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Market Mechanics Ep 5: Market Structure — Transcript

by Brad Goh (The Trading Geek) · 8,916 words · 1,428 segments · language en · Watch on YouTube

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0:00You lose money trading because you
0:02cannot read the chart properly.
0:05You see price moving, but you do not
0:08actually know whether the market is
0:10bullish, bearish, or simply pulling
0:13back. So, as a result, you end up buying
0:15into weakness, selling into strength, or
0:19getting chopped up in the middle.
0:21But, my friend, once you understand
0:23market structure, the charts start
0:26telling a much clearer story. Literally,
0:30right before I sat down to record this
0:32episode for the Market Mechanics
0:34Mentorship Series, I just closed a trade
0:37making me about 399.4K
0:41using the exact same concepts which I'm
0:43going to walk you through over the next
0:4530 days. And you will realize that the
0:47foundation of all of these Market
0:49Mechanics concepts is within market
0:52structure. I'm going to break down
0:54market structure at a fifth-grade level
0:57so that you can start reading the market
0:59with more clarity, more confidence, and
1:02a whole lot less confusion. Welcome to
1:06episode three of the Market Mechanics
1:09Mentorship Series. Now, it's time to
1:12learn one of the most important
1:13foundations in trading, and that is
1:17market structure.
1:19Because before you can think about
1:20entries and exits, stop losses and take
1:23profits, liquidity concepts, supply and
1:26demand zones, you first need to know
1:29what the market is actually doing.
1:31So, like I promised, I'm going to break
1:33it all down at a fifth-grade level so
1:36that you can absorb everything and apply
1:39everything with ease and confidence.
1:42So, this is, to me, the order of
1:45importance in terms of Market Mechanics.
1:48Market Mechanics comprises of liquidity
1:50concepts,
1:52institutional concepts, institutional
1:54zones, order flow, market structure, a
1:57lot of these different concepts, but
2:00what lies at the foundation is market
2:03structure. So, I really can't emphasize
2:06the importance of market structure. It's
2:08so god damn important. You just got to
2:10learn it and not only must you learn it,
2:12you must master it.
2:14Because every other concept is built on
2:16top of market structure.
2:18So, please spend a lot more time in this
2:21lesson really digesting the concepts,
2:23synthesizing the information, [snorts]
2:25applying the concept, applying the
2:27principles over and over again until you
2:30get it, until you can read market
2:33structure with ease, until it feels like
2:35second nature to just identify structure
2:38and just determine the trend direction.
2:42Now, with that being said, I have a pen
2:44and some slides that I've prepared for
2:45you guys, right? So, you can expect some
2:48good old
2:50entertainment. Okay? So, first of all,
2:52what I'm going to do is that I'm just
2:54going to go through theory first, right?
2:55I'm going to go through the theory using
2:57all of these chart diagrams that I've
2:58prepared for you guys. Just going
3:01to make sure that you really understand
3:03the theory before we go on to the charts
3:04and apply everything, right? Later on,
3:07I'm going to map out structure and show
3:08you my entire top top process in terms
3:10of how I determine the trend direction,
3:13how do I actually map out market
3:15structure from top to bottom. But for
3:17now, just go through the basics. Even if
3:19you already know the basics, it's
3:21important for you to like just revise
3:23the basics.
3:24So, what is market structure? Market
3:27structure is the way price forms highs
3:30and lows over time.
3:32Basically, what it does is that it helps
3:34us understand the direction,
3:37the momentum,
3:38who's in control of price, and whether
3:40the market is continuing or shifting,
3:44right? Whether it's actually going up or
3:46reversing.
3:48At the simplest level, market structure
3:50is simply the pattern of highs and lows
3:54that price tends to leave behind when it
3:56moves.
3:58And those highs and lows will tell you
4:00whether the buyers are in control
4:02or the sellers are in control or neither
4:05side has
4:06any control whatsoever.
4:09Remember like what I mentioned in the
4:10previous lesson, at any given moment,
4:13the market can only move in three ways.
4:16It can either go up, down, or sideways.
4:20That's it. And in the uptrend, price is
4:23going to be creating your higher highs
4:25and higher lows, right? Where this high
4:27is higher than the previous high and
4:29this low is higher than the previous
4:31low, which signal to us that the buyers
4:33are in control. So, if we want to trade
4:36with this uptrend, we want to look for
4:38longs. And ideally, we want to look for
4:40longs at these lows right here.
4:43Now, you got your downtrend, which is
4:46price creating lower highs and lower
4:49lows. Once again, we call that
4:51because this low is lower than the
4:54previous low. This high is lower than
4:56the previous high. Not rocket science,
4:58guys, which means that sellers are in
5:00control of price. So, ideally, I should
5:02be looking to short.
5:05And then last but not least, we got the
5:06period of uncertainty where neither
5:08buyers or nor sellers are in control of
5:11price. So, as a result, there is no
5:13clear trend direction and the market is
5:15just moving sideways just like this.
5:18This tell us that both the buyers and
5:20the sellers are fighting for control.
5:23They are playing the tug-of-war where
5:25neither side seems to be winning.
5:27But eventually, as we know, using the
5:30concept of imbalance and balance, using
5:32the concept of order flow, eventually,
5:34the market will move to a state of
5:36imbalance and it break out of this
5:38consolidation either to the upside or to
5:41the downside.
5:42That's just the nature of price.
5:46Once again, just understand that at any
5:47given moment, price can only do one of
5:49these three things. It cannot move in
5:52circle, it cannot move zigzag, all
5:53right? So, yeah. Just just keep things
5:56simple.
5:57Now,
5:58this is the expectation versus reality,
6:02okay? So, this is what textbook show you
6:05how market structure looks like, right?
6:07Higher highs, higher lows, lower highs,
6:09lower lows. But in reality, the market
6:11looks something just like this, where
6:13there's a lot more structural highs and
6:16lows that is being created on the lower
6:19time frames, that is being created in
6:21the internal structure.
6:23So, it's important for you to understand
6:25the core principles of market structure,
6:28so this way you are never ever lost in
6:31live market conditions. Because you
6:33cannot expect this sort of price action
6:35to be present in real market condition.
