What to look for in a bullish breaker.

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 Example of a bullish breaker

Fig. 204 – Naked USDCHF chart – 4h timeframe.

Fig. 205 – Annotated USDCHF chart explaining the bullish breaker – 4h timeframe.

We have an old low. The market trades below the old low and then it rallies up. What we are
seeing here is the market structure shift after stops have been taken on the sell side.
The focus point is in the short term high in the last up candle in between the two lows that most
recently formed and took out the sell stops. This is where the classic support is effective.
When you find the short-term low that has been violated, also find the short-term high that was
recently formed. When it trades back to that, that will be, in fact, a support level that is highly
probable for bullish prices.
Observe the price trading inside the range created by the last up candle where the short-term
high is. That candle was chosen because that was the highest one prior to the drop down taking the
sell stops out. The entire range of the candle will be used.

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EPISODE 3.3 – ICT Rejection Block – LINK

Fig. 206 – GBPUSD – daily timeframe. Major highs and lows.

30th of May 2011 to 27th of June 2012.

Fig. 207 – The major swings.

Fig. 208 – Turtle soup setups.

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 Bearish run on buy side liquidity [Turtle soup sell]

Fig. 209 – Turtle soup sell.

We have equal highs that has been ran out so there are buy stops above those equal highs in
there. We would reasonably expect to see a sweep through and a potential rejection and trade
lower.

The bearish rejection block is when a price high has formed with long wicks on the high(s) of
the candlestick(s) and price reaches up above the body if the candle(s) to run the buy side liquidity
out before the price declines.
As you can see there are several wicks forming potential
resistance. The classic chartist will look at this as a potential
continuation pattern in the form of a bull flag. Price does not
move around because of animal patterns or supposed geometry
in price action. It is based on the orders.
If this is near an overall longer term resistance level or
trading into a bearish order block or an old low that might not be
seen in this sample size of data and you see that the price ran up
higher for a good number of candles and then starts moving into a
small consolidation, look closely. Is there a strong likelihood that
this is going to go higher based on a continuation pattern like a
bull flag or a pennant OR is showing underlying distribution?
Notice there is no higher high here. Or is there?

Fig. 210 – Price moving in consolidation.

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 Take notice of the highest body in this
formation and the most recent candle that
traded through. Price pushes above the previous
highest candle’s body. That run above the highest
body’s candle [the arrow] produces the
distribution seen in the chart. Price does not
need to make a higher high to have a failure
swing. By looking at the body of the candles and
dealing specifically with the opens and closes, we
will be able to figure out what distribution and
accumulation takes place at these turning points.
In the red area we see the price clearing out
the buy side liquidity and then the rejection.
What we are seeing is distribution.

Fig. 211 – Distribution.

What does a rejection block really look like?

• Bearish rejection block is seen in major to intermediate term uptrends.
This is a single wicked candle and it will be better understood when there are multiple candles
and wicks that form the high. We are still looking at the highest open or close inside the swing high
that forms. The wicks are just drawing our attention to a potential rejection block. When we see the
wick we have to build the parameters for the rejection block by finding the highest high and the
highest open or close in the swing high. It does not matter if the highest candle is bearish or bullish
closed candle.
Once we have the rejection block defined by the highest wick’s high and the highest open or
close in the swing high, that frames the rejection block. This range is going to be a selling block and
we treat it as a bearish order block. When price trades back up to the low of that range, that is the
trigger.

Fig. 212 – Bearish rejection block + example.

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 • Bullish rejection block is seen in major to intermediate term downtrends.
When a price low has formed with a long wick(s) on the low(s) of the candlestick(s) and the price
reaches down below the body of the candle(s) to run the sell side liquidity out before price rallies
higher.
We frame the bullish rejection block as the lowest wick low and the lowest open or close that
makes that swing low on the timeframe we are looking for the pattern.
When the price trades back down into the high of the block we can be a buyer just below it or we
can wait for the price to trade through it by a little bit and we can be a buyer on a stop just above
that particular level.
The trigger is the high or the lowest open or close in that swing low.

Fig. 213 – Bullish rejection block + example.

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 EPISODE 3.4 – Reclaimed ICT Orderblock – LINK

Market maker buy model

What the market maker buy model is, is when the market drops down and a price swing lower
reaching into a higher timeframe or intermediate support level like an old high, old low, bullish
orderblock, a filled void or closing in on an FVG. We are going to be anticipating that move lower and
watch it go lower or we can be short.
If we have seen the decline down to a support we can start looking at specific levels to watch for
reclaimed orderblocks.
First, we need to understand the sell side of the curve on a market maker buy model. That is the
drop down into that support level before we see the market go
higher. The market maker is going to be scaling in early, so
they are going to have areas at which they start buying early
because their positions are much larger than ours. They
require a great deal of movement in time to price in their
orders because they cannot facilitate their entire order on one
transaction. They have to scale in that position in the form of
hedging.
As the price drops down into the lower level of support,
they are going to build more positions and we will see, as the
price gets lower, there will be small little transactions that
cause the market to create short-term little lows in the market.

Fig. 214 – Market maker buy model.

