Tuesday June 13, 2023 \ CPI & Price Action Lecture

Date: 2023-06-13

URL: https://www.youtube.com/live/_YTK5uXBe4o?si=9RI5el2GgjsZPJKf Watched Date: June 13, 2023

We will take a look at the ES and a quick pass through EUR/USD and Cable and the Dollar Index. We’ll take a look at Nasdaq, we’ll take a look at the Dow futures, and we’ll peek at gold. Okay, so that’s what’s on tap for this morning.

I want to talk a little bit about where setups form. I can trust the principles I’m teaching, but we’re going to watch CPI live. So it’s important you also understand that anything I tell you today should be viewed from the safety of a laboratory experiment.

I mean, you’re not even trying to trade a demo. You’re not even tempted at all to take any trade based on what I’m going to tell you today. I’m not. I’m not going to come back later on and say, “You want to do so-and-so. Here’s what I did,” because I’m going to be right here live with you.

So let’s take a quick look at—let’s start with the Dollar Index.

Okay, and let’s make sure we’re on a weekly chart, and we’re at the bottom of that gap in here. Let me zoom in. There’s a whole lot of annotations in here from our recent discussions pertaining to Dollar.

So this gap in here, originally, we treated that as an inversion gap: come down and act as support to take us up into our premium arrays. We have since worked lower back inside this gap, and I mentioned in the last commentary that I want to see if it wants to go outside of this and then treat this shaded area here as resistance, okay?

So far, we’ve come down and respected the low of it.

Drop down into a daily. I’ll try to get through this pretty quick; it’s only a few minutes before CPI comes down.

Okay, so we have somewhat of a small little remaining gap here within the order block. So I’m going to note that here. So I’ll be watching that going into the rest of this week. It does not mean for you to go in here and assume that Dollar is going to sell off right away because I see this imbalance here.

I want to see if CPI supports this idea. So that’s why I tell you, don’t stand ahead of it or get in front of the CPI number because it can be very one-sided. It can smoke you easily. Your stop loss will not protect you. It won’t have any protective characteristics at all because price can get right on through and the liquidity is pulled.

It does not mean for you to go in here and assume that Dollar is going to sell off right away because I see this imbalance here. I want to see if CPI supports this idea.

So that’s why I tell you, don’t stand ahead of it or get in front of the CPI number, because it can be very one-sided. It can smoke you easily. Your stop loss will not protect you. It won’t have any protective characteristics at all because price can get right on through and the liquidity is pulled.

I believe there’s a lot of people out there that want to trade it. But brokers, liquidity providers, they pull the liquidity. They don’t let you connect, okay? So because of that, you want to stay on the side. Let the initial, I guess, chaos hit the marketplace. Let the victims start bleeding. And then once the impact crater has been created, then you go around, you look around for the easy targets.

Yeah, who’s left that can be taken out with either short-term liquidity runs or runs to inefficiencies? So we treat that surge in price action by the CPI number as a means of creating that first initial shock.

Like imagine right now the surface of a pond, real smooth, mirror-like, and then CPI is going to be like a boulder being dropped in the middle of it. And that first splash, we don’t want to be harmed by that. And I don’t want any of you, my students, being harmed by that.

But once that occurs, there’s lots of new ripples, and every advancing, outward-moving circle from that impact are all opportunities, and each one of them are respective to their specific timeframe. So there’s setups that are forming all the time across all different one-minute, second charts, 15-minute charts. There’s all kinds of opportunities, and whatever one suits you is the one that’s for you.

But I want to see if it wants to get below this, then treat this as resistance and start to gravitate towards this. I’m not suggesting it will do it all in one fell swoop today. Obviously, it can do that because this type of market driver can create those types of runs. But I want to see, does it want to get down into here and reprice to this inefficiency?

Let’s go over to Euro.

All right, in similar fashion, we have a bearish order block here. Very small little gap here. I’m going to show you the two levels so you can see there’s a separation.

I want to see, does CPI lend well to wanting to get up into that area? There’s a smaller pool of liquidity in the form of buy stops that we were talking about.

The more the market has moved away from this gap here, traded above the short-term high here, relative equal highs. So I want to see, does it have a willingness to use the CPI number to expand in this direction?

Now, if we take out this low here and, very specifically, get below the consequent encroachment of this wick—why this one? Because the difference between the candle’s open and close on this one inside of the gap, this one over here, it left that fair value gap here. There was a change in the state of delivery right there.

So if we get through the consequent encroachment of this wick, that to me spells bearishness on EUR/USD, and Dollar might surprise to the upside. But as long as that does not happen, I’m looking for this order block and this gap.

If I knew, I’d be trading it. CPI, I have no idea what they’re going to do. And CPI is one of those events like FOMC rate announcements, which we’ll have tomorrow. This week is littered with landmines. So I teach my students, if you have a week like this, you want to try to get yourself paid on Monday. And Monday was a pretty good day.