6:37That's just fantasy.
6:39Because this is what the market tends to
6:41do, right? But like I said, if you just
6:44apply the same principles, which means
6:46in a bullish market structure, price is
6:48creating higher highs and higher lows,
6:50then you'll be fine, right? You will
6:52still be able to identify structure
6:53properly. So, using this example right
6:56here, let me map that up. So, price went
6:58up, creates a pullback,
7:01and then goes up there, holding a higher
7:02low right here,
7:04and then it continues higher, right? So,
7:06over here, this is like a minor
7:08pullback, right? But price continue
7:09going up even higher, right? So, this is
7:12the last low, and then this is the last
7:14high, and then this is where price
7:15starts pulling back again, and now this
7:18becomes the new high, which is much more
7:20higher than the previous high, and then
7:22later on it led to a break of structure
7:23to the upside again, giving us a new
7:25low.
7:26Now, I'm going to go through the concept
7:27of internal structure, where we talk
7:29about all of these tiny little peaks
7:31that is going on right here later on.
7:34But for now, just keep things simple,
7:37and just know that
7:38as long as you implement the principles
7:41that we are going to be teaching here,
7:43you will not be lost.
7:45So, yeah. And that's how break of
7:48structure is formed, right? The break of
7:50structure happens when price take out
7:53the last structural high in a uptrend
7:56and when it takes out the last
7:58structural low in a downtrend just like
8:00this.
8:01Okay, so that's what I can see. When
8:03price take out the last high, we got a
8:05break of structure. When price take out
8:07the last high, we got a break of
8:09structure. And then same thing in a
8:10downtrend price comes down and take out
8:13the low, we got a break of structure.
8:16When price take out the low, break of
8:17structure.
8:19And you want to expect a pullback after
8:21a break of structure because like I
8:23mentioned, the market has to move from
8:26phases of imbalance to balance to
8:28imbalance to balance. And applying that
8:30same concept right here, after a
8:32imbalance move to the upside where we
8:34just got a break of structure, we are
8:36expecting price to pull back and just
8:39balance itself out. So, as a result,
8:42it's going to start to lose steam and
8:44starts pulling back. So, this is a rule
8:46that I want you guys to remember, right?
8:48It's a fundamental principle on how
8:50price actually move.
8:52After a break of structure, you want to
8:54expect that price is going to start
8:56retracing or pulling back.
8:58This way, you are never entering way too
9:02late, right? Because once again, a lot
9:03of beginners, they tend to enter right
9:05here when the market has already made
9:06its move. And that's really because you
9:08don't understand this. Because if you
9:10understand this, then you will know
9:11that, "Okay, I shouldn't enter for a buy
9:13right here. I should just wait for price
9:15to pull back, wait for the pullback to
9:17be over, then I look for longs and trade
9:20the continuation
9:21of the move itself."
9:25So, that's what the bullish and the
9:27bearish market structure looks like.
9:29Let's talk about swing highs and swing
9:31lows. How do you actually identify valid
9:34swing highs and swing lows?
9:37So, in an uptrend, your swing high is
9:40basically the highest point that led to
9:43the swing low.
9:44That caused the pullback to start.
9:47The swing low is the lowest point that
9:50creates the break of structure and lead
9:52to the swing high.
9:54Okay, so using this example right here,
9:56we can obviously price see that price is
9:58in an uptrend. And if that's the case,
10:01how do we know that? We saw that price
10:03is creating higher highs and higher
10:04lows.
10:05Now,
10:06where is the swing high and where's the
10:08swing low then?
10:10Well, your swing high is the highest
10:12point that led to the swing low. So,
10:13quite simply put, is
10:15the highest point that price has reached
10:18before it starts pulling back.
10:21Before it starts retracing, that becomes
10:23our swing high. So, this is a swing
10:25high, this is a swing high, and this is
10:27a swing high. Because, once again,
10:28that's the highest high that price have
10:31reached before it starts pulling back.
10:33It's the peak of the mountain.
10:36And then, you got the swing low, which
10:38is the lowest point that creates the
10:39break of structure and led to the swing
10:41high.
10:42Okay, so in this case, is this the swing
10:44low? No. Is this the swing low? No. Is
10:47this the swing low? No. Is this the
10:48swing low? No. Why? Because it's not the
10:51lowest point that created the break of
10:54structure and led to the swing high. The
10:57keyword here is the lowest. So, that's a
10:59mechanical rule that you can actually
11:01use to identify the swing high and a
11:02swing low. Swing high is the highest
11:04point that led to the pullback to start,
11:07right? It's usually situated at the
11:09start of the pullback itself. And then,
11:11swing low is the lowest point before the
11:14continuation of the move itself. Right?
11:18So, when you're looking at a break of
11:20structure just like this, you can
11:22immediately identify your swing high as
11:24the highest high, you know, that caused
11:27the start of the pullback, and the swing
11:28low as the lowest point that caused
11:32price to break structure.
11:34Okay, so it's not going to be this low.
11:36It's not going to be this low because
11:37this low is higher than this low.
11:40And this low is higher than this low.
11:42Sorry, so in this case
11:44by definition, this right here would be
11:46the lowest low and that's the swing low.
11:48As simple as that. So once again, it's
11:50very important for you guys to have like
11:52this sort of mechanical rules in your
11:54trading system so that there's no room
11:56for guesswork or emotions whatsoever.
12:00In a bearish structure, same thing but
12:02you flip it upside down. Swing low is
12:04the lowest point that led to the swing
12:06high.
12:07Swing high is the highest point that
12:09creates the break of structure and lead
12:11to the swing low.
12:14So in this case
12:16this
12:17is the lowest point that caused price to
12:20start pulling back to create the new
12:22lower high.
12:24And then eventually price comes down and
12:26led to a break of structure to the
12:27downside and just continuing this
12:30downtrend.
12:31If that's the case, we can identify the
12:33swing high by trying to find the highest
12:36point that price has reached before it
12:39actually broke structure.
12:41So in this case, is this the highest
12:43high? No, it's not. Is this the highest
12:45high? No, it's not. This is the highest
12:47high. So as a result, this becomes my
12:49swing high and this becomes my swing
12:51low.
