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YouTube transcript (FOUzW0QmsfI) — Transcript

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0:27we're going to be looking at a
0:28amplification of order block Theory
0:31we're specifically dealing with the
0:34mitigation block
0:36okay when we look at mitigation blocks
0:38what we're looking for is a condition in
0:42the marketplace where
0:43the market has given clear indications
0:46that it wants to break down or move
0:49higher in a step ladder formation in
0:54other words like selling rallies or
0:55buying declines
0:57Vine declines in bullish markets and
1:00selling rallies in a bear Market okay
1:02when we look at the marketplace and we
1:04frame
1:05price action in the form of resistance
1:08levels and support levels or anticipated
1:10bearish institutional reference points
1:12and anticipated bullish institutional
1:14reference points we have to have a
1:17context in the marketplace behind our
1:19viewpoints are we looking at the market
1:20that has a bullish scenario are we
1:23looking for a market that has embarrass
1:24scenario in this example we're going to
1:26look at a market that has a bearish
1:28example
1:29when we're looking at a market that is
1:32moving up into a potential bearish
1:35resistance level
1:37Market typically will move up and they
1:40move into a
1:42old high it could be an old low it could
1:45be a bare shorter block it could be a
1:51breaker that we'll learn more about it
1:54could be a multitude of things
1:56that would lead your opinion
1:59into the realm of resistance
2:02okay but without going into great detail
2:04what that may be there's multiple
2:06opportunities to frame that idea of
2:08being resistance if a resistance level
2:10is expected or you anticipate some
2:13selling pressure
2:15at a particular level as is indicated
2:17here what we do is we wait for price to
2:19indicate a confirmation that there are
2:21willing sellers up there
2:23if the market does show repricing then
2:25it realize one more time up to it
2:28what we're going to be doing is
2:30monitoring does the market have a
2:32willingness to want to break down
2:35and eventually the market will show
2:38signs that it does in fact want to break
2:40lower now if you look at this specific
2:42pattern here this is what is referred to
2:44as an M pattern y because it looks like
2:48a giant M okay well when you have this
2:51pattern here it's a failure swing with a
2:54confirmation break in Market structure
2:57that low right here is what you're going
2:59to be utilizing to frame the context of
3:03the market structure shift
3:06so a net shift in Market structure is
3:08seen here with a break below that old
3:10low that gives us confirmation that the
3:12market does in fact have participants on
3:15a large scale willing to drive prices
3:18lower and that's what we need as small
3:20Traders we have to have the willingness
3:22to have the smart money indicate their
3:24cards if you will show in other words
3:26show their hand do they want to send
3:28prices lower or do you want to send
3:29prices higher in this case this is
3:31indicating that the market does in fact
3:32have confirmation that it wants to go
3:35lower
3:39so what we do is we look at this range
3:42from that short-term low up to that
3:44short-term High inside that range there
3:47has been buyers
3:49but the problem is is now those buyers
3:51are underwater
3:54this short-term rally in Price
3:55highlights a specific institutional
3:57reference point known as the mitigation
3:59block
4:07once price posts a market structure
4:10shift lower your attention as the trader
4:13moves to this specific low in price
4:15right there
4:17inside that low what we're going to be
4:19focusing on is the last downed candle
4:23because the last down Kindles where the
4:25buying took place right before that
4:27little short-term rally up
4:29since price broke below that low at a
4:32subsequent later time which is really no
4:37um there's no rule as to how long it
4:39takes before that low is violated we
4:41just note it and when it's broken it's
4:44seen as a short-term support level
4:46that's given way with a bearish context
4:49behind it so when we see that we're
4:51seeing the evidence is that there are
4:52smart money entities behind the
4:54marketplace driving price lower
4:57now at first glance it looks like well
4:59this is a missed opportunity but no what
5:01we do is we focus on this low because
5:03that last downed candle will give us a
5:06bearish level to sell into
5:12when price drives back up into that old
5:14short term low we just referenced
5:16there's going to be three reference
5:18points that you need to be aware of
5:21the market structure shift is seen here
5:24we're retracing back into it
5:27right there
5:29what three points are used at this
5:31moment
5:32you have point a
5:35point B
5:36and point C
5:39when price action returns to the point
5:41of a reference
5:44the long positions taken from A to B
5:47price swing will have an opportunity to
5:50liquidate or mitigate their losses that
5:53were occurred during the price move from
5:55B to C
5:57now this can result in new lower price
5:59swings to C for retesting or a
6:02significantly lower price move into a
6:04support level that's under the market
6:06price
6:13in short
6:14this is an opportunity to sell whatever
6:17particular Market or asset class this is
6:23as the market breaks lower
6:25let's say you look at the chart this is
6:26what you see here it does not mean that
6:29you've missed an opportunity it just
6:30means that now you have a new
6:32opportunity that's unfolding
6:38do the Longs in here in that short term
6:41low that has short-term high do they
6:43need to be mitigated
6:44we don't know for certain but if you do
6:47have a belief that price is going to be
6:48moving lower longer term that there's an
6:51unrealized lower support level for sell
6:54side liquidity that has not been tapped
6:56into yet
6:57we could be viewing this short-term
6:59rally in here as an opportunity for a
7:02new selling opportunity
7:08we have another Market structure shift
7:14so where's our Focus
7:16given what was explained in the previous
7:18example
7:19where's our Focus right now as a Trader
7:21why are we looking at a specific level
7:24and what are we anticipating
7:31that low right there
