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Never get daily bias wrong again.. Top Down Analysis MASTERCLASS — Transcript

by Ali Khan · 4,291 words · 592 segments · language en · Watch on YouTube

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0:00If you don't understand how to do top
0:01down analysis correctly, you're
0:03basically giving money away to the
0:05market. Today, I'm walking you through
0:07one of my biggest trades of the year
0:09step by step, so you can just copy the
0:12process. Not only that, this video is
0:14absolutely stacked with gems. Today,
0:16we're going to cover how to do a correct
0:18top- down analysis from the higher time
0:21frame down to the lower time frame.
0:23We're going to understand how we can
0:24interpret a high probability drawn
0:26liquidity. We're going to touch on
0:28dealing range theory, what high
0:30probability fair value gaps are, how
0:32they form, and what they look like.
0:34We're going to talk about high
0:35probability break-in structure, how we
0:38can incorporate the power of three model
0:40inside our top- down analysis. And I'm
0:43actually going to walk you through a
0:45real trade breakdown that I took using
0:47the exact systematic approach I take to
0:50top down analysis. So, you're going to
0:51see it from a weekly time frame all the
0:54way down to a 5minute entry. So, grab a
0:57notepad for this one because there's
0:58going to be a whole lot of information
0:59coming at you. Now, if you're fairly new
1:01to algorithmic price action concepts,
1:04then I've made a fantastic little
1:06resource called the ICT Bible. You can
1:08find that in the description below and
1:09that will really help you when going
1:11through this video. Okay, so let's jump
1:14into a chart. Here we are on the weekly
1:16time frame for the British pound. Now,
1:19the first thing that I want to do when
1:20I'm on the higher time frames is I want
1:22to bracket out the highest high and the
1:24lowest low in order to determine where
1:27we have the major buy side liquidity
1:29pool and the major sellside liquidity
1:31pool. Right now, clearly here we have
1:34major buy side above this high. This is
1:36the highest high inside of all of this
1:38piece of price action. And down here, we
1:40have major sellside liquidity. Now, this
1:42is also equal lows here. So, there's
1:45going to be a very large pool of
1:47sellside liquidity below these lows. So,
1:51already my eyes are going down here
1:52before I've even dropped down onto the
1:54lower time frames. See, you want to pay
1:56more attention to the higher time frames
1:58because that's going to be your longer
1:59term draw on liquidity. And this is
2:01where the big boys and the banks and
2:03institutions are looking at. They're not
2:04down on your lower time frames. Now, the
2:07algorithm is only going to be drawn to
2:08one of two things: liquidity and
2:10inefficiencies. To make things very very
2:13easy, what we want to do is anywhere on
2:17any time frame that we see equal highs
2:20or equal lows, that is going to be your
2:22strongest draw on liquidity. And you
2:25trade in that direction unless proven
2:28otherwise. In order to determine what
2:31the market is likely to do next, we need
2:33to look at what the market has already
2:35done. Now, if I anticipate the market is
2:39likely to draw down to these equal lows,
2:41I want to assess algorithmic order flow
2:43and that price delivery continuum from
2:45the higher time frame down to the lower
2:47time frame. Now, let's take this as a
2:49step-by-step approach based on this time
2:52frame alone. First, what I can clearly
2:55see here is this premium wick. We can
2:58grade this wick with our DRT levels. And
3:00straight away I noticed the reaction
3:02from that 25 DRT wick over here. After
3:06reacting from there, price really drops
3:08lower with a close down here. That's the
3:11first thing here that indicates that
3:12there is potential weakness behind this
3:15market. Also note this fair value gap
3:19from this candle's low to this candle's
3:22high. We have all sellside delivery. So
3:24this is an inefficient area of price and
3:27we deem this as a fair value gap. Again,
3:29look at the clues here. None of the
3:31bodies here are managing to close above
3:35this weekly fair value gap. Again, this
