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Strength Switching: Universal Frameworks — Transcript

by Afyz · 9,036 words · 1,392 segments · language en · Watch on YouTube

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  1. 0:02[music]
  2. 0:05>> Hello everyone and welcome back to my
  3. 0:06YouTube channel. Today we are going to
  4. 0:08be touching on strength switching and
  5. 0:10applying a universal framework to
  6. 0:12mechanically observe this concept and
  7. 0:15pair it with the concepts you've learned
  8. 0:17previously on my channel.
  9. 0:19We're going to be going through the core
  10. 0:21logic of strength switching and then
  11. 0:23applying it to both reversal and
  12. 0:25continuation logic.
  13. 0:27This lecture should be paired with my
  14. 0:29prior two lectures on YouTube in order
  15. 0:31for you to better understand how markets
  16. 0:33interact with one another in a triad and
  17. 0:36how true reversals and high probability
  18. 0:38continuations are framed using the
  19. 0:41confluence of strength switching.
  20. 0:44So, let's get into the core logic of
  21. 0:46strength switching. And to do this, you
  22. 0:48need to understand two ideas. The first
  23. 0:51is going to be liquidity dispersal
  24. 0:53theory and the second is going to be
  25. 0:55asset synchronization.
  26. 0:58Liquidity dispersal theory is simply a
  27. 1:00way of saying that markets do not evenly
  28. 1:03inject liquidity into all assets in a
  29. 1:06triad. That results in relative strength
  30. 1:09and relative weakness as you observe
  31. 1:11nearly every single day across all
  32. 1:14correlated markets. So, on the screen
  33. 1:16here I've shown you a generic assessment
  34. 1:18of the index futures triad where you see
  35. 1:21there is a leading asset which trades
  36. 1:23away from a point of interest and
  37. 1:25expands towards the other side of the
  38. 1:26range. We have a middle asset, right?
  39. 1:29Which is obviously weaker. And then we
  40. 1:31have a lagging asset which is the
  41. 1:33weakest and the furthest away from that
  42. 1:35relevant level. This relative strength
  43. 1:39is the result of market makers not
  44. 1:41injecting equal amounts of liquidity
  45. 1:44into these highly correlated assets.
  46. 1:47We can go one step further in fact and
  47. 1:49say that the uneven dispersal of
  48. 1:51liquidity is what results in SMT
  49. 1:54formations in the market.
  50. 1:57The signatures therefore left in price
  51. 2:01due to this uneven dispersal of
  52. 2:03liquidity is the basis of what we define
  53. 2:06as strength switching, and it allows us
  54. 2:08to determine what is happening at these
  55. 2:12extreme levels.
  56. 2:13That is to say, we can understand better
  57. 2:16if a true reversal or continuation is
  58. 2:19going to form at a key level. Is price
  59. 2:22going to break this SMT or is price
  60. 2:25going to form an SMT and reverse? We use
  61. 2:29strength switching at key levels with
  62. 2:32three markets in mind in a triad to
  63. 2:35better understand if we are going to get
  64. 2:37a true reversal, which is why it is such
  65. 2:39a powerful and important concept for our
  66. 2:42study.
  67. 2:44So, let's take a look at what these
  68. 2:45strength switch cracks in correlation
  69. 2:48really are. We're going to be using
  70. 2:50crack in correlation to mechanically
  71. 2:52define this, you know, vague concept of
  72. 2:56strength between markets.
  73. 2:58The first is a strength switch SMT, and
  74. 3:01I'm going to walk you through the
  75. 3:02liquidity dispersal logic.