For now, we’re focusing on the CPI. So I’m looking for evidence to support a bias for the rest of the week. So it’ll give me insight to see how they use this data. Manual intervention is where the quote-unquote powers that be—you call them market makers—they are the folks in charge of how far these markets will go, when they’ll move, and what price is going to be, period.

It has nothing to do with your buying and selling pressure. All of our gimmicks, all of our order blocks, all of our supply and demand, harmonic patterns, none of that matters when they step in. They will literally reprice to another price level, and it doesn’t matter what carnage is created from that.

So that’s the reason why I’m telling you that this type of market driver, CPI, is dangerous. You can’t trust even my own concepts in front of a move like this, because it can roll right over top of it. And I have been very candid about how many times I get this very CPI number wrong. It’s only very few times I’ve been able to publicly call it and be correct.

So I want you to respect the measure of risk. Do not look at anything I’m saying today as a little nudge to say, “Here is our secret little handshake. Go take this trade.” Please don’t do that, okay? If you’re right, it was luck. I promise you, on a day like today with CPI, if you make money, it’s luck. That’s the only time luck exists, when it’s complete uncertainty and you just happen to be on the side that worked.

So I don’t trade with luck. I don’t rely on luck. I only have that in my expressions for trading. That doesn’t exist. You make the results, and skill set and experience dictate that.

So that’s what I’m looking for. I favor this right now, so that way you understand what’s going on. But if I’m wrong, where do I concede and say I’m wrong, and then I look at the market from the opposite? And as I mentioned, it needs to get below the consequent encroachment of this wick, because that’s where the state of delivery changed inside this gap and started seeing us run higher.

We’ve taken a pool of liquidity out here, and we went a little bit higher. But these are relative equal highs. So I don’t know if they’re using that right there, and then CPI sinks us and they make aggressive runs for the sell-side below here. I don’t know.

So it’s important for you to understand that there are times where your analysis, your experience, your model will be silent. And it does not mean it’s broken. It doesn’t mean that they changed the algorithm. It just means that you have to sit still, and you have to exercise discipline and self-control and wait for the market to give you your setup.

You’re not trying to be like a crack fiend, okay, out there with a crack pipe every single day trying to smoke pips and points in these markets because it’s moving around. You just got to sit still, okay?

So that’s the two things I’m looking for for Fiber.

A quick peek at Cable. Cable, I believe this is nice. Came down inside this buy-side imbalance, sell-side inefficiency, which is a fair value gap. But it’s a buy-side imbalance, sell-side inefficiency. It trades down to it here, and then look at the reaction so far today.

So I want to see us return back up into this gap. I’ll show you in a second where that’s anchored. It’s on a weekly chart.

So I want to see the return back into that. If it does, it has unfinished business all in here. And that’s assuming, obviously, if the Dollar falls off.

Let’s get back into daily. So far, really, Cable has been just hanging around this large consolidation, not a whole lot of activity. Even though we came down into this gap, traded into it, and showed initial willingness to want to go higher, we have to overcome this. Okay, so let’s show that in perspective.

So it’s going to have to make a real meaningful move outside of that. So if we trade above it, fall short, and come back down to the middle of this inefficiency, there will be consequent encroachment in the form of potential support. So if we run up, but fail to get here, that shaded area, like run above and come back down, lower timeframes might give us an idea after CPI. That would be something I would look for.

It’s not a trade idea. It’s something I’m running in terms of scenarios. What do I look for? What would I wait for after CPI? If you don’t trade ahead of CPI, ICT, what are you looking for after CPI?

Those are the types of things. It’s these things here I’m trying to outline to you.

Quick look at NQ. We are looking at the September delivery contract month now, NQU2023.

All right, so here is the weekly chart. Here is the weekly view on NQ. And like I said, this was the primer on the upside, the strongest one. It has delivered.

Down into a daily. All right, this one here, only experience speaking here, okay, because we have a rate announcement, FOMC-related, tomorrow afternoon on Wednesday, and we have the CPI number this morning.

This sell-side looks suspect, even though we had a really nice run up in here. I just feel like they’re going to make an attempt to get into this wick. Will it be today or tomorrow? I don’t know. But this looks too clean. Way, way, way too clean.

And even if it went down there, that would upset folks thinking that it’s topped. And then, to me, if it went down below that and rallied and created another short-term inefficiency, that would be bullish. That could continue going higher.

This will upset those individuals that see this as support or real good areas to trail stop losses below that. Yes, real quick.

I don’t see the same thing there. But if NQ drops down there, the S&P would want to follow suit. I’m not trying to pick the top.

