ICT Price Action Chronicles - The Science Of Anticipation In Price

Date: 2026-08-06

Action.

URL: https://youtu.be/tByaPnk3fc4?si=9M4t5iNAYmQSqizx

Good morning, folks. How are you?

I hope you’re doing well.

Obviously, we've had an enormous rally following the FOMC.

Last week, I said I believed the low was in, and price has rallied significantly since then.

There are a couple of areas in the price action that I’m monitoring.

Yesterday, we just clipped that high right there, but I still think this area is a little too smooth.

We traded just barely above it, but this is how I’m looking at it.

We’ve essentially had four consecutive up days.

Now we’re getting our first pullback day, and today is starting off softer.

I don’t think today is going to close down.

I think the market will make an attempt to continue higher.

After such a strong rally, it’s normal to see a brief pause.

We have a volume imbalance here, extending up to yesterday’s low.

That defines our daily inefficiency range.

Notice there’s no volume imbalance on the upper side.

So our range extends from here down to the low of the volume imbalance.

Right now, price is just bumping up against this inversion fair value gap, which also aligns with an old high.

Looking to the left, because there’s a gap, we also have this wick here.

One of the things I would want to see is price overcome this wick.

As I’ve taught extensively with Forex and futures, if you’re brand new, Non-Farm Payroll weeks tend to offer the cleanest price action on Monday, Tuesday, and Wednesday—generally up until around 11:00 a.m.

If you’re new or still low on experience, there’s nothing wrong with admitting that.

That’s maturity and responsible trading.

Everyone wants to feel like a professional, know everything immediately, or participate in every possible move.

That’s not realistic.

You can see here that price just dropped sharply into that area.

I want to delineate the 7:00 a.m. time we’ve just entered and carry that forward to 9:00 a.m.

Inside this section, we’re going to drop down to the 1-minute chart.

So here we have our pre-market session.

There’s a gap right there—a suspension block.

I like that.

🚨LIVE TRADING🚨 https://youtu.be/tByaPnk3fc4?t=285

I’m going to look for a long in there.

See this wick?

If you grade roughly half of that wick, it aligns with the high of the inversion fair value gap.

I’m entering exactly at consequent encroachment of this gap, after price has hit the inversion fair value gap on the daily chart.

So it’s reasonable to anticipate a pop, especially after such a sharp drop.

Price was in a hurry to get here.

We also have these relative equal highs, these relative equal highs, and remember the level I showed you on the daily chart—the wick I want to see price trade above.

I also tweeted a level I want to see price reach before we get through Non-Farm Payrolls week.

We have today and tomorrow for that.

If we scrub back through the price action, you can see a couple of smooth areas left behind.

I like this area.

Look at how much energy was delivered after these relative equal highs formed.

So I like this as a potential draw for Non-Farm Payrolls.

We’ll use that level right there.

When I tweet a level I want to see, I also want something technical lining up with it.

I was telling you about this wick.

See how its consequent encroachment essentially aligns with the top of that inversion fair value gap?

So the stop loss needs to be framed right around that level and just below it.

Okay, there you go.

Initially, we’re looking for a run into these relative equal highs.

At the same time, we want to see price treat this midpoint like a threshold.

Think of it like a ladder—not a DOM ladder, but a progression through levels.

We have this large vertical decline in a single candle.

The range runs from this low, which is the highest point of the inefficiency, down to this volume imbalance low.

We want to see price show a willingness to trade above the midpoint of that range and begin leaving bodies above it.

If you want to be very purist about it, you can also add all of the grading levels I’ve taught for that inefficiency.

You can see how quickly price is moving into this area.

Now look at that line right there.

See how price is trading above it?

That bodes well.

What I can do now is wait for this candlestick to close above the midpoint.

If it does, I can roll the stop up from here to just below these lows.

What we want to see is price completely overlap this decline, rip above this area, and then hold above it.

Because the next order of business is evaluating order flow relative to these relative equal highs.