  76. 3:05If we consider a weaker asset in a
  77. 3:07market, that is to say, an asset which
  78. 3:09takes out a low or, you know, fails to
  79. 3:12take out a high, that weaker asset in
  80. 3:14here, if it gives us a strength switch
  81. 3:17SMT between consecutive candles at the
  82. 3:20point of reversal before expanding away,
  83. 3:24this is a sign that price is reversing
  84. 3:27off the low and liquidity is being
  85. 3:29injected into the market. Why does that
  86. 3:32logically make sense? We are order
  87. 3:34pairing the extreme of this range. These
  88. 3:37sell stops form liquidity that is
  89. 3:40injected into the market. This strength
  90. 3:42switch switch SMT you're observing is a
  91. 3:45function of the order pairing of that
  92. 3:47low, and you're seeing momentary
  93. 3:49strength from those sell stops being
  94. 3:51absorbed and that liquidity being
  95. 3:53injected into the market.
  96. 3:55This logic is equivalently true for the
  97. 3:58once stronger asset. The asset which
  98. 4:01fails to pair the range extreme has less
  99. 4:04liquidity injected into it. Therefore,
  100. 4:07at the point of reversal when it forms
  101. 4:09this consecutive candle SMT, this
  102. 4:12strength switch lower indicates that
  103. 4:14this asset, right at the point of
  104. 4:16reversal, is being paired.
  105. 4:19Right? With the strength of this asset
  106. 4:21to trade higher. So, this strength
  107. 4:23switch SMT that you're observing is one
  108. 4:26mechanical filter to define a strength
  109. 4:30switch at a key level, a old low or old
  110. 4:33high, or in the case of continuation, a
  111. 4:35gap.
  112. 4:37What's a two-stage variant of this?
  113. 4:39We're going to talk about PSPs in just a
  114. 4:40minute, but the second stage variant of
  115. 4:43a strength switch PS strength switch SMT
  116. 4:46would be a PSP forming after that
  117. 4:49strength switch SMT. So, you see in this
  118. 4:51case, there is order pairing of the
  119. 4:52range extreme. It forms a reversal
  120. 4:55candle here, right? Or it or sorry, it
  121. 4:57forms an expansion candle here. And
  122. 4:58then, as liquidity is injected into this
  123. 5:00market, we form both that strength
  124. 5:02switch SMT and that PSP. Right? We can
  125. 5:05see that in both markets. And again,
  126. 5:07this could be a bullish PSP or bearish
  127. 5:09PSP. Um what's important to recognize
  128. 5:11that there is a two-stage component to
  129. 5:13this crack in correlation.
  130. 5:15Right? So, when we look at that PSP,
  131. 5:17we're going to see something very
  132. 5:18similar. We see price trade into a low
  133. 5:21on the weaker asset and close as a
  134. 5:24bullish candle. This represents and
  135. 5:26shows us on the candlestick chart the
  136. 5:29logic that liquidity is being paired,
  137. 5:32and the strength switching via the
  138. 5:34closure of this swing point is bullish.
  139. 5:38Right? On the on this side, we see that
  140. 5:40the asset that was once stronger fails
  141. 5:42to pair the low, forms a failure swing,
  142. 5:45and closes as a bearish candle, right?
  143. 5:47At the point of reversal. And this in
  144. 5:49here, right, is showing us that less
  145. 5:51liquidity is being injected at the point
  146. 5:53of reversal because it has not order
  147. 5:54paired the low. So, this asset here is
  148. 5:57strength switching.
  149. 5:59Again, just like we had in the case of a
  150. 6:00strength switch SMT, there is also a
  151. 6:03two-stage strength switch PSP. That is
  152. 6:06when we form this PSP, and then we get
  153. 6:08that consecutive candle SMT as well,
  154. 6:11right? That is forming a strength switch
  155. 6:13at the lows. In this case, you can see
  156. 6:16the weaker asset closes as a bearish
  157. 6:18candle, right? So, that is not strength
  158. 6:21switching yet. It's just a PSP. Then,
  159. 6:24once we get that strength switch SMT, it
  160. 6:27confirms that we are trading away from
  161. 6:29this low, and we're trading away from
  162. 6:31this failure swing, right? Via a
  163. 6:34strength switch SMT, okay? So, these are
  164. 6:37important cracks of correlation that
  165. 6:38we're going to use in our analysis
  166. 6:40moving forward.
