How to identify directional bias using ICT concepts — Transcript

Full transcript

1. 0:00so how do you determine the directional
2. 0:03bias of Any Given market now the truth
3. 0:06is this isn't easy understanding Market
4. 0:09narrative and Market bias is one of the
5. 0:12hardest things that you can do so I'm
6. 0:14not going to sugarcoat it when I say
7. 0:16that it is difficult however there are
8. 0:19certain rules you can use which will
9. 0:21help you to determine the directional
10. 0:23bias so I'm going to keep it extremely
11. 0:26simple and only use a few Concepts that
12. 0:28you can get familiar with
13. 0:30now if you haven't seen my previous
14. 0:32video on my explanation of ICT Concepts
15. 0:35in regards to time and price watch that
16. 0:37first because that gives you a whole lot
17. 0:40of insight into what's actually
18. 0:42happening behind the scenes right you're
19. 0:43still going to need to take this
20. 0:45information and back test it yourself
21. 0:48this is not the type of Channel where I
22. 0:49say this is easy but it can be
23. 0:52simplified and it's still going to
24. 0:53require work on your part but I promise
25. 0:56by the end of this lesson you'll have a
26. 0:58better understanding on what to look for
27. 1:00when you are trying to establish a
28. 1:02directional bias and this can work
29. 1:04across any time frame whether it's the
30. 1:06weekly the daily the 1 hour the 1 minute
31. 1:10the concepts are the same because price
32. 1:12is fractal so let's get into this chart
33. 1:16now we are here on the weekly time frame
34. 1:19and this is for the US dollar Index the
35. 1:22first thing you want to do when you are
36. 1:24trying to establish the current
37. 1:26directional bias of the market is you
38. 1:29need to assess what pric has previously
39. 1:32done I cannot stress how important this
40. 1:35is it is very difficult to determine
41. 1:37directional bias without first looking
42. 1:40at what price has already done where has
43. 1:43it been where has it already visited and
44. 1:46what's the likelihood that it needs to
45. 1:48revisit that area so these are the first
46. 1:50things that I'm asking myself when I'm
47. 1:52trying to establish a directional bias
48. 1:54right now what do I mean by that in this
49. 1:57example we can see how the market has
50. 2:00sold off now where has it come to an
51. 2:02inefficiency in the form of this buy
52. 2:04side imbalance again as explained in the
53. 2:07previous video price is only going to
54. 2:09seek two things either liquidity that
55. 2:12rests above old highs and Below old lows
56. 2:15or to rebalance inefficiencies in price
57. 2:18whether it's buy side or sell side in
58. 2:20this case we have seen price drop into
59. 2:23this buy side imbalance but what is
60. 2:25occurring over here there's a few Clues
61. 2:27firstly right we can see the body of the
62. 2:30candle over here it stops dead at the
63. 2:32consequent encroachment which is the
64. 2:34midpoint of this buy side imbalance
65. 2:37again I've explained what buy side
66. 2:39imbalances and sell side imbalances are
67. 2:42in the previous video This is the first
68. 2:44clue it suggests that price doesn't want
69. 2:46to go any lower this could be good
70. 2:49enough for a long entry and there are
71. 2:51several factors why but that's beyond
72. 2:52the scope of this presentation but what
73. 2:54we are waiting for is feedback once this
74. 2:57candle closes the next candle you can
75. 3:00see how we dropped lower again back into
76. 3:02the consequent encroachment of this buy
77. 3:04side imbalance and then what happens is
78. 3:07we have a really sharp movement higher
79. 3:10with an up close candle leaving this
80. 3:13fair value Gap in the form of this buyid
81. 3:15IM balance so from this candle's High to
82. 3:19this candle's low we only have price
83. 3:22moving in One Direction buy side this is
84. 3:25significant this tells us that the
85. 3:27market is in a hurry to reprice higher
86. 3:29now once this candle closed and we had
87. 3:32the formation of this bide imbalance the
88. 3:35next candle opened traveled lower
89. 3:37slightly into this Wick and then closed
90. 3:40back Above This candle's high so we have
91. 3:43broken a swing High over here after
92. 3:45forming a swing low down here with a
93. 3:48displacement after rebalancing this bide
94. 3:52imbalance so when we see this this gives
95. 3:55us an indication that the market is
96. 3:57likely to draw higher now thek Market is
97. 4:00likely to first repic to equilibrium
98. 4:04right so this is our dealing Range High
99. 4:08and this is our dealing range low if we
100. 4:11split this range into half we get our
101. 4:13equilibrium level the midpoint between
102. 4:15the dealing Range High and the dealing
103. 4:17range low so this would give us an
104. 4:19initial upside objective which would be
105. 4:22to repic back to equilibrium equilibrium
106. 4:24is essentially fair value right it's the
107. 4:26mid price point between this high and
108. 4:28this low so inside of this range this is
109. 4:31our highest premium price and this is
110. 4:34our lowest discount price therefore
111. 4:36equilibrium is going to be fair value
112. 4:38and as I explained in the last lesson
