ICT Top Down Analysis & Daily Bias | Simplified + Trade Breakdown (Po3 & DRT) — Transcript

Full transcript

1. 0:00Imagine if you knew exactly where price
2. 0:02was likely to go and when it was likely
3. 0:04to move. No more staring at your chart
4. 0:06and second-guing everything. See, most
5. 0:09traders force a bias. They draw levels,
6. 0:12flip through time frames, look for
7. 0:14confluence, but deep down they're still
8. 0:15second guessing. What if you could build
9. 0:17a daily bias that actually made sense
10. 0:20from the higher time frames down to the
11. 0:22exact candle that confirms your entry
12. 0:24using DRT? In this video, I'm breaking
13. 0:27down a real trade from top- down
14. 0:29analysis to precise execution so you can
15. 0:32see how I anticipate the move before it
16. 0:34happens. Grab a notepad because I'm
17. 0:36about to drop a ton of gems in this
18. 0:38video from draw on liquidity to daily
19. 0:40bias and even a few gems on order
20. 0:42blocks, too. So, let's get into it. Here
21. 0:45we have the British pound and this is on
22. 0:48the daily time frame. Now if we're
23. 0:50presented with this chart, the first
24. 0:53thing that I want to do is I always want
25. 0:55to assess what has price previously done
26. 0:59and then I want to assess what is price
27. 1:02likely to do next. You see people get
28. 1:04that back to front. They try to look at
29. 1:05what price is going to do next and they
30. 1:08forget about what price has already
31. 1:09done. The advantage that we have of
32. 1:11these printed candles is that we can
33. 1:14already see what price has done and that
34. 1:16gives us a huge amount of information.
35. 1:18So our goal here is to predict what the
36. 1:22next daily candle is going to look like.
37. 1:24Essentially what we want to predict is
38. 1:27whether the next candle is going to go
39. 1:29higher or is going to go lower. Now how
40. 1:32do we actually arrive at that decision?
41. 1:36What can we use on the chart in front of
42. 1:38us to give us an insight into the
43. 1:41probable direction of that next candle?
44. 1:44Now, we don't even need that candle to
45. 1:47close higher if we anticipate it going
46. 1:50higher. And we don't need it to close
47. 1:53lower if we anticipate it going lower.
48. 1:56All we really want to anticipate is
49. 1:58what's the likely expansion of that
50. 2:00candle. Where is it likely to repric to?
51. 2:03So, let's first look at what price has
52. 2:06already done here. Now clearly we see
53. 2:10this rather large buyside imbalance
54. 2:13sellside inefficiency in the form of a
55. 2:15fair value gap to the left of the
56. 2:17market.
57. 2:18We can see that price has already
58. 2:21dropped lower and completely rebalanced
59. 2:25that inefficiency. Now before I go any
60. 2:27further to make things extremely easy
61. 2:30the algorithm is only really looking to
62. 2:32do one of two things. It's either going
63. 2:35to repric to an area of inefficiency in
64. 2:38order to rebalance like we've just seen
65. 2:40there or it's going to repric to an area
66. 2:42of liquidity. Now liquidity and
67. 2:44inefficiencies, they're totally
68. 2:46different things. And I see people
69. 2:48labeling their charts with this fair
70. 2:50value gap as internal range liquidity.
71. 2:53And that's not true. It's in internal
72. 2:55range and efficiency. They're two
73. 2:57totally separate things. And I'm going
74. 2:58to do a whole video on that at some
75. 2:59point. Now the second parameter is
76. 3:01obviously looking for areas of
77. 3:03liquidity. So if we have this
78. 3:05information behind us that price has
79. 3:07already rebalanced. We've seen it move
80. 3:10away higher and then we've seen price
81. 3:13drop back into that inefficiency. Now
82. 3:15this has left us a huge clue here. We
83. 3:18can see with the bodies of the candles
84. 3:20here that they're failing to close below
85. 3:24the consequent encroachment which is the
86. 3:26midpoint of that fair value gap. Now
87. 3:28this is really good information for us.