12:52And then I'm not able to identify my
12:55swing low until price starts pulling
12:58back.
12:59Okay, so once price starts pulling back
13:00just like this
13:02we can identify our new swing low.
13:06And then we cannot identify the swing
13:07high until price breaks structure.
13:10Right, so over here when price is doing
13:12this, I cannot identify my swing high
13:14yet. So this is still my previous swing
13:16high. So that stays exactly as where it
13:18is because price has not given us a
13:21break of structure yet. Until eventually
13:23price comes down, breaks structure
13:26taking out this low right here. Now,
13:29this becomes the new swing high because
13:31this is the highest high that creates
13:34the most recent break of structure and
13:37led to the swing low.
13:39Okay? So,
13:41that's just how the market structure
13:43actually works. Just to really drive
13:47that point home,
13:49you just want to make sure that you are
13:52sticking to these principles itself,
13:54right? So, in [snorts] this case, price
13:56goes up, pulls back, goes up, pulls back
13:59again, goes up, pulls back again, and
14:01then goes up.
14:03So, in this case, this is the break of
14:05structure.
14:07And once again, applying the same
14:09definition, swing low will be the lowest
14:11point that led to the break of
14:12structure. It's not going to be this
14:13low, it's not going to be this low, it's
14:15going to be this low right here.
14:17Okay? And then my swing high will be the
14:20highest point that led to the swing low,
14:22right? So, it's going to be this high
14:23right here since this is when price
14:25actually starts pulling back.
14:27So, this becomes my swing range, and
14:29this is the area that I want to focus
14:31on.
14:33I don't want to I don't care about what
14:34price is doing outside of this swing
14:36range.
14:37Because this is what price is doing
14:39right now in the present moment. So, I
14:42don't care about what price is doing
14:43right here or here or here. I only care
14:45about what price is doing within the
14:46swing high and the swing low itself.
14:49And all of that will change once price
14:51give us a new break of structure. You
14:54can see later on price gave us a new
14:55break of structure. Guess what? Now we
14:58reapply the same principles and we
15:00identify that this becomes the swing
15:01high, but the swing low is no longer at
15:04this point right here. Yes, been moved
15:07to this area right here. The most recent
15:10swing low is the most recent lowest
15:13point that led to the break of
15:15structure. So, this becomes the swing
15:17high, and this becomes the swing low,
15:19and this becomes the new swing range.
15:22Same principle right here on a
15:24downtrend,
15:26right? Swing high, swing low after break
15:28of structure, this remains as the swing
15:31low, and then this becomes the new swing
15:33high.
15:35Now,
15:36internal structure is everything
15:38contained between your swing high and
15:41your swing lows.
15:43Here's what I basically mean by that.
15:45After you identify your swing range,
15:48you will be able to identify your
15:49internal structure,
15:51which is why the first step is to always
15:54identify your swing range. And you do
15:56that by determining who is in control of
15:59price through mapping out of the market
16:02structure.
16:03Through mapping out your break of
16:05structure. If you see that we got a
16:07break of structure to the upside and
16:08price is creating higher highs and
16:09higher lows, obviously we are in an
16:11uptrend.
16:13If price has created a break of
16:14structure to the downside, lower highs
16:16and lower lows, we are in a downtrend.
16:19And
16:20that's the first step, right? Is to
16:21identify that so that we can define our
16:23swing range, which is the area in which
16:25we want to focus our attention on.
16:28In this case, this is the swing range,
16:30swing high, swing low.
16:31And this means that everything in
16:33between, all the structural pullbacks,
16:36retracements that you see within this
16:37swing range, is just internal structure.
16:41Okay, so once again, stick to the
16:42definition. Internal structure is
16:45everything contained between your swing
16:46highs and your swing lows. So in this
16:48case, price goes up, pulls back, goes
16:51up, pulls back, and then goes up.
16:53So if you look at this, this is price
16:55creating higher highs and higher lows,
16:58just like what we have seen on the
16:59higher time frame.
17:00But is this a swing low? Not really. Is
17:02this a swing low? Not really, because we
17:04have already identified that the swing
17:05low is right here.
17:07Okay, so that doesn't change whatsoever.
17:10So as a result, we can identify this
17:13thing that is going on in here as the
17:15internal structure. So this becomes the
17:18internal break of structure to the
17:19upside. Internal break of structure to
17:21the upside. And using and applying the
17:24same principles,
17:26the lowest low that led to the internal
17:28break of structure, this is your
17:29internal low.
17:31And then the highest point that led to
17:33the internal low, this becomes your
17:35internal high right here. So, internal
17:38high, internal low, and this becomes our
17:40internal range.
17:42This area right here.
17:45Okay? So, everything in between the
17:47swing structure is your internal
17:49structure.
17:51And the only way you can identify your
17:52internal structure is if you have
17:55identified your swing structure and your
17:57swing range.
17:59So, just to drive home this concept
18:02itself, I've given you another example
18:04that you can see on the screen right
18:05here.
18:07Once again, I think it's very important
18:09for you guys to really understand this
18:11concept because if you don't understand
18:12such a basic concept, later when you go
18:14into the charts and you try to map out
18:16structure, it's going to be extremely
18:18overwhelming and confusing.
18:22Ah.
18:23God damn. So, swing structure, this is
18:27what price is doing, okay? Price goes
18:29up, pulls back, goes up, pulls back, and
18:30then goes up just like this. Textbook
18:32swing structure, we already know that
18:34the buyers are in control of price.
18:36But let's zoom into this section right
18:38here. Okay? So, let's say this is on the
18:40higher time frame like the daily time
18:42frame.
18:43If you zoom in
18:45to the lower time frame, you look at
18:47price using a microscope, this is where
18:49you're able to see that this entire move
18:51that looks very nice and smooth actually
18:54looks like this on the lower time frame.
18:56Actually looks like this under the
18:58microscope.
19:00So, this leg right here
19:03represents this leg over here, okay? So,
19:06I want you guys to look at this side by
19:08side.
19:10So, swing low and swing high has been
19:13established using these purple dots.
