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How to Time Expansions | Part 1; Reversals — Transcript

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0:02Hello everyone and welcome back to my
0:04channel. Today we're going to be
0:06presenting the first part of a two-part
0:08master class on how to time expansions
0:11within the market. Today's lecture is
0:13extensively going to focus on reversals.
0:16Specifically, this lecture is going to
0:18bridge concepts such as market maker
0:20models, swingpoint formations, and crack
0:23and correlation. Before I get into this
0:25lecture, a couple of prefacing notes.
0:28The first is thank you very much for
0:29being patient with me. I know a lot of
0:31you guys have been waiting for this
0:32lecture and it takes an extraordinary
0:34amount of time and effort to produce a
0:36lecture such as this. So I appreciate
0:38you being patient while this comes out.
0:40Secondly, thank you all for the support.
0:42Recently you guys have shown me a lot of
0:43love on YouTube and I do read every
0:45comment and I do see the likes and I
0:47really appreciate kind of you guys
0:48engaging with my content. I hope you
0:50learned something today. I'm not going
0:52to be gatekeeping anything. This is
0:53going to be filmed in one take. I don't
0:55have an editor. I don't have a team
0:56around me doing my YouTube stuff. So, if
0:59I do pause for a minute, it's probably
1:00just to drink some water or collect my
1:02thoughts. But without any further ado,
1:04let's get straight into this. This is
1:05going to be a good one. So, let's talk
1:08about some of the core logic we're going
1:10to be discussing today. There are a
1:12couple of key ideas I want to emphasize
1:15throughout this lecture and I will call
1:17back to these specific key ideas through
1:19different chapters of this lecture. So
1:22the first is that expansion is going to
1:24require a swing formation. The second is
1:26that swing formations are market maker
1:29models. A general schematic of which can
1:31be seen to the right. And you've
1:33probably seen some of my content on my
1:34YouTube about market maker models
1:36before. The third is that market maker
1:39models are a way by which the market
1:41distributes liquidity from internal and
1:43external range liquidity pools, i.e. old
1:46swing highs and old lows and fair value
1:49gaps. Some of these concepts are
1:50refreshers. Finally, we want to expand
1:53on this idea by saying that every swing
1:56is formed with a crack in correlation
1:58which we will talk about in a bit. And
2:00finally, insync assets expand out of
2:03sync assets are said to be in a
2:05manipulation phase. So, we are going to
2:07be looking at how asset synchronization
2:09plays into the creation of swing points
2:11as well. So, let's hop into chapter 1.
2:15And I'm going to be chaptering out this
2:16lecture because it's filmed in one you
2:18know take so that you can refer back to
2:20it in the in the bookmarks and you know
2:23look at different areas for different
2:24things. So the first is going to be
2:26liquidity and market maker model
2:28fundamentals. We're going to be going
2:29into the universal model variance and
2:31phases of price. So let's start with the
2:35three universal model variants. The
2:37first is internal range to external
2:40range liquidity. As a refresher,
2:42internal range of liquidity is fair
2:44value gaps or inefficiencies in the
2:47market and external range liquidity is
2:49old swing highs and lows. The market
2:52only moves a few ways and these are the
2:55three ways it's going to. One is from
2:57internal to external. This is a trend
3:00following system and a form of expansion
3:03into retracement into expansion.
3:06The second variation is external to
3:09internal which is a higher time frame
3:11form of retracement using this universal
3:14model logic. That is when price expands
3:17into a swing high or swing low and then
3:20retraces via expansion back into an
3:23internal range of liquidity.
3:26Finally, we have something called an
3:28order paired range or erl to ERL. That
3:31is when price takes out one side of a
3:33range, be it the range high or range
3:36low, and then expands towards the other
3:38side of the range. This is a higher time
3:40frame reversal signature. So, let's go
3:43through those three things again so
3:44we're on the same page. Internal to
3:47external is a higher time frame
3:49continuation signature where price
3:52retraces into a gap and then expands
3:54towards an old high or low. External to
3:58internal is a retracement phase of price
4:01where price takes out a relevant swing
4:03and then comes back into the range to
4:05rebalance a fair value gap. And the
4:08final is external to external which is a
4:10reversal phase of price with this
4:12universal model variant in mind where
4:15price uh order pairs two sides of a
4:18range.
4:20So now let's build on this idea by
4:22looking at reversal signatures and swing
4:24formations. We're going to understand
4:26what reversals are and what C2C3 swings
4:30mean and how they form. So first of all,
4:33we need to understand what a reversal is
4:34and what a reversal is not. So a
4:37reversal is expansion met with
4:39expansion. Now as you saw on the
4:41previous slide, there is a couple of key
4:45uh price action signatures we can
4:46utilize to understand reversals. So the
4:49first is that when price trades into any
4:51key level in that universal model, we
4:53want to see displacement back into the
4:56range. Okay, that is going to be a
4:58reversal signature. Now, this can be
5:00qualified by a change in the state of
5:02delivery, which you have probably
5:03learned about before and also through
5:06displacement higher. This can be seen in
5:08fair value gaps and explosive price
5:11action. A Vshape is what's often used.
5:14You know, that's kind of the verbiage we
5:16use. Now, what isn't a reversal? Well,
5:19let's look at these examples here,
5:20right? A reversal is not choppy. It does
5:24not create failure swings, right, as it
5:26comes into that key level. It's really
5:29fast in and fast out creating that
5:32changes to a delivery and most
5:33importantly displacement. This here
5:36would be more of a retracement.
5:38Likewise, reversal is not consolidation
5:41either. This phase of price here is
5:44governed by a range in which you can see
5:46price is staying within and not
5:49manipulating and you know expanding
5:51outside of until you know up here where
5:53we get that reverse signature. Okay. So
5:54this is going to be important when we
5:56look at swing formations and when we
5:58look at trading reversals because these
6:00lower timeframe signatures are what are
6:03going to be very important for us to
6:05consider you know amongst other things.
6:08So let's take a look at what the
6:10reversal types of candles in the market
6:12are and how they can form in relation to
6:15our universal model like we talked
6:16about. Remember universal model variants
6:20are market maker models and market maker
6:22models are also swing points. So this is
6:24the interaction between these things. So
6:27here we have an example of a candle 2
6:29reversal. Now there's a couple of key
6:32considerations we want to look at for
6:34these types of mechanical reversal
6:36candles. One is going to be the wick
6:38size. This is going to be our price
6:41filter. As you can see here, the wick
6:43size is determined by the depth of the
6:46protraction or manipulation of this
6:49candle away from its opening price. So,
6:52if we have a large wick, right, this is
6:56going to be an indication that this
6:57candle is reversing and mechanically
6:59closing back in the range, right? Just
7:02to remind you, a mechanical C2 closure
7:05would see the first candle's low being
7:07swept and then a closure back in the
7:09range, right? For both the bullish and
7:11bearish case, we can also consider C2
7:15reversals with the time left in the
7:17candle. If there is limited time
7:20remaining in this higher time frame,
7:22candle 2, right? So, we see this Vshape
7:25on the lower time frame forming that
7:27wick happen near the end of that candle,
7:30right? then we're going to assume that
7:33this candle will likely reverse and the
7:35next candle will expand. Right? So if
7:38there is not a lot of time left in this
7:40candle, there isn't much time left for
7:42it to expand to the other side of the
7:45range in that universal model variant.
7:48So to recap, we are going to be
7:51filtering our candle twos by the size of
7:53their wick and by the time remaining in
7:57their candles to determine if this is
7:59going to be a reversal candle or a
8:02reversal into expansion candle which we
8:05will see you know in the next slide. So
8:08let's take a look at what a reversal
8:10looks like with respect to that
8:12universal model and these lower
8:14timeframe mechanics. So here I have a
8:17generic universal model. Remember all
8:20universal models are going to be forming
8:22swing points. Here we have some form of
8:25internal or external range liquidity. In
8:27this example here we have external to
8:29external. And I also have a time frame
8:31alignment up here for you to utilize. So
8:34if our higher time frame is the daily,
8:36right? Our lower time frame would be the
8:384 hour. If our higher time frame here
8:40for this universal model is the 4 hour,
8:42our lower time frame would be the 1 hour
8:44or 30 minute. and so on and so forth. So
8:47in this case you can see price engages a
8:50relevant level which is the external
8:52range low and it closes as a mechanical
8:55reversal candle back above C1's low.