And with CPI, I look at that number that comes out as a means of trying to smash anyone that’s profitable. It can, in some instances, be used to continue or capitulate a move. I mean, something that’s already in a movement like this, it could accelerate and add the last piece of it.

So again, that’s the reason why I’m not getting ahead of it and trying to trade.

In the Dow, this one here, I favor a run above this high here. I think that would be something to expect because it’s been the sick sister of all three indices. Nasdaq, I told you it would be the leader. Our focus has been teaching through the price delivery of E-mini S&P, and the Dow I use as a barometer, like I use the Dollar Index.

I don’t trade the Dollar Index, but I use it as a risk-on/risk-off. For comparative studies and relative strength studies for the indices, I use the Dow. So for Dow Theory, SMT divergences, sick sister concepts, those types of things, I lean on the Dow for that purpose.

We have a little bit of an inefficiency right in here. So if we’re going to drop initially on CPI, it could go down there and then make a run up into that. That’d be a scenario we’ll watch and see if it manifests today, and it’s not a trade idea.

Gold, sorry, real quick and easy. Gold, I don’t know. There you go. Gun to my head, I would say it’s going to run with the sell-side below here. There you go, that’s what I think. I’m probably wrong. Please don’t trade it, okay? But I wouldn’t touch this at all.

Dropped down to a 15-minute timeframe on ES. Smaller gap in here, buy-side rests above here, so you want to trade CPI?

Quick look at NASDAQ.

DOW 15 minute timeframe.

Let’s take a look at the daily on a deal like this. So whenever we have a wick like this, I’ll measure the midpoint, which is consequent encroachment. That would be first objective. And then I want to see if it wants to get above here.

I could be wrong because it may use this initial pump to feed into that, and in tomorrow’s rate announcement, do something completely opposed to what I’ve outlined and not even come up here. But I think that this is a likely draw on Dow.

So we’ve had buy-side here and sell-side taken, the initial draw. Let’s go into a minute chart.

All in one moment, in one minute, the market opened here, ran up just a little bit above the fair value gap, then slammed down to take sell-side, and then in the same minute, one candle closed up here after running up the buy-side. So in one minute, look how much the market has reversed.

Now, do you believe that you’re going to be nimble enough to trade in that when the liquidity is already pulled anyway? Your broker is not going to let you trade that. Okay, you’re not going to see these guys out there that put a buy order in, a sell order, unless they’re running their white-label fake broker, they’re running their own scam. Those orders will get filled because it’s not really happening.

But in a real market, none of that shit works, okay? You’re not going to be allowed to be trading it. It will not let you fill. So as much as I love having fun and ripping other people—and I can make a good living too—it’s important that, when it matters, when real discussions about risk and money and the potential loss of it, I don’t sugarcoat any of that.

So I’m telling you, if anybody’s out there showing you examples where they get filled, and they got a really good entry here, and they got out here, that’s total grade-A bullshit, okay? They didn’t get filled. They didn’t trade it.

I consider myself a little bit better than the average bear, and I don’t believe I can make my stuff work even in these environments because it’s highly manipulated. Like, you are absolutely up against a brick wall. And you can’t, you won’t be permitted, period.

Because it moves so fast, brokers can take—because they B-book a lot of people—they could be wrong by happenstance, and overleveraging Larry, that can be in there doing big moves and get lucky. They have to pay that out because of the fierceness and velocity of how fast it moves around.

You know, that’s just how the business works, folks. I mean, you can be mad about it or just understand that’s what takes place and respect that. It’s okay. I’m not going to play in that sandbox. I’ll wait.

So this is literally a 50/50. Now, because it’s taken both sides of the liquidity, I drew your attention to working off the fair value gap I mentioned first.

Now, the takeaway in this is I want you to think about how we were looking at the buy-side and the sell-side. Forget being right, forget being wrong, forget profitability. Think, okay? Think about this. All of the movement that took place thus far was all inside of a one-minute basis, or two minutes. That’s it.

So all of this movement from here and here, that happened in a blink of an eye. You would not have the ability, if you didn’t have limit orders in that could be filled—not that they would be—you wouldn’t have the ability to adjust or to comprehend what it is you should be doing next.

Especially if you’re a new trader. You have no idea what you’re doing. You have no idea where you would measure a willingness to seek continuation up or down. Maybe you didn’t even know where these pools of liquidity were before I mentioned them.

So if you don’t know those things, why would you even gamble on this report that’s coming out, or that came out six minutes or so ago? It’s important not to see these things and see how much it moves and think to yourself, “If I would have got a piece of that.” That’s not that kind of move, okay? That’s not what this is. This is a trap.

This type of market driver is essentially risking ruin. But we can identify it and use it like I teach the Non-Farm Payroll, okay? Non-Farm Payroll, I don’t trade that report. You can trade after the Non-Farm Payroll report. You can trade after the CPI number. But ahead of it? No.