88. 3:31We can see here that two times on both
89. 3:34these candles it's failed to close below
90. 3:37that consequent encroachment. Now this
91. 3:39indicates strength. Furthermore here we
92. 3:41can see this down close candle is an
93. 3:44order block. When price drops into it
94. 3:47here do we see a reaction from that
95. 3:51order block? Absolutely. We see this
96. 3:54next candle trade higher. So already
97. 3:57we're looking at an environment here
98. 3:59that we're seeing support. We're seeing
99. 4:02that the market has already repriced to
100. 4:04an inefficiency. So one of the two
101. 4:06parameters has already been filled.
102. 4:09We're seeing strength in the market by
103. 4:11the bodies of these candles failing to
104. 4:14close below the fair value gap which has
105. 4:16now been balanced. And that's exactly
106. 4:18what we expect to happen. When we see an
107. 4:21area balanced, price has no need for it
108. 4:24to travel lower. and we've seen a
109. 4:26reaction from the order block. Now, what
110. 4:29other clues can we look for to give us
111. 4:31more conviction that we may be seeing a
112. 4:34bullish market here? Well, to do that,
113. 4:37we want to look left. Now, obviously on
114. 4:40this chart, there's a whole lot of
115. 4:42nothing to the left. Now, let's say for
116. 4:45hypothetical sake, these were our
117. 4:47all-time highs. And I get this question
118. 4:49asked a lot. What do we do in this case?
119. 4:51What do we aim for? Well, we assume that
120. 4:54price is going to continue higher until
121. 4:57proven otherwise. Now, there are
122. 4:59extensions and all that kind of stuff we
123. 5:00can do and I'll get on to that at some
124. 5:02point in the future, but in this case,
125. 5:04what we want to do on this chart is we
126. 5:06want to scrub to the left and we want to
127. 5:09get some more data. Now, over here, we
128. 5:12can clearly see that we have these
129. 5:16highs. Now, what's going to rest above
130. 5:18those highs?
131. 5:20Buy side liquidity, right? in the form
132. 5:22of retail buy stops. I refer to this as
133. 5:26a type two dealing range where we have
134. 5:29equal highs. Whenever I'm looking to do
135. 5:31my top down analysis, I'm always looking
136. 5:34at a higher time frame type two dealing
137. 5:36range because this is going to give me a
138. 5:38longerterm draw. And since I know that
139. 5:41the algorithm is going to repric to
140. 5:44areas of liquidity when we have equal
141. 5:46highs, I know there's a large pool of
142. 5:49buy side liquidity above those highs and
143. 5:51it's going to act like a magnet to
144. 5:53really draw price up to those levels. So
145. 5:56let's go back to our price chart above
146. 5:58the market. We can see those equal highs
147. 6:00in the form of that type 2 dealing
148. 6:03range. Now let's say this is all of the
149. 6:05information that we have. We have now
150. 6:08decided our bias is bullish. Therefore,
151. 6:12the next candle that prints in this case
152. 6:14on a daily time frame, we anticipate
153. 6:16that daily bias to be bullish. We
154. 6:20anticipate that the market is going to
155. 6:22reach for those highs. Does it need to
156. 6:25get there? Absolutely not. Those equal
157. 6:28highs are telling us is that that's
158. 6:29where the draw and liquidity is. Now, I
159. 6:31can trade in that direction on the lower
160. 6:34time frames. And I'm going to show you
161. 6:36an example of a real execution on a real
162. 6:38trade that I took. And I'm going to
163. 6:40break the whole thing down in this
164. 6:41video. So for now, my areas of interest
165. 6:45are going to be the previous daily high.
166. 6:48Now, that's a key liquidity pool. It
167. 6:50can't be hidden from you because it's
168. 6:53right there on the chart, right? That's
169. 6:54the previous daily high. We also have
170. 6:58the previous weekly high. Again, they
171. 7:02cannot hide these areas from you. We
172. 7:05know that there is going to be a pool of
173. 7:08buyside liquidity resting above these
174. 7:10highs. Now, when we have all of this
175. 7:13layered by side liquidity and we've
176. 7:16already seen the market turn around here
177. 7:18and form support and prices showing a
178. 7:21willingness to go higher and not showing
179. 7:24a willingness to go any lower, we have
180. 7:26now arrived at a daily bias. So this is
181. 7:30what it looks like on the hourly time
182. 7:32frame. We have our previous daily high
183. 7:35here and we have our previous weekly
184. 7:39high over here. Note what day of the
185. 7:42week that high forms on Thursday.