8:59Here is that fractal isolated and here
9:02is what it would look like on that lower
9:04time frame. Pay attention to these
9:06mechanics. Okay, so as you can see C2
9:10reverses right after sweeping out the
9:12previous candles low. We're going to
9:13talk about this line here in a bit. And
9:16then we see after reversal, candle three
9:19opens and it continues towards, you
9:22know, the opposing side of the range or
9:24the draw on liquidity. So in this case,
9:26if you're a reversal trader, your
9:29emphasis, if you're trading, is going to
9:30be trading that first change in state of
9:33delivery or perhaps even this fair value
9:36gap that is going to be in this
9:38displacement leg. If you're focused on
9:40trading continuations, which we will
9:42talk about in a future lecture, then
9:44you're going to be waiting for this gap
9:46to be filled and really looking at this
9:48sequence in here, which is a
9:50continuation order block. Now, as you
9:53can see, as price reverses in candle 2,
9:57the time left for expansion, considering
10:00the draw, is not very much, right?
10:02There's also a very large exaggerated
10:04wick. So in this case here, our trade
10:07preference is actually going to be
10:09trading candle three as a continuation
10:11simply because this candle reversed. The
10:14next candle can form a small opposing
10:16run and then expand. And I'll talk about
10:19that in a future lecture. So let's
10:21remember that our trade preference for a
10:23reversal candle C2 is going to be
10:26trading the candle three expansion or a
10:28continuation.
10:30Now what about a reversal expansion
10:32candle? This is really where the bread
10:34and butter of trading reversals comes in
10:36and where I have spent a lot of time
10:38investigating how swings form. So this
10:42C2 reversal expansion candle is
10:44characterized in a similar way to a
10:46reversal candle. Yet pay attention to
10:48the price and time filters. For the wick
10:51size of a reversal expansion candle, we
10:54see a relatively small wick. This means
10:58that the protraction phase of this
11:00candle or the distance between the open
11:03and its low or opened and its high is
11:05relatively small. That allows the
11:08majority of the volume of the candle to
11:10be used for expansion, right? Or
11:12creating this larger body.
11:14Similarly, if we see there's lots of
11:16time left in the candle, i.e. this
11:18reversal happens quickly within this
11:20higher time frame candle, there is
11:22sufficient time for this candle to be an
11:24expansion candle. And that is what we
11:26want to focus on when engaging price
11:29within this type of swing formation.
11:32Let's take a look at some of these
11:33mechanics and the universal model. So
11:36again, I have my universal model right
11:38here. I have my internal to external
11:41variant this time, right? Any variant of
11:44that universal model will form a swing.
11:46And in this case, you can see candle two
11:49forms a small opposing run below candle
11:52one into this key level. And then we get
11:54expansion higher. Look at these lower
11:57time frame mechanics. We see a Vshape in
11:59here, right? This Vshape is very nice
12:02because it cis quite early in this
12:05candle. And then you can see it expands
12:08aggressively right into the highs as a
12:11continuation of C3. As you can see here,
12:14based on the uh time it takes to reverse
12:17and the relatively shallow wick below
12:19the open, this is an ideal candle to
12:22trade inside of this changes to a
12:24delivery level with an invalidation of
12:26the low. And we're going to talk more
12:28about invalidations when we get into the
12:30next chapter. So, there's a little bit
12:33of a difference here that we have to
12:34understand. One is going to be wick size
12:36and the type of reversal signature that
12:38we observe and the second is going to be
12:40time left in the candle for expansion.
12:44Okay, let's get into the final form of
12:46swing formation. This is going to be a
12:48C3 reversal. And this mechanically is
12:52defined when candle 3 closes below the
12:57opening price here of candle 2. This
13:00closure of the higher time frame candle
13:03right confirms that the candle 2 high
13:06has formed a swing despite candle 2 not
13:10closing back within the range of candle
13:12one. Now these types of swings can form
13:15for a variety of reasons and the key
13:17ones you should pay attention to are if
13:20there is a time constraint on C2 meaning
13:22this candle is closing however it does
13:24not have time yet to reverse because of
13:26the depth of the manipulation. It can
13:29also be due right um to something like
13:32you know uh price signature where
13:35there's just a lot of range to cover
13:38back into the range. So it's very
13:39similar to the previous types of swing
13:41formation considerations of price and
13:43time filters where we are saying that
13:46candle 2 doesn't close mechanically as a
13:48reversal. So we don't know if it's going
13:50to form a swing or not. Candle three
13:53closing above the opening price of
13:55candle 2 then confirms and then candle
13:58four is going to be that continuation.
14:01So we can trade C3 expansions, right?
14:03We're just going to need a bit more
14:05framework and we're going to get into
14:06that kind of framework, you know, in the
14:08next chapter. So here's an example of
14:10that uh C3 reversal, right? You can see
14:13here's an example, the third example
14:15which is ERL retracing into IRL where C2
14:18engages the low and doesn't quite close
14:21back in the range of C1. And then we see
14:24this here as a failure to CISD right
14:26back into the range and close above the
14:28opening price. And then candle 3
14:30actually forms that reversal enclosure.
14:32I'll be teaching you a methodology to
14:35engage candle 3 trusting that it will
14:38form a low down here at candle 2. And
14:41also we will be utilizing that same
14:43logic to trust that candle 2 has formed
14:45lows before those candles close. Right?
14:48So this lecture is going to be
14:50extensively focusing on engaging these
14:53candles before their closure
14:54necessarily.
14:56And we'll talk about that in a bit don't
14:58worry. So the best question now for us
15:01right going through this logic is to say
15:04if market maker models are swing point
15:06formations either a candle three
15:08closure, candle 2 reversal expansion or
15:12a candle 2 closure, how do I know that
15:16this low is actually going to stay
15:18intact or this high is going to stay
15:21intact? How can I be confident in
15:24trading these lower timeframe
15:26signatures? this V-shape change in state
15:29of delivery trusting this low to hold
15:32before the candle closes. Now,
15:35continuation traders do not have to
15:37concern themselves with this logic
15:39because their emphasis is waiting on the
15:42candle to closure and then trading the
15:45next candles towards the draw once the
15:48swing has formed. Reversal mechanics,
15:50however, require you to make inferences,
15:53right, or make you assumptions about
15:56where swings form before candles close.
16:00And how we do that mechanically is
16:02through Kraken correlation and
16:04divergence. So, this next chapter is
16:07going to be framing higher time frame
16:09reversals before candle closures as a
16:11function of divergence and precision
16:14swings at these swing formations or
16:16extremes.
16:18So my last video on YouTube talked about
16:21true reversals and you can dive into
16:23that a bit before this lecture or maybe
16:25even after this lecture to reinforce
16:27those concepts. But now we're going to
16:29go through comprehensively how we frame
16:32these candle two highs and lows as
16:34protected swings before they close. And
16:37this is going to be through the logic of
16:39a true reversal. So a true reversal are
16:43always present right at every single
16:46candle 2 formation um in a universal
16:50model and these form at the extremes so
16:52we can trade away from them. Again here
16:54are your universal models. These are
16:57going to be two-stage cracks in
16:59correlation. So let's kind of discuss
17:01what a crack in correlation is. Okay.
17:04The first thing we need to recognize
17:06when we say the word Kraken correlation
17:08is assets are associated or they are
17:11correlated in a triad. So if we are
17:14trading the indices, we are going to be
17:16looking at the NASDAQ, the Dow Jones,
17:18and the S&P respectively. If we are
17:21trading gold, we're going to be looking
17:22at GC, GU, and GBP Euro. And if we're
17:27trading oil, we're going to be looking
17:28at Harbor Oil, HO, RB, and CL. Now these
17:32are three you know triad examples. I'm
17:35sure there are many more depending on
17:36what assets you trade but these are the
17:38ones we usually focus on as futures
17:40traders. So the first Kraken correlation
17:43we have to understand which is a
17:45one-stage Kraken correlation is going to
17:47be a simple SMT divergence. This is when
17:51a swing high or swing low is diverged at
17:54right between two or more correlated
17:57assets.
17:58The next form of Kraken correlation we
18:00want to understand is called consecutive
18:02candle divergence or consecutive candle
18:05SMT where one candle takes out the
18:07previous candle's high and the other
18:09asset does not.