Now I can roll the stop up.

Easy peasy lemon squeezy.

I always pay attention when the market has been heavily suppressed—or after a blow-off move higher—and then reaches a key daily level.

That’s what we’re seeing here.

This was a massive decline.

It gets everyone excited: “Oh, this is going to be a big bearish day.”

But look at how aggressively price is already coming back.

Now think about it from the short seller’s perspective.

Suppose you were short here with your stop just above that high.

How safe would you feel right now after seeing price react this quickly off the daily inversion fair value gap, find support here, and rip higher?

It looks like price is trying to get somewhere.

When the market shows this kind of willingness to keep running, it’s usually reaching for liquidity.

These are the last bears who entered and were briefly rewarded.

Sometimes you can be on the wrong side of the market and still have a short-lived period of unrealized profit.

The problem is that traders often fail to recognize when they should have taken that profit and exited.

So again, we’re watching this line here.

We want to see price continue showing a willingness to stay above it.

[12:30]

Okay.

I’m actually going to roll the stop up just enough to cover commissions…

…or maybe buy the gang a pizza dinner. 🍕

NFP Explanation

Non-Farm Payroll (NFP) is a report released on the first Friday of most months, covering U.S. employment data.

It used to be something intraday and short-term traders loved to gamble on.

Over the years, I’ve found the data itself isn’t particularly trustworthy.

Not that I ever cared much about the numbers.

What interests me is the anticipation—the expectation of large volatility right at 8:30 a.m. on NFP Fridays.

They’re extremely unpredictable.

You never really know how the market will react because the data isn’t always reliable.

I’ve seen plenty of occasions where the jobs numbers should have been extremely bullish from a fundamental perspective, yet price behaved differently.

I don’t believe the markets are driven entirely by fundamentals.

Commodity markets—food, grains, livestock, cotton, and energy—are a different story.

Those markets are generally influenced by genuine supply and demand.

But for stocks and index futures, I don’t believe there are true supply-and-demand forces in the same sense.

They’re driven more by perceived supply and demand than actual shortages or surpluses.

Non-Farm Payroll is one of the most misunderstood reports among traders.

I fell into that trap early in my career.

I started trading on November 5, 1992.

During my early years, my uncle introduced me to trading, and he never once emphasized fundamental data.

Maybe if he had, I would have spent more time studying it.

It wasn’t until my second year that I really learned about fundamentals.

Even then, I thought the logic behind it was flawed.

With something like Non-Farm Payroll, you’re reacting to old information and expecting it to have an immediate impact on price.

Meanwhile, informed money has likely known that information long before it becomes public.

Do you honestly believe, especially in today’s world, that people with privileged access don’t already know?

The data sits for weeks before it's released.

During that time, the market can already be moving based on information available to insiders.

Whether it’s government officials, institutions, or others with privileged access, people often know about upcoming developments before the public does.

That’s one of the reasons I’m not a fan of fundamental analysis.

Maybe there was a time when markets were more transparent.

But I do believe fundamentals have a much stronger relationship with agricultural commodities.

Corn, soybeans, wheat, oats, livestock—those are real supply-and-demand markets.

If the corn harvest comes in below expectations, that directly affects the price of corn and everything that depends on it.

Livestock producers then pay more to feed their animals.

When it’s time to bring those animals to market, they have to charge higher prices to offset those costs.

That’s genuine supply and demand.

I don’t believe the same applies to bonds, stocks, or index futures.

From a technical analyst’s perspective, trying to explain those markets purely through supply and demand becomes more of a pseudoscience.

You could argue there’s supply and demand in collectibles like Pokémon cards.

There’s certainly demand for them.

Personally, I’d never invest in something like that.

It just doesn’t make sense to me.

But there’s almost always someone willing to pay more than you did—if you wait long enough and market it well.

All right, see how price is reaching above?

Look at this run right here.

