Wednesday May 24, 2023 Forex & Spooz Market Review

Date: 2023-05-24

URL: https://www.youtube.com/live/ZfnY2SH3G24?si=FK4MFXvDYEk_75M9 Watched Date: May 25, 2023

Here is the weekly chart on the Dollar Index. Last night, I mentioned that I wanted to see price drop into the low and, more specifically, the open of this bullish candle. This is a bearish order block on the weekly chart for the Dollar Index.

We had that delivered today rather handsomely. I also mentioned that I would use this shaded area here — the fair value gap between this candle’s low and this candle’s high — as an inversion gap, or inversion fair value gap. In other words, I expected it to act as support.

We’ll take a closer look at that by dropping down to a lower timeframe. This is our daily chart, with that same weekly bearish order block opening price extended here.

You can see how today, Wednesday, May 24, 2023, price opened and dropped down into Monday’s high. Notice that: it opened, traded down into that shaded area I told you I would treat as an inversion fair value gap — so think of it as support — and more specifically, it traded right to Monday’s high.

When price opens, trades down, and goes directly to that candle’s high, that is my immediate rebalance. Whenever that occurs, it is very powerful — but only if you already know where the market is likely to go. You have to have that going forward. If you don’t know the draw on liquidity, or where the market is likely to reach — whether for stops or for an inefficiency to rebalance or reprice — the immediate rebalance will not help you much.

But if you do have a bias, and I shared mine last night, then it becomes useful. I told you we would be looking for this very level here, and price traded down into Monday’s high. That is the immediate rebalance. You can see the Dollar Index’s performance as a result, and subsequently, that lends itself to weakness in the euro and other foreign currencies.

But we have to take it one step further. Just keep in mind that when price hits this level here — the weekly bearish order block opening price — it is important because that was my target. Now, I don’t know what to expect going forward, and I don’t want to guess.

Again, we’re not looking at the intraday chart for the Dollar Index. You’re welcome to do that on your own charts.

But on EUR/USD, here on the weekly chart, I mentioned that we would likely draw toward this order block here. And today, we did get some movement in that direction. Admittedly, it was a bit of a wonky session — very up and down — and we’ll look into that as we drop into the lower timeframe.

Here is the daily chart. As I just mentioned with the Dollar Index, we’re seeing the mirror image on EUR/USD. Our bias was bearish for EUR/USD and bullish for the Dollar Index.

Today, price opened and traded up to Monday’s low, which is an immediate rebalance. Then price began to move lower. Notice these two candles over here — they are relatively equal lows. Then we have the fair value gap here and a weekly bullish order block.

So I still believe, and still favor, that this is a downside draw on EUR/USD. And it can still deliver that, even if the Dollar Index trades in consolidation. If EUR/USD finds further weakness on the downside, I don’t see anything bullish here for the euro. That’s what I’m getting at.

On the hourly chart for EUR/USD, you can see Monday’s low shown here, and that is where we had the immediate rebalance.

Intraday, we had this high here and this high here, creating relatively equal highs. That will be treated as retail resistance. Traders will see that level, and we did in fact get the sell-side liquidity pool targeted, as I mentioned last night in the live stream. That was the downside draw.

Then price rallied up, bumped into, and engaged all the buy-side liquidity there. And again, Monday’s low on EUR/USD was the immediate rebalance level. From there, we had displacement to the downside.

Now we have relatively equal lows again, and I’m keeping them on the chart so you can frame that 1.07-ish big figure level as still being, in my opinion, a downside draw.

Watch this inefficiency here — the sell-side imbalance / buy-side inefficiency — along with these relatively equal highs. Price could step up into that area and then potentially resume lower. That is kind of what I would expect going into Asia and London.

On the five-minute chart, going into the AM session, you can see how the market ran up into Monday’s low. That is the immediate rebalance. The market tapped it one more time, and then we broke a swing low here, giving us a shift in market structure.

Then we have our time window from 10:00 to 11:00. That is when we are looking for the AM session ICT Silver Bullet trade.

You can use a fair value gap that formed prior to 10:00 a.m., which would give you this entry here. Or, if you want to stick strictly to only taking a fair value gap that forms inside the 10:00 to 11:00 a.m. New York local time window, you would get this fill here. Both are valid.

Why? Because even if price does not trade below these lows here, the rejection block gives us a reasonable target. The rejection block is the lowest closing price, and we learned this in my PD Array Matrix from the core content of the ICT mentorship on my YouTube channel. You can go find it there.

If we have relative equal lows and you are looking for a target, it is often better to take a partial profit at the rejection block when you have multiple wicks like this. Why? Because price may only trade down into this overflow area where the bodies are showing it, without ever really breaking below the wicks. The wicks do the damage, but the bodies tell the narrative.

So the rejection block is found by looking at these down-close candles and identifying the one with the lowest close. That is this candle here, and that is why it is my rejection block. You can see price does, in fact, reach for it. The rejection block price is 1.07506, and your short entries are up here around the 1.0772s or 1.0774s on either of these AM session Silver Bullet entries.