19:15This is the swing low, this is the swing
19:16high, so this is the swing range. Which
19:18means once again, everything in between
19:20the swing range right here is your
19:22internal range. So, all of this is
19:24actually your internal range.
19:27Okay, all of this right here is your
19:29internal range, all of this is your
19:30internal structure.
19:32So, the internal highs and lows are
19:35demarcated by these red dots. All right,
19:37so swing high,
19:39swing low. Zoom in, this is the swing
19:42high, swing low, no change. Everything
19:44in between internal structure. So, price
19:47goes down, pulls back, goes down, pulls
19:49back, goes down. Now, this is the
19:53hallmark of a bearish trend direction.
19:57Price is creating lower highs and lower
19:59lows.
20:00This tell us that price is actually
20:02bearish right now on the internal
20:04structure. Why did price shift to
20:06bearish? Well, price shifted bearish to
20:09facilitate the swing pullback.
20:12What I just mentioned? I mentioned that
20:14after a break of structure, you're
20:16expecting, anticipating price to start
20:19pulling back.
20:20So, as a result, after this break of
20:22structure, price is going to start
20:23pulling back, which means that it's not
20:25shifting bearish so that the entire
20:27trend can reverse. It's just shifting
20:29bearish in the short term to facilitate
20:31the retracement.
20:33So, as a result, price is creating lower
20:35highs, lower lows right here. So, you
20:37can see this is the internal break of
20:38structure to downside. Same right here,
20:40same right here. And then eventually
20:42price shifted bullish, and right now
20:46we've got a market shift, which we're
20:47going to touch on late a little bit,
20:49where signal to us that there's a
20:50reversal in price, and this tell us that
20:53the buyers has take back control of
20:54price, the buyers has overwhelmed the
20:56sellers, demand has exceeded supply, and
20:59as a result price start creating higher
21:00highs and higher lows on the internal
21:02structure again.
21:05Okay, so continuing this move causing
21:07this break of structure on a swing
21:09structure, which is what you see right
21:11here.
21:13So, this tells you that the internal
21:15structure has to shift first before the
21:18swing structure actually shift.
21:20All right, so the internal structure
21:23must shift from bearish to bullish first
21:26before the swing structure can shift
21:29back bullish.
21:31That's what
21:33fractal means, right? Basically, price
21:36is fractal, which means that whatever
21:37happens on a higher time frame
21:39must first happen on the lower time
21:41frame itself. And you will see the same
21:43exact patterns across every single time
21:46frame. Right, you can see you apply the
21:47same concepts of mechanical market
21:49structure, the same principles, you can
21:51come to the exact same conclusion.
21:56So, our goal as traders is that we want
21:58to trade with the prevailing trend
22:01direction, because that determines the
22:03institutional flow of money. So, if
22:06price is giving us a bullish market
22:08structure, this tell us that
22:09institutions are looking for longs, and
22:11we want to trade with them rather than
22:12against them. Same thing, price is
22:15giving us a bearish market structure, we
22:16want to look for shorts.
22:18So, in this case in a bullish market
22:21structure, you want to trade from strong
22:24structure and target weak structure.
22:26So, I want to look for longs at all of
22:28these strong lows, and I want to target
22:31these weak highs. Now, the reason why we
22:33call them weak is because this is where
22:36the record structure happened. And the
22:38reason we call them strong is because
22:40this is where price is most likely going
22:43to hold the next time price comes back
22:45to that area right here. Right, to
22:48maintain this bullish trend direction.
22:51So, we want to trade from these strong
22:53lows, we want to enter for longs at
22:54these strong lows and target these weak
22:55highs right here. Same thing in a
22:58downtrend, we want to sell at the strong
23:00highs and target these weak lows over
23:02here.
23:05So, next is the concept of market shift,
23:08which tell us that there's a shift in
23:09structure, which tell us that there's a
23:12change in trend direction.
23:14So, in this case,
23:17price comes down,
23:19pulls back, and then goes down. Okay, we
23:21got a lower high, lower low, break of
23:23structure over here.
23:25And right now, our expectation is that
23:29if price were to continue bearish, come
23:31up here, pull back, create like a new
23:34lower high,
23:35and then comes down and take out the
23:37weak low, right? Continue this strong
23:39lower high and weak lower low dynamic,
23:44which tell us that the sellers are in
23:45control of price.
23:47But, in this case,
23:48what we have seen is that the buyers
23:50actually took back control of the
23:52market. How can we tell? We can tell
23:55when price actually went up there and
23:57take out the strong high, the strong
24:00lower high.
24:02So, breaking the cycle of the bearish
24:05downtrend.
24:07And bear in mind that it takes a lot a
24:09lot a lot of money for price to break a
24:11strong structure,
24:13right? Like, in order for price to come
24:15all the way up here and take out the
24:15strong high, it requires a lot of
24:17capital. Only institutions have the
24:20power to do that,
24:21right? Only a lot of liquidity and
24:23trading volume has the power to do that.
24:26So, in this case,
24:28this just tell us that the buyers has
24:30overwhelmed the sellers, demand have
24:32exceeded supply, and the trend direction
24:35has now shift up from bearish to
24:38bullish.
24:40Okay, and then later on, price create a
24:42new higher high and higher low, which
24:44tell us that right now price is in the
24:46in a uptrend.
24:48Okay, so when this high is stronger than
24:50the previous high,
24:52bullish structure. This low, So, higher
24:55than the previous low, bullish
24:57structure. Okay, so yeah, this is where
24:59we know that price is going to maintain
25:01bullish and then eventually this bullish
25:04trend direction runs out again. Price
25:06comes down, take out the last low, the
25:08last strong low giving us another market
25:10shift which prove to us that
25:12right now the trend has officially
25:14shifted from bullish to bearish and the
25:17whole cycle repeats itself over and over
25:20again as the market actively seek fair
25:23value.
25:26So, that's what market shift is about,
25:28right? Market shift basically tells you
25:31that the trend direction has changed. It
25:34signals a reversal, a shift in
25:37structure. And it pretty much tell us
25:39that
25:41the buyers has took back control of the
25:43price or the sellers has took back
25:45control of the price itself.
