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Directional Bias - SOLVED with DRT | A Simple Method for Consistent Results — Transcript

by Ali Khan · 3,791 words · 546 segments · language en · Watch on YouTube

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0:00I'm about to show you something
0:01extremely powerful of how we can
0:04interpret where the market is likely to
0:06go and how we can understand directional
0:09bias. If we are able to understand where
0:12the market is likely to go, then we are
0:14able to find better quality setups and
0:16therefore make more money. Right? In
0:19this video, I'm going to show you
0:20exactly how to do that. And at the end
0:22of this video, I'm going to show you an
0:24execution that I actually took on the
0:26Euro dollar using everything that I'm
0:28about to teach you in this video. So
0:31stick around. It will definitely be
0:33worth it. Anyway, let's dive straight
0:36into what we can see here. Here we have
0:39the Euro dollar on a daily time frame.
0:42I'm going back as far as 2023, and I'm
0:45going to walk you through all of the
0:47price action to a 5minute time frame
0:49that I recently executed on. Now, since
0:52price is fractal, anything that we see
0:54on the higher time frame is applicable
0:56to the lower time frames. And I'm going
0:57to show you a very specific signatures
1:00in price that repeat over and over. So
1:03bear with me because this will make a
1:05lot more sense later on. As we now know,
1:08we have an established dealing range
1:10here in front of us with a dealing range
1:12high and a dealing range low. And for
1:17the sake of saving time here, we are in
1:19a higher time frame buy program where we
1:22anticipating higher prices. There is a
1:25pool of liquidity to the left and or an
1:28inefficiency above the market. Inside of
1:30this buy program, we are anticipating a
1:33type one continuation dealing range to
1:36form. Now this will form when we raid
1:39sellside liquidity below an old swing
1:42low and buyside liquidity above an old
1:45swing high. This now creates a new
1:48dealing range from our dealing range
1:50high or our DRH and the dealing range
1:53low or our DRL. Now that we have
1:57established our new dealing range, we
1:59can grade this dealing range with our
2:03DRT levels. We have the 75 DRT level
2:08which is 75% of this dealing range, the
2:1150 DRT level, the 25 DRT level, and then
2:15obviously the dealing range low and the
2:16dealing range high. Now again, this is
2:18going to be a type one dealing range
2:21since we are expecting higher prices.
2:24One of the ways to identify a type one
2:26dealing range is that it'll be nested
2:28inside of a higher time frame type two
2:30dealing range. And I'm going to get on
2:31to that in a second. When we have a type
2:35one dealing range, we anticipate price
2:37to drop lower below 50 DRT, which is our
2:42equilibrium level, and into a discount
2:45market. Now, note what we have here
2:48inside of our extreme
2:51discount. This down close
2:54candle becomes a high probability
2:57bullish order block. Note how price is
3:00consolidating inside of that order
3:02block. Now, all of this consolidation
3:06here inside of an extreme discount is
3:09indicative of smart money accumulating
3:12long positions to offload those to
3:14willing buyers above a dealing range
3:16high. Now, a clue that we can use over
3:19here is if we look to a correlated asset
3:22pair with the Euro dollar, such as
3:25dollar index, for
3:26example. What we want to identify is a
3:29cracking correlation. And what I like to
3:31use is the lowest down close or open
3:36inside of a swing. This is going to be
3:38our rejection block. Now the classic way
3:41of looking for SMT divergence is using
3:44the highs. But with dealing range
3:46theory, we use the bodies. And as you
3:50can see here where we have our rejection
3:52block on dollar
3:55index which is the equivalent rejection
3:57block here on the Euro dollar. We can
3:59clearly see that the bodies here are
4:01failing to close below that rejection
4:04block. On the dollar index we can see
4:06here that the bodies are closing above
4:09that rejection block. the fact that the
4:11Euro dollar does not want to close below
4:14its rejection block inside of that
4:16dealing range low and it's accumulating
4:20inside of an extreme discount at an
4:22order block. Whereas we're seeing the
4:24dollar index run and close above its
4:27rejection block. This shows professional
4:29accumulation of longs on Euro dollar and
4:32this is something known as a rejection
4:34block SMT divergence. If this was a
4:37market moving in sync, then we would
4:39also expect the Euro dollar to close
4:42back below its rejection block. In this
4:44case, it
4:46hasn't. Now, with this behind us, we can
4:49anticipate price to continue higher and
4:53target the type one dealing range high.