The sell side of the curve

So as the market moves lower, every time we see a small little bounce in price action that is
minor displacement showing that there was new accumulation being taken into the market place.
We need to have the understanding that the lower level of support that is reaching for is going to be
the ultimate price level it is most likely to have its impulse price swing away from. Prior to that low
being formed, many times trades are looking at those initial short-term rallies that take place as
entry points and they end up getting stopped out because what they are doing is that they are piggy
banking on an entry that is based on a hedging motive on the market maker. So as the lows keep
creating lower lows but every time the price makes a smaller short-term move higher, we are going
to be referencing that last down candle because that is a bullish orderblock. It is occurring during the
sell side of the curve. The curve is, basically, a price swing lower that trades higher.

The buy side of the curve

Eventually we will see the price move higher off of a major support level and we will start seeing
the buy side of the curve come underway. The market will start pricing new higher highs and we will
be focusing on those old down candles formed during the sell side of the curve. Every time there was
a bullish order block that was created on the major price swing going lower and it saw a little bit of a
minor movement higher, that has indicated that they were hedging on, and that down candle is what
we are going to be looking to reclaim or watch price recapitalize that old orderblock now that we are
on the buy side of the curve.

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 Every new buying opportunity is going to be matched up to the previous down candle while the
price was dropping earlier on the sell side of the curve. Ultimately everything will match up with the
down candle on the both sides of the market maker buy model.

What is a bullish reclaimed block?

Is a candle that was previously used to buy price and a short-term bounce confirms minor
displacement. In the buy side of the curve the old blocks or down candles will be reclaimed for new
longs.

Fig. 215 – Examples of reclaimed bullish orderblocks. AUDUSD, 1h timeframe.

Market maker sell model

It is the same thing as the market maker buy model but
reversed.
We are anticipating the market to trade higher to go
lower. You may not see it happen before the fact, you may
notice that the market is making a high and you expect to see a
sell-off so we can use this information just by focusing on the
buy side of the curve.

Fig. 216 – Market maker buy model.

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 The buy side of the curve
Every up candle that sees displacement or a short-term decline confirms that there are hedging
underway. It means that they are selling early, and the market makers are selling into these rallies.

The sell side of the curve

When we get to the sell side of the curve every single time we see the market trade back up into
an up candle right before the down move during the buy side of the curve, that bearish orderblock is
going to be reclaimed and we can take that as a new short. If there is a displacement in price and we
see bearishness after an up candle we can assume that this is going to be evidence that they have
been hedging and selling short early. When we get to the high and we climax there and start trading
softer and going lower, every time we re-trade back up into that old previous up candle during the
buy side we can now take new shorts at these old bearish orderblocks. Everything is matching on the
buy side of the curve to the sell side of the curve.

What is a bullish reclaimed block?

Is a candle that was previously used to sell price and a short-term decline confirms minor
displacement. In the sell side of the curve these old blocks will be reclaimed shorts or new entries for
short positions.

Fig. 217 – Examples of reclaimed bearish orderblocks. AUDUSD, 4h timeframe.

We are looking at a market maker sell profile and using the reclaimed orderblock we will be
looking at the sell side of the curve or to the right of the high and we are going to focus on every up
candle that showed a willingness to see the price drop during the buy side of the curve or to the left
of the high that formed.

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 EPISODE 3.5 – ICT Propulsion Block – LINK
The ideal setup is seen in major to intermediate term uptrends.
The bullish propulsion block is a candle that has previously traded down into a down candle
or bullish orderblock and takes over the role of price support for higher price movement.

In this example we have a down candle which shows price willingness to move higher and then
we have a new down closed candle that trades right back into it [the yellow shaded area]. That
candle becomes a propulsion candle. What makes it
propulsion is that it already dropped back down into an
orderblock that is already predisposed to go higher, then
it created another higher orderblock that touches the
initial one. That new higher level bullish orderblock will be
highly sensitive. It should never see the mean threshold
break. Half of the body’s height should not give way. The
sensitivity is going to be much more amplified when it
trades back down into the high, but we are willing to
allow it to still trade down to the mean threshold, but
most likely it will never do that. It just trades down into
the high of the candle and immediately explodes. The
market will show a sudden and violent movement away
from that down candle.
Fig. 218 – Bullish propulsion block.

Example 1

Fig. 219 – Bullish propulsion candle. USDCAD, 15m timeframe.

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 Example 2

Fig. 220 – Bearish propulsion candle. NZDUSD, daily timeframe.

We are looking at an example of a bearish propulsion candle.

First we see the bearish orderblock at the top. Price trades up into it, breaks down and a new
orderblock is formed.
[here I did not understood why ICT placed the line of the 2 nd OB on the wick of that candle and not on
the body as he did with the 1st one].
Secondly we have price movement lower and then it trades right back to the 2nd OB. That
specific candle that touches the 2nd orderblock, in this case, becomes the propulsion candle. If we cut
the candle in half we will find the mean threshold of its body. We take into consideration the mean
threshold only after the price broke the propulsion candle’s body. Pay attention. It says body, not low
as the wick.
Thirdly, after the price broke the propulsion candle’s low, we can draw its low with a line and be
a seller when price get back up. It already shown a willingness to not go above on the mean
threshold. As soon as it hits the low of the propulsion candle, it sells off.

Fig. 221 – NZDUSD clean chart. The analysis was made in the highlighted area.

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 EPISODE 3.6 – ICT Vacuum Block – LINK

Bullish vacuum gap – reversed for bearish vacuum gap.

