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Anomaly - Advanced Course - Lesson 3 - Invalidations — Transcript

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0:04Hello everybody. Welcome to the anomaly
0:06course core content lesson three. Here
0:09we're going to be covering
0:11invalidations.
0:12So firstly, let's cover what an intra
0:14candle reversal is. So this is
0:16essentially when within the current
0:19candle it creates the refined key level
0:22to actually reverse from. So instead of
0:25looking within the previous candle's
0:27range for a refined key level in the
0:30upper half of its range
0:32within the same candle or the current
0:34candle, we actually create that key
0:36level. And that key level can only be a
0:38swing higher low. Right? So here you can
0:40see price opens low first
0:43and then creates a swing low. Right?
0:45This will be a relevant low.
0:47And as you can see, it's printed or it's
0:49forming in the upper half of that And as
0:53you can see, it's forming in the upper
0:54half of that previous candle's range.
0:57And this will be our key level to form
1:00the protraction phase of this higher
1:02timeframe candle.
1:04And as you can see, once price engaged
1:05with it
1:06once it's manipulated, there you go.
1:09There's your refined key level
1:10respecting the equilibrium in the upper
1:12half of this previous
1:15candle's range.
1:17And if price does not respect that key
1:19level, then your whole trade idea is
1:22then invalidated.
1:25Now let's go ahead and cover some chart
1:27examples covering invalidations.
1:30Firstly, we're going to be covering
1:31intra candle reversal. So remember, this
1:34is where we have a C2 candle or any type
1:37of candle closure and you're looking for
1:38continuation.
1:40You mark out the EQ of the previous
1:42candle's range like so. We're going to
1:44mark out the wick because it's a C2
1:46closure.
1:47And this is where you will not find a
1:49key level within the previous candle's
1:51range. So what's going to happen is
1:52you're going to have to create a key
1:54level
1:55within the same candle. So let's go
1:57ahead and drop down to see what that
1:58looks like.
1:59So, here we are on the 4-hour. And as
2:01you can see, there is no 4-hour gaps
2:03within the previous candle's range. So,
2:05now we're going to drop down to the
2:06hourly chart to see if we can see
2:08anything there.
2:09And as you can see, all we have is this
2:11low
2:12and maybe this gap here.
2:15But, we do not really use hourly gaps
2:18for our refined key levels.
2:20We like to use swing highs and lows on
2:22the hourly
2:23and gaps that are on the 4-hour. So,
2:25what we're going to have to do is price
2:27is going to have to open low,
2:30create a low to reverse from in the
2:32upper half here,
2:33and then we're going to use that to
2:34reverse from. So, let's bar replay
2:35price. Okay, boom. We create a relevant
2:38swing.
2:40As you can see, the space between these
2:41lows.
2:42And when that is manipulated,
2:44this is going to create a protected
2:45swing, right?
2:47So, as you can see, if we bar replay
2:49price, we're going to have an SMT
2:51divergence here with ES.
2:54And notice how this is in the upper half
2:56of the previous candle's range. So, it's
2:57perfectly respecting uh creating a small
3:00wick on the daily time frame. Let's go
3:01ahead and look at ES really quick. As
3:03you can see, ES takes that low.
3:05Perfect.
3:07Right? So, that can be our established
3:10low of the day. And if you play price
3:12forward,
3:14price expands as this is capping off the
3:17retraction phase of that daily candle.
3:20And let's say price did not manipulate
3:22this low.
3:23Let's say it did something like this.
3:26Where it traded into it,
3:27and maybe it failed to manipulate like
3:29this, and then we created another swing
3:30low.
3:31Okay, boom. Now, this becomes your
3:32invalidation level because we're still
3:34within the previous candle's range. As
3:37long as you have a clean profile like
3:38this day is just more so opening low
3:40first,
3:41that can just roll over to the next
3:42session to be a reversal profile. So,
3:45you can still move the goal post every
3:46time you create a swing low, as long as
3:48we're not coming deep down here. That's
3:50the only concern you should be having.
3:53So now let's go over the refinement
3:54sequence. So step one is going to be
3:57marking out equilibrium of the previous
4:00candle's range as your first
4:02invalidation.
4:03Then we're going to take it one step
4:05further by looking for a key level in
4:07the previous candle's range. As you can
4:09see, here we have a relevant low.
4:12Now once price engages with that refined
4:15key level and it prints a C2 candle,
4:19then we're going to refine it once more
4:22by marking out equilibrium of that C2
4:24candle.