113. 4:40the markets are booked based on
114. 4:42principles of fair value anything below
115. 4:45the equilibrium price point this is
116. 4:47referred to as our discount range and
117. 4:50anything above the equilibrium price
118. 4:52point is referred to as our premium
119. 4:55range generally the markets will move
120. 4:57from premium to Discount and discount to
121. 4:59to premium in a bearish market ideally
122. 5:02we want to wait for price to come into a
123. 5:05premium before we sell short and in a
124. 5:07bullish Market we want to ideally wait
125. 5:09for the market to drop into a discount
126. 5:12before looking for a long entry you can
127. 5:15see how this swing low to this swing
128. 5:17High we are obviously below equilibrium
129. 5:20level and into a discount relative to
130. 5:22this dealing range now since we have
131. 5:24seen what the market has previously done
132. 5:27down here and we have conviction that
133. 5:29the Market is giving clues that it wants
134. 5:31to run higher we want to look for areas
135. 5:34that the market would Target above the
136. 5:36equilibrium level now again like I said
137. 5:39there are two things that the market
138. 5:40will reach for it's going to either
139. 5:42reach for liquidity in this case buy
140. 5:45side liquidity above these relative
141. 5:47equal highs and or is going to repic to
142. 5:50rebalance and over here we have this
143. 5:53sell side IM balance where the market
144. 5:54has moved in One Direction only sell
145. 5:57side and this cell side side imbalance
146. 6:00sits inside of the premium range
147. 6:02relative to this high and this low let's
148. 6:05zoom in onto a daily time frame and this
149. 6:08will give us more detail so here you can
150. 6:11see the three candle formation which is
151. 6:13our swing low again I'll do a separate
152. 6:15teaching on this at some point after
153. 6:16that swing low has been created you can
154. 6:19see how we have this displacement higher
155. 6:21now price has retraced back into this
156. 6:23displacement but it hasn't fully
157. 6:26rebalanced this bid imbalance why well
158. 6:30if we look to the left we have this sell
159. 6:32side imbalance here and then back
160. 6:34through that range we have this buy side
161. 6:36imbalance so this area has been
162. 6:39sufficiently balanced with both sells
163. 6:41side delivery and buy side delivery and
164. 6:44this fair value Gap now will act as an
165. 6:46inverse fair value Gap and we anticipate
166. 6:49this level to hold price you can see how
167. 6:52we're consolidating above it and notice
168. 6:54the bodies of the candles here they're
169. 6:56failing to even dip lower into that
170. 6:58inverse fair value Gap which again
171. 7:00suggests that we are looking for higher
172. 7:02prices on The Daily time frame if we
173. 7:04look above the equilibrium level which
174. 7:06is this green line we can see that we
175. 7:09have this large cell sign IM balance
176. 7:10here as well and this sits inside of a
177. 7:13premium so in this case we have an
178. 7:15overlapping of fair value gaps between
179. 7:17two different time frames and we still
180. 7:19have all of this buy side liquidity
181. 7:21above the market and this is even
182. 7:23stronger since we have two parameters
183. 7:26here in close proximity we have the buy
184. 7:28side liquidity residing above these
185. 7:30relative equal highs and we have this
186. 7:32cell side imbalance that sits above
187. 7:34those relative equal highs so we have
188. 7:36liquidity and an inefficiency in a
189. 7:39premium relative to the dealing Range
190. 7:41High and the dealing range low now this
191. 7:44gives us a range of opportunity between
192. 7:47this inverse fair value Gap and this
193. 7:49cell side imbalance so this is going to
194. 7:51act as a very strong magnet and a very
195. 7:53strong draw in liquidity and this gives
196. 7:56us a range to now work with ideally you
197. 7:59want to trade on your lower time frames
198. 8:01in the direction of the higher time
199. 8:03frame draw we have concluded that the
200. 8:05weekly expansion is likely to run higher
201. 8:08now there are several entry techniques
202. 8:10and a whole lot of other stuff that I'm
203. 8:11going to get into at some point but for
204. 8:14the purposes of this lecture we just
205. 8:16trying to determine where the market is
206. 8:18likely to go right now that we've
207. 8:20arrived at this level we are in a
208. 8:22premium we've completely rebalanced this
209. 8:25gray shaded box which has our higher
210. 8:27time frame weekly cell side balance and
211. 8:30we're currently consolidating around
212. 8:31this area now there are a whole lot of
213. 8:33other Clues over here that can tell us
214. 8:35where the market is likely to go but
215. 8:37again beyond the scope of this
216. 8:39presentation however when we are trying
217. 8:41to establish a draw on liquidity we need
218. 8:43to look at the market in the series of
219. 8:45if and then functions we are inside of a
220. 8:48higher time frame fair value Gap here
221. 8:50and the market could just go into a
222. 8:52consolidation so what are we looking for
223. 8:55we're looking for displacement and this
224. 8:57displacement is going to give us an