The bullish vacuum gap is a “gap” created in price action as a result of a volatility event. The gap
forms by a “vacuum” of liquidity directly related to an event like NFP, FOMC, interest rates,
geopolitical event that was not foreseen. Those events can create a vacuum block or, in futures
market, a session opening can.
Here we can see a crude depiction of price action, short-term lows formed on futures, basically
any market that has futures contracts to trade. When we see that gap the first assumption in on the
part of most traders is that it is going to keep going higher. Sometimes it will. If the market had been
rallying for a number of days, weeks in a prolonged uptrend and then it does this, this could be an
exhaustion gap and that is a graphic depiction of capitulation.

If we gap away from a market that is in a discount, we had some retracement but we are
expecting higher prices, nonetheless, that space in between the two candles is important. There are
no trades made between the previous candle’s close and the next candle’s opening. The gap can be
30-50-60 pips from where it was trading right before the numbers release for the NFP, for example.
Because that happens there is absolutely no way for any trader to execute. So, what it does is that it
creates a vacuum of liquidity. Most times the market will come back and want to close that in. There
are some points we must take special notice of, but for the most part is we are going to anticipate
that move to fill in. First we have to identify the gap in a specific manner.

If there are no trades in that range, what the

market actually did is that it gapped up through it
and it started trading at a higher price on a new
candle. Now we have to discern whether or not
the market is going to continue and run away
from that price level and leave the gap opening or
if it will trade back down and close in that range.
If it does not close in the range, how much we can
reasonably expect for that range to close in and
still look for a potential buy setup?
Inside the range we have a vacuum block.
Even though there is no candlestick on our chart,
price did, in fact, have a parameter. We can look
at it and interpret it. There is an absence of
liquidity but we are defining it as the high and the
low of the gap. Seeing it as a candle, it has a mean
threshold, an opening and a close. Fig. 222 – The bullish vacuum block.

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 • Scenario 1
If we are bullish we are looking for „Is there any bullish orderblock or
down candle that would cause the gap not want to fill entirely?”. As price
trades down we see that happening. We have the 2 down consecutive
candle acting as an orderblock. Here we would expect a potential bounce
and leave that little gap opening still intact. We have to see immediate
feedback. Buying it there, the stop loss will be below the lowest down
candle.

Fig. 223 – Bullish orderblock

and vacuum block.

• Scenario 2
If the price of a trading asset is lower and it reaches a specific orderblock area, we may choose
not to buy at that point because we have a stronger belief that it will likely trade back down to the
level of the previous upward candle before the price gap occurred.
There are certain factors that influence this expectation. For instance, if it is still early in the
trading day, such as the beginning of the New York session, it is probable that the price will come
down and close the gap. However, if the asset had a gap up later in the afternoon, it is more likely
that the gap will remain open.
Typically, gaps occur during the New York session or late New York due to events like the FOMC
(Federal Open Market Committee) announcements. Usually, when the news embargo lifts at 08:30,
there can be market movements that cause such gaps to occur. Less likely to have gap formed in
London opening.
In this situation, we can disregard the bullish
orderblock level and instead anticipate the formation of a
smaller area. But if it is later in the day, around 10 am or 11
am, it is possible that a portion of the gap will remain open,
presenting us with a fair value gap for trading at a later
time. We will then wait for the price to return and close the
gap, but leave it open for the remainder of the current
trading day. To clarify, if there is a gap during the New York
trading session, particularly between 10am and 11am in the
morning, it can influence our thinking process. This is
because important news events are typically released
during this time.
Fig. 224 - Bullish orderblock and FVG.

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 • Scenario 3
We have two reference points here. The opening of the
gapped-up candle and the close of the up candle right
before the gap forms. As the price trades lower and lower
we would see a complete closure of the gap. That would be
a full return of the vacuum block. The range is 100% filled.
This is a perfect delivery of price and now is completely
balanced out. If we are expecting higher prices, if there is
liquidity that has not been sought out prior to that highest
high that formed on the gap opening and back bullish
liquidity above the market place, this would now allow
price to drive higher. This could be a buy here with a stop
loss below the lowest low.

Fig. 225 – Perfect price delivery

in a vacuum block.
• Scenario 4
If price was to trade down and hit that level and we start to see a
rally up, we do not want to see the price ever come back below the
level that would have cause it to close the gap. When we see this, we
are looking for the up candle that formed the gap to be cleanly broke
through. We do not want to see it hesitate here because, otherwise,
that would be a bearish orderblock. We are anticipating the bullishness
of this move to drive right on through that last up candle when it
gapped up because now the price has already been delivered
efficiently. There is no reason for the price to come back down below
the close of the first up candle as it has closed in and filled in that
vacuum of liquidity. At this point we take profits because it if starts
correcting and trades lower, the trade is suspect because it has no
reason to come back down as it already closed the gap.

Fig. 226 – Price completely fills

the gap and rallies away.

Summary
A vacuum block is nothing else but a breakaway gap. Because it creates a vacuum of liquidity,
we have to understand that not all gaps fille completely. We anticipate the gap sometimes not filling
is because if there is a bullish orderblock and price gapped up, the price may only come down to a
bullish orderblock that would be inside that gap. Price just comes to that level and stops trading
lower and rallies higher leaving a small gap which would be classified as a fair value gap. We can use
the FVG at a future time when price is now trading lower and we look for price to come down and
close that gap in. If it stays open we would label that as a breakaway gap and it will show willingness
and strength to get in there and expect higher prices.

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 EPISODE 4 – Liquidity Pools - LINK
Reinforcing liquidity pools and when to anticipate raids.