4:26Once price expands away from that C2
4:28candle,
4:29you're going to wait for a key level to
4:31print. Once that key level prints, that
4:33key level is now your new refined key
4:36level.
4:37Once price engages with that key level
4:39and forms a C2 candle,
4:41you're once again going to mark out
4:42equilibrium of that C2 candle
4:45and that becomes your new refined key
4:47level. As price should be expanding away
4:50from these key levels, right? So you
4:52have a C2 candle into this low. If we're
4:54going to truly reverse, we're going to
4:55respect EQ here and expand, right? If
4:58the price is truly going to continue
5:00from this gap,
5:01we're going to confirm it by having the
5:03C2 candle and we're going to expand a C3
5:05respecting equilibrium.
5:07So this is what it's going to look like
5:08when we're aligning the 4-hour
5:11with our 1-hour / 30-minute timeframe.
5:13Picture this as the 1-hour 30-minute.
5:15This is obviously the 4-hour. But when
5:17we engage with a key level to form the
5:19high and low of day, what are you going
5:20to ask yourself? Does the current 4-hour
5:22candle support expansion?
5:24If it does,
5:25then you can trade this reversal to
5:27expansion kind of right? And this key
5:29level is going to form the low of that
5:324-hour candle and this swing formation
5:34is confirming that, right? Once it
5:36expands away, right? We get that 4-hour
5:39candle closure, look within the EQ
5:42of this previous 4-hour candle, right?
5:46Look for a refined key level within
5:48upper half. What do we have? This gap
5:50here.
5:51Right? Once we engage that gap, form a
5:52C2,
5:53oh, look again, it's forming the low of
5:55this 4-hour candle, just like we did
5:56down here.
5:57And again, this is now your new refined
5:59key level for this whole entire 4-hour
6:02candle to continue.
6:04And when you put it all together,
6:06this is what it looks like, right? Uh
6:08truly a thing of beauty, honestly. Um
6:10very mechanical, and it's just a great
6:13way to align time frames together
6:16in a repeatable process.
6:19Now, let's go ahead and cover the
6:21invalidation refinement sequence. So,
6:24step one is to have that candle closure.
6:27So, here's our candle closure. You're
6:28going to mark out EQ. That's your first
6:30invalidation. Now, what's our next
6:32invalidation? It's going to the lower
6:34time frame and looking for a key level
6:36within the upper half of this bullish
6:37expansion candle. Let's first go to the
6:394-hour.
6:40Okay, here we are on the 4-hour. We're
6:42going to be looking for gaps in the
6:44upper half. So, boom, perfect. We have a
6:46gap right here next to that daily open.
6:49And as you can see,
6:51price does not tag it on this asset, but
6:54if you go to ES,
6:55it indeed does. That's what we want to
6:57see, man. We want to see these key
6:58levels have SMT SMT divergence there,
7:01which is an SMT fill, where one asset
7:04tags the gap, another one does not
7:06within the correlated market. So, we're
7:07going to move this cuz this is not our
7:08invalidation anymore. EQ here of the
7:11candle's range, it's now this gap is our
7:13invalidation. So, as soon as we engage
7:16with this gap here,
7:19let's go to lower time frame.
7:21All you're waiting for is to price to
7:23create a swing point on the hourly
7:25or 30-minute time frame. As soon as you
7:28create that swing point after engaging
7:30that key level, this gap is not your
7:33refined key level anymore. It's actually
7:36this C2 candle's EQ.
7:39Like this.
7:40Right? And if it kind of closes back in
7:42the range like this, you can actually
7:43mark it like this from the closing price
7:46to the um
7:48low of the candle. So, now we want to
7:50look for again, a key level within the
7:53upper half of uh discount's range up
7:56here, right? We're going to drop down to
7:58lower time frame and look for a refined
8:00key level. So, let's go down to the
8:025-minute. So, if you're on the 3-minute,
8:04it doesn't matter if you go to the
8:055-minute, 3-minute. I don't think it
8:08matters whether you're using a 30-minute
8:09swing point, hourly swing point. I don't
8:11think that matters. They're essentially
8:13the same thing. And I also don't care
8:15which time frame you're using for entry.
8:17You know, if it's an hourly swing, you
8:19can use a 3-minute, vice versa.
8:2130-minute swing, 5-minute. It doesn't
8:22matter, in my opinion. Um but as you can
8:25see, this is the previous candle's
8:26range. And notice how we have already
8:28retraced into this range here. So,
8:32really
8:33we could just expand at this point,
8:35right? Um as soon as you get this CSD
8:40Boom, we get that CSD.
8:41Now, what is your invalidation level?