4:56What we now notice here is another
4:59really, really nice algorithmic
5:00signature in price. If we look at the
5:02low on this candle and the high on this
5:05candle, which is the area between the 25
5:09DRT level and the mean threshold of the
5:11order block, we can see this inversion
5:14fair value gap like so. Note the bodies
5:18over here. They're respecting the
5:20discount low of that inversion fair
5:22value gap. And then we see price turn
5:24around here and run higher. Notice how
5:28it closes above that 50 DRT level.
5:32Again, this is a very strong algorithmic
5:34signature in price that indicates that
5:36the market wants to spool
5:38higher. Notice what we have at this 50
5:41DRT
5:42level. We have another buy side
5:46imbalance. Again, note the bodies over
5:49here. They're failing to close deeper
5:51into that buy side imbalance and are
5:53respecting the 50 DRT level.
5:57So if you miss this entry down here,
6:00then you get a second chance at that 50
6:03DRT level. Above 50 DRT, ideally we do
6:06not want to enter any new long positions
6:09unless we obviously go down to a lower
6:11time frame and we can refine our stops
6:14there. In this case, we have seen price
6:17run into an extreme premium and we've
6:19seen the candles close here. Once that
6:22occurs, this fair value gap down here we
6:25anticipate to be left open. This is
6:27known as a breakaway gap because price
6:29is breaking away from all of this
6:31consolidation over here. So where smart
6:33money were accumulating long positions,
6:36the algorithm now is going to repric
6:38higher to the stops above the dealing
6:41range high.
6:43Note these up close candles over here,
6:46how they're all supporting price all the
6:48way until we get above the dealing range
6:51high. This is how we can anticipate and
6:53track order flow and continuously get
6:55feedback whether we're on the right side
6:57of the market. Now, after we've raided
7:01the dealing range high, which remember
7:02is going to be a major buyside liquidity
7:05pool, we form a new dealing range high.
7:10So now the next major liquidity pool
7:12rests above that dealing range high. And
7:14again we still have our major sellside
7:16liquidity pool resting below the dealing
7:18range low. Now that we have our new
7:21dealing range, we can again grade this
7:23dealing range so that we can find our
7:25DRT
7:27levels. Let's just scrub this over to
7:30the right. Over here you can see that we
7:32have now a type one dealing range, but
7:35we also have equal highs over here. So
7:37again, if we didn't even know that price
7:40is going to continue higher, we still
7:42have equal highs above the market where
7:43we have a likely draw on liquidity and
7:46this can also be classed as a type two
7:48dealing range inside of a type one
7:51dealing range. Now we still have buy
7:53side targets above the market and until
7:56price proves to us that it's going to
7:58switch gears, we continue with our
8:00higher time frame bias. Now again we
8:03anticipate price to drop back below into
8:06a discount market below the 50 DRT level
8:09and that's exactly what we see here.
8:11Note how we tap that 25 DRT level. If
8:15you look left what else can you see at
8:17that price
8:21point? You see how we have our inversion
8:24fair value gap. Again, this nests at
8:27that 25 DRT level and price respects the
8:31discount low here. And also note the
8:34bodies. They're failing to close deeper
8:37into that inversion fair value gap. This
8:39shows that price is in a hurry to repric
8:41higher. And again is a fantastic little
8:43algorithmic signature that we want to
8:45look for in price. Again, this gives us
8:47feedback, right? The price wants to go
8:49higher. Therefore, we want to see the
8:51bodies where the bulk of the volume is
8:53contained show us that it isn't having
8:56any willingness to go
8:59lower. And of course, then we can see
9:01how price runs higher and raids the
9:05stops below the dealing range high. So
9:08all of those accumulated longs here and
9:11here are being offset to the buy stops
9:14above these equal highs.