Because you have no idea. You have no idea. I have no idea where it’s going to go on a CPI number.

You think you’re going to be able to beat this? No, don’t do that. You’re going to create scar tissue.

I drew out, here’s where the buy-side is. Why did I call this out? Look at the idea of it not wanting to go higher. So retail sees this as what? Strong resistance. So they can be short in their mind. Stop losses would be above these highs here in the form of buy stops. That’s what we call buy-side liquidity.

I took you over here to the relative equal lows. What’s going to be resting below that? Sell stops, which is why we call that sell-side liquidity.

Both sides of the marketplace are always in contention for high-impact news drivers like CPI, rate announcements, Non-Farm Payroll, those types of things.

Anytime you see in your lower-timeframe charts the smooth edges like this, where there are very smooth relative equal lows or very smooth relative equal highs, they are going to be made jagged, meaning it’s going to rip through it like it does here. So now they’re not so smooth already.

Now, if this whole movement down here was a function to offset any positions or interest, because it controls sentiment as well.

With orders resting below relatively equal lows and above relatively equal highs here.

If I’m in a one-minute chart, here’s the 8:30 candle. It opens, trades up, and it looks like it completely rolls right on through it. But we saw momentarily, before it ran up higher, it ran up to it here and stopped right in here. It stopped and then moved lower.

Then came all the way back up and overlapped the entire run, and then went to the buy-side.

I’m going to have to show it to you on a 30-second chart here. Opens, rallies up, drops down. Still, 15-second chart. There’s the move right there.

https://www.youtube.com/live/_YTK5uXBe4o?si=kvBuDPrpt8Urgddh&t=1930

30 seconds.

15 seconds.

The main takeaway while saying this was, even in this fast market move, the fair value gap I mentioned and the liquidity pools: it went to the fair value gap, then dropped to sell-side, then ran for the buy-side.

So the takeaway would be, even in that speed, okay, within one minute, the very levels that I gave you, the algorithm referred to immediately in a way, in a speed and velocity, that even I can’t participate in it.

So the takeaway is for you to see that even in this recklessness that looks like chaos and just carnage, it’s still being controlled. But it’s being controlled in a way where it’s going to move a lot in a short span of time, but you’re not being permitted to profit during it. That’s what I’m trying to convey to you.

It’s an illusion. These types of moves are the very things that draw people into wanting to trade, because they think that you can get in here and take these trades and make 20, 30 handles in a minute, overleveraged, and get a five-figure withdrawal. So don’t fall for that trap. It’s very, very important that you don’t fall for that trap.

This craft that you’re involved in now is a lifestyle. It’s not, you learn how to make money and that’s it, you’ve reached your destination. Excellence is a pursuit. It’s not a destination. It’s final. It’s always, always going to be something that you’re striving to do better and reach for.

And mine is my exits. And I’ve been open about that as well. I always want to make them better, because I have lots of ways to get into things. But I’m never fully satisfied, if I’m going to be honest with you. I’m never satisfied ever with my exits.

Most important thing is where price is going to go. Literally, there are so many ways to get into a trade. If you’re right in where you think it’s going to go, if you have that understood, it makes it a lot easier and allows you to hold on to your trade, and you don’t have the frustration.

You got to spend more time understanding where it’s going to reach for and not just focus on these lower timeframes. And the lower timeframes are wonderful for entry and managing risk. But if your trade is entirely linked to and founded on a lower-timeframe draw on liquidity, you’re missing the point entirely. You’re completely missing the entire focus of why you should be taking trades.

You need movement, folks. As a trader, we need displacement and a change from one price to another over a duration of time. How much time? You have to come to that conclusion, what fits for you. For some of you, holding overnight, it can’t happen. You won’t let yourself do that. Others, you can’t be in a trade longer than 10 minutes, and 10 minutes is long-term position trading to you.

I’m not saying that that’s a bad thing. Because if you decide on what your main comfort zone is—how long can you hold a trade before you start getting antsy? If you’re really, really impatient and you can’t overcome impatience, then you will do very, very well in intraday charts, working with one-minute timeframes, and you can get your setups in one-minute bars, get it, be done, and stop trading for the day. Go do something else. And you would probably be very, very profitable doing that.

But will you be comfortable seeing these 30-handle runs that happen over the span of the entire daily range? How about 100-handle moves or 1,000-handle-plus moves that I’ve just outlined in the Nasdaq over the last month or so?

Again, this is a 15-second chart. What would a high-frequency trading algorithm entry be on a buy model? High-frequency trading algorithm.

You can see very plainly that I outlined that we would likely draw up into the consequent encroachment of this wick here on the 15-second chart, and then potentially draw to here. Now, the draw I’m thinking is up here because it’s going to move on the folks that see this as a high-low break and retest and try to go lower.

