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Fractalizing Reversals (The Formula To Precise Entries) — Transcript

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0:00One of the biggest mistakes I see
0:01traders make is treating reversals as an
0:03isolated event. They see displacement
0:05away from a key level and they assume
0:07that the reversal must be confirmed on
0:09that time frame. But the thing is price
0:12is fractal. The 4hour reversal candle
0:14you're trading might be better profiled
0:16with a 1 hour or 30 minute swing where
0:19you can use 3 to 5 minute reversal
0:20candle signatures to get on side much
0:23earlier. This allows you to not only
0:25take entry before that higher time frame
0:27candle closes, but it also allows you to
0:29preserve that mechanical precision that
0:31you demand when trading reversals. Okay,
0:34now let's get into the first chapter of
0:36this lecture and this is going to be on
0:37the candle anatomy that you've already
0:39learned in my prior lectures. This is
0:41going to give you the prerequisite
0:43information to start fractalizing your
0:45reversals. So, as you know, there are
0:48two phases of a candle. The first is the
0:50protraction phase which is defined as
0:52the deviation below the opening price of
0:55the candle which creates its low or its
0:59high. The next phase of the candle is
1:01the expansion phase. This is either from
1:04the low to high or high to low in the
1:07case of a bearish candle. And this is
1:09the creation of the body. The
1:11protraction phase creates the wick. The
1:13expansion phase creates the body. So
1:15what we're going to be doing is
1:17utilizing these two phases of a candle
1:20and focusing on how we can fractalize
1:22this even further to understand where
1:24reversals and continuations occur. So
1:28when we put it together, it looks like
1:29this. We have one part of this candle
1:32being the manipulation phase or the
1:34protraction phase where we will look to
1:36profile and fractalize the reversal of
1:40this low and then we will see price
1:43expand from its low to its high where we
1:46will look to engage the market in
1:48continuations and fractalize this
1:51development as well. So as long as you
1:53can understand that in both the
1:55manipulation or the reversal phase of
1:58this candle and the expansion phase or
2:01continuation phases of this candle, we
2:03can zoom in even further and fractalize.
2:06That is the purpose of this lecture.
2:10So when we define this daily candle for
2:12example in context of this idea of a
2:16reversal and a continuation, this is
2:18what it looks like. If we have a daily
2:21MMXM being defined by a 4hour swing
2:25formation or a universal model here,
2:28this is what it would look like on the
2:30lower time frame. And we're going to
2:32talk specifically about how we can
2:34define this candle 2 and the candle
2:37three and fractalize this on the lower
2:40time frame. So, if this is the daily
2:42expansion candle that we're working
2:44with, we're going to look at how we can
2:46actually engage this 4hour C2 and this
2:494hour C3 that make up this universal
2:52model. This is what it looks like on the
2:54lower time frame. What we're going to do
2:56is we're going to fractalize each of
2:58these components.
3:00So, how do swings form? That's really
3:03the meat of this lecture. And what we
3:05want to do is we want to focus first on
3:07reversal swings. So when we consider
3:10that daily protraction and expansion
3:13phase, as you learned from our prior
3:15lecture, the 4hour profile is going to
3:18see one single session creating the low
3:21or the high of this daily candle. Now in
3:25the case that we have this reversal
3:27candle, say it's at 2200,
3:30we can actually go into this candle
3:33itself and fractalize that further. That
3:36is to say that we are going to be
3:38looking for our true reversal variance,
3:41our two-stage cracks and correlation on
3:44a lower timeframe swing to this 4hour
3:47chart. So it could be a 1 hour or 30
3:50minute two-stage crack and correlation
3:52as a swing formation or in the special
3:55case of a strength switch which you've
3:57learned through my universal frameworks
3:59lecture, we can use the 15minute chart.
4:03Let's take a look at really what this
4:04looks like using a couple of examples of
4:07universal models. So in the case of an
4:10order paired range here, what you can
4:12see is that if we have this C2 candle in
4:15here and it itself is not a two-stage
4:19cracking correlation. So we do not see a
4:21two-stage presented on the 4hour chart.
4:24Then we can go in and confirm this 4hour
4:28swing extreme with a lower time frame 1
4:31hour or 30 minute or in the case of a
4:34strength switch 15minute swing
4:36formation. So the logic is as follows.