18:11The next form of Kraken correlation will
18:14be SMT fill right or divergence within a
18:18gap. Now this is going to be extensively
18:21utilized in continuations which I'll
18:23talk about in my next lecture. However,
18:25for this lecture, we will also be
18:27drawing back to this in context of IRL
18:29to ERL moves, right? In the universal
18:32model.
18:33Okay. What about precision swing points?
18:35Now, this is something you probably
18:36heard about. I have a video on my
18:37YouTube as well and you can refer to
18:39that. A precision swing point is simply
18:41a um crack in correlation of the
18:44delivery closure of a higher time frame
18:47candle. So in this case or what
18:49sometimes I say a precision swing point
18:51shows a crack in the correlation of the
18:53phase of price. So in this case you can
18:55see one asset closes right as a bearish
18:58downlo candle at the swing extreme and
19:01one candle one asset closes as a bullish
19:04right reversal candle at the swing
19:06extreme. So this is a precision swing
19:08point.
19:10Let's quickly talk about something
19:12called strength switching which is going
19:14to be used to validate all of the
19:16onestage cracks I have just shown you.
19:19So there is PSP SMT fill consecutive
19:22candle SMT and SMT with swings. Whenever
19:26we see any of these cracks in
19:28correlation or SMT form, we need to see
19:32strength switching to validate that that
19:34crack in correlation is valid. So we
19:38need to see the manipulating asset
19:40momentarily reversing the strongest. The
19:43way I like to think about this is
19:44through two cases. The asset or assets
19:47which make higher highs are going to
19:49reverse lower with relative strength.
19:52The asset or assets which makes a lower
19:54low is going to reverse back in the
19:56range right faster more energetically
19:59and with relative strength. Now again
20:01this is due to a phenomenon known as
20:03order pairing. Right? If we are going to
20:06reverse off of a high, for example, that
20:09has been diverged at, we need to see the
20:11asset that sweeps the high in that
20:14universal model potentially show us a
20:16displacement lower and a willingness to
20:19order pair the high and move lower.
20:20While the asset that creates a failure
20:22swing is obviously going to be in
20:24respect, right, of that bearish order
20:25flow and also trade lower momentarily. a
20:29strength switch right of the
20:30manipulating asset will confirm that SMT
20:34is valid. So we can also observe this
20:37phenomenon through the creation of a
20:40precision swing point. Right? That is
20:42when for example an asset which trades
20:44higher into the range maybe forming an
20:46SMT closes as a PSP. That would show the
20:50stronger asset becoming momentarily
20:53weaker after sweeping out a high or a
20:56low. We can also see the creation of a
20:58larger displacement after reversing for
21:01example fair value gaps. And the final
21:04one is a timebased filter which is going
21:06to be a faster reversal in the form of a
21:09faster change in the state of delivery.
21:11And we'll look at this as we progress in
21:13the lecture and use this to tie into
21:16reversal logic. Okay. So this is a very
21:18important concept for us to now
21:20introduce.
21:22This is an example here. Okay. So when
21:24we see an asset sweep out a high, this
21:26is an SMT with a swing. The asset which
21:29trades highest right in the range
21:31sweeping out the external for example
21:33closes right as a down close candle.
21:36That is a form of strength switching and
21:38known as a strength switch precision
21:39swing point. Likewise if we look at an
21:42internal to external range liquidity
21:44model, you can just flip these right.
21:45These are showing the bullish case.
21:46These are showing the bearish case. Here
21:49you can see that the the asset which
21:52runs highest into the gap closes down
21:55close. Right? This uh black uh or sorry
21:58this red outline on this candle shows
22:00that the other asset is going to be the
22:02opposing color. So this would be a
22:04uplose candle on the correlated asset.
22:06This would be an uplose candle on the
22:08correlated asset. You can see this is
22:09strength switching. It drives higher and
22:12then closes as a weaker candle.
22:15Okay. So, we've talked about one-stage
22:17cracks in correlation and switches in
22:19strength. Now, let's get into the bread
22:21and butter, which is going to be how we
22:23qualify these true reversals. These
22:26second stage cracks in correlation are
22:28going to build on the previous one-stage
22:30cracks we have just been through. So,
22:32the first one is going to be a two-stage
22:34SMT with swings. That is where price
22:37creates an SMT and then creates a SMT
22:41again two- stage with that swing point
22:44that was previously diverged at. This is
22:46a true reversal signature
22:48as is variations with precision swing
22:51points. So here are the two-stage
22:53precision swing point variance. I have a
22:55full YouTube video on this that you can
22:57refer to. It's my last upload. So the
22:59first crack in correlation in this case
23:01would be a precision swing point forming
23:03say for example at a range high range
23:06low or fair value gap and then we see a
23:09second stage cracking correlation of
23:11SMT. So this is when the SMT divergence
23:16confirms the precision swing point. The
23:19SMT divergence here confirms the
23:21precision swing point. In this case, we
23:24can trade this candle here on the asset
23:27that makes a higher high as a mechanical
23:30C2 reversal expansion if it supports
23:32that, right? We can also trade the asset
23:34which makes the lower high as a
23:36continuation, right? C3, right? Or a
23:39pseudo C2, depends on depends on how you
23:41think about it, right? We can trade both
23:42these assets as this SMT is forming.
23:45Okay? Because the two-stage crack is
23:48there. The first stage is here and the
23:50second stage SMT validates the first
23:52stage when we get that reversal
23:54signature and strength switch that we
23:56talked about. Okay. So if SMT can
24:00confirm PSP well then PSP can also
24:02confirm SMT. So that is when the first
24:05stage Kraken correlation is going to be
24:07an SMT and this is just a single phase
24:10of Kraken correlation. And then the
24:12closure of that candle 2 confirms the
24:16swing with a PSP. I'm going to take a
24:19sip of water.
24:23So in this case, as you can see, the
24:26precision swing point confirms the SMT
24:29and we look to trade candle three lower.
24:32Okay, we look to trade the next candle
24:34lower because we need to see that two
24:37stage to validate a true reversal. And I
24:41talked about that in my last lecture and
24:42we're going to build on that in the next
24:44chapter of this video.
24:46Okay. And in the last one, we have some
24:48variations involving two-stage PSPs and
24:51SMTs, right? So these ones are a little
24:53complex, but you know, the logic is
24:55largely the same. It's where we have a
24:57two-stage PSP, right? Form with a swing
25:01of an SMT. That's it, right? So we have
25:03a PSP plus a swing in this case. And we
25:06can also have something like a
25:07three-stage, which is the exact same
25:08thing, which is a two-stage PSP, and
25:09then a two-stage SMT, right? So, these
25:12are just variants that involve swings
25:14and precision swing points, right? And
25:16multiple cracks in correlation. Again,
25:18the logic is more important here. And
25:20that is that a two-stage crack forms
25:23that reversal, right, candle. And uh if
25:27you're looking for when you're expecting
25:29things like a three-stage crack, so
25:32you're seeing a two-stage PSP form here
25:34and then you get one asset running out
25:36the high. What we can often do is see if
25:39this candle here, which forms that third
25:42cracking correlation has a driver, a
25:45driver in here may form that high
25:47because there's lots of volatility. or
25:49if the previous candle closes above
25:53candle one. In this case, see it doesn't
25:55here, but it should really for this
25:57example. It'd be better to show that if
25:58it closes above candle one, then candle
26:01two did not close as a reversal candle.
26:04And then sometimes we'll see that third
26:06candle sweep out the high. Again,
26:07there's a couple of times, especially
26:09around drivers and based on this candle
26:112 closure, that you can expect a, you
26:13know, three-stage to form. And that
26:15would simply be when candle two doesn't
26:17reverse and give us that swing
26:19formation. The next candle sometimes
26:20creates a new manipulation. Don't over
26:23complicate it. These are just the forms
26:24of SMT divergence that form or cracks in
26:27correlation.
26:28Okay guys, so now we're building quite
26:30nicely in a logical order, right? We
26:33have swing formations which are market
26:35maker models and we also understand that
26:38the extremes of these swing formations
26:40within the universal model are going to
26:42be formed with these two-stage cracks in
26:45correlation that will validate right
26:47what we talked about earlier which is
26:49going to be how do we know that this C2
26:52is going to hold right how do we know
26:54this C2 is going to hold how do we know
26:56that we're going to actually reverse
26:57before we close right that's going to be
27:00those two-stage cracks and correlation
27:01forming at the extremes of those candle
27:04twos, right? And we looked at again,
27:06sorry to go back and forth, we looked at
27:08that in context of our, you know, lower
27:11time frame reversal signature, right?