That’s what the algorithm is running on. It’s already ran to the majority of the position holders here because their stops would have been right above here.

So the opening here(8.30), it trades down into that, and then we have a short-term high. It’s broken to the upside.

So now think for a moment. Your mindset is, “I’m strapped in. I’m in the saddle. I’m only running for buy-side.” So the high-frequency trading algorithm that you would be studying in this practical, in this type of price action, would be only looking for longs or only looking for buys, okay? And how could you use that?

But what if I told you, what were the signatures that you’ve understood so far about what price uses to go higher? You have to have a shift in market structure. Here, it was swing high. It rallies through it on this candle right there. It runs higher, that’s fine. But what does it leave? Small little inefficiency right there.

It just ran our target there. That’s it. But that’s it right there. That is all you need.

An order block, okay, is a change in the state of delivery. Okay, it is not a zone. It is not every down-close candle that is an order block. It is not an up-close candle, every single one, is an order block. It’s a frame of reference where a change in where price will be drawn to or from occurs.

Here, why am I using this down-close candle and not this one over here? This one has the larger body. So it spent more time and recorded more time in duration at its extremes. That lowest close, that makes this an order block.

This swing high that it’s part of, when it trades above it here, that’s a shift in market structure. So that means high-frequency trading algorithms will trip to buy-side and they’ll all be looking primarily for the largest leverage to be on this side of the marketplace.

Not every down-close candle is an order block. Not every down-close candle with a fair value gap like this is a long. Wait, that’s a contradiction? No. That’s a refinement. I’m teaching you narrative logic framework.

The fact that we had this idea here: what was the first side of liquidity taken at CPI? We opened here at 8:30. It opened, rallied up here, stopped short, and then went down below to take the buy-side—I’m sorry, the sell-side.

So what side of the marketplace did the algorithm run to first? What do smart money players, the folks that don’t write books, that aren’t going to be talking to you—I’m it. I’m the one that stepped out. I’m not supposed to be doing these things. You’re not supposed to know these things.

You have what delivery? To sell-side first. So smart money, the folks that understand the algorithm, the folks that follow its lead, wait for this signature here, because the first move tells you the direction. Because they’re going to run for sell-side first.

So this is the reason why I told you I believe it’s going to go up here.

Why didn’t it want to come back down to consequent encroachment of this wick?

It does not need to come back down here before it goes up to the buy-side. And how it delivers—listen, folks—how it delivers price after the second pool of liquidity is engaged. The sell-side was below here. I’ll go back up to the higher timeframes in a moment. For now, I outlined all this.

The sell-side was taken first. That means the move will be likely prolonged and much more prominent to the buy-side. That means it’s going to go higher. It upsets the orders and sentiment by this drop down here. Then it runs for the buy-side. It breaks lower, comes back up, and then creates a false shorting opportunity. It delivers a short run.

Opening price trades down. Look at the bodies; they tell you the story. The wicks do the damage. The body stops right at the opening price. The 8:30 algorithm receives that as information, comes back down to it, stops on a dime, turns around, creates your short-term shift in microstructure.

There’s your down-close candle, bullish order block, separation here. Comes back down into it, hits the order block, respects it, closing the inefficiency. Time distortion, all this movement here.

As long as we’re not breaking below the midpoint of this down-close candle, everything’s still a go.

What I’m looking at is this range from this high of this candle down to that low. As long as these two candle reference points here have not been breached, above or below, all this stuff in here, I’m ignoring every bit of it.

I’m not looking at any fair value gap inside of that. I’m not looking at any kind of potential order block, because this range here, that’s your dealing range. It will not be anything of any importance or significance unless it trades outside of that range.

And because I’m telling you, and as I told you live here, I believe it’s going to go higher and take out, behind the first draw here, the buy-side above this high here.

The market rallies up into that inefficiency again and trades down only to offer delivery to the order block, close the inefficiency, and then time is spent marking time. We’re in 15-second candles, so it’s just hanging around.

What is it doing? What do you think’s occurring inside of all these ranges in here, between this candle’s high and this candle’s low? That’s all one order block. What kind of order block? Propulsion block. Look at Month 4 content on my YouTube channel, because it’s all of this price action from this candle below my cursor all the way over to here. All these candles are inside this.

So my mindset and focus is inside this range. Everything is happening inside it. I could care less, because my mind is already established. What the algorithm is going to refer back to is this signature here I’ve coded. So all of this price action here is irrelevant. It’s just marking time where price is moving in that interval, the highest and lowest beginning and the end. That’s all it’s doing.

But my mind as a trader and analyst is, I’m looking inside this range here. I want to see this range maintain itself and then eventually break to the upside, which we get right there.

Where does it draw to? Where I told you here. And then what does it do? It stops and then consolidates. What’s it doing? What is it doing, folks? Think. The order block. It trades down to it. It’s spending time down here for traders that understand what I’m teaching you to position themselves.