4:39If we have the extreme of a 4hour
4:42universal model not presenting a
4:45two-stage Kraken correlation, we can
4:47then look to the 1 hour, 30 minute, or
4:50maybe even 15 minute to find this
4:53two-stage signature to confirm the low
4:56of this candle. If there is a 4hour
4:59two-stage present then we can go
5:01straight to our lower time frame which
5:03is going to be the five three or one
5:05minute depending on which time frame
5:07shows that clearest Vshape. So to make
5:10this crystal clear, what we do is that
5:12when we profile this candle on the
5:15higher time frame, this 4hour candle,
5:18we're going to fractalize the reversal
5:20with these 1 hour, 30 minute, or
5:22potentially even 15minut swings. If they
5:25are not present as a two-stage on the 4
5:28hour, then once we confirm that swing
5:31formation, we can go and look for our
5:33lower time frame entries. And we're
5:35going to look at many examples going
5:37forward.
5:39Okay, so let's to take a look at another
5:41example. This would be a internal to
5:44external 4hour logic. Again, if there is
5:48no two-stage presented on this reversal
5:50candle, this C2, so that is to say that
5:53this is not a two-stage PSP or two-stage
5:56SMT in the gap, right? We can look to
6:00profile this 4hour extreme with some
6:02form of two-stage on the 1 hour or 30
6:06minute or in the case of a strength
6:08switch the 15minute. Therefore using
6:10that lower time frame fractal to
6:13fractalize this 4hour extreme that forms
6:16down here before we go to entry on our
6:19lower time frame associated charts.
6:21Okay, with that Vshape.
6:24Finally, here's an example where we act
6:26we can skip the part of fractalizing the
6:284hour extreme because there is a
6:31two-stage present. So in this reversal
6:34swing which is external to external or
6:37order paired ranges, you can see that we
6:39form a two-stage SMT on the 4hour chart.
6:44So if that is the case where we have a
6:45two-stage present or if in the case
6:47where we had a two-stage PSP or some
6:49other form of two-stage Kraken
6:51correlation variant, we can go directly
6:54to that lower time frame entry signature
6:56and trade that Vshape. So to sum up,
7:00it's pretty simple. When we are
7:02fractalizing swings, we are essentially
7:04looking for these true reversal variants
7:07on a time frame that is the one hour or
7:1030 minute or in the case of a strength
7:11switch, a 15-minute chart to understand
7:15where this 4hour candle is forming this
7:18reversal inside of its reversal phase of
7:21price. All we need to do is utilize a
7:24lower time frame swing such that we have
7:26a two-stage crack and correlation
7:28confirming that higher time frame swing
7:30and then we can move to our entry and
7:33get on side with that reversal andor
7:36continuation candle on the 30 minute, 1
7:38hour or 15 minute as opposed to waiting
7:41for the 4hour chart which may not
7:43present a two-stage crack and
7:45correlation in and of itself. So, the
7:47concept is fairly simple. When it comes
7:49to continuation swings, you've already
7:52learned from my lecture on continuation
7:54that we only demand a one-stage
7:57continuation from a gap. So, when we are
8:00confirming reversals, we need to see
8:02some form of two-stage SMT or Kraken
8:05correlation. And that can either be on
8:07the 4 hour chart itself at the extreme
8:10or it can be on the 1 hour, 30 minute or
8:1350 minute chart in the case of a
8:15strength switch fractalizing that
8:17reversal swing on a lower time frame.
8:19Now for continuation, we know that we're
8:21going to be using gaps as the first
8:23invalidation and therefore we need to
8:25see only a one-stage crack in
8:27correlation on whatever time frame is
8:29associated with the gap. So if this is a
8:3130-inut gap, we need to see a 30 minute
8:34SMT fill for example or a PSP or a
8:38two-stage Kraken correlation in that 30
8:40minute gap or 1 hour gap. So let's put
8:43it all together, guys. The concept
8:45you've learned through today's lecture
8:47is quite simple. In the case of a
8:51reversal candle, a C2 candle, we are
8:54looking to profile or fractalize that
8:57reversal candle with a two-stage variant
9:00of Kraken correlation. Now, this can
9:02either be on the 1 hour, the 30 minute,
9:05or if we have a strength switch, the
9:0615-minute chart, and it's going to look
9:08like one of these three things. It's
9:10either going to be a PSP confirming SMT,
9:13it's going to be an SMT confirming PSP,
9:15or it's going to be a two-stage SMT.
9:17That's the only three forms of true
9:20reversal that you've learned. Now, once
9:22we expand away from this true reversal,
9:25we are now going to be trading higher
9:27time frame continuation like in this
9:304hour C3. And in this case, we're going
9:33to be using gaps on the 15minut, 30
9:36minute or 1 hour. You utilize my gap
9:39selection video if you guys want to
9:40learn which time frame gaps to to use
9:42and you know which ones you should
9:43expect to hold. And there we only need
9:46to see a one-stage cracking correlation.