27:13And also, right, how that fractal forms,
27:16right, with the higher time frame.
27:19Okay, so now let's talk about
27:22reversal sequences. We're going to be
27:24talking and introducing two types of
27:26sequences today. The first is a type one
27:28sequence which is a simple reversal
27:31where all assets reverse at the same
27:33time. They form SMT and that SMT leads
27:36to a reversal where they form Kraken
27:37correlation. And the second is going to
27:39be a type two reversal where we're going
27:41to utilize a concept known as asset
27:43synchronization. And I will introduce
27:45that later. But asset synchronization
27:47involves SMT break logic. That's when
27:50assets create swing highs and lows at
27:53different times or they deliver in
27:56opposing ranges. And we'll talk about
27:58some algorithms we can utilize to
28:00understand these types of reversals as
28:02well. So a synchronized reversal
28:05sequence, right, or just regular
28:06reversal has four steps. One, the triad
28:10trades into a key level like we talked
28:12about. It can be a swing high, a swing
28:14low, or a fair value gap. That's either
28:15going to be ERL or IRL. Right? Stage
28:18two, which is really important, is a
28:20two-stage CIC forms at that key level
28:24and creates that C2 or C3 swing
28:27formation that we previously studied.
28:29This is the unique element that we're
28:31going to focus on for our analysis. Step
28:34three is that we're going to see a form
28:37of strength switching away from that
28:39two-stage CIC. So that means the asset
28:42that manipulates higher or lower is
28:44going to give us some sort of strength
28:46switching signature that we discussed
28:48and we previously looked at some slides
28:49for. Finally, all assets are going to
28:52expand and reverse together. So let's
28:56take a look at some of these type one
28:58reversals. Okay, I'm going to use some
29:00examples here and then we're going to go
29:01into some chart examples later and this
29:03is really going to get drilled into your
29:04head. This is really the master class in
29:06reversals. And if you look at my trades,
29:0890% of my trades that are reversals look
29:11just like these prototypical examples.
29:13I'm not gatekeeping anything here. Um,
29:15if you have any questions, put them in
29:16the comments and I'll try my best to
29:18answer as many as I can. Okay, so step
29:20one, let's define a universal model.
29:23Here we have an order paired range,
29:25right? Some form of ERL to ERL. This
29:28could be any universal model. As you can
29:30see, we have a PSP confirming an SMT.
29:35This is a variant of that two-stage CIC
29:39that forms at the low of candle 2. Okay.
29:42So that means one asset in the triad
29:45into that key level forms this
29:47signature. Now because the two-stage
29:50forms when the PSP closes, we don't
29:54trade the candle too. We wait to trade
29:58the candle three once this candle
30:00confirms the low with a two-stage,
30:03right? and then we trade the
30:05continuation. So on these cases where
30:08PSP confirms SMT, I'll wait to see this
30:11candle close or in other times if I know
30:14it's going to close the PSP, I may enter
30:16in C2 if enough signatures are given.
30:20Specifically, if I have that Vshape and
30:22maybe a fair value gap continuation
30:24within candle 2. But typically speaking,
30:26I like to see the PSP candle close and
30:29then trade C3 is a continuation, which
30:32you can see right here is when the wick
30:34is formed. You have an order block and
30:36you can get involved, right? This wick
30:37is going to be formed based on these
30:38lower time frame dynamics. So if this C2
30:42is a, you know, 4hour candle, then we're
30:45going to look for that next candle C3 to
30:48open and come into a 1 hour 30 minute
30:51gap, right? Or opposing run and then we
30:53can trade away from that, right? So this
30:55would be the lower time frame.
30:58Okay, let's take a look at an example
31:00where I would engage C2. So this is a
31:02reversal expansion that I would want to
31:04get involved in. So in this case, we
31:06have price trading internal, right? We
31:09have nice reversal expansion with a
31:11relatively small wick and then a nice
31:13large body. And then we have a SMT
31:17confirming PSP. So this fractal down
31:20here right is created with a PSP for
31:23candle one SMT of candle one with the
31:27correlated asset in the triad. And now
31:29once I confirm that I see this strength
31:32switch signature maybe we here first
31:35maybe we expand higher and I can take
31:37entries in the order block or the cy or
31:40I can take a propulsion block inside
31:42this candle or wait for candle three and
31:44just trade a continuation. Right? These
31:46are always going to be the universal
31:48sequences, right? Reversal into
31:50continuation. But I will engage uh C2
31:54here. I will trade it if I have the
31:55right signature, which is going to be if
31:57this candle is a C2 reversal expansion
31:59candle. Okay. So this is going to be an
32:03example of SMT confirming PSP. And then
32:07here we have another example of this,
32:09right? Where we have an internal range
32:11of liquidity. We have a candle two
32:15closing as a PSP which validates the SMT
32:18with candle one. And in this case, like
32:20I said, I'll just wait, right? I'll wait
32:22for this candle to close for the
32:24reversal to print and just trade the
32:25continuation because that's when the
32:27two-stage is confirmed, right? The SMT
32:30when it sweeps out this low, if I get
32:32the expansion higher, I can say I want
32:34to trade this candle, too. But in the
32:36cases where the P I like to see the PSP
32:38close to validate that SMT, right? Um,
32:41and again, this is a preference of mine
32:42and it's something I use regularly,
32:44right? That hierarchy of waiting for
32:46candle 2 to close if it's a PSP. Um, I
32:49will do regularly.
32:51Okay. What about a two-stage SMT? So,
32:54we've gone through the PSP and SMT
32:55variance. What about a two-stage SMT? No
32:57PSPs. Well, let's take a look at this
33:00example here. We have another order
33:01paired range, right? External to
33:03external, and we get candle one
33:05diverging at the external low with one
33:08asset in the triad. Okay, so this could
33:10be a reversal candle here. And then we
33:13see C2 form a two-stage where this asset
33:16makes a lower low and the other asset
33:19makes a higher high, right? And this
33:21would be our two-stage divergence and
33:23strength switch confir confirmation. And
33:26what we want to see here is this
33:28expansion, right? Once we form the
33:30extreme of candle 2 with that two-stage
33:34SMT, right? we go to the lower time
33:37frame, whatever the lower time frame is
33:39and then we can take our entry inside of
33:41this candle or trade the continuation,
33:43right? Again, you can always do that and
33:45I'll have a video on this, right? Say we
33:46expand, we create a gap in here, maybe
33:49in the 30 minute or 1 hour and the next
33:51candle opens, right? The next 4hour
33:52candle opens into the gap and we create
33:54a fractal inside that gap. Very simple,
33:57right? We can take that in and candle
33:59two or candle three. So, what are some
34:02takeaways, guys? Right? This is the
34:03bread and butter of trading reversals.
34:05We want to filter candle 2, right, by
34:08price, by time, and by crack in
34:12correlation. If there is a small wick,
34:14we want to trade C2 as a reversal
34:17expansion. If there is a very large
34:19wick, we want to wait and trade C3
34:22because our invalidation
34:24is so far away with this large expanded
34:28or large protraction phase of price that
34:31we'd have to cover all the way to the
34:32low. That's where our stop loss wants to
34:34be. Our stop loss wants to be at the
34:36true invalidation, right, for the
34:37reversal. So, we'll just wait for candle
34:39three to form a continuation, which it
34:41often forms as a lower timeframe true
34:44reversal. That's coming. Okay, that'll
34:47come soon. Now, time filter. If there is
34:50sufficient time to expand, we want to
34:52trade C2, right, as a reversal. That's
34:55the second filter. And if there is
34:56insufficient time, we're going to wait
34:58for C3 to form its wick and then trade
34:59continuation. Now, the most important
35:02logic here in this hierarchy is crack
35:05and correlation. If there is a two-stage
35:07crack and correlation, whether it's SMT
35:10confirming PSP, PSP confirming SMT,
35:14right? What one of those variations, we
35:17can trade that C2 reversal. Now, if
35:20there is no two-stage crack and
35:22correlation, that's the variance where
35:24the precision swing point closes,
35:27validating the SMT. We're going to wait
35:30and trade candle 3 as a continuation.
35:32So, in the case of SMT confirms PSP,
35:36which is here,
35:38or a two-stage SMT, we're going to trade
35:42candle 2 as a reversal expansion if it
35:44has a small wick and sufficient time to
35:47expand. If it doesn't, we're going to
35:49trade C3.