186. 7:46Now
187. 7:48notice what day of the week the current
188. 7:51low forms
189. 7:54down here on a Tuesday. So, we had the
190. 7:57high of the week on Thursday and we've
191. 8:00had the low of the week on Tuesday.
192. 8:03That's significant. That's algorithmic.
193. 8:05And now what that does is it allows us
194. 8:08to determine
195. 8:10the weekly dealing range. The high is
196. 8:13going to be our dealing range high where
197. 8:15we're going to find major buy side
198. 8:17liquidity and our Tuesday low of the
199. 8:19week is going to be our dealing range
200. 8:21low where we're going to find a major
201. 8:23pool of sellside liquidity. We can now
202. 8:25of course plot our DRT levels, the 75,
203. 8:29the 50, and the 25 DRT. Now, I could
204. 8:34talk about just this one chart for the
205. 8:36next hour, but I'm going to spare you
206. 8:38that. Let me tell you what I was looking
207. 8:40for when I was hunting a setup here. The
208. 8:42first thing I'm noting is the 12:00 a.m.
209. 8:45opening price, which is going to occur
210. 8:47on this candle over here. Now, if I am
211. 8:51bullish, if my daily bias is bullish,
212. 8:54what do we want to see the market do
213. 8:56first before it goes higher? That's
214. 9:00right. We want to see the market drop
215. 9:03lower. I don't know why it did that. I
216. 9:05want to see the market drop lower before
217. 9:08it goes higher. And that's exactly what
218. 9:11we see here. After 12:00 a.m., we see
219. 9:13the market turn around and repric lower.
220. 9:16What does it do? it drops below the 50
221. 9:20DRT level into a discount market raiding
222. 9:24sellside liquidity below the relative
223. 9:27equal lows to the left. Now notice how
224. 9:31the candle closes.
225. 9:34Does the body close below that 50 DRT
226. 9:36level? No. So this is indicating
227. 9:40strength here. Now, this is very typical
228. 9:42to happen, especially after we've
229. 9:44already raided a pool of liquidity to
230. 9:46the left. Every time this happens, price
231. 9:49wants to gravitate back towards a fair
232. 9:51price, which is going to be that 50 DRT
233. 9:54equilibrium level since it's a fair
234. 9:55price between the highest price and the
235. 9:58lowest price. It's like a reset point,
236. 10:00so to speak. Now, when I was seeing this
237. 10:03wick form, I was waiting for that hourly
238. 10:05candle to close. Now, remember, I'm
239. 10:07bullish, so this is fantastic for me.
240. 10:09After 12:00 a.m., I want to see the
241. 10:11market trade lower. Let's drop into a
242. 10:14lower time frame. In this case, we're
243. 10:16going to use the 15minut time frame. And
244. 10:18this gives us a little bit more detail.
245. 10:21So, we can see after 12:00 a.m. price
246. 10:24drops lower into
247. 10:28a buy side imbalance below the market.
248. 10:31Note the bodies. Are they closing deeper
249. 10:34below consequent encroachment of that
250. 10:36buyside imbalance? No.
251. 10:39Now, what else can you see here?
252. 10:43Well, notice that down close candle over
253. 10:47here.
254. 10:49This down close candle is a high
255. 10:51probability bullish order block because
256. 10:55of where it rests inside of the range.
257. 10:58It's nested inside of the daily fair
258. 11:02value gap. And a high probability order
259. 11:04block will generally have two things. It
260. 11:06will have an imbalance next to it and it
261. 11:11will have a pool of sellside liquidity
262. 11:15above it. In this case, we have both
263. 11:17conditions and we can see price failing
264. 11:20to dig deeper into that 15-minute buy
265. 11:23side imbalance. Then we see this candle.
266. 11:27Now, as soon as this candle trades
267. 11:29through the opening price of this down
268. 11:31close candle, we have something known as
269. 11:34a change in stayer delivery. I'm going
270. 11:35to do a whole video on order blocks at
271. 11:38some point in the future. So again,
272. 11:39please remember to like and subscribe.
273. 11:42Now, all of this is giving me clues that
274. 11:45the market wants to run higher. But the
275. 11:48cherry on the cake is this.
276. 11:51We can see here with a correlated market
277. 11:54like the Euro dollar, for example.