What is liquidity?
• Liquidity is the „open interest” of buyers and
sellers in the market and can be further defined
by those entities at or near specific price levels.
The gray area represents the current price that we
are looking at for our specific asset class. Let’s assume
it is the dollar index. If the current price is the market
price, our understanding is that is going to always be a
participation in the marketplace by buyers and sellers.
We do not always know why the interest would be in
the form of buying or selling. We are not really so
concerned about what other traders are trying to do
with their trades, but we are interested in knowing
where their interest may reside in new pending orders.
Fig. 227 – What liquidity is.

New pending orders are in the form of buy stops above the market place or usually more
refined smart money traders that will be selling above the market price. Below the market price we
will see sellers and usually it is the smart money that usually wants to buy below market price. The
retail trades is, usually, the one that is reactive to price and they are usually buying and selling at
market price.
The liquidity that we seek as a smart money minded trader is that we want to sell to the buyers
above us or above the market price. We want to buy below the market price from sellers that are
willing to sell below the market price.
By having this understanding, we are always going to be selling at a premium and buying at a
discount. This is diametrically opposed to what retails is typically taught. They are taught to buy on a
breakout or buy on some continuation pattern like a bull flag, wedge etc. We require the market to
pull back into a level of discount and that requires a bit of discipline and most traders, especially
retail, lack discipline in terms of patience.
In this hypothetical example with the dollar index, if we are looking at a bearish market, what
we are willing to do is to sell above old highs. The retail sees that as a bullish breakout. We know that
if the price prints at an old high or just above an old high there is going to be buyers willing to
accumulate longs up there OR they have shorts on and the market has repriced above and old high
and that is exactly where their stop loss for protective short position would be residing. We could sell
at that moment.
By doing that we are selling short in a pool of liquidity of buyers. Above old highs there is a pool
or a collection of orders that traders will build up around.
For example, if we believe that the dollar index is bearish we can wait for a rally to go above an
old high and look to get short there with the expectation that that move above an old high would be
a false breakout and then the market would be going lower at some lower level liquidity reference
point in terms of another old low, a bullish orderblock or to close in fair value gap.

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 Run on bullish liquidity pool

Fig. 228 – Run on bullish liquidity pool.

• Definition
The low that is under the current market price action will typically have a trailed sell stop under
it for long traders. On sell stops for traders who wish to trade a breakout lower in price for a short
position, it also resides below old lows.
• Validation
When the low is violated or price moves below the recent low and the sell stops become market
orders to sell at market. This injects sell side liquidity into the market and, typically, this is paired
with smart money buyers.

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 • Entry techniques
When the underlying market is bullish before the price trades under the recent low, place a buy
limit order just below or at the recent low. You are buying the sell stops like a bank trader or any
other smart money entity would.
• Defining risk
The low you are buying under can be a swing of 10 – 20 pips in most cases. A 30 to 50 pips stop
loss is ideal if your entry is under the low and not above it. It is better to wait the market to trade
under that low and once it trades under 10 – 20 pips, that is a really good entry point because if you
use 30 – 50 pips stops loss while entering below the low, it is going to need a real significant move to
knock you out. If it starts moving beyond 25 pips below the low, it is probably not just a stop run. You
might be looking at a much further decline.

Example

Fig. 229 – USDCAD, daily and 15m timeframe. Example of a pool of liquidity.

On the left side we have the daily chart and on the right side we have the 15m timeframe. Take
a look at the candles’ body on the daily. We are going to look for a sweep below the bodies of these
candles as there are stop losses below them.
In the shared example of ICT that 1.3102 line is not exactly on the candles’ body. It is lower. I do
not understand exactly why. Let’s continue.
The last candle that we can see on the daily chart on the left has its low at 1.3102 and then we
transpose that level on the 15m timeframe. We see the price trading below it. It rallies away. No
trades yet. As the news are coming out, interest rates announcement in this case back in 14 th of
December 2016, we are looking for a run below the low that was just created.

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 As we can see, the 15m low previously created was swept and then the price rallied. The target
will be the daily level we see at 1.3357.

Fig. 230 – Pool of liquidity on 15m timeframe. USDCAD, daily and 15m timeframe.

Price finally reaches into the daily level at 1.3357.

Fig. 231 – Price reaching into the daily level. USDCAD, daily and 15m timeframe.

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 EPISODE 5 – Liquidity Voids – LINK
This should have been episode 4, not 5, as previously we had episode 3.x lectures. The episodes
are missing from YouTube or there was a mistake when ICT uploaded them.

This is about when to anticipate ranges to fill in.

• Liquidity void is a range in price delivery where one side of the market liquidity is shown in
wide or “long” one sided ranges or candles. Price typically will want to revisit this “porous
range” or void of contrarian liquidity.

When price is in a small consolidation / trading range we call this price imbalance. It means that
price is in a point of equilibrium. At some point the price will eventually move out of the
consolidation. When this occurs, we know that there is a participation in the form of smart money.
Smart money is the only one that has the deep enough pockets to cause price to move out of
consolidation or move it at all in any significant manner. This causes a price imbalance or, as we call
it, displacement.
Price can stay away from that drop down aggressively. There is no specific time limit on how
long it is going to take for these voids to close in.
The void is this small little area of price action where it was only delivered on the downside. We
have long body candles where price has only delivered on the downside and has a small little gap in
between the 2 biggest down candles. This is what we framed as a liquidity void.

Fig. 232 – Liquidity void. EURUSD, 1m timeframe.