The algorithm is allowing time for traders that are in the know, that are real smart money. It’s allowing them to get their orders in before the algorithm reprices. Then it goes through our first point of reference, which is the consequent encroachment of this wick, with your stops, and then spends time.

What’s it doing? Allowing them to build a larger position. What’s the model? Where’s price being drawn to? Higher. So it allows them to accumulate more longs. And then as it runs up, they’re distributing all their initial entries.

That provides liquidity. So there’s this dance that’s always occurring between inefficiencies and liquidity, premium to discount, discount to premium. Always, that’s what’s occurring.

So one minute, and we have an opening price. We trade down to here, rally up, consolidate around. What’s it working in here on the one-minute chart? Mean threshold. Rally, consolidate, allow smart traders or smart money to accumulate more longs and displace to the upside.

Now look what’s occurring here. We’re getting short-term highs. We run above it. Short-term high, run above it. When it starts doing this—and you watched me do this many times, and I just did it again yesterday in my trade for ES—when it starts creating these short-term highs, every time it runs above that and you’re long, high-frequency trading algorithms are dumping portions of their position above that. That’s why I do it, okay? I’m in there doing the same thing that these entities are told to do when they work with these algorithms. And if they’re doing it, they’re doing it because there’s a purpose in mind. They’re offsetting distribution.

If they have accumulated long positions in here and in here, how do they exit? Short-term highs. Move away from it. Above that high, it’s going to be buy-side. Sell to those buy-side. Creates a short-term high, retraces back down, and takes the short-term high. When it runs above it again, sell, offset, distribute. Offset their long positions and distribute them to willing buyers.

Where are the willing buyers? Above market price. Every time it creates a short-term high, somebody in here, some joker, okay, some clowns out there, believes that Elliott Waves and animal patterns move the market around. They’re in here trying to trade their little gimmicks, and they’re trying to go short. So if they’re going short, they’re going to try to do what? They’re going to use an order that they think is protective. For a short position, they use a buy stop. Where are they going to place that buy stop? Above the recent swing high.

So using narrative, reading where price is going to go, why it should go there, when it will consolidate and pause, I taught you that live today. I’ve literally sat down here with the intelligence. Now, did I tell you exactly how to do it right before CPI? No, because I have to wait and see what that does. What does it leave? It leaves clues all the time. But I have to wait to see what it will run for. I can’t call the high and the low of the day until midnight in New York.

When we have these high-impact or medium-impact drivers that come out in the marketplace, I have to wait for the potential for manual intervention. Manual intervention is here.

We initially opened, ran above the fair value gap, then dropped for sell-side. So think about what I taught you. We outlined, real time before the market delivered, where the liquidity would be and the inefficiency that would be utilized.

The fact that it ran to the fair value gap here, then to the sell-side, in itself, if it was not a high-impact news driver like this, that type of run would have happened over the morning session. And the later run in the afternoon would have been this move here to the buy-side.

But because of the removal of liquidity—believe me, there are people that want to trade this. But brokers and liquidity providers, they pull access away from the marketplace. That’s intervention. That’s manipulation. That is a barrier to you being profitable, whether you like it or not. It’s going to happen.

And that’s what they do around Non-Farm Payroll too. And they say, “Oh, there’s an absence of liquidity.” Not because it’s organic. Believe me, there are people that want to trade.

It’s prevented because these types of moves offer a lot of movement in a very short span of time. And somebody could be really wrong by accident, make a lot of movement in terms of profit, and the broker, if they’re B-booking them, they have to take that hit.

They don’t want that. That’s the reality of this business, folks.

Now, both of those pools of liquidity define a very specific range for liquidity purposes. We outlined buy-side was above here and sell-side was below here. The algorithm knows both those points of reference, just like I showed it to you live before it was being used.

You can use the element of time as the most influential factor in price delivery, because everything around price delivery is first controlled and delivered by a schedule. It’s time. It’s time and price theory.

The market’s about to open up in a moment. And the one you got to settle in on is the person that makes the money that you’re comfortable with making.

You think that you want to make millions of dollars, and I’ll be honest with you, it’s scary sometimes when you’re making big money. And you’re probably not prepared for that. I’m going to be honest: if you’re not prepared for that, nobody is when you start making big money.

It’s a weird feeling. You think it’s going to be easy. It’s not, because it’s intoxicating. You think that every big winner is going to be available every single time you get into a new trade. And you have to control that impulse.

For the folks that really want to learn how to do it, you can get it from what I’m teaching. You can get the very thing that you’re looking for.

But the problem is, if you’re constantly moving and evolving into what your definition of success is—watch this little area in here—if you’re constantly changing that, how do you rate or measure success? Like, what is it that you’re looking for that meets the goal?