Price trades down into the daily inversion fair value gap, then completely runs back above this area and uses the midpoint.

Notice that none of the candle bodies close below that halfway point.

See that?

Interesting, isn’t it?

Now we’ll see if price can continue higher toward consequent encroachment of that daily wick I gave you.

The topic I want to talk about is generic price structure that yields continuous opportunities.

In other words, if you knew everything I’ve released in the teaching compendium on this YouTube channel, you’d have a broad framework for understanding price action and identifying recurring setup opportunities.

You’d also have a clearer idea of where price is likely to run, just like we outlined here with that daily inversion fair value gap.

Now, why did I select this particular one?

Because it’s the last inefficiency in this entire move lower.

Take the full price run from this high all the way down to this point.

Starting from the lowest candle in the decline, work your way back to the left.

There’s no fair value gap here.

There is a volume imbalance, but that was already utilized here.

See that?

So if I had been sitting in front of the charts, talking through it live and recording, I would have taken one of my initial entries there.

Then I would have pyramided into the position as price moved up into this area.

Keep working to the left.

There’s no fair value gap in this section because the wicks are bridging it.

We do have a small volume imbalance here.

It gets utilized there—price opens, trades down into the volume imbalance, and colors slightly outside the inversion fair value gap, which is completely permissible.

Then we have this suspension block.

There’s a volume imbalance here where the candle bodies do not connect or overlap.

And we have another one here where these two candle bodies also fail to connect or overlap.

When an inefficiency has a volume imbalance at both the high and the low, that forms a suspension block.

Carry that information forward, and you can see why I went long directly at the midpoint.

Why was I confident there?

Because of everything we just covered.

Price traded down aggressively into a key daily level.

When price reaches a key level on the daily chart, there’s a higher probability of getting a tradable price run.

That does not mean the trade will automatically be profitable.

It simply means we, as traders, need movement.

Without movement in price, there is no opportunity to profit.

So naturally, we should spend more time identifying areas where price consistently has the potential to produce meaningful movement.

That gives us the opportunity to take measured risk, manage it properly, and anticipate instead of react.

Notice what I was doing down here.

I anticipated the drop into this area.

Even though it didn’t happen exactly while I was speaking, I expected price to react the way it did once it reached that level.

I anticipated this area would propel price higher.

Price traded about halfway into it, closed back outside of it, and then rallied on the very next candle.

That’s where I felt it was reasonable to get long.

Why?

Because the broader backdrop was bullish.

We were trading inside a daily inversion fair value gap, and we also had this volume imbalance.

Price utilized it right there.

The algorithm opened and immediately traded down into that imbalance.

Let me show you visually.

So there’s the volume imbalance, and you can see price traded directly into it.

Look at the open of this candlestick: 29,390.75.

Now look at the low of this candlestick: 29,390.75.

Perfect, folks.

And you want to talk to me about order flow, Level 2 data, bubble charts, and all of that?

It’s not necessary.

A quick glance at price action already gave me what I needed.

But because I’m working on a 1-minute chart, I’m operating in a timeframe where I don’t have the luxury of adding a lot of fluff.

You have to know exactly what you’re doing—what price should do, what it should not do, and what is or isn’t permissible.

In the beginning, that can feel impossible.

But over time, you start recognizing recurring patterns of volatility and price runs that become easier to anticipate.

We anticipated that this area could produce a sustained run higher.

We anticipated that this level could act as the catalyst for that move.

We anticipated that price would completely retrace this decline, trade back above it, and then run for the buy-side liquidity here and here.

And it did so handsomely.

We also anticipated that price should respect this halfway point—consequent encroachment.

The idea is for price to run up and take the buy-side liquidity here.

Now look at this wick.

We want to see price show a willingness to support this level.

I want to see price continue showing a willingness to stay above consequent encroachment of this wick.

Right there.

Now, because this move has already been very energetic, I’m going to ease back on demanding that higher objective.

We’ve had a strong run from down here, so I’m going to take one contract off at this high.