278. 11:57We can see that price on the British
279. 12:00pound has dropped below these lows. Now
280. 12:04the equivalent lows down here for the
281. 12:06Euro dollar, we can clearly see that the
282. 12:09market's having a hard time to get back
283. 12:11below those lows. This is indicating
284. 12:13relative strength behind this market. So
285. 12:17watch what happens next. We're going to
286. 12:19drop now onto a 5minut time frame. Now,
287. 12:22for those of you who have been through
288. 12:24my free webinar, which you can find
289. 12:26after downloading the ebook in the
290. 12:28description below, you'll know that I
291. 12:30talk more on power of three and I talk
292. 12:32about something known as the London
293. 12:33hour. It's a very specific period of
294. 12:36time inside of the London session
295. 12:38between 3:00 a.m. and 4:00 a.m. Like so.
296. 12:42Now, I really like to look for price to
297. 12:44turn around in this hour of time during
298. 12:47that London session. And you can see
299. 12:49here between 3:00 and 4:00 again
300. 12:52remember New York Eastern Standard Time.
301. 12:55You can see how we've formed this swing
302. 12:57low. As soon as this happens with the
303. 13:00analysis that we have already done with
304. 13:02the bias that I have arrived to that the
305. 13:04market is going to repric higher after
306. 13:07seeing the market drop after 12:00 a.m.
307. 13:09into a logical area of support at a
308. 13:13specific time with SMT behind this
309. 13:17trade. Now I want to look for an entry
310. 13:20and I'm going to use the exact same
311. 13:22process that I've taught in the DRT
312. 13:24model which you can find for absolutely
313. 13:26free on this very YouTube channel. I'm
314. 13:28going to link it up here somewhere. Now
315. 13:30let's move on and see what happens.
316. 13:33Now your eyes should go right to this
317. 13:37consolidation up here because we have
318. 13:41all of these equal highs and what's
319. 13:43going to rest above those highs? Buy
320. 13:45stops, right? So, we're going to have a
321. 13:47pool of buy side liquidity. Now, when
322. 13:49we're already bullish and we've seen a
323. 13:51radon stops below the lows, we want to
324. 13:53see price turn around and run for that
325. 13:57opposing liquidity pool. So, what are
326. 13:59these equal highs in terms of dealing
327. 14:01range? That's right. Again, it's another
328. 14:04type two dealing range. We can now, of
329. 14:07course, grade this range and get our DRT
330. 14:10levels. Now, the rules for the DRT model
331. 14:12state that we want to see price close
332. 14:15above the 25 DRT level. I call this the
333. 14:1825 DRT change in state of delivery. Now,
334. 14:21the true change in state of delivery
335. 14:22happened down here. But again, to make
336. 14:24things simpler and for extra
337. 14:26confirmation, I like to use that 25 DRT
338. 14:29level. As soon as this happened, I am
339. 14:31now looking for extra confirmation. And
340. 14:33I find that in the form of this
341. 14:37inversion fair value gap to the left.
342. 14:39Again, where does that inversion fair
343. 14:41value gap rest? And if you've been
344. 14:43following along with the DRT series, you
345. 14:45will know that the high probability
346. 14:47inversion fair value gaps form in the
347. 14:49leg that raise liquidity and at that 25
348. 14:53DRT level. So now watch what happens.
349. 14:56The market drops one more time into
350. 14:59consequent encroachment of that
351. 15:01inversion fair value gap. And I might
352. 15:03have to zoom in here, but you can see
353. 15:05this is where I took an entry. My stop
354. 15:07goes below this swing low. And where am
355. 15:10I going to target?
356. 15:13The buy stops above the type 2 dealing
357. 15:16range high. Note the next candle here.
358. 15:19It nails the discount low of that
359. 15:21inversion fair value gap. Watch what
360. 15:23happens next. we see price run higher
361. 15:26and close through that 50 DRT level. Now
362. 15:30again, if you've been through the DRT
363. 15:32model, when we see this, I like to move
364. 15:34my stop to break even at that 25 DRT.