225. 8:59indication of where the market is likely
226. 9:02to draw to if we close back above the
227. 9:04weekly sell side imbalance then we can
228. 9:06anticipate price returning back to the
229. 9:09premium end of that Weekly sell side IM
230. 9:12balance and that holding as support
231. 9:14which would then become an inversion
232. 9:16fair value Gap and we can aim for the
233. 9:19complete rebalance of this area or we
234. 9:22are looking at these relative equal
235. 9:23highs up here there's going to be a
236. 9:24large pool of liquidity resting above
237. 9:27this area for the more advanced students
238. 9:29you can see this as a market maker model
239. 9:31now that's a very very long conversation
240. 9:33I have a whole course on that so if you
241. 9:35are interested that course alone is a
242. 9:38game Cher but to keep things simple here
243. 9:40we are looking for one of two things
244. 9:42either we are looking to close above the
245. 9:44sside imbalance and it would act as an
246. 9:47inverse fair value Gap and we would find
247. 9:49support or we're going to close below
248. 9:52that Weekly sell side and balance in
249. 9:54which case this would act as a balanced
250. 9:56price range since we are fully balanced
251. 9:58here and the discount end of that sell
252. 10:01side imbalance would act as resistance
253. 10:03sending price lower If This Were to play
254. 10:06out where would we target well we have
255. 10:10these relative equal lows over here so
256. 10:12there's going to be a pool of sell side
257. 10:14liquidity resting below that and just
258. 10:16below those relative equal lows we have
259. 10:19this Gap so since these two are in close
260. 10:21proximity this would act as a strong
261. 10:24magnet for price if we are to push lower
262. 10:27this is a common misconception that I've
263. 10:29seen with many of my students is that if
264. 10:32you establish a bullish bias then they
265. 10:35think that the bias is going to remain
266. 10:37bullish until we clear the highs up here
267. 10:39that doesn't necessarily mean it's going
268. 10:41to clear the highs up here we could turn
269. 10:43around from where we are this is why you
270. 10:44have to constantly evaluate and assess
271. 10:48what the market has already done and
272. 10:50what it could likely do next if this has
273. 10:53happened then this is likely to occur at
274. 10:56the minute we have completed three of
275. 10:59the objectives we have run above the
276. 11:01equilibrium price point so we've gone
277. 11:02from a discount into a premium we have
278. 11:04cleared buy side liquidity above the
279. 11:06relative equal highs and we have fully
280. 11:08balanced the higher time frame for Value
281. 11:10Gap so what's my bias now going to be
282. 11:13neutral until I see some form of
283. 11:16displacement you have to allow the
284. 11:19market to tip its hand and then you look
285. 11:21for Clues okay if the market has done
286. 11:23this then where's the next likely
287. 11:26Direction and then on the lower time
288. 11:27frames you stick with that bias until
289. 11:30you are proven otherwise from where we
290. 11:32are I'm anticipating price to break
291. 11:35lower that's what I want to see I want
292. 11:36to see a displacement lower and leave a
293. 11:39fair value Gap and then I want to see
294. 11:40price come back into that fair value Gap
295. 11:43and then potentially run lower for the
296. 11:45selli liquidity here and close in this
297. 11:47Gap again I would have to assess what
298. 11:49price is going to do once we get back
299. 11:51down to this level do we run through it
300. 11:53do we displace through it do we close
301. 11:55back below it and how do we close back
302. 11:57below it all of this is going to give me
303. 11:59insight and feedback into what I will
304. 12:01anticipate price to do next in
305. 12:04conclusion price is going to seek to do
306. 12:06three things move to equilibrium since
307. 12:09it's fair value repic to liquidity in
308. 12:11the form of old highs and old lows and
309. 12:14rebalance inefficiencies in the form of
310. 12:16sell-side imbalances and buy side
311. 12:18imbalances your job as a Trader is to
312. 12:21determine the probability of the market
313. 12:23moving in One Direction Over another so
314. 12:26you want to wait until the market looks
315. 12:30extremely one-sided that is obvious it's
316. 12:33going to move in One Direction Over
317. 12:35another before you start looking for
318. 12:37trades so in the words of ICT I hope you
319. 12:40guys have found this one insightful I
320. 12:42will be getting into more detail and
321. 12:44there's a whole lot of videos I have
322. 12:46planned if you haven't downloaded the
323. 12:48ebook already I strongly suggest that
324. 12:51you do there's actually a free gift that
325. 12:53comes with it with one of my actual
326. 12:54mentorship videos and you can see the
327. 12:56level of detail that I really go into in
328. 12:58that but for now try to keep things
329. 13:00simple Define your dealing ranges into
330. 13:03premium and discount and look for the
331. 13:05inefficiencies and the areas of
332. 13:07liquidity inside of that range so thank
333. 13:11you for watching and I will catch you
334. 13:12again in the next video