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 When we see price moving aggressively from a consolidation area it indicates that there is smart
money in the market place and they believe that price is wanting to go lower. Because they are smart
money, their orders are going to be larger than ours and that means that their participation will have
to be scaled in as they cannot facilitate their entire short position at one price so they have to
gradually work that position in. It may require them to take a little bit lower entry, sometimes they
may push it higher and run back above that consolidation in the form of buy stops they can sell to
those buy stops.
When we have the liquidity void and it is broken down like this, there is a void of buy side
liquidity. This means that the market aggressively moved away from that consolidation. Because it
repriced aggressively lower, it was all one sell side liquidity only and very little buying took place in
that run down. The nature of the liquidity void is that we will probably see, with a great deal of
probability, a move back up into that 1.0476 level which will fill in the entire liquidity void.
Remember it is a void of buy side liquidity that causes downward ranges like this. We expect
price to come back up and trade again in same price levels marked by the bracket below.

Fig. 233 – Void of buy side liquidity. EURUSD, 1m timeframe.

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 We are now looking at the same chart, but on the 5m timeframe. The liquidity void is not shown
as one big 5m candle that drops down. That is the absence of buyers or buy side liquidity.
While price is showing a short-term support, what is going to be building up below those lows?
Sell stops. So, if we anticipate price potentially going up and closing in that range that we have
identified as a liquidity void, that will be covered back over at some future time with bullish price
action. When it does that it means that the price action has been balanced out.
Then the sell stops below the low get ran and price runs up and at this point we would
reasonably expect to see that liquidity void completely closed in. Sometimes it does and sometimes it
does not.

Fig. 234 – Sell stops being ran and price runs into the liquidity void. EURUSD, 5m timeframe.

Sometimes it will come back right down, run an area of liquidity again, the same equal lows, and
then it will run up and fill the void.

Fig. 235 – Price running the equal lows again and hitting the liquidity void.
EURUSD, 5m timeframe.

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 On the 15m time frame we can see a bit more “friendly on the eye” where the runs on those sell
stops would have been.
Notice, also, that there is two times the price trades up into that 1.0476 level, but this time it
trades a little bit higher than the first time it hit it. When we this second run into that, it just pokes its
head above the previous time it went above 1.0476.
Look at the two candles immediately after the run into that level. The second candle gaps down
at the opening and creates a bearish candle.

Fig. 236 – A price gap formed after the second hit of the expected level.

We know that it is more likely to move lower because it moved aggressively away from that
1.0480 level and it tried a couple of different times to get up there. Remember that pricing in on an
institutional level has to happen in graduated terms. It cannot be done on the first pass.
Liquidity voids are gaps during price trading. When we see a gap where price has closed from
one candle and gaps into another opening of another candle and that separation between the two
prices do not have a closure, a range closing that in, it creates a common gap. Here we can put a sell
limit order. In that price gap we can be a seller at that specific price level.
Look at the reaction. Once it closes in that gap, only the bodies closes it in. It wicks up into the
body, but the body of the up candle as it closes that gap, that is all that is necessary. Once filled, it
reprices and makes it run down below the equal lows that were formed.

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 Fig. 237 – Price reaching into the equal lows after the void was filled. EURUD, 15m timeframe.

On the 15m timeframe we can see that the 1.0476 level had been hit with an ideal use of a
common gap. Price makes a run for 1.0404 sell stops where we can take partials and then continues
with another leg down towards to 1.0365.

Fig. 238 – Price reaching into a final target. EURUSD, 15m timeframe.

Everything presented into this chapter is reversed for when the market is bullish.

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EPISODE 6 – ICT Fair Value Gap - LINK
Reinforcing fair value gaps and trading inside the range.
• Fair value gap is a range in price delivery where one side of the market liquidity is offered
and typically confirmed with a liquidity void on the lower timeframe charts in the same range
of price. Price can actually “gap” to create a literal vacuum of trading, thus posting an actual
price gap.

Where do you see an example of the fair value gap?

Fig. 239 – EURUSD, daily timeframe.

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 The FVG ICT presented is highlighted below in the blue shaded area.

Fig. 240 – Fair Value Gap seen on EURUSD, daily timeframe.

What makes that gap so significant?

The candle to the left of the down candle we are looking at comprises the FVG and to the left of
that we have the higher bearish candle. Draw your attention to the fact that it has a down close, but
it has come off the low. We are looking at the
low up to the close of the candle. That is the
wick of the candle.
If we take that same range and look at the
down candle that created the FVG, that price
range has already been traded up into it
delivering the buy side liquidity.
In other words, on this candle’s low up to
the close the price has come off that low. So, if
it came off that low to have a higher close on
that candle, that means the buy side liquidity
had been offered on that range.
When we look at the down candle that
makes the FVG we are not concerned with the
range created higher.

Fig. 241 – The low to close offered buy side.

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 We are now looking at the other candle
that frames the FVG. The next area at which we
see buy side liquidity offered is from the up
close candle, the blue shaded area, that makes
the FVG. The open to the high of this candle has
offered buy side liquidity as well.
So, we have seen price offered on the up
movement, or buy side liquidity, on two
candles. One to the left of our FVG creating
down candle on the daily chart and one created
to the right of it where we saw the price move
higher in portion of that down candle. We have
a range left that is open.

Fig. 242 – The low to close offered buy side.