35:51We're also going to trade C3 if the PSP
35:54confirms the SMT. So, these variants,
35:57okay, we're going to also trade C3. In
35:59those cases, if there's no two-stage CIC
36:02to confirm a swing, I will not be
36:05trading that fractal as it is not a true
36:08reversal.
36:09Screenshot this slide, guys, and make
36:11sure you study these mechanics. Okay,
36:13these invalidations are so pivotal in
36:17understanding when I trade reversals,
36:18when I trade continuations, and when I
36:20don't trade at all. Okay, let's talk
36:23about type two reversals which are going
36:25to be asynchronous in some sort or
36:28they're going to involve some opposing
36:29delivery SMT breaks. We're going to get
36:31into all of that. This is where we
36:33introduce asset synchronization. And I
36:36have two unique algorithms I'm going to
36:38teach you today. The first is foreseen
36:40distribution and manipulation. The
36:42second is middle asset SMT break into
36:46reversal. Those are both mouthfuls. So,
36:48let's talk about what they actually
36:49mean. I'm just going to take a sip of
36:51water.
36:56Okay, let's talk about asset
36:58synchronization, guys. So, with asset
37:00synchronization, the key dynamic to
37:03consider is failure to manipulate,
37:06right? And SMT breaks. So, in this case,
37:09we see the leading asset trade into a
37:13key level in the universal model. And
37:16this is said to be decoupled expansion.
37:19We're going to see algorithm one present
37:22itself when typically the 6 a.m. 4hour
37:25candle meaning when a stock market opens
37:28at 9:30 you generally see one asset
37:30maybe NASDAQ will expand in one
37:32direction maybe with the ES and the YM
37:34will expand the other direction. This is
37:36called decoupled expansion. So two
37:39assets move together one asset in the
37:41triad moves the opposite side of the
37:43range. This whatever asset fails to
37:46manipulate the key level whether it's
37:49the range high or the range low is said
37:52to be in foreseen distribution. What
37:55does a fail to manipulate really mean?
37:58Because at this point we don't know
38:01which direction the triad is going to
38:03go. Remember that critical point I made
38:05early on in the lecture. Assets expand
38:08in sync. When they're out of sync,
38:11they're manipulating. one or more assets
38:13is manipulating. So, we don't know which
38:15ones are manipulating until we see a
38:18failure to manipulate.
38:21This here shows the 6 a.m. candle on YM
38:25closing as a bearish 4hour candle. Okay.
38:29Into that key level, the gap. So,
38:31external to internal. We then see the
38:34other two assets run the external high
38:37forming SMT right with that range level
38:40and then form a bullish upclose candle
38:42and a bearish downlo candle. This is
38:45that crack in correlation that is
38:48forming to form the swing point. This is
38:50one variant, right? This is going to be
38:51the PSP and this is going to be the
38:54two-stage PSP. What's important to
38:57recognize in this algorithm is that the
39:00leading asset lower that distributed
39:03lower fails to reverse inside of the key
39:07level. Whereas the other assets which
39:10were manipulating show a reversal
39:13signature. What is that? It's a
39:15two-stage crack in correlation and
39:18they're manipulating a key level. Okay?
39:21So that signature of price is something
39:23you'll see time and time again when you
39:25see decoupled expansion. How can we look
39:28to break that or how can we look to
39:30break that SMT sorry and trade that? So
39:33as you see 6 6 a.m. closes at the low
39:37and fails to reverse and then 10 a.m.
39:39right is in continuation on this asset.
39:41But this asset is consolidating or
39:44retracing near the opening price new
39:46phase of price that's not reversal.
39:48while these assets expand lower to break
39:52the SMT. Look at this low. They're
39:54breaking this SMT, meaning they're
39:56catching up, which is a form of strength
39:59switching. So, in this case, I've shown
40:01you another example of what that trigger
40:02could look like. It could look like a
40:04two-stage PSP. It could look like a
40:06two-stage SMT with a two-stage PSP. It
40:10might just be, you know, a two-stage
40:12SMT. It could just look like this, the
40:14lower the high. These are all potential
40:16two-stage variants like we talked about,
40:18right? And the most important thing to
40:20recognize is the strength switching. The
40:22assets which trade higher in the range,
40:25right, switch strength and they trade
40:27lower. Look at this closure here, right?
40:30The assets that's bull, there's a
40:31bullish up close candle here into the
40:33key level. This is also a bullish up
40:35close candle into the range closes down.
40:37That's form of strength switching you're
40:38going to see on the lower time frame
40:40which will also be accompanied by maybe
40:42a faster CD maybe an imbalances that are
40:45forming right and this in this case
40:46you're seeing a PSP as a really obvious
40:49example right while this asset fails to
40:52manipulate
40:54this is an example of a typical trigger
40:56which we'll see all the time but it's
40:57going to be this four this is really
40:59like you can go and back test this this
41:00happens you know most of the time when
41:02we see this algorithm we see you know 6
41:04a.m. expand, right? Forming a PSP on the
41:07two assets that take out the highs.
41:09Obviously, we see the asset that was
41:11distributing lower, the foreseen
41:13distributing asset closes the down close
41:15candle. Then we form a two-stage PSP of
41:17some sort or a two-stage SMT. And then
41:19we catch up in the next candle. Look at
41:2110 a.m. expanding lower, expanding
41:24lower. And this asset really here is,
41:26you know, just holding in a holding
41:28pattern, waiting for these assets to
41:30break the SMT. Okay, so this is where we
41:33have reversals happening at different
41:35times or asynchronous, right? This asset
41:38already reversed. Now it's
41:40consolidating, retracing. These assets
41:42now need to reverse and that's why we're
41:43seeing a strength switch. Okay, let's
41:46take a look at what this looks like on
41:47the lower time frame, right? That's
41:48obviously important.
41:51As you can see here, once we have this
41:53initiation,
41:55the initiation is going to be that key
41:57level, right? and that foreseen
41:59distribution and manipulation. We're
42:01going to see this confirmation of that
42:02trigger, right? That manipulation with
42:05something on the lower time frame that
42:06looks like this. We're going to see the
42:07middle and lagging assets, the other two
42:09assets in the triad reverse, right? Look
42:11at them mechanically reversing after
42:13this two-stage crack is formed.
42:15Remember, we have a two-stage CIC.
42:17Whereas the lagging or the leading asset
42:20must consolidate or retrace a gap inside
42:25of this candle. What it does not what it
42:27cannot do guys is it cannot reverse
42:29itself. If this leading asset into that
42:32key level reverses this will be a
42:35regular type one SMT potentially right
42:37where price comes in forms a divergence
42:40at the range low and then we all trade
42:42higher. The failure to manipulate
42:45consolidation or retracement is what
42:47leads to the SMT break right that will
42:51eventually form as these assets expand
42:53and reverse right together.
42:56Okay, that's algorithm one. And I'll
42:58have a couple examples and I'd love to
42:59answer your questions on this because I
43:00get a lot of questions on it. It's
43:02really to do with the phase of price.
43:04So, pay attention to a manipulation or
43:06lack thereof at these levels, these
43:09extremes.
43:11And then we can use this slide here to
43:12really confirm what that looks like on
43:14the lower time frame once our Kraken
43:16correlation is established.
43:18What about algorithm two? This is an
43:21algorithm where we see the leading asset
43:24fail to manipulate a higher low. We see
43:27the middle asset breaking that SMT
43:30similar to the previous example. And
43:32then we see the lagging asset failing to
43:35break that high and all three assets
43:37reversing together. So this is called a
43:39middle asset SMT into reversal.
43:44Stage one, step one, the initiation,
43:47right? Always need initiation. We see
43:49the leading asset trade into a key level
43:51in the universal model. High or low
43:54imbalance. We see the middle asset form
43:56a failure swing that is deep in discount
44:00or premium. Okay, deep in discount or
44:02premium is very very key here. As you
44:05can see, this forms very high close to
44:07this high. We then see the lagging asset
44:10right form a larger range SMT. So now
44:13I'm going to introduce to you an
44:14advanced premium and discount sequence
44:16which is involved with this reversal
44:18type. So as the leading asset fails to
44:22manipulate the high, what does that
44:23mean? Let's recall. A failure to
44:25manipulate a new phase of price is going
44:27to be a consolidation or a retracement.