3:38indicates a sign of weakness. So now I
3:42can see that based on algorithmic order
3:45flow, there are a few things here that
3:48is indicating lower prices. Now let's
3:51look at market structure. This swing low
3:53down here was that last swing low inside
3:57of this leg of price action that raided
3:59the last swing high. So all of the
4:01liquidity above these highs up here was
4:04purged over here and then price drops
4:08back down again and closes right through
4:11this swing low. This is a high
4:13probability breakup structure. Not only
4:16that, this break of structure is
4:18qualified with the presence of this fair
4:20value gap that is inside of the leg that
4:23break structure after a raid on
4:26liquidity is very very important. Taking
4:28this information, we can drop down to a
4:30lower time frame and we're going to use
4:32the daily time frame over here. Now,
4:34this time frame allows us to flesh out a
4:36little bit more detail. And again, what
4:38we're going to do with this time frame
4:39is look for clues that will indicate
4:42price does in fact want to travel lower
4:45for these equal lows down here. Now,
4:47what I want to do here is I want to see
4:50where price currently is relative to the
4:54current dealing range. Now, the dealing
4:56range is going to be from the swing high
4:58down to the equal lows down here. Once
5:00we have established this, we can grade
5:02this entire range using DRT where we
5:04have the dealing range high. This is the
5:06highest price inside of all of this
5:08price action. The dealing range low
5:10which is the lowest price inside of all
5:12of this price action. The 50 DRT level
5:16which is the fair price or the midpric
5:18between the highest price and the lowest
5:21price. And then in between that we can
5:23have the 25 DRT level which is the mid
5:26price between the 50 DRT and the dealing
5:28range high and the 75 which is the
5:31midpric between the 50 level and the
5:34dealing range low. between the fair
5:36price at 50 DRT and the highest price at
5:39the dealing range high. This is all
5:41going to be premium prices. And from the
5:44fair price or 50 DRT to the dealing
5:47range low or that lowest price, all of
5:50this is going to be discount prices. Now
5:53the market is going to move from premium
5:55to discount and discount to premium. Now
5:58this again gives us more information.
6:00What has price previously done? We've
6:02seen price has spent time here inside of
6:06an extreme premium market. So from the
6:0825 to the dealing range high, this is
6:11going to be our extreme premium. This is
6:14very very high prices relative to this
6:17dealing range. Now watch this. We have
6:19seen price run higher here into an
6:22extreme premium. But before that it has
6:25raided a minor buyside liquidity pool.
6:28This is minor buy side because it's
6:30liquidity that rests inside of the
6:33range. This is internal range liquidity.
6:36Not only has price raided and purged all
6:38that buy side liquidity, it has balanced
6:41this inefficient area of price. We have
6:44again from this candle's low to this
6:46candle's high. This candle only offers
6:49sellside delivery. This is inefficient
6:51price action. This is our daily fair
6:53value gap. Again, look at where the
6:55bodies have closed. They haven't even
6:57managed to get into that daily fair
6:59value gap. Again, a huge indication of
7:01weakness. Now, how do we interpret this
7:03information? Well, we know that in order
7:06for smart money or large banks and
7:08institutions to move money, they need
7:10liquidity. So, if they are going short,
7:13they need to pair their short orders
7:16with retail buyside liquidity. So
7:19essentially they have to sell to
7:21somebody who's buying and the buyers are
7:23going to be above all of this minor
7:25buyside liquidity. Now that buyside
7:27liquidity is going to be in the form of
7:29buy stops above these relative equal
7:30highs. Again the books teach us to place
7:33our stops above double tops. Right? Also
7:36note here between this candle's low and
7:39this candle's high, we have a smaller
7:42sellside hardside imbalance buy side in
7:44efficiency inside of that higher
7:46timeframe weekly fair value gap. This is
7:49going to be influential going forward.