It is specifically that area that is left in the

red shaded area. So, we are delineating the low
of the previous candle and the high of the
candle to the right that creates that little pocket
of space. That is our FVG. There is no trading
outside the movement of that range, except for
that down candle and no up movement at all on
this timeframe.
When we are looking at FVGs and studying
a specific timeframe, the gap occurs on the
timeframe we are looking at. We can break this
down further into smaller timeframes, but in
the smaller timeframes we will probably end up
seeing a liquidity void where the gap would be
indicated here on this timeframe on a lower
timeframe.
Fig. 243 – Fair Value Gap left open.

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 We are going to expect the price to eventually trade back up into that little gapped area. That is
the nature of the FVG.

Fig. 244 – Expecting price to reach into the FVG. EURUSD, daily timeframe.

We are now looking at the 4h timeframe and we can see the two specific price levels again and
we also have a low delineated as well for potential liquidity run on sell stops below the low. Price
does, in fact, go down below that previous low and now we can expect to see WHAT form? A turtle
soup setup or a false break below and old low.

Fig. 245 – The daily FVG shown on the 4h timeframe and a potential turtle soup being formed.

Why would we reasonably expect it to go back up to fill that gap? Because it already the sell side
liquidity out by running an old low. We have equal highs delineated on this chart and right above the
equal highs we have the daily FVG.
Eventually price trades back up and closes the FVG in. That trade or idea is now complete. While
it does not look like a great deal of money or pips offered, it is a very highly profitable and probable

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conditions in the marketplace where we can see these FVGs and double tops where buy stops be
resting above it.

Fig. 246 – The daily FVG being filled. EURUSD, 4h timeframe.

Everything that has been shown here is reversed for buy side liquidity runs.

The gaps, fair value gaps, liquidity voids, orderblocks and liquidity pools kind of overlap in a lot
of different ways that you are probably not aware yet.

More examples
This is on overlapping liquidity voids and FVGs.

Fig. 247 – EURUSD, 5m timeframe.

The orange line is a FVG seen on higher. We are seeing in the upper right corner the price
reaching into the FVG. This is the 2nd time it trades through.

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 Now we will see what it looks like when we have a
run above an old high, which is the orange line, and it is
also a run on liquidity in the form of a liquidity pool
running buy stops. Also, it is hitting that FVG. Many
times on lower timeframes this will create a liquidity
void. We see the first candle going lower and then
another candle opens lower with a gap.

Fig. 248 – Liquidity void on 5m timeframe.

Price then moves lower and ultimately trading to where the sell stops were mentioned earlier.

Fig. 249 – Price trading into sell stop. EURUSD, 5m timeframe.

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 On my EURUSD chart, the price is not exactly the same as ICT’s and I could not go on the 5m
timeframe. But as far as I understood, this is where I think he showed the 2nd touch of the daily FVG
and the sell stops.

Fig. 250 – The daily FVG seen on the 1h timeframe of EURUSD on 19th of December 2016.

On the 15m timeframe, the chart looks like this in the same area.

Fig. 251 – EURUSD, 15m timeframe. Gap formed.

Watch what happens on this timeframe after the daily FVG is hit. It gaps. If the price comes
back, and in this case it did, we can be a seller at the bottom of the gap. Also noticed that the green
candle does not close above the gap.

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 The price, eventually, moves down into the sell stops.

Fig. 252 – Price hitting the gap after the FVG was hit.

Notice that another gap was formed and how it was filled with the wick after the candle
opened.

Further on we can see a fair value gap being formed after the gap shown above.

Fig. 253 – FVG formed in the red area. EURUSD, 15m timeframe.

We can be a seller when price hits the FVG targeting the low printed before.

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 EPISODE 7 – Divergence Phantoms – LINK
Market maker trap – momentum divergence phantoms.

The indicators do not have any reflection, whatsoever, what the market is going to do next.
Price has no awareness of our indicators. But we can reverse engineer that thought process and use
the market paradigm efficiency where we look at how liquidity can be either engineered or
neutralized and whether there are willing or unwilling participants the market maker can draw
traders into the marketplace or take them out from the marketplace. By unseating them they can
assume their position or put them on the wrong side by engineering liquidity runs and take the
market in the opposite direction.

• There are two types of divergences:

o Type 1 bearish divergence – classic higher high on price and no higher high on the
momentum indicator.
o Type 1 bullish divergence – we see a lower low on price and no lower low on the
momentum indicator.
o Type 2 – trend following – bullish hidden divergence – higher low on price and the
momentum indicator makes a lower low.
o Type 2 – trend following – bearish hidden divergence – lower high on price and the
momentum indicator makes a higher high.

Fig. 254 – Different types of divergence.

Here we are looking at USDCAD and at how the market made a slightly higher high while
momentum was already posting a potential bearish divergence.

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 Seeing the chart like this with the oscillator plotted, we can clearly see a bearish divergence. As
a retail trader we would go short at this moment.

Fig. 255 – Bearish divergence on USDCAD, 1h timeframe.

But understanding what we know now, there is liquidity above the high on the left and they are
not going to keep the price this close and not run that high, so there are buy stops above. The
bearish divergence is qualified as we have a move down on price, a cross over on stochastic and a
lower high compared to the higher high on price.
But look what we have on the chart. We have a down candle, equal lows, the market drops
down, clears out the equal lows, dips into the bullish orderblock. There is also the range of the open
and high of that low candle. Price traded into the midpoint of it just like a mean threshold. During
this time the momentum indicator shows bearish divergence so we are expecting lower prices.