44:31As it fails to manipulate off that high
44:34in reverse, it fails to strength switch
44:37lower. We then see the middle asset
44:40break that SMT which formed in deep in
44:42this case right premium or discount and
44:45the lagging asset forms a very you know
44:49deep range SMT right this you can see
44:51here is quite a ways away in proximity
44:54from this high whereas this proximity is
44:56very close and then once this you know
44:59logic right this sequence forms we then
45:02see that two-stage cracking correlation
45:04form same ones we've been talking about
45:05right two-stage SMT two-stage CIC of
45:08some sort or involving a PSP and then we
45:11see expansion right that is synchronized
45:15remember assets are in sync for
45:17expansion and maybe out of sync here
45:20this is consolidating this is expanding
45:22this is retracing or consolidating they
45:25re-synchronize and expand together so
45:27what are we going to see a form of
45:29strength switching here's an example
45:30here a strength switch PSP for example
45:32and then expansion towards the low where
45:35we anticipate that the lagging asset,
45:37the one that didn't make the high,
45:39right, is going to hit its low first
45:41based again on proximity to that low,
45:44right? So, this is going to be a
45:45retracement into expansion. This is
45:47going to be a reversal and a reversal.
45:51Everything is primed for expansion now,
45:53right?
45:55So, this is kind of a schematic where we
45:57have that leading asset failing to
45:59manipulate above a key level. Then we
46:01get the [clears throat] SMT break. We
46:04get that strength switch and we get
46:06that, you know, deep or kind of spaced
46:08out SMT kind of here, right? The spaced
46:11out SMT was a term that uh GXT used and
46:14I'm going to use as well. I think it's a
46:16good way to call it between that
46:17reversal and that new high that's
46:19created in that premium discount
46:20sequence. And then as you can see right,
46:23we expand together. Now invalidation is
46:25going to be again if this SMT forms as a
46:28very very tight failure swing or if we
46:32fail to reverse after breaking the SMT.
46:35So here you can see we have invalidation
46:37right we need to see these assets
46:40reverse together not continue to kind of
46:42chop around consolidate or retrace. So
46:45that's the logic for algorithm 2.
46:49All right what are our key takeaways
46:51guys? We filter asynchronous reversals,
46:54right? These candle twos that reverse at
46:56different times or at different phases,
46:58right? By decoupled triad expansions and
47:02failure to manipulate assets that expand
47:04and then failed to manipulate. We can
47:06trade algorithm one if they're
47:08decoupled. Typically, it's 6 a.m.
47:10offering that decoupled move between YM,
47:13the NASDAQ, and the ES. Then at 10 a.m.,
47:15we get that fail to manipulate on the
47:17asset which expanded in the true
47:19direction. we get the two- stage and
47:21then the other assets reync after
47:23reversing and break the SMT right so
47:25sometimes it can be NASDAQ and ES which
47:27are the true direction of expansion and
47:29YM manipulates and sometimes it's the
47:31inverse what's key is the failure to
47:34manipulate right whichever asset
47:37fails to manipulate so say we failed to
47:39manipulate the high then maybe YM trades
47:41back into that key level right but since
47:44we failed to manipulate the low these
47:45two assets one they give us that
47:46strength switch and CIC that two-stage
47:49page are going to be catching up and
47:52breaking the SMT. Okay, what's the
47:54second key takeaway? If we fail to
47:56manipulate, we can also use premium and
47:58discount ranges or sequences, right? If
48:00we have a leading asset fail to
48:03manipulate a high such as this and put
48:06in a new phase of price and we have a
48:08premium or discount SMT forming, right,
48:11we can anticipate that we might get a
48:13algorithm two where the middle asset
48:16breaks the SMT and then we reverse.
48:18Recall that if the leading asset in any
48:21cases here, right? Say case one, if the
48:25leading asset in algorithm one reverses
48:28down here. Okay, so we see this large
48:31SMT, these lows, and then a strength
48:33switch and a reversal or in this case,
48:36we see price come into this high and
48:39reverse forming SMT. Then we're just
48:41going to trade it like a reversal type
48:43one, right? where we form SMT, we see
48:46the leading asset which made that higher
48:48higher lower low reverse and then all
48:50assets are going to expand. Where we use
48:52this asset synchronization logic is when
48:55the phase of price following that key
48:57level is not reversal. We do not see SMT
49:01leading to reversal. Remember going to
49:03flip around the slides a bit. Sorry for
49:05that. What do we validate SMT with? A
49:08strength switch, right? And a reversal.
49:10So if we do not see the manipula
49:12manipulating asset reversing then we can
49:14now assume that there will be some sort
49:16of SMT break logic whether it's
49:19algorithm one or algorithm two. Okay
49:22let's get into some chart examples. Okay
49:24I'm doing it all on a PowerPoint today
49:26just so we can save time. I know these
49:28lectures can get quite long and I want
49:29you guys to have you know something
49:30that's you know less than an hour so you
49:32can refer to it and really use this in
49:34your studying. I want it all to be in
49:35one place. I don't need you to join my
49:37mentorship. uh you know that's for
49:39access to me. This information I want
49:41you guys to have. Okay, so type one
49:44reversals. Let's take a look at how
49:45these form. So here's some just chart
49:47examples from trades I've actually
49:48taken, which is cool. So I can break
49:49down kind of trade recaps I've done.
49:52Here we have a daily erl to erl. Okay,
49:56we have a two-stage forming at this
49:58range low on one asset. Doesn't matter
50:00what it is, NASDAQ, ESM. I think today
50:02this one is ES. Then we see on the lower
50:06time frame this wick right that forms a
50:09two-stage on the daily
50:12is confirmed with a two-stage on the 4
50:14hour. The PSP confirms the SMT of this
50:18daily low.
50:20So what I want to do is I can now trade
50:23C3. Right? When PSP confirms SMT, we
50:27have this two-stage forming on the
50:29daily. We have this two-stage forming on
50:30the 4 hour. I can trade C3 towards the
50:33highs, external to external.
50:36Well, look at the look at the entry
50:38sequence here. So, that low right on
50:42this 4hour candle is created with a
50:4415minute two-stage and a PSP of its own.
50:49Again, we're just we're just using these
50:51time frames in continuity, right? We
50:53have a true reversal of this daily
50:55candle with a two-stage SMT. We have a
50:57true reversal of this 4hour candle with
50:59a two-stage PSP. And then we have a true
51:02reversal of this 15minute fractal in
51:04here which forms that 4hour low with a
51:06two-stage itself. What I do is I take an
51:09entry right here in C3 as we trade
51:12higher. Boom. Right. The PSP closes. We
51:14get a wick lower right into this order
51:17block. As you can see I buy it and we
51:20take it at the highs. Right. So SMT
51:22forms, PSP closes. Now I'm entering in
51:25C3 which is a continuation which again
51:26I'll do a lecture on in the future. You
51:28can see that logic for framing the
51:30reversal is very nice.
51:33Okay, what about this type one reversal
51:35where we have a two-stage SMT and a
51:39two-stage PSP as well, the highs. So,
51:41you can see this is a trade I took
51:43today. We have a 4hour market maker sell
51:45model and this true reversal of this
51:48daily high, right? Look, order paired
51:50range, the daily high to the daily low.
51:54We have a true reversal up there on the
51:554 hour and then we distribute lower.
51:58Right now look at this distribution
52:00here. We get a reaccumulation inside of
52:02a gap which I'll talk about in the
52:04future and then we expand lower and we
52:07fail to manipulate. That's going to be a
52:09continuation signature. Right? So we
52:11retrace and this is that redistribution
52:14fractal right in here. It was today I
52:15took it on ES. Look what happens here on
52:17the 4 hour. Right? We get a external to
52:21external 4hour move right here. Boom.
52:24Boom. Order paired range. That high
52:27right at 6 a.m. is formed with a SMT
52:33confirming the PSP. So that's a true
52:36reversal right in here. SMT confirms the
52:38PSP. I didn't trade this reversal
52:41fractal. I allowed it to form. Okay.
52:44Then look what happens after we get the
52:46SMT confirming the PSP up here. This
52:504hour candle is now in expansion. and I
52:53get a new internal swing which is a new
52:56true reversal. So I have a upclose
52:59candle here on the ES and down closed
53:01candles on NASDAQ and YM. I see an SMT
53:04confirming the PSP just like this. You
53:07can see here and I just take the five
53:08minute SSD down to these equal lows and
53:10towards the draw. So I could have traded
53:13the true reversal up here on the hourly
53:14right SMT confirming that 4hour PSP. I
53:18could have traded that with an hourly
53:19fractal. I just simply took the
53:22continuation later on in the day which
53:23was a new reversal, right? A higher time
53:26frame continuation.