25:48So, this concept allow us to know when
25:50price is actually reversing.
25:54Now that you guys have understood all
25:55the theory, right? All the you have went
25:57through all the chart diagrams and you
25:59have kind of established the principles
26:00that define swing and internal structure
26:03and a reversal,
26:05it's time to go on to the charts and
26:07apply everything that we just learned.
26:09So, with that being said, let's go on to
26:11TradingView. So, when you open a blank
26:12chart just like this, you want to ask
26:15yourself these few questions for you to
26:17like just really determine the market
26:19structure and just determine the trend
26:21direction.
26:22Is the market trending up, down, or
26:24sideways? Where are the obvious swing
26:26highs and swing lows? Is price making
26:29higher highs and higher lows or lower
26:31highs and lower lows? Is this move a
26:34pullback or a reversal? Who is in
26:36control of price right now?
26:38So,
26:39just by applying the same mechanical
26:42principles that I just taught you, using
26:44the exact same systematic approach of,
26:47you know, swing low is here, swing high
26:48is here, break of structure is here, you
26:51should be able to come to a conclusion
26:54on like whether the buyers or the
26:55sellers are in control of price.
26:58So, what I'm going to do now is that I'm
26:59going to show you some examples. I'm
27:01going to do one using the chart that we
27:03have on the left-hand side right here.
27:05And then later I'm going to do a bar
27:07replay and show you using like this live
27:10market condition right here. So, let's
27:12go through the first example, right? So,
27:13let's look at a chart just like this.
27:16The first thing when you look at a chart
27:17just like this is that you want to just
27:19go and identify the most obvious break
27:22of structure. That's it. If you see
27:24price is like, you know, just going I'm
27:26just like this, go and find out where is
27:29the most obvious break of structure, the
27:31most significant break of structure. So,
27:33in this case, price went up, make a
27:35massive pullback, and then goes up,
27:37right? So, I can clearly see that this
27:39right here is my bullish swing break of
27:42structure.
27:44Okay? Bullish swing break of structure
27:46just like this.
27:47This also tell me that this is the
27:50lowest point that led to the bullish
27:51break of structure. It's not this low,
27:54it's not this low, but it's this low
27:55because this is the lowest point, and
27:57this becomes my swing low, right? And
28:00it's a strong low, right? Because we're
28:02actually in the uptrend right here. And
28:04then the swing high can only be
28:05identified once price actually starts
28:08pulling back, right? So, in this case,
28:10once price starts pulling back right
28:12here, this is the highest point that
28:13caused the pullback to start to happen,
28:15and this becomes my
28:17weak low.
28:19So, my expectation right now, looking at
28:22this bullish swing structure, is that
28:24I'm expecting price to, you know,
28:26potentially pull back, create like a new
28:29higher low right here, and then continue
28:30going up, take out the previous weak
28:32low, and just continue this bullish
28:34market structure.
28:36And this also tell us that if price
28:37comes down here and take out our strong
28:40low, this signal to us that the market
28:43has reversed from bullish to bearish.
28:46The sellers has actually took back
28:48control of price.
28:50Okay, so that's always the first step is
28:51to just identify the most obvious break
28:54of structure so that you can define your
28:57swing structure.
28:59And once you have defined your swing
29:00structure and you can clearly see that
29:02we are actually in a bullish trend
29:04direction right here, what you can do to
29:06go one step further is to define your
29:09internal structure.
29:11And like I said, internal structure is
29:13basically everything that's in between
29:15your swing structure.
29:17Okay, so I'm just going to hide this a
29:18little bit right now since we don't need
29:20it anymore.
29:21So the internal structure requires you
29:24to like just
29:25look at what price is doing within the
29:27swing range.
29:29So, let me just use like a purple
29:31highlighter to map out the the swing low
29:33and swing high in this example here.
29:35This is the swing
29:37high, right? Because that was the
29:39highest point that caused price to start
29:42making this massive pullback.
29:44And then this is the new swing low and
29:46then this becomes the new swing high
29:48that we have up here. All right, so this
29:50is the swing range. Swing high, swing
29:52low, swing high.
29:54And then everything in between right
29:55here is your internal structure, right?
29:57So if I'm zooming in here, right, the
29:58price action over here, what do I see?
30:01I saw that price has actually shifted
30:04bearish, right? To actually facilitate
30:06the pullback right here.
30:08So, this is just price turning bearish
30:11in the short term
30:13to retrace
30:15to fair value so that we can have more
30:17buyers to step into the market for price
30:19to continue going up.
30:21Okay? Just like remaining at this exact
30:24same time frame, I can clearly map out
30:26my internal structure, right? You can
30:29see just by looking at the candlesticks,
30:30you can see price goes up, pulls back,
30:32goes up, pulls back again, goes up,
30:34pulls back, creating all of your lower
30:37highs and lower lows and lower highs and
30:39lower lows.
30:41Right? So this is where you can also map
30:43out your internal break of structure.
30:45Right? So, in in this case, I can see
30:47once again, just
30:49keep things simple and go and map out
30:50the most obvious one. Right? So, this is
30:52the most obvious internal break of
30:54structure right here. And then there's
30:56another one right here. Very obvious,
30:59right? Price pull back, come down, take
31:00out the low, and just continue bearish.
31:03So, in this case,
31:05this
31:06becomes
31:08the swing internal high and internal
31:11low. Let me map that up for you guys
31:13with the highlighter tool again.
31:15Right here. Okay, so let me just map
31:18that up in like the red color just to
31:20show you guys this is the internal high,
31:23internal low,
31:24internal high, internal low.
31:27And this tell us that this is the most
31:30recent internal high. This is the most
31:32recent internal low until price starts
31:34pulling back. Once price starts pulling
31:35back, then I can pretty much define this
31:39right here as my new internal low, and
31:42my internal high remains there until
31:44that high gets taken out. Until we get a
31:47break of structure.
31:49So, in this case,
31:51forget about all of these move that has
31:53happened right here. If we were in this
31:55exact moment, right? Where these
31:57candlesticks was like down here, my
32:00expectation will probably be, okay,
32:01price is just going to continue creating
32:03lower highs and lower lows, just
32:05continuing this downtrend.
