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8 Power of 3

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300 views

8 Power of 3

Uploaded by

Julie Anne Villaruel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Lesson 8: Power of 3

If you knew why price behaves the way it does, would you be able to identify where it is
likely to go? What would you need to know in order to do this? How would you identify
the behaviour? This lesson is an introduction into understanding the movements of
price, and creating a framework of price movement to setup trade ideas.

The power of 3 (or what is known as Accumulation, Manipulation, Distribution → AMD),


is a very simple strategy to use and identify market maker models, and where price is
likely to go. It helps you visualize price in a constructive ways by using the different
overnight trading ranges and pairing them with points of liquidity. It doesn’t need any
magical forecasting, just a confirmation of market structure and market structure shifts
after price has taken out liquidity.

[This lesson is built for futures: $ES, $NQ, $YM although the concept can be applied to
anything]

Power of 3 → Sell Model


Here is a general idea of what a bearish PO3 looks like. In this scenario, price will look
to reprice higher (HTF POI) before setting up a mmxm that favours the sell-side. This
could indicate the start of a reversal.

Lesson 8: Power of 3 1
Here is another sell model but with price seeking a premium before continuing the trend
lower (downtrend).

Lesson 8: Power of 3 2
In both cases, price manipulates higher seeking a premium of an array OR external
liquidity. THEN it sets up the market maker sell model to the downside.

Example
Here is an example using today’s price action - Jan 17th 2023. It wasn’t very clean price
action, but it has setup a potential market maker sell model for the remainder of the
week. This chart showcases a clear accumulation phase, followed by a manipulation up
to take out buyside liquidity. This manipulation up was the move to setup the market
maker sell model. Price is currently getting ready for the distribution phase down
(overnight) to seek sellside liquidity.

Lesson 8: Power of 3 3
You should look for periods of accumulation between 6:00PM EST to 5:00 AM EST.
These ranges should be obvious and clear. The manipulation and distribution periods
occur between 2:00AM EST and 10:30AM EST. (If you’re familiar with killzones, then
you already know when to look for these manipulations - this PDF is simplified for
beginners). You’re entry should be once liquidity has been taken and there is a market
structure shift in the direction of interest for price distribution.

Here is a step by step to get the above chart:

Lesson 8: Power of 3 4
Lesson 8: Power of 3 5
Power of 3 → Buy Model
Here is a general idea of what a bullish PO3 looks like. In this scenario, price will look
to reprice lower (HTF POI) before setting up a mmxm that favours the buy-side.

Price is moving in an uptrend. It seeks internal liquidity at a discount (manipulation)


before continuing higher.

Lesson 8: Power of 3 6
Here is another example of a buy-model but with price dropping lower before seeking a
premium of the downtrend. This could indicate the start of a reversal from this down
trend.

Lesson 8: Power of 3 7
Example
Price has been in an uptrend. It begins to accumulate before making a sudden drop
lower to take out recent sellside liquidity. This manipulation down reverses back up and
sets-up the buy model to take out buyside liquidity. In strong uptrends (or strong bull
markets) this is where BTFD comes into play!

Lesson 8: Power of 3 8
There you have it. A simple introduction to AMD / PO3! Now get practicing on the
charts!

Lesson 8: Power of 3 9

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