53:29This candle in here is a lower time
53:32frame, right? Reversal fractal that
53:34forms here. So, we get more
53:35continuations, right? And this was a new
53:37six-hour candle. And you can go look at
53:39my Twitter for the exact six-hour high
53:41that was created with this two-stage.
53:43Very cool, right? Just like this 4hour
53:45high and daily high is created with this
53:484hour two-stage, we have this 6-hour
53:50high being created with this hourly
53:52two-stage. Right? So remember what I
53:54said, the extremes of market maker
53:56models. This is going to be internal to
53:58external. Right? Universal models are
54:01going to be created with a two-stage
54:04crack and correlation. That's how we
54:06know the swing has formed.
54:10Let's look at some type two reversals.
54:13Okay, so here we have a couple of
54:15examples a type one reversal. You can go
54:16look at my uh Twitter for like a hundred
54:19more. I want to keep this video a bit
54:20shorter, but um if there's enough
54:22demand, maybe I can do a back testing
54:23session on YouTube where we go through,
54:25you know, types of, you know, type one
54:26and type two reversals. We go through
54:27several examples. Just let me know in
54:29the comments, right? Give me a like uh
54:30if you enjoy this stuff and I'd love to
54:32make more content like this. Okay,
54:35algorithm one. What do we notice here?
54:38Well, we really have right out of phase
54:41or out of sync markets. We have the Dow
54:43Jones expanding to this range high,
54:46right? The S&P near its OTE. This is the
54:49daily chart. And we have NASDAQ, right?
54:51Forming a bearish down close candle
54:53after forming this SMT fill. Very
54:55interesting. You can see these are out
54:56of sync, out of phase. Now, look at what
55:00happens on the lower time frame this
55:01day. So, we see that we have a 6 a.m.
55:05right expansion that forms the high on
55:10NASDAQ and YM with the PSP. Remember
55:13this 4hour candle? I don't show the YM
55:15here. Sorry, I shouldn't. The YM here
55:17forms a bullish up close candle. Okay,
55:19so imagine YM has a 6 a.m. bullish uplo
55:22candle like we talked about in algorithm
55:23one. This 6 a.m. candle closes with the
55:26ES and the NASDAQ in foreseen
55:30distribution. Okay. So in this case it's
55:33not YM trading lower. It's ES and NASDAQ
55:36trading in the true direction of the
55:38daily candle which is towards this
55:39internal. Okay.
55:42Now at 10:00 a.m. right we have NASDAQ
55:46failing to manipulate
55:49this low. The same low that we see right
55:52here on the ES failed to manipulate.
55:55Okay. And we have a lower draw in
55:56liquidity. So we can trade ES as the
55:59middle asset once we see YM reverse.
56:04Well, look at this logic. Look at YM. So
56:06YM as it expands higher. You don't see
56:09the 4 hour, but that 4 hour candle
56:10closes right here, it forms a two-stage
56:15PSP on the 4our chart. Okay? So 10 and 6
56:20a.m. diverge. Then what we see is we get
56:23an SMT fill signature on the ES and this
56:27candle here which is higher in the range
56:31right it's higher in the range on this
56:33close to this internal draw higher in
56:35the range because NASDAQ already took it
56:37and failed to manipulate it forms a
56:40strength switch PSP remember we talked
56:42about that down close candle up close
56:44candle and look SMT confirms the PSP
56:49look at that variant I taught you Right,
56:51we can trade what once that SMT fill
56:54confirms the PSP, we take an entry on
56:56the one minute and we hold all the way
56:58to that SMT break level. Meanwhile, YM
57:02is reversing, right? YM is going from
57:04the high of its range back internal. So
57:06everything is realigned and we get that
57:08strength switching of YM and the ES
57:12become weaker. NASDAQ, which came into
57:15the lows, look, you can see this candle,
57:17it's consolidating, right? it starts to
57:19consolidate here while these other
57:21assets play catch-up. Let's look at
57:23another example. Okay, so this is
57:25another algorithm one example. So, we're
57:26going to look at that 6 a.m. and 10 a.m.
57:28candle. What do we see here at 6 a.m.? 6
57:31a.m. on the YM creates a two-stage PSP.
57:36What's the What's the universal model?
57:39External external. Okay, 4hour high, 4
57:42hour low, order paired range in here.
57:44Look at these failure swings. Okay, so
57:46now YM and NASDAQ form this two-stage
57:49PSP at 6 a.m. Now 10:00 a.m. opens.
57:53NASDAQ is failing to manipulate this
57:56high, the range high. Look, it's failing
58:00to manipulate it. Okay, so now YM can
58:03play catch-up while NASDAQ continues to
58:05expand. YM as the lagging asset can
58:07break the SMT. I just need to see what
58:10Well, I have my two-stage PSP, right?
58:13This is where PSP confirms SMT. So now I
58:18can trade this candle here as a C3,
58:21right? Remember, we wait for this to
58:23close. We wait for this to close and now
58:24we can trade C3. We don't need to see
58:26this low swept, right? That low could be
58:28a protected low as long as we get a
58:30strength switch. Now look at this. This
58:32is why I'm on the 30 minute. So that low
58:35right down here at 9:30 before 10 a.m.
58:37opens is a PSP with NASDAQ forming SMT.
58:42Then 10 a.m. look at this. It opens.
58:45Okay. And we have that SMT break level
58:47right up in here. It opens and I'm
58:49waiting to get involved. Right? So you
58:51can see I have no opportunity to get
58:53involved at 10. It just opens and
58:54immediately trades higher. Then I need
58:56to see a form of strength switching
58:57because look NASDAQ also opens and
58:59immediately trades higher. What we do is
59:01we create a PSP
59:05and this is a candle which is higher in
59:07the range forming a down close
59:10accumulation. Well, this asset expands,
59:13right? This asset is down close
59:15retracing. So, this is a consolidation.
59:17This is a retracement. Then we form a
59:19two-stage PSP, right? NASDAQ sweeps out
59:22that low. YM does not. I take an entry
59:26as soon as we close here. Right inside
59:29that, I take an entry right at that uh
59:32change state delivery and I hold for the
59:33SMT break. So, what's the algorithm? NQ
59:36failed to manipulate the 4 hour high.
59:38Right? We talked about it. fails to
59:40manipulate these highs, this imbalance
59:42failing to reverse here. It forms a
59:44two-stage strength switch PSP and then
59:48we reync and we expand together. Look,
59:50we consolidate here while this asset
59:53expands. Okay.
59:56Really interesting breaking this SMT
59:58here. Okay. Okay. Let's look at trading
1:00:00the manipulation phase. When you
1:00:01understand this, you can now start to
1:00:03trade the manipulation phases of price
1:00:05as well. So in this case, you can see in
1:00:08this example, we have a relevant low
1:00:10taken, a relevant low taken. We don't
1:00:11have a true reversal down here yet, but
1:00:13you can see we have a mechanical C2
1:00:15closure and we have this all-time high
1:00:18level. Okay? Right? Look at this
1:00:19all-time high level. And today on this
1:00:22day, we traded the manipulation phase.
1:00:24So that 6 a.m. candle going in opposing
1:00:26directions, we traded that. So look at
1:00:28the 6 a.m. candle. NASDAQ forms its high
1:00:31of day with that two-stage PSP, right?
1:00:36PSP. SMT confirms PSP. That's the high
1:00:40of day. So, NASDAQ's trading from its
1:00:42external daily high back into the range.
1:00:44Look at equilibrium. External to
1:00:46internal. Remember, it has to be a
1:00:47universal model. So, 6 a.m. reaches into
1:00:50this fair value gap going from internal
1:00:53to external. Now, look at YM. At the
1:00:55same time, YM is doing the exact
1:00:58opposite. YM is expanding from this
1:01:01two-stage formed the low, right? Well,
1:01:03this formed the high. This formed the
1:01:05low. And now we can expect 6 a.m. and 10
1:01:08a.m. to do exactly the first part of
1:01:09algorithm one. Remember, recall what's
1:01:11the first step in algorithm one.