32:08And if price actually go up there and
32:10take out this high, this internal high,
32:13guess what we have? We got your market
32:15shift, which is a change in the trend
32:18direction.
32:20And it's indicated with a shift in
32:23structure, where price take out a strong
32:26structure and cause the entire direction
32:29to reverse, to change.
32:32So, in this case,
32:34internal high, internal low.
32:37Later on, demand over exited supply,
32:39buyers overwhelm the sellers. As a
32:41result, there was so much buy orders
32:43right here, so much buying volume
32:45causing price to rise significantly
32:48and taking out this last internal strong
32:51high. Internal strong lower high.
32:54Causing the market to shift bullish and
32:56this tell us that this pullback is over.
32:59And the short-term direction, short-term
33:01trend direction has changed from bearish
33:05to bullish again.
33:06And right now, this tell us that okay,
33:09cool. Internal structure is bullish and
33:11the swing structure is also bullish.
33:13Everything is aligned and now is the
33:15perfect time to look for longs.
33:17Once again, we're we're going to go
33:18through all the multi-time frame
33:20concepts and when to look for longs,
33:21when to look for shorts in the next few
33:24lessons. But for now, like I said, don't
33:26worry about entries, don't worry about
33:27exits. Just focus on mastering market
33:30structure. Just focus on reading price.
33:33So, let's continue to map out the
33:34internal structure. So, over here, we
33:36got a market shift, so I can map that up
33:39as my
33:41market shift right there.
33:42And then after the market shift
33:43happened,
33:45let's try to determine where is the new
33:47internal high.
33:49So, this is the internal low and just
33:51nice, if you look at the internal low,
33:53it's aligned with the swing low as well.
33:55Sometimes this can happen, right? The
33:57internal low can be
33:58at the exact same price point as a swing
34:00low, right? So, don't be surprised when
34:02that does happen.
34:03Price went up
34:05and it starts pulling back. So, now,
34:07this is the highest point that caused
34:09price to start pulling back. So, this
34:11becomes our new internal high.
34:13And then, where can we find our new
34:14internal low? Well, we try to identify
34:17where's the next break of structure on
34:19the internal structure. So, in this
34:22case, price went up, pulls back, goes up
34:24there, take out the internal high. Now,
34:26we got an internal break of structure.
34:28Now, we can identify the new internal
34:30high.
34:31Okay, and the new internal high is
34:33pretty much the lowest price point that
34:35led to this internal break of structure.
34:37And in this case, it's going to be this
34:38low right here.
34:40Okay, so now
34:42this becomes the new internal range,
34:44right? Like
34:46this internal high and this internal
34:47low.
34:49And that's the range that we want to
34:51focus on.
34:52And then eventually, you can see the
34:54market start shifting bullish on a swing
34:56structure when price actually come up
34:58there and take out the swing high that
35:01we have on the left-hand side. And when
35:03price take out a swing high just like
35:04this, we know for a fact that price is
35:06going to just continue going up until it
35:09creates a new high. And we also know
35:11that at some point of time, it's going
35:13to start pulling back.
35:15So, we should anticipate
35:18a
35:19pullback to happen anytime soon after
35:21the break of structure happen.
35:24All right?
35:25So,
35:27right here, this is where price starts
35:29pulling back, okay? Price goes up and it
35:31starts pulling back.
35:32Now, at this point of time, I want you
35:34to like just ask yourself,
35:36is this move a pullback or a reversal?
35:39How do we know whether it's just a
35:41pullback for price to, you know,
35:43retrace, pause, catch a breather before
35:46continuing going up?
35:48Or whether it's actually like a real
35:51reversal where the trend direction is
35:53really shifting bearish and right now
35:54the swing structure is going to change
35:56from bullish to bearish and right now
35:58price is just going to absolutely
35:59collapse what he has done right here.
36:01How do we know?
36:03Well, we don't.
36:05We don't know until price actually break
36:08structure.
36:09Okay? So, a pullback is a temporary move
36:14against
36:15the swing structure, against the higher
36:17time frame trend direction. And the
36:19reason why the pullback occurs is
36:21because it needs to find fair value so
36:24that it can get more fuel for it to
36:26continue going up.
36:27A reversal is when the market actually
36:31shift direction.
36:32It's when the market actually shift from
36:34bullish to bearish.
36:35And a reversal only happen when there is
36:38a market shift.
36:40Remember just now what we talked about
36:41the market shift?
36:43Right? The market shift indicates to us
36:45that the market is reversing.
36:47And in this case right here,
36:49where is the market shift going to
36:51occur? Because if the market shift
36:52occur, then that tells that the entire
36:54trend is reversing.
36:56Well, we are in a bullish trend
36:58direction,
36:59and this is the strong low.
37:02So,
37:03in order for the trend to shift from
37:05bullish to bearish, price needs to come
37:07down and take out the strong low, giving
37:09us the market shift.
37:10So, in this case, if price starts, you
37:12know, starts going down just like this,
37:14this doesn't necessarily mean that price
37:17is actually reversing. It could simply
37:19means that price is pulling back to the
37:21fair value, creating a new higher low
37:22right here for price to continue
37:24bullish.
37:26But, if price were to continue bearish,
37:29keep on coming down, and it comes down
37:31and take out the 4-hour swing low that
37:35we have on the left-hand side, the
37:36strong low that we have on the left-hand
37:38side right here, this could be the first
37:40sign that tell us that the market is
37:43officially shifting bearish because we
37:45just got a market shift.
37:48So, that's where we know for a fact
37:50that, okay, the market is actually
37:51reversing.
37:52The reason why I want to briefly cover
37:53this is because a lot of beginners, they
37:55tend to get trapped because they think
37:57that every pullback is a reversal.
38:00When in reality, it's just
38:03a pause in price before it can continue
38:06going up or down.
38:09So,
38:10pullback versus reversals. Right, so in
38:13this case,
38:14you can see
38:15Another thing I want to point out is
38:16that the internal structure starts
38:18shifting before the the structure starts
38:21shifting. So, in this particular
38:23example, we know that
38:25price actually came down to got this
38:274-hour swing low right here, right?