365. 15:37And I'm going to show you an example in
366. 15:38a second here. Price then runs higher
367. 15:41again. We see it close through that 75
368. 15:44DRT. But not only on this 5minut time
369. 15:47frame, also on that hourly time frame as
370. 15:50well. price retraces lower after
371. 15:53rebalancing the inefficiency to the
372. 15:55left. And note the bodies here. See how
373. 15:59they're failing to get back below that
374. 16:0075 DRT level. Why is that? Because we
375. 16:04have the buy side liquidity. All it's
376. 16:06doing here is engineering more stops
377. 16:09because retail are going to look at this
378. 16:11as oh this is strong resistance. You
379. 16:13guys understand that we have a type two
380. 16:15dealing range above the market which is
381. 16:17layered by side liquidity. We also have
382. 16:20the previous daily high over here and we
383. 16:24also have the previous weekly high as
384. 16:26buy side targets. So when we see it
385. 16:28start consolidating below a type 2
386. 16:31dealing range high. All it's doing is
387. 16:33engineering more stops above the market.
388. 16:35We can see this confirmed here. It's
389. 16:38failing to drop below that 75 DRT level.
390. 16:41And then what happens next?
391. 16:44price runs higher, sweeping all of that
392. 16:47liquidity above that dealing range high.
393. 16:50It actually raises above the previous
394. 16:52daily high as well. But for me, this is
395. 16:55a very nice lowhanging fruit objective
396. 16:58with a 3:1 risk-to-reward ratio. This is
397. 17:00a very good trade. Look at my draw down
398. 17:02on this. Now, I trade on MT4. I put my
399. 17:07executions on Trading View because at
400. 17:10the end of every single day, I
401. 17:12screenshot this. I journal it and I have
402. 17:15my executions all in one place. And I've
403. 17:17done this for the last eight years
404. 17:18nearly. Now, unfortunately, I didn't
405. 17:20manage to get a screenshot when I had my
406. 17:22stop down here. So, I only managed to
407. 17:24get the screenshot when I went to break
408. 17:26even. Anyways, moving on. We can see our
409. 17:29next candle
410. 17:31how it printed. It actually ended up
411. 17:33running for the previous daily high.
412. 17:35That was our draw on liquidity, our
413. 17:36near-term objective. The previous weekly
414. 17:39high was also rated here as well. Now,
415. 17:42I'm anticipating some form of
416. 17:44retracement to run for those equal highs
417. 17:47and that type two dealing range to the
418. 17:49left. Does it have to do it straight
419. 17:50away? Absolutely not. When would my bias
420. 17:54change? It would change if we got below
421. 17:57this daily fair value gap on a closing
422. 17:59basis. In that case, I would no longer
423. 18:02be bullish on this market and I'd be
424. 18:04looking for a retracement below the 50
425. 18:06DRT or that equilibrium level on the
426. 18:09current dealing range. So there you have
427. 18:11it. This is how you do correct top-down
428. 18:14analysis. This is how you define a daily
429. 18:17bias. This is how you use type 2 dealing
430. 18:20ranges to determine a draw on liquidity.
431. 18:22When you understand that the market is
432. 18:24only likely to repric to areas of
433. 18:26inefficiency or areas of liquidity, it
434. 18:29makes the decision process and the
435. 18:31analytical process a whole lot easier.
436. 18:33When you understand what dealing range
437. 18:35we're operating in and how we can define
438. 18:38where the high probability arrays and
439. 18:40gaps will form inside of that range,
440. 18:42using it as a framework, it's extremely
441. 18:46powerful and it's something that I've
442. 18:47been using now for many, many years. And
443. 18:50I've made my money with this. And I
444. 18:52guess this is why I'm out here now
445. 18:53teaching it for free and why I've
446. 18:55decided to actually finally get onto
447. 18:56YouTube. And the response has been
448. 18:58absolutely incredible. I've had so many
449. 19:01students over these last few weeks share
450. 19:03chart examples with me, statements and
451. 19:05payouts, and this has actually made
452. 19:07everything click for them. And I really,
453. 19:09really hope it's clicked for you as
454. 19:10well. I'm going to give you a whole lot
455. 19:12more examples in the coming weeks. I'm
456. 19:14going to give you further studies on
457. 19:16dealing ranges, further examples of
458. 19:19different entry models, different timing
459. 19:21mechanisms. So, there's a whole lot of
460. 19:23really good stuff coming. So, again,
461. 19:24please like, subscribe. It'll really
462. 19:26help me out with this channel. And as a
463. 19:29thank you, I will continue to make these
464. 19:31kind of videos for you.