Fig. 256 – Bearish divergence on USDCAD, 1h timeframe with ICT’s notes.

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 Watching the price develop itself further, it is now when we can see the hidden bullish
divergence. This is, actually, a very powerful scenario. If we know what we are looking for in price
and we see the hidden divergence, not that we are basing our trade on the indicator, but we like
seeing this because this is, basically, an “arm-wrestling” with the guys that are looking at the bearish
divergence.

Fig. 257 – Price reaching into the range and below the EQL.

When we are looking at indicators, the mythology is that we can pick tops and bottoms. While
we can go back on charts and see many examples how that may have been profitable, there are
many times where it is not profitable, either. So, if we are going to be looking for price action to give
us clues as to where the price is going to be reaching for, we cannot get that information by looking
at an indicator. All that is doing is looking at the past and it is compressing all that data
mathematically and spitting out an output. The output has absolutely zero bearing on where the
actual orders are in the marketplace. The banks and institutions are not looking at what stochastic is
telling them. They are interested in where the buy and sell stops are. They are attacking the liquidity
on the fund level. When we say that “they are making a run on stops” it is not that they are aiming
for retail stops. They know that if they push the price to an area below an old high or below an old
low, they know that there is going to be pool of liquidity in the base of fund trading.
Recalling the market efficiency paradigm, the retail views price and they see what they want to
see in the context of an indicator. Buy or sell, overbought, oversold. Market makers look at the
participants’ thought processes about price and they manipulate their decisions based on what they
should be seeing in price.
Funds trade with a trend following nature. They are long-term momentum followers. But those
long-term trend following systems they use can be targeted. Usually, it is in consolidations or
sometimes, if it is at a high where they are making a top in the marketplace, those funds that are
aggressive, they try to sell short, they make one more pass up there and knock out those individuals.
The smarter fund traders will go back in again, but you noticed that sometimes when you get
knocked out of a trade, you do not want to do it again. You are afraid.
There are two camps when we are looking at the divergence. Those that see the higher high and
the subsequent movement lower which would confirm in any retail trader’s mind that they did catch
the top. That is what they are thinking.

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 When we look at price now we know that they are going to
see that as a bearish divergence, they will want to sell short and we
expect that same measure of retracement lower as well.
But we want to see it back down and hit the orderblock and
wipe out the stops. Why would they want to come down below the
lows? To gather all the sell stops. Why? Because there are willing
sellers down there. Why would they want to go down there?
Because they want to pick up those orders that liquidity is offering
so they can buy on them. So, price quickly reprices and now it will
make a run above the high on the left because this is the real
divergence [the hidden divergence or the new cycle low on the
stochastic]. Notice it is not oversold. It is not needed to be
oversold. What we are doing is we are watching the momentum
shift back down just to get the sell stops then they make a run for
where the market really wants to be reaching for, the orders, not
what this indicator divergence is indicating here ->
Retail sees a higher high in price with a lower high on
stochastic, which is what every textbook shows. That is a type 1
bearish divergence. Fig. 258 – Snapshot from chart.

You might have saw 30 pips or so in your favor, but

you are not going to hold for just that; you are going to
hold forever, you are going to see it go lower and lower.
You know what it is like to be a new trader and looking at
this stuff.
BUT if we wait for the stochastic to cycle down
below its previous low as you can see in the image above,
we can anticipate that same thing occurring when it runs
out some sell stops and it closes in a range for a bullish
order block. Then we can expect price to snap back
higher and take out this whole assumption that it is a
bearish divergence in the market place.
Price has no awareness of the divergence, but
markets have an uncanny ability to be aware of the
thought processes that are in all the traders because of
their orders, trading, leverage, what they are doing in the
marketplace, excitement around specific levels.
When we see this we anticipate the price going
higher not on the basis of a bullish divergence.
Fig. 259 – Price reaching higher.

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 The next example is on USDCHF on the 1h timeframe.

Fig. 260 – USDCHF, 1h timeframe. Type bearish divergence is present.

On ICT’s chart the stochastic 2nd high was a bit lower than mine.

What we see is the last candle prior to the up move. So, inside its wick we expect price to trade
down into that. We will use body open to its high. We expect the price to drop, but now below the
middle of the candle’s body and also we expect its low not to be violated.
We also expect the stochastic to trade lower than the last low that was printed, but not on
price.
Why would we expect this to unfold? Because we have sellside liquidity offered and we expect
price to close in that range.

Fig. 261 – USDCHF, 1h timeframe and with notations.

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 As we can see the price did not break the highlighted low, the low on stochastic was violated
and the gap was filled in.

Fig. 262 – USDCHF, 1h timeframe. Price unfolded as expected.

In the next image we can see more type 1 bearish divergences as the price continues to higher
before it actually “gave up”.

Fig. 263 – More examples of type 1 bearish divergence.

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 EPISODE 8 – Market Maker Trap – Double Tops and Bottoms – LINK
Before we get into double tops and bottoms we will first discuss about measured moves and
clean highs and lows.
Here we have a drop down in price with relatively equal highs. In the marketplace there is an
occurring phenomenon about measured moves. We can see this price swing projected up and it gets
us pretty close to that right upper level.

Fig. 264 – AUDUSD, 1h timeframe. Highlighting the measured move.

You can also do this with a Fibonacci retracement and plot #2 on the chart.