Initially, we have worked into this high, so there was buy-side here. So that’s what we’re looking at. Also, in how the market was reaching into those short-term highs, and I was telling you that’s how smart money offsets and distributes their position when they’re long.

So look at this high here, okay? That purple line here is that weekly or daily chart high. We went above it, and since we went above that, we’re in kind of like an area where we’re above that high. Where liquidity? How far do you see it reach on the weekly chart?

This high here, the next important level above here is inside of this inefficiency right there. Okay, so we have consequent encroachment. About midpoint, let’s get the measurements.

We had our five-minute gap. I told you to watch that. There, it went higher, but inside this range of this wick, okay? Let’s go through that.

4 minute.

3 minute.

2 minute.

1 minute.

Did you notice how the bodies—except for the four-minute, look at it again. Here’s one-minute. Look where the bodies were. Were they going inside the fair value gap?

The wicks went down to offer what? The inefficiency that was in here. What is it inefficient? Sell-side delivery. It’s a buy-side imbalance, sell-side inefficiency: BISI. There is a fair value gap by classification, but specifically, it’s a buy-side imbalance, sell-side inefficiency, meaning that it will likely need to drop into that again, offering repricing.

Once we leave that range, it becomes what? It’s a balanced price range.

The wicks are doing damage, but it’s offering the sell-side. But the wicks and bodies are not both inside that fair value gap. So what is it telling you? It’s likely to go higher, which is why I told you I would like to see how it trades to this. And if it goes above it, it thinks that the draw in here is what we’re looking for. But if it goes above it here but falls short of this high, does it act as support?

How far can it go, ICT? When I have these types of runs, what I like to use the fib for: I’ll take the fib, anchor to the low, draw it to this high, and import the extensions. Okay, this will be first partial.

Assuming that you would like, if you’re looking at price action, whether you back-test it and it’s already happened, like when you go to work and come home later on and you’re watching this video, or if you were at school, or if you’re waking up if you were sleeping while it’s being live. You go back to data like this and you look at the price swings like this.

You measure it: one half of one standard deviation, or negative 0.5. That’s always going to be a partial, no matter how you trade, whether it’s this timeframe or another. If you have an extension that offers you profitability, I don’t care if it’s not even five handles. You’d have to learn to take something here when you’re first brand new at learning how to do this, because it will reward you and allow you to graduate into trusting yourself, trusting price action.

When it doesn’t reach it, how often does it not reach it versus how many times it does? And then what you’re seeing here, it was negative one standard deviation, which is really the measured move of this low, this high, added to this high, projected up.

In similar words, if you were to take this movement from here to here, duplicate it from this high, projected up, that’s what this negative standard deviation of one is. So it’s a perfect measurement.

I like to look at how we have traded also. So let’s assume for a moment and play devil’s advocate that we were long in here, and we rallied up, and we took partials here, and we wanted to trade the daily range, not trade the session.

When I’m doing my examples, I’m teaching you how to trade that particular session. So I’m moving my stop up to protect the open profits for that particular session, which is what you watched me do yesterday, and you see me do in last Thursday’s example. So I showed you both those positions working what? The long side.

Why? Because my higher-timeframe analysis that I’ve been sharing with you has been calling ES higher. Why? Because it’s going to trade in sympathy to Nasdaq, even though Nasdaq, I told you, was going to be the leader.

How do you manage the impulsiveness that comes in with not being in the strongest one because either you didn’t know it or you did it by error? I’m teaching you how to not even concern yourself with that.

So if I’ve already told you that Nasdaq was the leader on the upside, but I’m going to teach you with the medium of the ES, E-mini S&P.

So by having this outlined experience, where we note the market’s likely drilling these higher-timeframe premium arrays, that means it’s going to go up. How do I engage with it?

Well, how do I teach you? First, start looking for one good setup per week. Just find one good setup, not an everyday setup. Because if you can find a setup that you can find once a week, that same model, that same approach that you use for that one setup that you’ve been waiting for, for one period of trading inside of an entire week, you’re going to forge discipline, self-control. You will get your ends met by that.

And because you’re getting experience with it, you can take that and reduce it to a smaller timeframe, and you can find more of that same model information across the entire spectrum of the week.

Silver Bullets exist in many runs, but I just gave you a very specific time when they form every day. But unless you know where the market’s going to go, it’s highly unlikely that you’re going to be consistent with it, because you’re just going to be guessing. You’re going to look at every little separation between three candles and think it’s a fair value gap, that it’s an entry point. And it’s not. You still have to know where the market is likely to go to.

Now, devil’s advocate, say we were long and it wasn’t a CPI day, and we went long and everything behaved as we see here. We were taking partials here. We would take a majority of our trade off in here. The stop would have remained below the opening price at 8:30.