So does it offer more than 15 pips for a short? Yes. That makes either one of these significantly valid as a short setup.

And again, they say it doesn’t work in Forex. Here is another example, using the bias I shared last night.

E-mini S&P — this is our daily chart. I mentioned that we would remain bullish on the E-mini S&P until we lost the mean threshold of this order block here, along with this fair value gap as well. Those were the discount arrays I was watching.

I said that if we lost those levels, we would likely go down and clean up some of the sell-side liquidity. I’ll take you into that chart and show you that on the lower timeframes.

But we are heading into a holiday weekend, and there is a lot of potential for things to go off. I’ll just say it that way without saying anything more. Those of you who are familiar with me from Twitter Spaces know that I sometimes refer to tinfoil-hat discussions.

This is a long weekend, and senators have been offered satellite phones. So read between the lines. There may be some urgency for price to move lower and then sell that narrative — that fear narrative.

And we do have relatively equal lows here. Is there sell-side remaining there? I think what we’ll most likely do tonight is trade into the Opening Range Gap and close that in. We’ll take a look at that now as we drop into the lower timeframe.

Here is the hourly chart.

These are the lows where the sell-side would be raided. I mentioned this in last night’s video, so you can go back and watch it. Ten thousand, ten thousand of you watched me talk about this live.

I said that if we lost the mean threshold and the fair value gap up here, and if they did not offer support, then this would be treated as an inversion fair value gap. You can see that price did, in fact, trade up, offered consequent encroachment here, and then sold off, attacking the sell-side liquidity pool.

Notice the bodies of the candles over here. See where all the bodies are stopping? Right at that low. So price is only running up into that liquidity, then coming back up into a short-term premium.

15-minute candlestick chart. There is buy-side liquidity up here.

This morning, we had news at 8:30. We had a sell-side imbalance / buy-side inefficiency here. Price traded up into that, then displaced to the downside, clearing out all those sell stops resting below the 4120 level.

In the afternoon, during the final hour of trading, you can see that we had a shift in market structure here. Price came back down into a bullish fair value gap. This is a buy-side imbalance / sell-side inefficiency, along with an order block.

Then we start to see price rally back up into this fair value gap. But more specifically, it rallies into the Opening Range Gap — and I’ll show you what that is.

Here is a five-minute chart. For futures trading, there is a separation between sessions. If you look at where we closed on Tuesday and where we opened here, using the regular trading hours tab on TradingView, this is how you get that information.

Usually, it will say ETH, which means electronic trading hours. When you have it on a five-minute chart, 15-minute chart, or whatever timeframe you’re using, you can toggle it to regular trading hours, and it will show you the gap that exists once the normal regular day session begins.

So when we have that gap right there, it is likely to fill. But when there is a strong bias — and I told you what that bias was last night — I was suggesting that we would see the Dollar move higher into that weekly bearish order block’s opening price. That would send EUR/USD lower and also create a willingness for sell models to appear in the equity markets.

And we saw that. Yes, there is a gap here, and usually it is a good idea to avoid shorting into a gap like this. But when there is a strong, merited draw in play, price will usually go for the objective, which was that 4120 level. Again, watch last night’s live stream — that is where the sell stops were resting.

The raid on those stops would occur if we lost the mean threshold I mentioned for ES, the S&P market. Because we had that gap lower and price was so close to taking those stops, it opened and rolled right down into them. Then it consolidated around here until noon.

Why did it turn here? We’ll get into that a little bit. But for now, just know that this turning point at noon is something I teach anyway. There was a confluence of events occurring there: not only was it New York lunch, it was also the midpoint of the day, we had met our downside objective, and we had a Silver Bullet context.

We’ll look for that here on the one-minute chart. We have an up-close candle here, which becomes a bearish order block after it has been broken — so there is a shift and a change in the state of delivery. The market trades back up into that during the 10:00 to 11:00 window.

Now, on a one-minute chart, you might look at this and say, “Well, I don’t really see a fair value gap there, Michael. I don’t see it, so therefore it doesn’t work.”

No. If you listened to my Twitter Spaces, and also what I mentioned in last night’s live session, I explained how I look for inefficiencies and how I can know, with a great deal of certainty, when certain inefficiencies will not fully fill or rebalance. That comes from watching lower timeframes offering multiple passes inside specific ranges. If you have not watched last night’s video or live stream, that will go right over your head and won’t help you much.

But in that video, I went into great detail about how to read real order flow. When we take that insight into what we’re looking at here — this order block between 10:00 and 11:00 — remember, as I mentioned last night and many times in Twitter Spaces, I do not look only at a one-minute chart.

I have an intraday matrix where I watch 45-second charts, 30-second charts, 15-second charts, five-second charts, and one-second charts. So I go beneath the one-minute timeframe. If I have a very strong bias — which, in this case, was that 4120 level I pointed to last night — then I can use those lower timeframes to refine the setup.