9:18Now note what happens here again for the
9:20sake of time has breached and completed
9:24our higher time frame objective. We then
9:27see it turn around here and close back
9:31inside of the dealing range. Before this
9:33happens, we can see it forms a balanced
9:36price range. So this again is
9:38significant and suggests that price is
9:40now likely to switch gears and run
9:43lower. Where is it likely to target
9:46next?
9:47Well, we have these relative equal lows
9:51and this low down here is in close
9:53proximity to these lows and it's lower
9:56than the lows to the right. This gives
9:59us a nice lowresistance liquidity run
10:02signature. And this is exactly what we
10:04want to look for inside of a type two
10:06dealing range. So since now we have a
10:09type two dealing range, we have a clear
10:11draw on liquidity below the market. And
10:15this is what we see eventually happen is
10:18price turns
10:20around, drops
10:22lower. Note the reaction we have here at
10:25that 75 DRT level and then it continues
10:29lower for the major sellside liquidity
10:32pool below the dealing range
10:34low. Let's just scrub this to the the
10:38left again. And we can see now that we
10:40have a new dealing range high and we
10:42have a new dealing range low. You can
10:45see this dealing range low here has
10:48raided that previous dealing range low.
10:51And this is occurred after completing a
10:54higher time frame by program. Now when
10:56this happens after completing a higher
10:58time frame by program and sweeping below
11:01a previous dealing range
11:04low this gives us something that we can
11:06call a type three dealing range. Now
11:09type three dealing ranges are
11:10notoriously difficult to trade and this
11:13is generally where we will see
11:14consolidation for larger amounts of time
11:18and this is exactly what we seen here a
11:20few years ago on the Euro dollar. When
11:22we have these types of dealing ranges
11:24with the conditions that I just outlined
11:26previously, we anticipate the market to
11:28gyate between an extreme premium and an
11:30extreme discount. And again, I mentioned
11:32this all last year inside of my 2024
11:35Forex mentorship. But let's get a little
11:37bit deeper here and use type 1, type two
11:41dealing ranges inside of a type three
11:43dealing range utilizing extreme discount
11:46and extreme premium ranges to see how we
11:48can flesh out high probability setups
11:50even inside of a consolidated market.
11:53Let me just dim out these levels here.
11:56And I want to draw your attention to
11:59this swing high here that raided buyside
12:02liquidity above a previous swing high.
12:06And then this swing low here that raided
12:09all of that sellside liquidity to the
12:12left. This gives us a new minor dealing
12:16range inside of our parent type 3
12:19dealing range. Notice how we see price
12:22run higher above the 50 DRT level and
12:26into an inversion fair value gap to the
12:30left. Note the bodies over here. They're
12:32failing to close above that inversion
12:34fair value gap. And this again is
12:36exactly what we want to see in price
12:38action if we anticipate lower prices.
12:41Where do we anticipate it to drop to?
12:44Well, the minor dealing range low and
12:46that previous major sellside liquidity
12:50below that dealing range low. You can
12:53see how as price runs lower, we're
12:55seeing these
12:56inefficiencies repric
13:00to until we see price drop below that
13:03old dealing range low and then we start
13:05seeing that whole accumulation again
13:07inside of that lower quadrant. There is
13:09also now this dealing range high that
13:13has raided again a small pool of buy
13:16side liquidity to the left and now we
13:18have a new dealing range low that raided
13:22the previous dealing range
13:25low. We can now grade this range and
13:28more importantly I'm interested in that
13:3025 DRT level. We can see again inside of
13:33that level the high probability order
13:36block that forms. See how we are finding
13:38support in the premium end of that order
13:40block. And we also have that high
13:42probability inversion fair value gap.