7:51So now that I have market structure, a
7:54higher time frame draw on liquidity down
7:56here with the equal lows and I've
7:58assessed the price delivery continuum
8:00from the higher time frame down to a
8:02lower time frame. I can now get a little
8:04bit more granular here. So, the first
8:06thing that I want to do is I want to
8:08look back 20 days from the current
8:11price, which is going to be on this
8:13candle here. Now, anything to the left
8:15of this candle for now, I can ignore
8:18because if I'm going down into more
8:20short-term trading, because if I'm going
8:22down into short-term day trading, then
8:24I'm only going to be concerned about
8:26what's happened in the past 20 days. So,
8:29I'm going to take this piece of price
8:30action and I'm going to zoom in here on
8:32this a little bit more. Now, what I want
8:34to do is I want to mark out the highest
8:37high and the lowest low in the last 20
8:39days to see where my major buy side and
8:42my major sellside liquidity pools are.
8:44And we can see that above this high
8:47would be our major buy side liquidity.
8:49And below this swing low down here in
8:52the last 20 days, this is our lowest
8:54low. This is where major sellside
8:56liquidity is going to reside. Now, this
8:58forms a dealing range here. We can grade
9:01this entire range with our DRT levels.
9:04Notice where price action currently is.
9:06It's around this 50 DRT level, which is
9:09that fair price between the highest
9:11price and the lowest price. It's worth
9:14noting over here that this candle really
9:17closes through that 50 DRT level and
9:21that weekly fair value gap. This is a
9:23very strong signature in price that the
9:25market has turned around here. Now, one
9:27of the things that we can use for DRT
9:29levels is if we can see price has
9:31displaced from one DRT level straight
9:34through another DRT level and has left a
9:37gap, we can class this gap as a
9:39breakaway gap and we do not anticipate
9:42price to return back up into this gap.
9:44So again, this is giving us another clue
9:46that the market here is very heavy. Also
9:49with this 50 DRT level being in very
9:51close proximity to the consequent
9:53encroachment of the weekly fair value
9:55gap as you can see here in this black
9:56dotted line. This again is further clues
9:59that a setup may be forming here on the
10:01lower time frames. Furthermore, this leg
10:04here ran a previous high within the last
10:0720 days, forming our dealing range high.
10:10And then price turned around and dropped
10:12right through the weekly fair value gap,
10:14the 50 DRT level, and that swing low
10:17that raided that 20-day high and all the
10:20highs to the left over here as well. It
10:22dropped below it with a close making
10:24this a high probability breaking
10:27structure. Also note inside of the leg
10:30that break structure we have this fair
10:32value gap. Now this fair value gap is a
10:34high probability fair value gap. It's
10:37inside of the daily fair value gap to
10:38the left and the premium high of this
10:41fair value gap overlaps with a
10:43consequent encroachment of the weekly
10:44fair value gap when we already have
10:46established that this fair value gap is
10:49likely to remain open here. So again, we
10:52have a higher time frame draw on
10:54liquidity with the weekly time frame
10:56with those equal lows below the market,
10:58but because we're going to be looking at
11:00more shorter term trading, we can still
11:03use the higher time frame as a draw, but
11:06we can use lower time frame targets.
11:09Now, within this dealing range, we want
11:12to look for the extreme low. So the
11:14extreme low is going to be where we have
11:16this major sellside liquidity pool at
11:18the dealing range low. Now remember the
11:21algorithm is going to reach for one of
11:23two things liquidity and inefficiencies.
11:26When we have areas where they both
11:29overlap all right in close proximity to
11:31each other that is a very very strong
11:33draw on liquidity. And if we look below
11:35this major sellside low, we can see the
11:38remainder of this buy side imbalance
11:41sellside and efficiency still open.