I said that if ES lost the last line of defense for the bulls, we would likely sweep that very level. So if that is the draw on liquidity, and we saw that we broke down and lost all the final discount-array defenses that could have sent ES higher, and that was supported by the Dollar Index reaching up into its weekly bearish order block — the level I mentioned in last night’s video — then those factors are in agreement.

With that agreement, we can take this area here and break it down into a lower timeframe. Even though this is a one-minute chart, where every candle represents one minute, this red line here is the level we’re going to inspect on a 15-second chart.

This is that same order block. Inside that order block, everything north of this line — all that price action — we inspect it to see whether there are any inefficiencies. And lo and behold, there it is right there.

So when the market trades back up into that order block, it is not simply short because it is an order block. Any random up-close candle does not automatically become an ICT bearish order block. There has to be a narrative. The narrative here is that price wants to draw down into the liquidity below 4120. It draws up into a short-term premium, because the algorithm can only short when price runs higher. That is how smart money operates.

When price rallies up into this inefficiency, this fair value gap, they go short. Then the market starts to spool lower, attacking the sell-side. So there is your AM ICT Silver Bullet.

As I mentioned, I don’t simply trade from a one-minute chart. I can take many of these types of trades throughout the day. If I showed them to you only on a five-minute or 15-minute chart, you would be lost as to why I’m getting in and getting out while still being profitable. It is these very small lower timeframes that I’m working with, and once you know what you’re doing, you can parlay your account even on ugly, choppy, messy days.

If you want to find your five handles, you can use this method. It is a way of dissecting price and looking with an X-ray view into real order flow — but only when you have a narrative, when the market is likely to reach a predetermined level for either an inefficiency or liquidity.

In this case, I mentioned last night that if ES lost that mean threshold, then we would go lower and sweep the 4120 level, where the sell-side liquidity was resting. And we did exactly that here.

Is it a viable trade? Well, if the stops are at 4120, is it unreasonable to see price trade three handles below that? No, of course not. There is liquidity resting below there. So if price could trade down to 4117.75, and assuming your entry is around 4127.75, what is the minimum criterion for a high-probability ICT Silver Bullet trade? It has to offer 10 handles. Can it offer 10 handles in range? Yes.

So this meets the criteria.

The setup delivers right here a couple of minutes after 11:00, giving 10 handles from up here. You would not see that unless you had access to a platform that offers those lower timeframes. TradingView happens to offer that, which makes it a very good platform for this kind of study.

When we got down below that 4120 level, this was the first pass here during the Silver Bullet trade. Notice there is no obvious inefficiency, right? Because we’re looking at it on a five-minute chart. That was the first pass through. Then price trades lower and goes down 10 handles, right there at 4117.75. That is the low right there.

Then at noon, it makes the low of the day. At the same time, look at what is occurring in the Dollar Index: it goes right up into our weekly bearish order block opening price. This right here, occurring at the same time we are below the stops and inside that sell-side liquidity pool, marks the end of the day. We’re done.

So now what is price going to do? It’s going to consolidate until the last hour of the day. Why? Because the Dollar has met our target. It’s chopping around in here. Index futures are going to work toward going back into the Opening Range Gap I showed you earlier — that shaded area here.

This is regular trading hours shown on the five-minute chart, and here is the five-minute chart with electronic trading hours. You can see ETH down here in the lower right-hand corner, showing price action during electronic trading hours.

In the last hour of trading, from 3:00 into 4:00 for the New York session — obviously, index futures trade until 5:00 and then stop until they restart at 6:00 p.m. — we see displacement to the upside. There is a shift in market structure here. We have an imbalance, a fair value gap, and three consecutive down-close candles forming an order block.

Draw that out in time. Price trades into the fair value gap here, then works toward doing what? Getting back up into that gap.

Could it have worked inside all of that? Remember, it opened here and spent all this time down here. Then we get a shift in market structure after 12:00, which is a normal time when we often see a lunch reversal. With this gap up here, I would expect price to trade up into 4158, close that in, and then see whether it is willing to go any higher. Maybe it bumps this liquidity here, or this small gap there, but more specifically, I would like to see all of this filled in.

Now, let’s assume for a moment that it trades up, hits that level, closes it in, and then starts to fall again. For that to happen, the Dollar would likely have to be going higher. And if that is the case, then we would be looking for these lows here to be taken out — the relatively equal lows on the S&P.

So you got a chance to see me “cherry-pick” in the future: a daily candle, a weekly candle, and then watch it deliver exactly as we outlined last night. This stuff works. I don’t know how else to prove it except to show it to you over and over and over again — outlining it beforehand, then watching it perform.

The hardest part is keeping yourself from becoming impatient and trying to make money right away. You are going to learn patience by not worrying about the money. Focus instead on learning, understanding, and growing in your ability to know where these draws on liquidity are going to be.

It does not happen overnight. Nothing I have, and nothing anyone else has, is going to get you there faster. You just have to keep showing up every day. I’ll keep putting these out. I’ll keep revealing and showing you the things you should be seeing in price action. And you’ll grow between now and November.

Hopefully this was insightful. Until next time, be safe.