13:45Also note the bodies again failing to
13:47close any deeper into it. And then we
13:50see it repric higher. Note the inversion
13:52gap that we see at the 50 DRT level. We
13:55find support here. And then the order
13:58block that also nests inside of that 50
14:01DRT level. We find support here again as
14:04it reprices higher to an extreme
14:07premium. Once we've seen price repric to
14:10an extreme premium, we ideally want to
14:13see it look to repric to an extreme
14:15discount because the market in a
14:17consolidated market will repric from
14:19premium to discount, from discount to
14:21premium, from extreme premium to extreme
14:24discount. Now, let me bring back our DRT
14:27levels. And I'm going to again push this
14:29chart to the left a little bit more. And
14:31then I'm going to dim them out so that
14:33we can see how we have a new dealing
14:35range over here. Again, we raided
14:38buyside liquidity above the market and
14:40then sellside liquidity below this swing
14:43low. Again, forming a new minor dealing
14:46range inside of our parent dealing
14:49range. We see the market reprice higher
14:52into a fair value gap. Again, now we
14:55have another fair value gap at that 50
14:57DRT level. This is a reclaimed fair
15:00value gap and then we see the market
15:02drop lower back below that minor dealing
15:05range low and into an extreme discount.
15:09Notice here how we're leaving a high in
15:13an extreme premium and a low in an
15:16extreme discount. This is extremely
15:19typical of a type 3 dealing range inside
15:21of a consolidation market. And the
15:23reason this is done is to engineer
15:25liquidity on both sides of the market
15:27before price will run higher into an
15:31extreme premium and then later it will
15:33run lower for the extreme discount. But
15:36we'll get into that in a second. First I
15:38want to again bring your attention to a
15:40new minor dealing range here. Again same
15:43principle we have raided buy side we've
15:46raided sell side and now we have this
15:48dealing range that is a minor dealing
15:50range inside of the parent dealing
15:52range. Again, notice here it leaves
15:54relative equal highs, especially the
15:56bodies. So again, we can class this as a
15:59type two reversal dealing range after
16:01price has already entered into an
16:04extreme discount from an extreme
16:07premium. That's very key. Again, same
16:09thing here. Note where we have our high
16:13probability inversion fair value gap. It
16:15comes at that 25 DRT level. Again, what
16:19do we have at that 50 DRT level?
16:22We have another high probability
16:24inversion fair value gap. And note the
16:26bodies. They're stopping dead at that 50
16:29DRT level. And it's also leaving the
16:32discount portion of that fair value gap
16:34open. And then we see this huge
16:36displacement through the 75 DRT level
16:40inside of this minor dealing range.
16:41Again, this is great news. This is what
16:43we want to see. And then we find support
16:46here, sending the market back into an
16:50extreme premium. Now what happens next?
16:54It starts
16:56consolidating inside of an extreme
16:58premium, engineering relative equal
17:01highs. So smart money are accumulating
17:04short positions here and they're going
17:05to distribute these
17:07shorts to the willing sellers below the
17:10market inside of an extreme discount.
17:14and the major sellside liquidity pool
17:17below the initial dealing range low. Now
17:20that this event has occurred, we have
17:23seen a major sellside liquidity pool
17:26raided below an old dealing range low.
17:29Again, remember this is a parent dealing
17:31range. How low can it go below that
17:33dealing range low? Well, there are
17:35various ways of interpreting that, but
17:37one of the easiest ways is that we can
17:39take one of these grades and project one
17:43of those quadrants lower. In this case,
17:46we can see that the bodies of the
17:47candles here are failing to close below
17:50that deviation. Furthermore, we also
17:54have equal highs above the market. So,
17:57what does that
17:59become? It becomes a type two dealing
18:02range. So now we have equal highs above
18:04the market after raiding a major pool of
18:07sellside liquidity below a parent
18:09dealing range low and we're seeing all
18:12of this consolidation. Now we have a
18:14clear draw on liquidity above the market
18:17and we see the market repric higher
18:20using all of that
18:23liquidity below the parent dealing range
18:25low as they're accumulating that over
18:28here and offsetting all of those
18:31accumulated longs to all that buy
18:33liquidity above the equal highs and the
18:37high of the parent dealing range. Now, I
18:40want to take your attention to this
18:42little piece of price action over here.