38:29Giving us a market shift.
38:31But before this market shift happened,
38:33we actually got a internal market shift
38:35right here.
38:36Because if you look at the internal
38:37structure, once again, by definition,
38:39it's everything in between the swing
38:41lows and the swing highs,
38:42you will see that we actually got a
38:44market shift right here. All right, so
38:46let's once again take things one step
38:48further, right? Let's not get ahead of
38:50ourselves. Let's just go back to this
38:53area right here. This was the last
38:54internal break of structure, and then
38:56later on, price went up there,
38:58pulls back, goes up, pulls back, and
39:00then goes up, right? That's what the
39:01price action is showing me. So, as a
39:03result, I can map this up as my new
39:06internal break of structure right here.
39:09Which means that I can also identify my
39:12new internal high
39:15and internal low.
39:17Right, so in this case,
39:19you can either mark this as your
39:21internal high or this one right here.
39:23Uh in this case, just to stick to the
39:25mechanical rule, I'm just going to mark
39:26the internal high right here, and then
39:28the internal low will be over here. And
39:29this is where if I want to refine it,
39:31this becomes my internal break of
39:32structure right here.
39:35So,
39:36if price comes down and take out this
39:39low right here, this will tell us that
39:41the internal structure is shifting from
39:44bullish to bearish. And that could be
39:47the first sign that tell us that price
39:48is going to start pulling back. It's not
39:50going to reverse yet because price has
39:52not take out the swing low, but it has
39:53take out the internal low, which tell us
39:55that the pullback is potentially going
39:56to happen.
39:57So, in this case, price comes down,
39:59right? Later on, comes down and take out
40:02the internal low, giving us the internal
40:04market shift.
40:06So, this becomes internal market shift.
40:08Let me just put a I beside it to make
40:10things even more clearer for you guys.
40:12Right, so this is the internal market
40:13shift. And you can see, the internal
40:15structure shifted bearish first before
40:18the swing structure actually shifted
40:20bearish.
40:22Once again, this is what I mean when I
40:23said that price is fractal. Whatever
40:25happens on a higher time frame must
40:27first happen on the lower time frame.
40:29As above, so below. As below, so above.
40:34And then later on, you can see internal
40:36structures that are shifting bearish,
40:37right? So, once again, map out all of
40:39these internal break of structure right
40:41here.
40:43And here, and you can identify your
40:45internal lows right here.
40:49And here, the highest point,
40:52lowest point,
40:53and then later on, price came down and
40:56give you us a market shift.
40:57Okay, so hopefully by now you guys
41:00should have a very clear understanding
41:01of how to define your swing structure
41:04and your internal structure. If not, let
41:07me just quickly give you guys another
41:08example where we can maybe map out the
41:10charts live, right? So, let's go back to
41:13like a random point in time like right
41:14here. Okay, so over here, this is where
41:16the market structure has officially
41:18shifted bearish, right? And the internal
41:20structure is also bearish. So, once
41:22again, draw your internal range. So, in
41:25this case, this was the last internal
41:27high,
41:28right? So, I'm just going to map that
41:30right here.
41:31And then, this is the new internal low,
41:34right? But, we actually got an internal
41:37break of structure to the downside right
41:38here. So, let me erase that, put that
41:41right here, internal break of structure.
41:43So, this means that the internal high is
41:46no longer at this point right here. It's
41:49been moved to this new internal high
41:52that we can establish right here, which
41:54is the highest point that led to the
41:55internal break of structure. So, now
41:57this becomes the new internal high. And
41:59then, where's the internal low? Internal
42:00low is the lowest low
42:02that caused price to start pulling back.
42:04So, in this case, it's going to be this
42:06low right here.
42:07Okay, so that becomes the internal low.
42:11And now, ladies and gentlemen, this
42:13becomes the internal range where we are
42:15focusing on.
42:18So, once again, our expectation right
42:19now is that price is just going to
42:20continue bearish, right? Price is going
42:22to come up here, pull back to this high,
42:24and just continue going down.
42:26Now, this is another example
42:30or another confusion that a lot of
42:32beginners have. Does this count as a
42:33break of structure? You can see the
42:35candlestick wick they clearly took out
42:37the last high.
42:39No, this doesn't really count.
42:41In order for a break of structure to
42:42happen, the candlestick body must close
42:46above the high or below the previous
42:48low.
42:49Write this down somewhere. You must get
42:51the candlestick body close, right? So,
42:53in this case, price came down, pulls
42:56back, this is the low.
42:58And notice what price does when price
42:59approaches this low.
43:01And take out that low. Look at this
43:03candlestick here.
43:05The candlestick body closed below the
43:08previous low, right? It closed right
43:09here.
43:11When in this case,
43:12the candlestick body did not close above
43:15the previous high. You can see all of
43:16this is just candlestick bodies closing
43:19like somewhere around here. And the
43:20candlestick wick they did break out the
43:22high, but it did not close above the
43:24high.
43:25So, you want to have this sort of like
43:26mechanical rule in your system, right?
43:28So, if you got a wick break, it does not
43:30constitute as a valid break of structure
43:32or a valid market shift.
43:34You need a candlestick body closure.
43:37We're going to talk about Japanese
43:37candlesticks in the next lesson, but for
43:39now, just understand that
43:42that that rule that I just laid out
43:44right there is very, very important
43:46for you to just discern whether the
43:48pullback
43:49or the reversal is actually valid or
43:51not.
43:52Okay, so in this case, price comes down
43:53here, giving us another break of
43:55structure to the downside, right? You
43:56can see the minute price breaks
43:57structure, don't waste time, take your
43:59internal break of structure, put it
44:00right there, and move your internal high
44:03from here to here.
44:05And then, now this becomes the new low,
44:07the new internal low.
44:10Okay, and then later on, price started
44:12reversing, right?
44:14So, we are playing within this internal
44:16range right here, and then later on,
44:18price starts, you know, consolidating
44:20here a little bit. This is an example of
44:23a sideways market, where price is within
44:25the swing high, swing low, within the
44:28internal high,
44:29internal low. It's not going to the
44:31downside because it has not taken out
44:33this low. It's not going to the upside
44:35since it has not taken out this high.