8:44It's the low of the CSD.
8:46Right?
8:47Cuz that's what you're going to be
8:48entering off of. So, boom, you enter off
8:50of this.
8:51Whether it's the close, whatever. Um
8:55and that's your invalidation level. Now,
8:56as price plays out and expands away from
8:58the initial swing point um out of the
9:01key level
9:02that's when you get new invalidation
9:05points. Right? So, you have candle one,
9:07candle two, candle three.
9:08So, now just waiting for a key level to
9:10be created on the 30-minute or the
9:12hourly or even the 15-minute. Um and
9:14that's going to be your new invalidation
9:15level. So, boom.
9:17New invalidation level right here.
9:19On the 30-minute or the hourly, whatever
9:22prints first.
9:23Um here's the higher time frame. We're
9:24always going to use the higher time
9:25frame over the lower time frame. So,
9:26boom, we have an hourly
9:28uh gap here.
9:30And now if we're going to continue
9:31throughout the day
9:32this is our refined key level. So, let's
9:35go ahead and play price. So, as you as
9:36you can see here,
9:38this asset is not tagged that gap, but
9:42ES does.
9:44So, this low is 4:00.
9:47As you see, 4:00 gap
9:48does get tagged there. So, again, what
9:50are you doing as soon as we hit that key
9:52level or create that SMT with the key
9:53level is you want a swing formation. So,
9:57dropping down to 30-minute,
9:59boom, you got that swing formation right
10:01there.
10:02So, again, this key level is not your
10:03final validation for continuation within
10:06the daily candle.
10:07It's going to be this here. And you can
10:10even go crazy with it and use a
10:1115-minute.
10:12And and have that as your refined key
10:15level, right? Before these candles even
10:16close, you know, it's it's all up to
10:17you. So, you we can do this right here,
10:19right? As soon as you get the C2 candle,
10:22right?
10:23This is EQ is your invalidation level.
10:24Look for a key level up in here. Let's
10:27drop to the 1-minute, if it'll let me.
10:29Okay, it does.
10:30All right, do we see anything here
10:32clear? I have this gap right here. Let's
10:34see if he tags that gap. No, we do not.
10:36Maybe there's a 3-minute. No, 5-minute.
10:40Okay, there's really nothing that clean,
10:41but if there's something clean, that's
10:43what I'd be using. I don't really see
10:44anything clean there. Maybe there's an
10:46SMT in a lower timeframe with like a
10:47swing low or something.
10:49Okay, this is more of a great a better
10:51example, actually.
10:52Um we're going to use ES here.
10:55Here's your C2 candle.
10:57We look back in that range.
11:00Looks like we have a 1-minute gap here.
11:03So, this is your invalidation level.
11:05This swing low is an EQ or below EQ.
11:09That would not be good. So, as soon as
11:10that gets confirmed, boom, you can enter
11:12this trade
11:14like this,
11:16assuming that the low of the candle is
11:18put in. And we're going to actually
11:19going to target that external range
11:20liquidity, right? Going from internal to
11:22external. Doesn't matter how the trade
11:24plays out, it's
11:26who cares? It's more about just going
11:28over the logic, right?
11:29Um but as price expands away from our
11:32swing point, what are we going to
11:33create?
11:34Gaps in price.
11:37So, 15-minute gap.
11:38Right?
11:40It's no longer this is your invalidation
11:41point. As soon as it creates
11:43this gap above our swing point, or after
11:46price does that,
11:48this is our invalidation level. So,
11:49you're going to look for, you know, SMTs
11:50with this gap. I don't think there is
11:52any.
11:53So, you simply, you know, none of these
11:56assets trades through the gap.
11:57Um, so there's no SMT. There's no way to
12:01enter that trade. But that would be your
12:03invalidation level. So, as you can see,
12:05we're just moving the goal post over and
12:07over.
12:08So, now let's go over what an
12:09intra-candle continuation is.
12:11So, this is essentially within an
12:12already existing expansion candle, price
12:15will open low, put its low in, expand
12:17away.
12:19That expansion away creates a key level.
12:21In this case, we're going over a gap.
12:23And if this candle is going to continue
12:25expanding, this gap has to essentially
12:27hold, right? So, this is going to be
12:29your invalidation
12:31to know if this candle is going to
12:32continue expanding, right? We have to
12:34respect this gap to continue. Once it's
12:36respected, we can assume that this
12:38candle is ready to continue again.