  167. 6:43Let's now get into asset synchronization
  168. 6:46and how this can confirm, or how
  169. 6:48strength switching can confirm asset
  170. 6:50synchronization. So, I want to teach you
  171. 6:52this concept as a function of a
  172. 6:55universal model, okay? That means there
  173. 6:57is a universal application to this idea
  174. 7:00and where you should consider strength
  175. 7:02switching as a filter.
  176. 7:04Let's take a look at two generic market
  177. 7:07maker models. We have a leading asset
  178. 7:09and a lagging asset. Consider the case
  179. 7:12where the leading asset trades into a
  180. 7:15range extreme, okay? So, this is where
  181. 7:18you want to consider liquidity dispersal
  182. 7:20theory and strength switching.
  183. 7:22There is two things that the lagging
  184. 7:24asset can now do. It can one, catch up
  185. 7:27through asset synchronization and
  186. 7:29strength switching, and break that SMT,
  187. 7:32or it can reverse via strength switching
  188. 7:35of the leading asset into a bearish
  189. 7:37order flow. So, at this point in time,
  190. 7:40we see markets synchronize either to A,
  191. 7:43break the SMT as you see in this red
  192. 7:46catch-up leg, or B, hold the SMT and
  193. 7:50reverse.
  194. 7:51These concepts, or these confluences I'm
  195. 7:54going to teach you today, are going to
  196. 7:55validate whether the reversal is going
  197. 7:58to play out or the continuation or
  198. 8:01catch-up leg is going to play out. And
  199. 8:03what we will see is that there is an
  200. 8:05intrinsic logic to using strength
  201. 8:07switching for asset synchronization.
  202. 8:10If we are going to see the lagging asset
  203. 8:14break the SMT high and catch up, we are
  204. 8:17going to see some form of strength
  205. 8:18switching or liquidity dispersal into
  206. 8:21the lagging asset so that it can break
  207. 8:23the SMT, right? Pair that same level. If
  208. 8:26we are going to form a SMT and reverse,
  209. 8:30we are going to see the leading asset
  210. 8:32reverse here and not strength switch
  211. 8:35with this lagging asset. That way we can
  212. 8:38both understand where reversals are
  213. 8:40likely to hold and where continuations
  214. 8:43are likely to occur. This concept is a
  215. 8:46perfect confluence for either scenario
  216. 8:49for any strength scenarios of a triad.
  217. 8:52Here you can see I have some common
  218. 8:54strength scenarios of the index futures
  219. 8:56triad.
  220. 8:58So, with that being said, let's get into
  221. 9:01reversal frameworks. How can we better
  222. 9:04understand range extremes and true
  223. 9:06reversals like you learned about in my
  224. 9:08first lecture on YouTube in the master
  225. 9:09class using strength switching?
  226. 9:12The first is going to be an advanced
  227. 9:15premium and discount sequence paired
  228. 9:16with a strength switch. So, in the case
  229. 9:19of one asset, right, reversing off a
  230. 9:21high like in a market maker model where
  231. 9:23we trade to an external high and then
  232. 9:24expand lower, we may see this sequence
  233. 9:28where during the reaccumulation phase of
  234. 9:31this leading asset, we see a strength
  235. 9:34switch SMT as this other asset in here
  236. 9:38breaks the high and then reverses. So,
  237. 9:41the asset that was once weaker strength
  238. 9:43switches to break this SMT and then
  239. 9:46reverses. Whereas the asset which was
  240. 9:48once stronger is now in continuation. It
  241. 9:51forms this SMT, meaning it's weaker, and
  242. 9:55then it continues towards the draw.
  243. 9:57In this example, I've also shown you
  244. 10:00two-stage variants where you can see,
  245. 10:02you know, a local strength switch as
  246. 10:04well paired with that higher time frame
  247. 10:07model. And we're going to go through
  248. 10:08several examples of this including an
  249. 10:11example from today's price action which
  250. 10:12paints a very compelling example of how
  251. 10:15we see these reversals and continuations
  252. 10:18form, right? This EQ condition hold with
  253. 10:22strength switch.