44:37It's just going sideways just like this.
44:40So, as a result, this is where the bias
44:43is unclear. Once again, the buyers and
44:44the sellers are actually playing a
44:46tug-of-war right here.
44:47So, nothing happens.
44:49Boom. Eventually, price went up there
44:52and take out this 1-hour strong high.
44:55Now, what does this mean for us? This
44:57means that the trend direction has just
45:01shifted bullish.
45:03Because price is literally gotten so
45:05much buying pressure, so much buying
45:07momentum that it causes
45:10price to actually went up there and take
45:11out a strong high.
45:14If price were to remain bearish, it has
45:15to continue
45:17going down, coming up, respecting the
45:19last lower high, maybe creating like a
45:21new lower high right here, and then
45:23later on go down and just continue
45:24bearish just like this. But in this
45:26case, that did not happen. Right, what
45:29did happen was that price went up there,
45:30take out the high, giving us a market
45:32shift.
45:33And the minute this happens,
45:35>> [snorts]
45:36>> this is where, you know for a fact that
45:38right now, the trend has officially
45:39shifted bullish.
45:41And right here, you can see
45:44that what we have over here is price is
45:46just starting to create higher highs and
45:48higher lows, higher highs and higher
45:50lows. Right, so we can potentially map
45:52this up as the new internal break of
45:54structure, and then there's another
45:56internal break of structure right here.
45:58And if I were to actually map out my
46:01internal structure again,
46:03this was the last internal high, last
46:05internal low. Later on, this becomes the
46:07new internal high and this becomes the
46:09new internal low. This becomes the new
46:11internal high and this becomes the new
46:13internal low.
46:14Right? So, by right, this becomes the
46:18most recent internal high and this
46:21becomes the most recent internal low.
46:24So, now this becomes the internal range
46:27that we want to focus on.
46:29Okay? So, in this case itself,
46:34since the market structure is bullish
46:36right now, I want to look for longs.
46:38Okay? I want to look for longs.
46:40So, right now, just look at the market
46:42structure. Higher highs
46:44and higher lows.
46:46Okay? Wait, no, that's not how I draw
46:48it. That's like this, comes down, pulls
46:50back like this and then comes down.
46:51Right? So, this high previous This high
46:53higher than the previous high, this low
46:55higher than the previous high
46:56uh previous low and this is where
47:01we potentially have a market shift.
47:03Actually, let me just take a look at
47:04this right here. Right? So, I forgot to
47:05actually point this out, but you can see
47:08this is why it's so important for you
47:09guys to like just look at price closely.
47:12So, this is the last high, price pulls
47:14back,
47:16comes up, pulls back and then goes up.
47:19Right? Giving us a candlestick body
47:20close like somewhere around here.
47:22Okay?
47:24So, this is the lowest point that led to
47:27price actually breaking structure.
47:30And then this is the highest point that
47:31led to the start of the pullback. So, by
47:33right, this is actually the last low.
47:35And look at what a candlestick did.
47:37Candlestick came all the way down here
47:39and take out the last low, giving us a
47:41market shift.
47:43Which signaled to us that right now the
47:45internal structure has officially
47:47shifted bearish.
47:49Okay? So, now instead of looking for
47:51longs, we should be looking for shorts.
47:53Now, this could also be a liquidity
47:55sweep, which is another concept that we
47:56want to talk about later on. Right? If
47:58this is a liquidity sweep, then this
47:59could potentially still be price pulling
48:01back and then later on for price to go
48:03up even further. But like I said, I'm
48:05not going to confuse you whatsoever
48:06right now. Just stick to market
48:08structure and just apply the same
48:09mechanical principles and you will come
48:11to a conclusion that okay, this becomes
48:14a strong high right now because right
48:16now we're actually in a downtrend since
48:19we already got a market shift right
48:20here.
48:21And then this becomes the new weak low.
48:26So, there you guys have it. Right? So,
48:27that's how I would go about just mapping
48:29out this entire structure right here.
48:32You can see if you just apply the
48:33principles that we actually teach here,
48:35you will not go wrong. Right? You will
48:37always come to the same conclusion as I
48:39do.
48:40And for majority beginners out there, I
48:42would just advise you to practice this
48:44on one time frame right now. Right? So,
48:46practice this on either the 4-hour time
48:48frame, the daily time frame, the 1-hour,
48:50or the 15-minute time frame. Just try to
48:52practice identifying a swing and
48:55internal structure on one time frame.
48:57Just really training your eyes [snorts]
48:59to spot all these break of structure,
49:01market shift, swing range, internal
49:03range. And the more you practice, the
49:06better you get at it. Right? Just like
49:08anything worthwhile in life, it requires
49:11you to put in a lot of reps and also
49:13give yourself some time for your
49:15experience to compound into wisdom.
49:17Right? For you to like just get more
49:18competent at analyzing the charts.
49:22So, I hope that our video
49:24showed you guys like the importance of
49:25like just overall mapping the market
49:27structure and also given you the tools
49:29that you need to clearly define who's in
49:32control of price. And to keep things
49:34simple, basically market structure is
49:36the pattern of highs and lows price
49:38tends to leave behind. If price is
49:40making higher highs and higher lows, the
49:42market is bullish, the buyers are in
49:44control. If price is making lower lows
49:46and lower highs, the market is bearish,
49:48the sellers are in control. And if price
49:50is moving sideways just like this
49:52without clear direction, the market is
49:54ranging.
49:56So, your job as a trader is to stop
49:58guessing what price is doing and start
50:00reading the story properly. Start
50:02building a narrative based on what the
50:04market is telling you.
50:06And when you do that, you will finally
50:08be able to see the market for what it
50:09is.
50:11So, with that being said, I look forward
50:12to seeing you guys in the next episode.
50:15And as usual, just go and like and
50:16subscribe and just click that bell
50:18button so that you can get notified
50:21when the next episode actually drops.
50:24And as always, remember you guys are
50:26just No, as always, remember you're just
50:28one trade away. Cheers. Mwah.

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