Price can give up the ghost below this level, although I’d prefer that it doesn’t.

If it does trade below, then I want to see price remain within the upper half of this gap.

So what I’ve just given you is an if-then clause for the current price action.

Ideally, we want to see this wick continue to provide support.

If price were to trade below this gap, then we’d have to reassess.

Right now, though, it isn’t showing any willingness to do that, which is good.

So I’m going to bring the stop up to here and lock in a solid profit.

If price does come back down into this area—and it looks like it might try—we want to see discount sensitivity.

That means price should respect roughly the upper half of this gap, from the midpoint up to this level.

If price comes down into this area, we want an immediate reaction higher rather than a willingness to trade all the way through it.

That’s why my stop loss is here—below the midpoint of this wick.

If the market is truly bullish, price does not need to trade below this area.

Worst case, it could wick down into it, although I’d prefer not to see that.

So again, this is an if-then condition:

If price holds above this level and continues higher, that’s exactly what we want to see.

But if price does trade below this level, then this area has to show a willingness to send price higher.

This is a critical zone because I’m tracking three PD Arrays here:

The old high.

The upper portion of this buy-side imbalance, sell-side inefficiency.

And this wick right here.

So those are my three PD Arrays.

The third—and lowest—PD Array is this upper portion of the buy-side imbalance, sell-side inefficiency.

The upper half of a gap formed like this is where you can expect the strongest buying response for an entry.

Why?

Because ideally, a small portion of the gap remains open.

That unfilled portion shows an unwillingness to trade lower.

So if the market is unwilling to go lower while you’re expecting higher prices, that’s a sign of strength.

Let’s see if price taps this small blue-shaded area or comes down and stops me out.

Either way, it’s been a good experiment.

That wick up here is consequent encroachment of the daily wick I showed you earlier in the session.

Now, suppose you’re nervous.

You know price is at a strong level, but you’re worried it may retrace too deeply.

You can simply reduce risk or take something off.

Look how painless that is (took one contract off).

You immediately remove the pressure of feeling like you have to be right.

You don’t need to be right.

But you do need to manage your emotions.

Trade psychology becomes much easier to manage when you reward yourself when the opportunity is there.

Give yourself the cookie.

In trading, the goal is to grow your equity.

So when the market gives you a legitimate opportunity to take profit, take something off and let that equity accumulate.

That’s the cookie.

In the beginning, you need to teach yourself to reward good execution when it’s permissible.

And in this case, it is permissible.

The idea is to reward yourself when the opportunity is there.

Think about it.

When I was younger and experienced anxiety, my urge to eat sweets would skyrocket.

I eventually realized I was a nervous eater.

During long periods of drawdown early in my trading development, I ate terribly.

Snack cakes, homemade cakes—you name it.

I enjoy baking, and it wasn’t unusual for me to eat an entire cake over the course of a trading day.

If you sit there stressed all day, constantly eating sweets, you’re going to hurt your health and gain weight.

Trading should be different.

When the market offers you a cookie, take it.

Don’t be afraid to take profits.

No one is going to punish you for banking gains.

That’s the benefit of giving yourself the cookie.

In this trade, I took two contracts off and left one runner.

If the last one comes back and stops me out from here, that’s perfectly fine.

See that?

Painless.

There’s no reason to be upset because price didn’t reach the next target.

Why would you be?

Now the next thing to monitor is this inefficiency.

Using the same idea of discount sensitivity, I’d grade the area from its midpoint up to here.

If price is going to continue higher, I’d prefer to see it remain sensitive to this upper portion and show an unwillingness to trade deeper while we’re in this area.

Ideally, I’d like to see price completely repel away from this area, overlap that high, and then begin expanding higher.

From there, the next draw would be the daily wick I mentioned earlier—specifically its consequent encroachment.

I sensed a little disturbance in the force here.

Price dropped into this area, then printed that one candle that looked like it was ready to run.