  254. 10:24Okay, this will be the bullish case. We
  255. 10:26see the weaker asset reverse at the
  256. 10:28range low, right? Giving a V-shape. Then
  257. 10:31we see the lagging ass or the asset that
  258. 10:34was once stronger break the SMT and then
  259. 10:37reverse as well while this asset's in
  260. 10:39continuation. So, we're using that
  261. 10:42equilibrium
  262. 10:43paired with that strength switch SMT.
  263. 10:46And then you're also seeing again the
  264. 10:48local two-stage variant that can occur,
  265. 10:50right? This could be with a PSP or
  266. 10:51another SMT where we see that reversal
  267. 10:54happen at the lows and that continuation
  268. 10:56happen on this leading asset, right?
  269. 10:58Which already reversed.
  270. 11:01Okay, here's another example where we
  271. 11:03don't see that expansion away from the
  272. 11:06low on the previously weaker asset. We
  273. 11:09see that the asset that was stronger,
  274. 11:11right? Is lingering near the high. We
  275. 11:14get that SMT break which I talked about
  276. 11:16with my advanced premium discount
  277. 11:18sequence, right? When we have assets
  278. 11:20that are extremely close to that high,
  279. 11:22we're likely to see them break. And then
  280. 11:24when they do break, we see that strength
  281. 11:27switch SMT, right? We see the asset that
  282. 11:29was previously stronger become
  283. 11:31momentarily weaker, and then expand,
  284. 11:34right? Towards the draw.
  285. 11:36And again, I'm going to talk about when
  286. 11:38we demand strength switch in a little
  287. 11:40bit, but we're going to be using asset
  288. 11:42synchronization or the idea of relevant
  289. 11:45swings to really demand strength
  290. 11:47switching at times. In this case,
  291. 11:49because we have an open draw on all
  292. 11:51assets, we don't need to see this
  293. 11:53necessarily, but it is preferred or more
  294. 11:56probable.
  295. 11:58Here's an example of bullish case,
  296. 12:00right? We see the weaker asset
  297. 12:02momentarily strength switch as the
  298. 12:05stronger asset breaks the SMT and then
  299. 12:09reverses, okay? So, this just shows us
  300. 12:11that we've already order paired the low,
  301. 12:13and now what we're doing in here is we
  302. 12:15are continuing from that reversal, and
  303. 12:18this asset's breaking the SMT and then
  304. 12:20reversing itself.
  305. 12:22Let's look at PSP variants, okay? So,
  306. 12:25what happens when the leading asset
  307. 12:27trades into a high and then forms that
  308. 12:31bearish close? Well, that's a strength
  309. 12:33switch PSP, and that allows us to trade
  310. 12:37away from failure swings. So, in order
  311. 12:40to trade away from a failure swing, I'll
  312. 12:43need to see this strength switch idea,
  313. 12:46because that shows me the leading asset
  314. 12:48is reversing off of the range high and
  315. 12:50wants to expand toward the other side of
  316. 12:52the range. So, this premium, right? SMT
  317. 12:56can hold because this asset, which was
  318. 12:59once stronger, forms that bearish close.
  319. 13:02This is the only way I will trade away
  320. 13:04from failure swings is if I see a
  321. 13:06strength switch signature. Again, I've
  322. 13:09shown you a two-stage variant as well,
  323. 13:11where we get that consecutive candle
  324. 13:13SMT,
  325. 13:14right? We get that strength switch SMT
  326. 13:16as well, paired with that PSP.
  327. 13:19Here's an example of bullish case,
  328. 13:21right? We see that weaker asset in here.
  329. 13:25It forms this bearish close, so I don't
  330. 13:27trust that, right? So, when I see this
  331. 13:29two-stage form, right? This two-stage
  332. 13:32form, on this PSP, that is a strength
  333. 13:35switch SMT that I can validate the
  334. 13:38failure swing being traded away from.