11:43Right? So from this candle's low to this
11:46candle's high, the bottom half of it
11:48sits below that major sellside liquidity
11:51pool. So this is going to act like a
11:52magnet for price to draw down into. This
11:55is what we refer to as a draw on
11:57liquidity. Let's drop even further down
11:59into a 4hour time frame. Now, not only
12:02is it one thing to do a correct top down
12:04analysis, we have to also find trading
12:07setups that's going to yield a good
12:08return. This is very crucial, right? So
12:11on these lower time frames, what I'm
12:13really doing is fleshing out a few
12:14things. I'm looking for potential
12:16targets. I'm looking for a potential
12:19entry. And I'm using the lower time
12:21frames to refine my stop loss. Now here
12:24on the 4our, straight away I can see
12:26that we have a minor sellside liquidity
12:29pool where we have all of these equal
12:30bodies. This is going to be an initial
12:33consolidation on a lower time frame. So
12:35I know that the market is probably in
12:37some kind of market maker sell model. I
12:39will do a video on that at some point.
12:41So, make sure you subscribe to this
12:43channel. Now, similarly to the daily
12:45time frame below this sellside
12:47liquidity, I can see another buy side
12:49imbalance sellside and efficiency below
12:51the market again close proximity. This
12:53is going to act again as another draw.
12:55So, this would potentially be my first
12:57target area on a lower time frame. Now,
13:00what I also want to do is understand
13:02where the market isn't likely to go. And
13:05this is where I start stacking PDAs.
13:08PDAs are going to be the ladders that
13:11the algorithm uses to facilitate the
13:13movement from buy side to sell side or
13:15inefficiency to inefficiency. So let's
13:18see what's happened here. Again, we had
13:19these relative equal highs within the
13:22last 20 days. So there's going to be a
13:24big pool of buy side liquidity resting
13:25above those highs. Now inside of this
13:28leg here that raids that buy side then
13:31turns around closing below it which
13:34constitutes our high probability
13:35breaking structure as we discussed on
13:37the daily time frame. Now inside of that
13:40swing we see this down close candle
13:43that's nested in the upper half of the
13:45weekly fair value gap. This is our high
13:48probability breaker. We can draw that
13:50out in time and notice that the closing
13:52price of that breaker overlaps with the
13:53consequent encroachment of that weekly
13:55fair value gap. So we now have a couple
13:57of nested levels here again supporting
14:00the idea that we may have a potential
14:02trade set. It's also worth noting inside
14:04of that daily fair value gap this black
14:06dotted line is its midpoint or the
14:08consequent encroachment. And you can see
14:10how all of the bodies here are acting
14:13around that level again failing to close
14:15above it indicating a sign of weakness.
14:19Let's drop further into an hourly time
14:21frame. And here I'm going to delineate
14:23the opening price on Sunday and extend
14:25that out in time. If we are bearish and
14:27I anticipate lower prices for the week
14:30and I anticipate that the weekly range
14:32is going to close lower, then I want to
14:35see price early on in the week run
14:38higher above the weekly opening price.
14:41This is because retail who are excited
14:43at the beginning of the week are going
14:45to chase price as it runs higher. Now,
14:47how high is it likely to go? Well, if I
14:51take the highest high and the lowest low
14:54between Sunday's opening candle and
14:56Monday 12 a.m.'s opening candle, which
14:59is going to be this high and this low,
15:02and project deviations higher, generally
15:05between 2.5 and three deviations is what
15:07I'm aiming for. And if it overlaps with
15:10a key level like we have here which is a
15:12consequent encroachment of that daily
15:14fair value gap and it's a Monday,
15:16Tuesday or Wednesday, I know that
15:18there's a high probability that the high
15:20of the week here is likely to form. Now
15:22this high forms on a Tuesday and notice
15:26that it sweeps the buy side liquidity
15:28above these relative equal highs to the
15:30left which also includes Monday's high.
15:33then price stays inside of a
15:35consolidation engineering sellside
15:37liquidity below the consolidation's low.