7:33inside that low the last down candle
7:35that's what we're going to be looking
7:37for price to reach back up into if it
7:39does that we can be a seller at that
7:42moment
7:44as price dries back above it
7:47into that low we're watching price trade
7:50into that last down candle right before
7:52I had that short-term rally before
7:55rated that moment here we're looking to
7:57go short
8:00as price hits that last down candle in
8:03the previous short term low
8:07where's your focus at this moment we're
8:09anticipating price to move down from
8:11this point here which is giving us a
8:13short opportunity to run the liquidity
8:15Out Below this short term low here and
8:18potentially as low as our higher time
8:21frame support level
8:26as price hits our longer term support
8:29level or anticipated bullish
8:30institutional reference point which
8:32could be an old high it could be an old
8:33low it could be a bullish order block
8:35many many opportunities to frame that
8:38idea but whatever that is that forms
8:40your idea for support this is the
8:42objective that you could be reaching for
8:47as price hits that level
8:49we would be collapsing our trade and
8:51moving to the sidelines waiting for new
8:53developments
8:57when we had this
9:00in the marketplace what we're seeing is
9:02the classic support broken turns
9:04resistance every time price moves back
9:06to an old low it's actually happening is
9:08it's referred to as buyer's remorse the
9:11buyers at the previous short-term low
9:12that saw a short-term pop in their favor
9:15then eventually saw the American break
9:17below that low they bought that when
9:19price gets back to that level
9:21they're remorseful for buying it so they
9:23bail
9:24but on an Institutional level the smart
9:27money understands these short-term
9:30fluctuations and they can drive price on
9:33a short-term basis higher or lower
9:35through manipulation
9:37so if they're going to manipulate price
9:38on the short term by having large orders
9:41come in and push and Bully market
9:43pricing around they're going to want to
9:45liquidate their Physicians because just
9:47like anyone else they don't want to
9:48incur losses so this gives them the
9:51opportunity to mitigate those losses
9:56premium price Highs are bought by less
9:58informed Traders and sold by smart money
10:01which are you going to be grouped in
10:05we're going to look at a quick example
10:09and I draw your attention to a liquidity
10:13avoid in here
10:17and there's equilibrium of that
10:18liquidity void body's a body end or
10:21where's the open and close
10:25and we're going to highlight that
10:27reference point here except halfway
10:29point of this equilibrium
10:31the idea is we broke this high back here
10:33we're expecting continuation on the
10:35upside
10:38Market trades
10:39higher
10:44but it shows a breakdown in here
10:51okay
10:54in here this failure swing right there
10:57we're gonna be looking at this low
11:04and I'm just going to drop horizontal
11:05lines in on the respective lows
11:10[Music]
11:12and this will be a new mitigation block
11:16when we drop down into the lower time
11:18frames
11:20in order to sell off there
11:23it sells off
11:25breaks this low here to the last down
11:28candle on this move here is
11:35there so once price trades back up
11:37that's a sell
11:39right in here and choose it just
11:41overshoots it by a little bit
11:43but nonetheless it breaks lower
11:47right here so now our attention is on
11:49this low
11:52every rally
11:55that sees lower prices needs to be
11:58mitigated
12:00right here so if we trade back up to
12:02that low that's a cell right there's a
12:04cell we're gonna be aiming for a move
12:06back below this low
12:10ultimately down into our equilibrium of
12:14our liquidity void right here
12:17well it comes in at 1 11 48 11 48.
12:24here's a
12:26short-term low hits it
12:28trades lower trades back up into the
12:31last down candle
12:32hits it overshoots a little bit but it's
12:34inside the body of the candle which is
12:35with a mitigation block represents price
12:38trades down below
12:41the last
12:43down candle here and we have another
12:45lower low here so we can
12:48adjust that one to that low there
12:52right
12:53there
12:55price hits that objective is going to be
12:57break below this low sells off goes
13:00through it and ultimately goes down into
13:01our
13:03mean threshold of the liquidity void so
13:06a couple different things shown in here
13:10as an overlap study on
13:12mitigation let's take a look at a 30
13:15minute chart on the same
13:18price action
13:26here's the mean threshold liquidity void
13:30last down candle great for the up move
13:32price hits it sell it right there this
13:34is a mitigation block everything that
13:36was used to drive price higher once it's
13:38traded below here it's underwater
13:39they're going to want to mitigate those
13:41losses at that candle sell short
13:45this last down candle here
13:47is violated here it probably trades back
13:49up to it here we can be a seller the
13:53bodies the whole entire candle is used
13:55not just the bottom but we can be a
13:57seller down here so it could be a short
13:58seller at
14:00112.62 and our stop has to be somewhere
14:03above the down candle in here okay so
14:06that high on this candle comes in at
14:09112.89 so it needs to be above that in
14:11the form of a stop
14:13so we could be seeing just a little bit
14:15of draw down in here about 20 Pips or so
14:18but never getting much above this down
14:21candle probably trades lower violates a
14:25very convincing break down here last
14:27down candle the low
14:29trades up now again notice the body of
14:31the candle is not violated this is
14:33Hallmark characteristics of a of a
14:35mitigation block price trades up into it
14:38we're expecting prices below this low
14:41now and ultimately reaches down into
14:45our mean threshold of the liquidity void
14:47then ultimately I'll give you a view of
14:49what took place price eventually started
14:52moving back up
14:53so hopefully this helped you with
14:54mitigation blocks we will still talk
14:56more about it again in the PDF file for
14:58your December 2016 ICT mentorship study
15:01notes until next time I wish you good
15:03luck and good Trading

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