12:42So, here is essentially the same thing,
12:43but using swing highs and lows as your
12:46key level. As you can see, price opens
12:48low first, prints a low of the candle,
12:50expands away, then consolidates. So, we
12:53know if this candle is going to
12:54continue, we have to manipulate its low.
12:57As you can see, it does. Once it does,
12:59then you can assume this candle is ready
13:00to continue the expansion.
13:03Now, let's go ahead and go over an
13:04example of continuation validation using
13:07swing highs and lows. So, as you can
13:08see, this is a reversal to expansion
13:10candle out of a fair value gap. So, now
13:13let's drop back.
13:15So, now let's drop down to lower time
13:16frames and see if we can see a relevant
13:18swing within this candle for
13:20continuation.
13:21So, here we are on the 15-minute chart.
13:24And if I mark out that 10:00 a.m. open,
13:27here it is, right? It opens out first,
13:29small wick, expands away enough from the
13:31open where it's creating that expansion
13:33candle.
13:34And as you can see, it falls short of
13:35this overall low, so we know the
13:38continuation is probably likely for that
13:414-hour internal to external. It has the
13:44wick to potentially get there. As you
13:46see, price retraces back in the range
13:49and engineers a relevant high. The space
13:51in between these highs is what makes it
13:53relevant.
13:54And we want to use this high to continue
13:56lower, right? As you can see, this asset
13:58does not engage with that, but if you
13:59drop over to ES, it does engage with
14:03that
14:04to create a protected swing. So, you
14:07kind of have to imagine it like this,
14:09where it manipulates that level, and
14:10this is going to be used to continue
14:12that 4-hour expansion candle to get down
14:15to these lows.
14:17So, here we are on the 4-hour chart
14:20with this same example.
14:22And when we get these 4-hour closes that
14:24confirm the low of day, right? 4-hour
14:26swings confirm the low of day. That's
14:27GXT. You can mark out EQ,
14:30right?
14:31And when you look back with side of
14:33these ranges,
14:34those
14:35key levels that form
14:37when the swing confirms low of day out
14:40of the key level are typically going to
14:42be your refined key levels on the 4-hour
14:44time frame, right? So, as you can see,
14:46going to mark out EQ here,
14:48but honestly, we can do this because
14:50we're kind of closing back in the range
14:51a little bit. So, really this area is
14:53fine. Let's go up down to the hourly.
14:55And as you guys can see,
14:57what happened here? We had that original
14:59swing formation.
15:01When we expanded away,
15:03what do we say was our refined key level
15:04now?
15:05Was this now,
15:06right? But this is also within the
15:09upper half of the previous 4-hour
15:11candle's range. So, this is
15:13simultaneously
15:15the refined invalidation for the daily
15:18candle to expand, but also the previous
15:204-hour candle's range as well. So, as
15:23you can see this 4-hour candle opens low
15:24first,
15:26creates an SMT fill there with the only
15:28key level to reverse from,
15:31and expands, right?
15:33So, when you put it all together, you
15:34have that daily expansion candle, right?
15:37Refined from our 4-hour key level, as
15:40you can see, and then we're trading
15:414-hour expansion candles within the
15:44daily expansion candle and within the
15:464-hour expansion candle, we're trading
15:49hourly expansion candles from the
15:50previous 4-hour ranges, right? It's
15:52really a beautiful thing, uh mechanical,
15:55um across all of our time frames, and um
15:58yeah.
16:00Now, we're going to be using this same
16:01example. We're going to be talking about
16:03continuation and validation. This is
16:05essentially where price has already
16:07opened low and expanded within an
16:09expansion candle, and you're just trying
16:11to to ride the expansion or the
16:13continuation. So, here we're going to be
16:15covering a gap as our continuation and
16:18validation, so let's go and drop down to
16:20a lower time frame. So, here we are on
16:22the hourly time frame. Going to go ahead
16:23and mark out the opening price of this
16:256:00 a.m. 4-hour candle. As you see,
16:27price opens low first. It puts in its
16:29low.
16:31Once it puts in the low,
16:32we start to expand away. It's already
16:34expansion candle at this point. What do
16:36we create?
16:37A key level above the opening price. So,
16:41if we're going to continue,
16:43we're going to continue from this key
16:46level here, which is that gap, so let's
16:47play price.
16:50And as you can see, price uses this key
16:52level to get on side with the expansion,
16:54right? Cuz at one point, when this
16:56candle was retracing, it looks like it
16:58has a very, very large wick, right? Um
17:01but you can imagine that when we hit
17:03this key level, we fill that wick back
17:05in to close off as an expansion candle,
17:09cuz we know expansion candles close near
17:11the highs.

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