15:40Now let's go further in time and see
15:42what transpires at Wednesday's opening
15:45price. So to do that we'll drop down
15:47here onto a 5minut time frame and I'm
15:50going to get rid of this blue shaded
15:52area since that's the higher time frame
15:54daily fair value gap. Now we can still
15:56use that here but that's for another
15:57lesson. The main thing here that I want
16:00to focus on is the opening price at
16:02midnight New York. If I am bearish, I
16:05want the market to move above the
16:07opening price before going lower. And we
16:10see that here. Now, what I also want to
16:12do is I want to look left at the
16:14near-term dealing range. And in order to
16:16do that, I want to see where the highest
16:18high has been raided and where the
16:20lowest low has been raided prior to
16:2212:00 a.m. And we can see that here. We
16:25had the high rated here and we had the
16:27swing low rated down here forming a new
16:29dealing range high and a dealing range
16:32low. So now the algorithm has a price
16:35range to work within. It has its highest
16:37price, its lowest price, and it has its
16:40mid price with the 75 and the 25 levels.
16:44If we are bearish, we want to sell at
16:47premium prices. So we want to see the
16:50market move above the 50 DRT level. Now,
16:53it just so happens that above the 50 DRT
16:56level, we have this 5minute fair value
16:58gap from this candle's low to this
17:02candle's high that sits within the range
17:04of this down close candle here where we
17:06have a high, we have a low, we have a
17:08higher high. So, this is our bearish
17:11breaker and we also have a reclaimed
17:12fair value cap to the left as well as
17:14these consecutive upclose candles as an
17:16order block. So again, there's a few
17:18levels here that are nested and stacked
17:20together inside of a premium market
17:22relative to this dealing range. Not only
17:24that, we have a minor buyside liquidity
17:27pool above price after 12:00 a.m. where
17:30we have equal highs. So I was sat here
17:33in front of my charts just prior to
17:35London and I put a stop order at the low
17:37of the 5-minute fair value gap plus a
17:40few pips for spread and I got in here on
17:42this wick. My stop would go above the
17:44dealing range high. Now this is textbook
17:46DRT model which I've taught here for
17:48free on this YouTube channel. Now watch
17:50what happens. Price runs higher one more
17:53time and then drops lower leaving this
17:57buy side imbalance. When price closes
17:59back through it, this becomes an
18:01inversion fair value gap. Also note that
18:04this candle closes back below the
18:06opening price. Again, this is a
18:07significant algorithmic signature. Note
18:09what's left. We have this minor cell
18:12sued. Apparently, we have this minor
18:14sellside equal lows and we see price
18:17retrace back higher into the consequent
18:20encroachment of this 5minute inversion
18:22fair value gap. So, I got in right at
18:24that level again with my stop above the
18:26dealing range high. This was my second
18:28entry. Then price drops lower raiding
18:31that minor sell liquidity pool. Now, if
18:33we zoom back out to the hourly time
18:35frame, we have that daily opening price
18:37over here on Wednesday. We have our
18:39first profit target down here which was
18:41Monday's low and this was the near-term
18:43intrae low. Now resting below that was
18:45that 4hour fair value gap. So this is
18:48going to be a very strong draw on
18:50liquidity and we see price absolutely
18:53tank straight through that 4hour fair
18:56value gap. Now it did this so quickly
18:57that by the time I look back at my
18:59charts I had already had profit taken.
19:01So I move my stop to break even and let
19:04the trade run because I anticipated that
19:07daily sellside liquidity pool. Remember
19:09that major buy side liquidity that we
19:11had on that daily dealing range. So I
19:13knew price was going to go lower still.
19:16So if we zoom out here, you can see how
19:19we ended up dropping for that daily low
19:21which rested above the remainder of that
19:25daily fair value gap that we spoke about
19:27earlier. Now, I managed to get a
19:29screenshot of the trade just before we
19:30actually uh went a little bit lower into
19:32that daily low around 13330 is where I
19:37got out. I had my stop here rolled to
19:39break even. Now, this yielded 175 pips
19:43with a risk-to-reward ratio of 34. Now,
19:45let me just be honest here for a second.