9:48So we do not need to fractalize the
9:51continuation. We simply need to
9:53fractalize the reversal. So we look for
9:55these 1 hour or 30 minute swings at the
9:574hour swing extreme in the case of this
10:004hour C2. And then for the C3 we look
10:03for a 30 minute or 1 hour gap
10:05potentially and then our one-stage crack
10:08and correlation variance. Because we are
10:10trading continuation, we now look for
10:12either an SMT fill, a PSP in a gap or a
10:16two-stage SMT or Kraken correlation in
10:19the gap. So that's how we put together
10:22both fractalizing the reversal and then
10:24trading continuation. So now that we've
10:27understood some of these concepts, let's
10:29go into a chart and really make sure
10:31that we can understand exactly how to
10:33get on side with these reversals and
10:35continuations. If you're finding the
10:37session helpful and want to explore some
10:38of these ideas in a bit more depth, we
10:41work through complex topics like this
10:42every single week inside of Lazarus.
10:45Alongside the educational material you
10:46see here, you're going to gain access to
10:48our course, live market trading
10:50sessions, ongoing discussion forums, and
10:53a community focused on refining the
10:55exact same process. If that sounds
10:57useful to you, you can learn more at
10:58latherrading.com. I'm going to leave the
11:00link in the description below. But for
11:02now, let's get back into the final
11:03chapter of this lecture. All right, then
11:05let's hop into a few examples to
11:08crystallize this concept of fractalizing
11:11reversals. So, we're going to start here
11:13with this example, which is fairly
11:15recent. And what I want you to pay
11:16attention to here is this phase of
11:19price. So, what we have in here is we
11:22have an order paired range on the 4our.
11:25And the reason why we're looking for
11:27this to expand higher is simply because
11:29price is trading away from a higher time
11:32frame reversal. This can be your
11:33homework. go in and confirm this higher
11:36time frame reversal and we are trading
11:38towards the buy side liquidity of the
11:40market which is a failure swing to this
11:43consolidated high. So we have this
11:46inside bar that we create in here. This
11:49is the inside bar high and the inside
11:52bar low. So this is a consolidation into
11:55expansion after we manipulate the lows.
11:57So let's look at what happens at the
11:59reversal. So you can see at the
12:02reversal, the trigger for reversal
12:04itself is where we have the NASDAQ and
12:07the Dow Jones trading into this 4hour
12:11low. This is your first stage of SMT.
12:14Now, as you can see here, we do in fact
12:16have a two-stage SMT directly forming on
12:20the 4hour chart. It looks like this. So,
12:23we could go straight to our entry once
12:26we find this two-stage SMT that this 6
12:30a.m. candle forms. So, we could go down
12:32to the lower time frame and go straight
12:35to entry in here. And as you can see, if
12:38we zoom in, as this second stage SMT
12:41forms right in here on the 4 hour, that
12:43itself is the confirmation, we can use a
12:46change in the state of delivery to get
12:48on side and we can look to get all the
12:50way up to that buyside liquidity. Now,
12:53incidentally, I also want to point your
12:55eye to the fact that you can profile
12:56this reversal for even more precision.
12:59You can fractalize it. So, as you see,
13:02we also have the low of this 4hour
13:06candle being made with a two-stage SMT
13:10on the 1 hour as well. So, it looks like
13:13this where we have this two-stage
13:16divergence forming at the lows. So, not
13:20only is this a two-stage SMT on the
13:224hour, it is also fractalized on the 1
13:25hour as a two-stage SMT where we then
13:28see expansion away. Now, you might be
13:30asking yourself, well, if he's YM here
13:33isn't really reversing and I don't like
13:35how this is, you know, a phase of price
13:37of consolidation in here. And I would
13:39completely agree. I would avoid this
13:42reversal because of the consolidation
13:44signature. But what we can now do is
13:47look to get on side with the
13:48continuation higher in the range once we
13:51create gaps towards our buy side
13:53liquidity. So you can see we have order
13:55pairing ranges on all three assets. Now
13:58look at this. As we talked about in the
14:00slides, once we expand away from our
14:03point of reversal, so this two-stage SMT
14:06on the hourly and 4hour at the lows, we
14:09now expand creating gaps. And look how
14:1210:00 a.m. here is going to be opening
14:14up into this gap. This gap gives us an
14:18SMT sequence right here with our Dow
14:21Jones. And now we look for a one-stage
14:24SMT to get on side out of the reversal.