1:01:14Typically 6 a.m. is a decoupled
1:01:16expansion. 10 a.m. reyncs. So on this
1:01:19day, I'm trading that 9:30 open as that
1:01:23decoupled move. Okay, right here, this
1:01:26is 6 a.m. This right, this body is at
1:01:289:30. Okay, before 10 a.m. resyncs
1:01:30price. Well, how is it going to resync?
1:01:32We're going to take out the alltime high
1:01:34and then this asset's going to either a
1:01:36fail to manipulate and we'll trade
1:01:38higher or it's going to reverse and this
1:01:40asset will, you know, start to
1:01:41accumulate, right? The exact same logic
1:01:43we talked about in the other examples.
1:01:45Look at this 9:30. We're trading the
1:01:47manipulation phase because we understand
1:01:49that this dynamic supports 9:30 reaching
1:01:51higher and 9:30 reaching lower. I took
1:01:53both trades, right? We had a another
1:01:56two. I need a swing to trade. Right.
1:01:58Look at this. 9:00 a.m. PSP two stage
1:02:02right here. Right. There we go. We get a
1:02:04two-stage PSP and we sell off right
1:02:07here. Trade NASDAQ into its internal
1:02:09draw. What about YM? We get 9 a.m. right
1:02:13PSP SMT with the PSP. So, while NASDAQ
1:02:16trades lower here, we get that SMT
1:02:19confirming the PSP. And then we trade
1:02:20this higher. Boom. on YM all the way to
1:02:23the all-time highs as you can see. So,
1:02:25this is where you can trade the
1:02:26manipulation phase of price as well. And
1:02:28again, it comes from an understanding of
1:02:30what price is really doing when we're
1:02:32doing when we're doing opposing
1:02:33deliveries, right? When we have opposing
1:02:34deliveries, we're either going to be
1:02:38failing to manipulate a level and then
1:02:40reyncing or we're going to be reversing
1:02:42from a level. And when you understand
1:02:43that logic, you can trade manipulation
1:02:45phases of price. And what I suggest
1:02:47always to do is trade the resync, right?
1:02:51wait for that trigger and then trade the
1:02:53confirmation of the recynchronization.
1:02:55Same with this, right? Instead of
1:02:56trading the uh middle asset break, wait
1:02:59for the recynchronization and trade the
1:03:01expansion lower all in sync. Okay? And
1:03:04then when you get advanced, right, when
1:03:06you start to get more exposure to these
1:03:07types of trades, you can then start to
1:03:09trade manipulation as well. Okay? So,
1:03:12let's take a look at algorithm two,
1:03:14which is a bullish SMT break into
1:03:16reversal. I'm going to do two quick
1:03:18examples for you and then I'm going to
1:03:19leave you because I want you guys to
1:03:20have time to study this and you know ask
1:03:22questions, you know, interact with it.
1:03:24So, as you can see, we have this premium
1:03:26and discount range, right? The first
1:03:28thing that we do is we draw out this
1:03:30range for all three assets. Okay,
1:03:31there's this low and the external low.
1:03:34Now, the first step is we see the
1:03:36leading asset, which is asset two. It
1:03:38fails to manipulate the low. Look at
1:03:40this candle right here. Fails to
1:03:42manipulate this low. as it fails to
1:03:45manipulate this low. This asset, you can
1:03:47see it's in very close proximity to this
1:03:50low. It's pretty far away from this low,
1:03:52right? But it's still very close to this
1:03:54low. So, we can frame a SMT break of
1:03:57that specific low. Okay, that's what
1:04:01happens. And again, we're going to see
1:04:02that in the lower time frame. Again, you
1:04:03can look at the you can look at this
1:04:05example here. Sorry, I have to go
1:04:07through all my slides. My apologies. You
1:04:09can look at the lower time frames here
1:04:10to see the SMT break. It's going to be
1:04:12again some sort of swing formation and
1:04:13then we're going to trade higher. I'm
1:04:14just not showing you that swing
1:04:15formation on the lower time frame just
1:04:17for the logic of the algorithm, right?
1:04:19You go into your own charts and you can
1:04:21find examples. So here you can see we
1:04:23get that fail to manipulate and then we
1:04:24get this candle breaking the SMT. Now
1:04:26look at this. This asset trades into the
1:04:28range low and we form this PSP. So we're
1:04:31reversing here off the SMT break and
1:04:34we're reversing here off the external
1:04:36low. Look at this candle 2 closure. Now
1:04:39what's interesting is we have a strength
1:04:41switch observed by this PSP. So the
1:04:44asset that trades into the external low
1:04:46closes as a bullish reversal candle. The
1:04:47asset which breaks the SMT bullish
1:04:49reversal candle. Look at the asset which
1:04:51forms SMT at both of these lows. Asset
1:04:53three, it forms this premium discount,
1:04:56right? Deep range SMT. Now you might
1:04:59think, well, why is this not going to
1:05:01break? You said if an SMT forms near its
1:05:03low, it's going to break. Because of the
1:05:06strength switch. these strengths which
1:05:08confirms the SMT. This is a bearish
1:05:11closure while these are bullish
1:05:13closures. Then we see all assets expand
1:05:17to the external high. As you can see,
1:05:18this asset should break this high first.
1:05:20It's in closest proximity to this high,
1:05:21right? The external high is the leading
1:05:22asset higher. Now, we trust that this
1:05:25low will hold because we see a middle
1:05:28asset SMT break. Look at the logic.
1:05:31Asset one trades into the low, fails to
1:05:34reverse. Middle asset SMT break ERL to
1:05:38ERRL erl to ERL
1:05:42erl to ERL universal model all assets
1:05:45expand together with a two-stage Kraken
1:05:48correlation see that two-stage CIC where
1:05:51PSP confirms the SMT this is how you
1:05:54trust SMTs to form when you get that
1:05:56bullish SMT break of that middle asset
1:05:59you can trust this lag or this asset
1:06:01here which didn't take the lows to hold
1:06:03that SMT despite its proximity based on
1:06:06that strength switching in this
1:06:07algorithm. Let's see a bearish example.
1:06:10Right? So look, we come into this high
1:06:12on asset one. We fail to manipulate.
1:06:14We're putting in a consolidation.
1:06:17Okay, this is the weekly chart. And I'm
1:06:21not going to I'm going to spoil it. Uh
1:06:23if you go into your uh charts and you go
1:06:25find this exact example, it will be
1:06:26pretty easy to see. You're going to see
1:06:28that eventually once we form that low,
1:06:30just like in the previous example, we
1:06:32end up taking out the high, right? We
1:06:34trust that this SMT holds based on the
1:06:36same logic and it's on the lower time
1:06:37frames. You can go do that in your own
1:06:39time. Um you can see we have SMT break
1:06:42now of this high. So we fail to
1:06:44manipulate the same daily high. Then we
1:06:47start to consolidate the middle asset
1:06:49breaks the SMT and we get a strength
1:06:51switch PSP. So we get a two-stage SMT
1:06:55with that SMT break and the asset which
1:06:58trades the highest right here forms SMT.
1:07:01This asset forms a bearish downlo
1:07:04candle. This forms a bullish up close
1:07:06candle. And that's a strength switching
1:07:07PSP. Okay, look at this candle. It
1:07:09already took the high, already
1:07:11manipulated. So, it does not need to
1:07:12trade any higher. Then we see a reversal
1:07:16sequence that synchronized. Okay, so the
1:07:18same exact sequence failed to manipulate
1:07:20new phase of price. Okay, SMT break of
1:07:23the middle asset and then synchronized
1:07:25reversal. Look, this is a large range
1:07:27SMT and this should hit the range low
1:07:30first. Okay, very similar to this case,
1:07:33right?
1:07:35Key level fail to manipulate SMT break
1:07:38two-stage crack and correlation and
1:07:40strength switch, right? The strength
1:07:42switch PSP is right here. And then we
1:07:44can see that external low was taken,
1:07:46right? We're trading ex internal to
1:07:49external just like we were trading
1:07:50internal to external here. Okay, so
1:07:53that's today's lecture on reversals. I'm
1:07:55going to be making a lecture on
1:07:56continuations in the new year. Please
1:07:58let me know if this was helpful. Any
1:07:59support you guys give me truly helps
1:08:01out. I try and read as many comments as
1:08:02I can and I'll try and answer your
1:08:04questions. So, please put those below.
1:08:06And yeah, I really appreciate you guys
1:08:07uh tuning into this. Have a good one.

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