19:48This isn't a typical trade, right? I can
19:50find very very high yielding
19:52risk-to-rewards trades based on the
19:54systematic approach to top down analysis
19:56and the fact that I've been trading ICT
19:59concepts and algorithmic price delivery
20:01for the last 8 years. So there's been a
20:03graduation in my development as a trader
20:05over the years. Now I'm also not here to
20:08flex. This is why I hide my lot sizes
20:10and I don't flex my wealth or my
20:11lifestyle. But what I want to make you
20:14aware of is that the knowledge is
20:16transferable. And if you really do study
20:18this, these are the type of trades that
20:20you can do yourself. But I also want to
20:23be realistic with your expectations. I
20:25don't expect this to happen overnight.
20:27I've been trading for almost 10 years
20:29now. And it's taken me a very very very
20:31long time to be able to interpret and
20:34read the market the way I'm able to read
20:36it. So, if you can appreciate that, then
20:38drop a comment below, like, subscribe so
20:40that I can continue making videos with
20:43as much value as I possibly can without
20:46the ICT rants and stuff. Right now,
20:48there was a third entry that I could
20:50have got into, but unfortunately, I
20:51didn't get into this entry, but it was a
20:53really nice, clean setup. Again, after
20:55reacting here from that 4hour fair value
20:57gap, we retraced higher into that 50 DRT
21:01level from the higher time frame, which
21:02I've got here in this red dotted line.
21:05And that over overlapped with this
21:07inversion buy side imbalance sellside
21:09and efficiency. You can see how we we
21:12nailed that area here and the body's
21:14failing to close above it. And then we
21:16displace lower again back into the order
21:18block nested with that initial intraweek
21:22low. And then you see price roll over
21:23and again the reaction lower there. When
21:25I opened up my phone to check my chart,
21:27I was actually surprised with how far
21:28price had already traveled. So I managed
21:30to get a screenshot around here and then
21:33I got out right at that low there. And
21:35this is what it looks like here on the
21:37daily time frame. So that was that
21:39sellside liquidity below the dealing
21:42range low and the remainder of that buy
21:44side imbalance. Now of course we had the
21:46equal lows below here which was the
21:49ultimate target and you can see how
21:51price ended up really digging into those
21:54lows completing the objective that we
21:56initially outlined. Now, I outlined all
21:59of this in my mentorship group when we
22:00were up here. And a lot of my students
22:02managed to capitalize and did really
22:04well in this decline lower. And on that
22:06point, I've had a ton of emails asking
22:08me about mentorship. Enrollment is back
22:10open again for a short time. I'm really
22:13restricting numbers just so I can keep
22:15the quality of the teaching as high as
22:17possible. If you are serious about
22:19taking this to the next level and you
22:20want to learn from somebody who really
22:23really understands this stuff, then
22:25click the link below and fill out the
22:26application. Spots are limited, so I'm
22:28only reserving this for traders who
22:30really want to up their game. If you're
22:32not quite ready for mentorship yet or
22:33you don't have the investment for that,
22:35then that's absolutely fine. Click the
22:37link below and get started with the ICT
22:39Bible. And I'm also got a free training
22:41webinar that can get you started as
22:43well. So, I hope you have found this one
22:45insightful. Again, please like,
22:47subscribe, comment below on what else
22:50you want me to do teachings on. And as
22:53long as you're getting value here and
22:54this is helping you, then I'll continue
22:56to keep making these videos. So again,
22:58thank you for watching and I'll see you
22:59in the next

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This page contains the full transcript of Never get daily bias wrong again.. Top Down Analysis MASTERCLASS by Ali Khan, generated from the public captions YouTube serves with the video. The transcript has 4,291 words across 592 segments, with the original timestamps preserved so you can click any line to jump to that moment in the embedded player.

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