14:27We have expansion retracement into a
14:29gap. This is a one-stage SMT fill and we
14:34are able to get on side with that based
14:35on our logic of continuations. We can go
14:38to our entry time frame. We can look for
14:40a change in the state of delivery, cover
14:43the wick, target the buy side liquidity,
14:47and there you go. This would be a
14:48fantastic trade that you could take,
14:50right? And eventually both targets here
14:52do in fact get hit. First that minor buy
14:55side, and then eventually you can see
14:57price expands and takes out the buy side
14:59liquidity, that failure swing high. So
15:01this would be a a very good example of
15:03both how we involve ourselves in
15:06continuation using that one-stage crack
15:09and correlation and then how we profile
15:11the reversal here with both the 4hour
15:14two-stage which you're seeing on the
15:16higher time frame extreme like this
15:20and you also have the oneh hour
15:23two-stage that can fractalize that 6
15:26a.m. low. So in the second example here
15:28I have the S&P 500 chart and I have the
15:31NASDAQ chart. And as you can see I've
15:33shown us the drawn liquidity. We can
15:36label this the DO which is this daily
15:38swing high and we are in continuation.
15:41So as you can notice what we do is we're
15:43opening this daily candle at 1,800 as
15:46you discovered in protraction profiling
15:48into this gap which forms SMT. Now, this
15:53SMT that forms with NASDAQ, it itself is
15:56not a two-stage crack in correlation,
15:59right? This is not a PSP. So, this is
16:01not a two-stage PSP. So, instead, what
16:05we will look to do is fractalize this
16:08reversal, 1800, this wick with a 1 hour
16:12or 30 minute swing formation. So, we'll
16:15hop down to our 1 hour chart now, and we
16:17will look to see if we can fractalize
16:19this reversal. Now you can see in here
16:22once this SMT forms with the gap it
16:24looks like this.
16:29Okay, we trade into our gap in here and
16:32then we get a reweep. So we have this
16:33spaced out SMT with the low. There is
16:36still only a one-stage SMT right inside
16:39of this gap. It's a spaced out SMT. But
16:42let's drop down to the 30 minute time
16:44frame to find that two-stage signature.
16:46So we can fractalize this 4hour low is
16:49in this 30 minute that you will see we
16:52have our two-stage signature forming
16:54with this PSP at the 8:30 candle and
16:58then we have 900 p.m. right forming that
17:02two-stage PSP as NASDAQ engages the fair
17:05value gap. This two-stage PSP now
17:08becomes the invalidation and 1000 p.m.
17:11opens up or 9:30, my apologies, opens up
17:15as a candle 3 in continuation on NASDAQ
17:20and a candle 4 right on the S&P. So now
17:23we can look to trade this going down to
17:26our lower time frame for entry. We can
17:28see that what we want to do is we want
17:30to align a Vshape after this SMT forms
17:34in the gap with this two-stage
17:37PSP. That is how we're fractalizing the
17:40reversal with this 30 minute swing. So,
17:42we can go and look for a lower time
17:44frame CSD, which we can confirm with
17:46this candle body closure here. taking
17:49entry on the closure or in the gap. We
17:52can now cover the low, target the highs
17:55and that again is a fantastic trade in
17:57which price delivers. Ideally, we'll see
18:00it deliver all the way to that draw on
18:02liquidity. Right? Play out candles until
18:05that happens.
18:06There we go. So, you can see price in
18:08here expands away from this true
18:11reversal on the 4 hour which is
18:14fractalized by this swing point on the
18:1730 minute. So, we are utilizing a 30
18:19minute two-stage signature to fractalize
18:23that wick of 1,800 or 6 pm. So, in the
18:27case here, I want you to pay attention
18:29to this daily chart. As you can see on
18:33YM, we are sweeping out this previous
18:36daily low after forming a higher time
18:38frame reversal, which we can confirm
18:40again as homework here on October 1st.
18:43Now, as we form SMT with the previous
18:46day low, we know that the profile on YM
18:49is going to support returning back to
18:51its opening price. This is delayed
18:54protraction like we talked about with
18:56that large wick and then the relatively
18:59small body. So, our drawn liquidity
19:01becomes the daily open. Now, this on the
19:03daily chart is not a two-stage cracking
19:06correlation, is it? So, we can go down
19:08to our 4hour and fractalize this swing.
19:11What you see on the 4hour is that there
19:14also is no two-stage SMT at this low.
19:18So, we are not able to go directly to
19:20our entry utilizing the 4hour. So,
19:23instead, we're going to fractalize this
19:25reversal. And this is the case where
19:27we're actually going to see a 15minute
19:30strength switch at the low of day
19:33confirming the 4hour reversal. So we
19:36take out the previous day low. This is
19:37the sequential SMT or SS SMT is a SMT
19:42between daily candles, right? At the
19:45previous day low and then we get at the
19:47driver at around 10 a.m. right after
19:509:30 manipulates. At 10 a.m.'s open, we
19:53are confirming the low with a 15minute
19:57strength switch. So the 4hour candle
19:59low, although no assets sweep out the
20:02previous candle's low. Here you can see
20:04no assets sweep out this 6 a.m. low.