Fig. 265 – My Fibonacci settings. You can add “2” wherever you like and tick the box.
The other numbers are for the EQ and OTE.

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 On the right side of the AUDUSD chart on the 1h timeframe, we can see a double top forming.
We are looking at the last 2 candles going up before the drop, we chose the lowest one and we mark
its lower price on its body and extend the range down to the top of the double top where we see the
highest candle. Everything below the candle of which body we have market is all sell side delivery.
That is a gap or liquidity void.
On the lower side of the chart, we have an FVG and also a bullish order block. The OB is the
lowest down candle before the move up. We will concentrate on its opening price, not on the wick.
The chart looks like this.

Fig. 266 – Highlighting the sell side delivery, the OB and the double top. AUDUSD, 1h timeframe.

So, we have mapped out both sides of the market’s liquidity and we can now build ideas about
what we would reasonably expect to see the price do.
• The retail will see this as a double top, therefore, resistance – “Let’s get short and put a
protective stop above the highs”. And they are looking for the market to trade down into the
last low.
• Institutionally what we would be thinking is “Price definitely has buy stops above that double
top so the traders that are already short from that highest high above the red area we want
them to drop their protective buy stops on the bottom of the red area. We will wait the price
to drop lower, close in the fair FVG and, potentially, hit the bullish order block. If we see the
price drop down to that level we could reasonably expect the price to go back up and clear
out the buy tops above the double top. OR the market can come up, trade into that liquidity
void to close it in and then trade lower to close the FVG or hit the bullish order block”.

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 Fig. 267 – Highlight how the price hits the FVG, the OB, takes out the BSL and closes the LQV.
AUDUSD, 1h timeframe.

We will on another example on AUDUSD.

Fig. 268 – AUDUSD, 90m timeframe. Clean chart.

My Trading View plan did not permit me to go on the 1h as seen on ICT’s chart.

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 Here we have the same chart with a few notations highlighting the double top, the measured
move and the target to be reached by the algorithm. The double top is seen as resistance by the
retail traders.

Fig. 269 – AUDUSD, 90m timeframe with notations as seen by retail traders.

Eventually the price rejects the 1h OB and rallies into both targets, the double top and the
measured move. Not so visible on this chart, but there is a type 1 bearish divergence present on the
1h. On this 90m timeframe you can see the stochastic curving down as the price goes higher.

Fig. 270 – AUDUSD, 90m timeframe. Price reaching into its targets.

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 Eventually, the price does, in fact, go lower and reaches for the sell side liquidity.

Fig. 271 – AUDUSD, 90m timeframe. Price reaching lower into sell side liquidity.

Personal addition
Depending on how you trade, some oscillators, such as the stochastic or MACD, actually seem to work. It depends a lot
on what is your taste for risk and RR and how much time you are willing to stay in a trade. Some traders will bring
arguments that the short from that double top as seen on AUDUSD above would have been a good trade. I tried and used
lots of indicators from EMAs, RSI, MACD, stochastic, Bollinger Bands, Elliot Waves Theory and harmonic trading and at some
point I had my charts all cluttered will all sort of drawings and lines. It was a very difficult pass from having my charts filled
with a lot of indicators to no indicators at all. I can see the bullish and bearish divergences without having the indicator
plotted in my charts. It might sound difficult, but it is not.

If we look closer at the chart, we can see a clear double bottom that is considered support for
retail traders. The algorithm delivers price very precisely on that 1 to 1 measured move.

Fig. 272 – AUDUSD, 90m timeframe with a double bottom on price + measured move.

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 Soon after the double bottom is liquidated and the sell side was taken, price is delivered in the
opposite direction reaching into the previous double top. The algorithm will know about the double
bottoms and tops as reference points even if time has passed. It knows how to find these reference
points by consolidation then it takes those projections and moves price above or below. This is why
we get those spike reversals on both sides of the marketplace and why we get the reaction as a
consequence.

Fig. 273 – AUDUSD, 90m timeframe. Price liquidating the double bottom and reaching into the
previous double top.

When we are looking at double tops and bottom while they may take time to eventually get
through and trade through them, we never trust double bottoms and tops because we understand
the marker makers and the interbank algorithm will go through these old highs and lows seeking
liquidity in the form of sell stops and buy stops.
The extreme ends of the range is where high probability trading is. In the middle of the range
there is low probability. When we use double tops and bottom we frame the extremes of the current
trading range. This will give us specific laser guided precision levels at which price will drive through
above for the buy stops and below for sell stops.
On the hourly chart we can see that it gives us a lot more framework instead of using like a 15m
timeframe for intraday trading where usually it is 10 -20 pips run on stops. Usually, we expect 10 - 20
pips run above an old high or below an old low. We cannot use a 10 - 20 pips grade so we have to use
other ideas and the algorithm will reach for these reference points based on the double tops and
bottoms. The ranges in the AUDUSD chart above is 48 pips. It is moving that far based on the
movement inside of the double bottom or inside the consolidation.
Look for levels that are clean. We might not have a trade today with that information but it will
give us insights at a later time when we start to run through it. Or once we have run through that
level, then we can understand where it is going to reach for in a contrary view. If they take the buy
stop, already, what side of the marketplace is going to reach for now? The sell stops.
Go through your charts and you will be amazed at how many times you see this phenomenon
taking place. It is on all timeframes, so do not think only in a 5m or 15m basis or an hourly. Look
across all the timeframes and you will see it there.

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