When the market started making its runs, here’s your 8:30 opening price. You would still have your stop where it would be below this opening price initially. This wick, consequent encroachment, we would be in here. Your stop would have to be below that.

“But ICT, earlier you said it doesn’t need to go down.”

It doesn’t need to go down here, but it can revisit the consequent encroachment. It can. 8:30 is when the news embargo lifts. That means there’s going to be volatility trying to get up and down, not to this magnitude because CPI is a little bit more aggressive. Think of it like Non-Farm Payroll. It can be a little bit more wild or more animated.

So, or if you want to be very conservative with your stop loss, again, you’re trading for the daily range. So that means you’re not trying to do your 30 contracts, your 40 contracts, max position, okay? You’re trying to trade the daily range, where you’re trying to maximize the availability of the full daily range. Your stop could be placed below here, sell-side liquidity, minimum, consequent encroachment.

We’ve already worked at sell-side. So how do you place your stop loss and feel confident it’s not going to hit it and knock you out?

If you’re trying to day trade, day trading is position trading for the daily range. Intraday scalping is session trading. That means you’re trading the morning session before lunch in New York and in the PM session. There’s a distinction there.

When I say day trading, what I’m saying is you’re trying to capitalize on the majority of the full daily run from open to close. You’re trying to get the lion’s portion of that move. That’s not scalping.

Scalping, or intraday scalping, or session trading, is where you’re getting in and out, typically many times within the same hour or so, or two hours.

Whereas when I’m trading intraday, I’m capitalizing on the move that I foresee that would be just the lion’s portion of that specific session of the day, whether it be London session, New York session, or New York PM session. Whatever it is I’m trading, it’s relative to that specific session.

If you want to capture larger runs on price, then you’re going to leave your stop loss.

You won’t learn how to place stops and move stops effectively in the beginning by trying to move them tight or trying to see what I do. Like when you see me do that, it always comes with a price. Invariably, if you trail your stop loss, it will be hit. Eventually, it will absolutely be hit. My stops get hit. When they’re trailed up, eventually, boom, it gets out. But I have taken the majority of my trade off in profit before that even happens.

So when I do these examples, I’m teaching you how to graduate into that. Now, I know if I want to be in a day trade, if I think the daily range is going to expand and close near the high of the day, and I’m bullish, then I’m not going to rush to move my stop loss. It’s going to stay where I initially placed it.

And I’m not worried about reducing its exposure, because throughout the day, what am I doing? I’m taking partials to pay me, which by default reduces the exposure that you would have with a stop loss at or below the low end of that range, which would be going here. There’s no need for it to come back down here. It’s already done the damage.

Other traders don’t understand what you’re being taught: that the first run on liquidity is the tip. That’s the signature that you’re looking for. If you want to be long, the best time to go long is after sell stops have been taken.

So if you’re looking for bias, you will learn how to do daily bias. It starts with understanding where that weekly chart is likely to go to. That’s the first thing you have to decide: is it more likely going to go up on the weekly candle or down?

Why would it be wanting to go higher or lower? That’s what I’ve been showing you. That’s what I’ve been putting your attention to on that weekly chart. And every time it starts to go lower on intraday charts, on one-minute, three-minute, and five-minute candles, you see people out there trying to chase it like it’s going to go lower. It’s only going down to present new buying opportunities. That’s all it’s doing. It’s going into discounts.

So as a day trader, you could be still long. Your stop loss will be below the low end of that dealing range where sell-side was already tagged. Lion’s portion of the move will be off here, and you would have taken partials above this high here as well.

You would not, as a day trader, put your stop loss below that low. Why? What do I teach you about the lunch hour? Lunch hour macro runs on liquidity. What liquidity? The stops that would favor the folks that have been profitable all morning long going into New York lunch.

They have trailed their stop loss because they don’t want to lose open profit, when really they’re guaranteeing no potential further open profit, because the market will, in fact, many times go down and take out the low of the day that was formed prior to 11 or noon New York local time. They’ll take those stops, the ones that occur between 12 o’clock New York local time and 1:30 New York local time.

Don’t believe me? Go into your charts and see if it’s what’s going on. I don’t want you to believe anything I’m saying. I want you to go into the charts and back-test and look at that stuff, because you will see it. You won’t need to hear me say it all the time. It will be in your notes, and it’ll be part of your repertoire.

I’ll give you some homework to go into your charts and start analyzing, seeing where things are manifesting, and build up that experience with your journal. The more experience that you gain in studying old moves, the better you’re going to be, because your brain is going to retain that as framework.

And when you start watching price real time, tape reading, where you’re not pressing a demo entry, you’re not trading with a live account, you’re just watching price and observing what it’s doing, that is a critical part of learning how to do this, whether you learn how to trade through me or anyone else.

I promise you, if you put more time into that, you will be better equipped to trade.