18:45And what we're going to do is zoom in
18:48onto the 4hour time frame. You can see
18:51here that we have the old dealing range
18:54high and we have that 75 daily DRT
18:59level. Note how price displaces through
19:02that dealing range high. we come back
19:04higher into an order block and fully
19:07rebalance that area and then drop lower
19:10into our 75 DRT level. Does price close
19:14below
19:15it? It doesn't. We then see the market
19:19turn around and then drop into a
19:22balanced price range since we've had
19:24sellside delivery here, buy side
19:27delivery through that range, and then
19:29sellside delivery back through that
19:31whole range, raiding all those lows and
19:34into our 25 DRT level. Again, note the
19:39bodies. You should now start seeing the
19:42recurring theme in price action. Whether
19:44it's on a higher time frame or a lower
19:46time frame is all the same. What can you
19:48notice above the market? We have
19:52relative equal highs up here and that is
19:55going to be a type 2 dealing range. So
19:57again, this gives us now a directional
19:59bias to run higher. Note how we turn
20:03around here and close back through that
20:0650 DRT level. Where do we find support?
20:10What are the bodies doing? They're
20:12failing to close back below that 50 DRT
20:15level. Again, this is feedback that we
20:18want to see. Now, we have this swing
20:21low. Price has displaced and left the
20:25fair value gap through our old dealing
20:27range high. displaced and left another
20:30fair value gap through our 75 DRT level
20:34inside of this minor dealing range,
20:36giving us a new minor dealing range
20:39where we have the swing low here that's
20:42nested at that 50 DRT level and the
20:46newly formed swing high here. Where does
20:49the high probability order block
20:52form? right here inside of that lower
20:55quadrant between the 25 DRT and the
20:59dealing range low. And note how we find
21:01support inside of that fair value gap.
21:04Now, I'm going to get rid of that and
21:05we're going to drop down again into an
21:08hourly time frame. Now, over here, you
21:11can already see that we have a new
21:13dealing range. And inside of this
21:16dealing range, we have equal highs above
21:19the market, which we can classify again
21:21as another type two dealing range that
21:23sits below a 4hour higher time frame
21:26type two dealing range. So this is going
21:28to be a very strong draw on liquidity
21:30because we have a lot of buy side
21:31liquidity resting above the market. So
21:33price is going to draw towards these
21:35areas like a magnet. Also note when we
21:38turned around over here we closed
21:41leaving a fair value gap above that 50
21:45DRT level and then when we dropped to
21:47the 1 hour time frame I was waiting for
21:50a new dealing range to form. In this
21:52case I was looking for a type one
21:54continuation dealing range where we
21:57raided sellside side here and we've
21:59raided buy side above the market marking
22:01a new dealing range high and a new
22:04dealing range low. Once price dropped
22:06into the 50 DRT level from the higher
22:10time frame, we see how price really ran
22:13higher, breaking structure above this
22:15high and forming this new swing high. I
22:17then anticipated price to drop lower
22:20back below equilibrium. And I noticed
22:22that we had this balanced price range
22:26that over overlapped with that 25 DRT
22:29level. I took an entry over here at that
22:3225 DRT level. My stop was below the
22:35dealing range low and I was targeting
22:38the hourly type 2 dealing range high.
22:41Notice I got out above that high. Now I
22:45didn't need it to go to the type two
22:474hour dealing range high because this
22:49was a low easy objective for me and as
22:52you can see the risk-to-reward on this
22:54trade was very nice. Now, I gave the
22:56draw on liquidity in my previous video
22:59here on YouTube before I even took this
23:01trade and walked through this trade on
23:03my Twitter account, but you can do this
23:05too once you understand the framework of
23:08dealing range theory and how we can
23:09anticipate the different types of
23:11dealing range and how they impact price
23:13and how the DRT levels is the
23:16algorithmic market structure where we
23:18can find high probability setups. It
23:21gives you an X-ray view of how the
23:22markets actually booked. As you can see,
23:25price isn't random. It's not buying and
23:28selling pressure. There are very
23:31specific things that repeat in price
23:34because it's algorithmically coded this
23:36way. Understanding dealing range theory
23:39allows you to filter out lowquality
23:42setups and helps you to identify where
23:44high probability PD arrays will form as
23:47well as directional bias. This is the
23:50highest form of ICT in the simplest
23:54manner. So, take your time to back test
23:56this and you will be amazed with how
23:58accurate it actually is. So until next
24:01time, I hope you found this one
24:03insightful and I'll see you in the next

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