It opened, traded right down to this level, pushed into the rejection block, and then gave up the ghost.

That’s why the price action started to feel heavy.

Look at the bodies—they’re closing below consequent encroachment of that wick.

Everything I’ve been teaching is showing up in the price action.

But if you ever reach a point where you’re worried about the outcome, or you feel like you’ll be a victim if price comes back and stops you out after you’ve adjusted your stop, take advantage of the ability to scale out.

If you can take a partial off, do it.

As soon as you start wrestling with those thoughts—especially if you're new or inexperienced—the best thing you can do is reward what you've done so far and reduce the emotional burden by simply taking something off.

Don't start thinking:

"It's probably going to hit my stop. I shouldn't have moved it. Let me move it back down."

What are you doing?

You're giving back unrealized profit by widening your stop after you've already tightened it.

Once you raise your stop, commit to it.

You're telling yourself, "If I get stopped out, I'm getting paid."

Why would you want to undo that?

Think of it this way:

Would you work all week for an agreed salary, then walk into your employer's office and say,

"You know what? Something doesn't feel right. Go ahead and take a third of my paycheck."

That's exactly what you're doing when you move your stop back and give up the profit you've already protected.

Once you've adjusted your stop, stick with it.

Doing that builds discipline.

At first, it may not feel like it, but you're also learning to manage the emotional weight of being right or wrong—and the constant battle between fear and greed.

You simply don't have enough experience yet to recognize that's what's happening.

Watch live traders.

Even some of my students still struggle with this.

They move their stop, price starts drifting toward it, and suddenly you can hear it in their breathing.

You can see it in their body language.

Their facial expressions change.

They become concerned.

You don’t think about it that way in the moment.

You think you’re being victimized.

“The market did this.”

“Something happened.”

“Trump caused it.”

No.

You just handled the trade poorly.

You didn’t manage yourself.

You made a mistake.

That’s the reality.

You moved your stop.

You didn’t take profit when price was offering it.

And here, I walked you through it in real time.

Price started showing signs that maybe the move was weakening.

So I took one contract off.

Then price gave the impression it wanted to rally, but it only reached the rejection block.

A rejection block is the highest up-close price within a swing high.

That’s right here.

Once price tapped that level and started coming back down, the concern increased.

I had already taken a partial at the high, and that rejection block was another area where I could have taken more off.

Look at the prices.

See how this, this, and this all line up?

They’re essentially the same level. (his partials)

I’d like to see price climb back into this area.

If it can use that area as support again and continue higher, then we can start considering this next level as the draw.

But if price folds and closes below this low, then this area becomes the last line of defense for the bullish expectations I had for this morning’s session.

I think that’s actually a perfect place to close this one out.

This is occurring during the time window I teach you to focus on—between 7:00 a.m. and 9:00 a.m. Eastern Time—using the logic of the daily PD Array.

Price traded aggressively down into discount arrays on the daily chart around 7:00 a.m., then ripped higher, consolidated, and folded quickly.

Now price is supporting the upper half of that range, which is exactly the kind of defensive behavior I said I wanted to see.

The question is whether price wants to defend its market structure here.

If it can climb back into this area, reaccumulate, and rally above this high, then the bullish continuation becomes much more likely.

There are opportunities everywhere.

But unless you know what you're looking for—what to anticipate and hunt—you'll miss them.

That's what we're doing: hunting.

We're not chasing price after it starts running.

We're waiting for it to come into our area of interest, and then we execute.

You have to learn to anticipate.

Know when price is likely to do something, then look for the behavior that confirms your idea.

Once you believe price is going higher, ask yourself:

• How should that move begin?
• What should the initial price action look like?
• What levels should continue supporting the move and confirm it's sustainable?

That's exactly what I walked you through here.

Hopefully this was helpful.

It's just one more piece of the puzzle.

There's a technical science behind all of this.

You just have to spend a little more time with the old man.

I promise you'll like where it leads.