20:08Instead, we have this candle here
20:10opening up in continuation with a
20:13two-stage strength switch PSP. So 945,
20:18the asset that trades lowest into its
20:20range, which is Dow, is closing at 945
20:24as a upclose candle, while the other two
20:27assets in here, you can see, are closing
20:28as down candles, creating fair value
20:32gaps. If you guys have watched my
20:34lecture on advanced premium and
20:36discount, this is your APD sequence
20:40where the other assets are continuing
20:42from a premium and a gap that looks like
20:45this.
20:49Okay, the other assets are continuing
20:50from a premium and a gap and the
20:52reversing asset is forming a strength
20:55switch at the reversal. So, we can go
20:57directly to our entry here. We can
20:59utilize a lower time frame CSD that
21:02looks something like this. So here is
21:04our strength switching at the open of 10
21:07a.m. And you can see here 10 a.m. opens
21:09and we immediately CSD right that is an
21:12entry technique right on this closure
21:14covering the low 10 a.m. and targeting
21:17the daily open for around 4.5R which is
21:20a fantastic trade. So this is where we
21:22see strength switching at the reversal
21:26on the 15-minute chart which confirms
21:29the 4hour low even though it does not
21:32sweep out the previous candle. So this
21:34is not a candle two closure. It is a
21:36candle three closure as it closes above
21:39the opening price here on the 4 hour. We
21:42can confirm that low however by
21:44fractalizing it and seeing candle three
21:47here at 10 a.m. as a strength switch
21:49PSP. one of the strongest confirmations
21:52for an SMT at the reversal when you see
21:55the weakest asset switching strengths.
21:57So in our final example here, I want you
22:00to pay attention to both the Dow and the
22:02NASDAQ and the phase of price. So as you
22:05can see in here, we are trading away
22:07from a reversal
22:09as qualified by this SMT at the lows and
22:13expansion away. Now what happens? We see
22:16that the Dow Jones trades into the
22:19external range high here and it fails to
22:22manipulate this on the lower time frame
22:24is a consolidation and we can see that
22:26via this seek and destroy type of
22:29formation. Okay, we are not V-shaping
22:32away. So instead we are consolidating at
22:35this high that is a continuation
22:38signature for the lagging asset in this
22:41case NASDAQ to break SMT at that same
22:44high that NA that YM is failing to
22:47manipulate. So, what we're looking for
22:49now is how 10 a.m. is actually
22:52confirming this idea or narrative of
22:55price delivery to break SMT with a
22:58two-stage strength switch, which is a
23:01crack in correlation. So, you can see 6
23:03a.m. opens, trades into the low, forming
23:06the first stage of divergence with the 2
23:09a.m. low or London's low. Now, the low
23:11of the 10 a.m. candle is formed from a
23:14two-stage SMT itself. So we can go
23:17directly to entry as we have this
23:19two-stage which is also in the form of a
23:22strength switch to confirm the SMT break
23:25or strength switch to confirm asset
23:28synchronization. What we can do is we
23:30can go directly to our lower time frame
23:31here and we can look for entry. So as 10
23:34a.m. opens with this strength switch,
23:37what we can do is we can confirm this
23:39CSD
23:41as such and we can look to take entry on
23:44the candle closure or the retest up to
23:46you. Covering the low and targeting our
23:49highs for just around 1.5R. And this is
23:53why we'd probably use the retest in here
23:55to get two R. Okay. And this is a very
23:58good example of strength switching on
24:02the 4 hour paired with that 4hour candle
24:04itself acting as a two-stage SMT. Okay.
24:08So the 4hour candle itself is a
24:10two-stage SMT and you can see that leads
24:12to SMT breaking. Now it's very important
24:15in this example to also recognize the
24:18phase of price. Right? We have expansion
24:21met with consolidation
24:23which supports expansion not reversal
24:26given that we have a failure swing and
24:29SMT break logic. All right guys, so that
24:32wraps up our lecture on fractalizing
24:33reversals. If you found this lecture
24:35helpful, please do leave a like and
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This page contains the full transcript of Fractalizing Reversals (The Formula To Precise Entries) by Afyz, generated from the public captions YouTube serves with the video. The transcript has 4,151 words across 577 segments, with the original timestamps preserved so you can click any line to jump to that moment in the embedded player.

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