  335. 13:40So, in the case of a failure swing,
  336. 13:43where we have a deep retracement into
  337. 13:46the lower high, I will need to see a
  338. 13:49strength switch of some sort, whether it
  339. 13:52is via PSP or whether it is via SMT or
  340. 13:56both to trade away from that. That is
  341. 13:59one way. The other way I can trade away
  342. 14:02from this is via a continuation
  343. 14:05sequence, which I will talk about in the
  344. 14:06next chapter. That essentially is
  345. 14:09waiting and demanding a gap to be
  346. 14:12printed away from the failure swing low
  347. 14:14here
  348. 14:15or the failure swing high, and then
  349. 14:18trading the universal sequence, right?
  350. 14:20Or the continuation sequence that forms
  351. 14:23thereafter, as you learned in my last
  352. 14:25lecture. And we will touch on that in a
  353. 14:27few minutes here. But this is the core
  354. 14:29idea of failure swing reversals and how
  355. 14:32we can use strength switching to
  356. 14:34validate failure swings.
  357. 14:37There's also one more way we can use
  358. 14:38strength switching at reversals, and
  359. 14:40that is for decoupled markets. So, if
  360. 14:42you've seen my first uh lecture, which
  361. 14:45is going to be linked in the bio, I'll
  362. 14:46link both the first and second lecture,
  363. 14:48for re-synching decoupled markets via a
  364. 14:51strength switch. That is when we see,
  365. 14:54right? The leading asset
  366. 14:56or the middle asset and the lagging
  367. 14:58asset have some sort of divergence at a
  368. 15:00key level, where this asset expands into
  369. 15:03a low and these assets are expanding
  370. 15:05into a high, we will see markets
  371. 15:08re-synchronize
  372. 15:09through these strength switch crack in
  373. 15:11correlations. Now, I'm going to be
  374. 15:13building out a bit more logic on this in
  375. 15:16a further lecture, but realistically,
  376. 15:18what you have to understand about this
  377. 15:20concept or this sequence is that we're
  378. 15:23going to see the asset which expanded
  379. 15:25with foreseen distribution form some
  380. 15:27sort of strength switch in this case
  381. 15:30with the leading assets, in this case,
  382. 15:33the ones that are reversing at the high,
  383. 15:35or the lagging assets, and you're going
  384. 15:36to see these same sequences. And again,
  385. 15:38if this is kind of unfamiliar, go back
  386. 15:41into my lecture part one of the
  387. 15:43reversals in the master class, and you
  388. 15:45will see some more logic on asset
  389. 15:47synchronization, right, for decoupled
  390. 15:49moves. And I'll be building on this in a
  391. 15:51future lecture as well.
  392. 15:53Okay? So, this is how we can confirm
  393. 15:56that these markets are going to
  394. 15:57resynchronize by seeing these strength
  395. 16:00switching signatures between the leading
  396. 16:03and the lagging and middle assets,
  397. 16:05right? So, let's take a look at some
  398. 16:07lower time frame signatures for strength
  399. 16:10switching as well. I've already told you
  400. 16:13about these higher time frame cracks in
  401. 16:15correlation, these candle closes.
  402. 16:17However, on the lower time frame, we can
  403. 16:19also see things like faster sys D's. So,
  404. 16:23look at the lagging asset here. It has
  405. 16:25this draw on liquidity, and it's
  406. 16:27reversing with some sort of strength
  407. 16:30switching, right, at the low? We might
  408. 16:32see a faster sys D to break that high,
  409. 16:35right, while the leading asset more or
  410. 16:38less consolidates, right? So, at the
  411. 16:41low, you're seeing that this leading
  412. 16:43asset here has already taken out a high.
  413. 16:46We're seeing the lagging asset strength
  414. 16:48switch and then start to trade, right,
  415. 16:50into that high with faster expansion,
  416. 16:54right? Quicker V-shapes, etc. Okay? And
  417. 16:57you're seeing that strength switching
  418. 16:58concept in here.
  419. 17:00Now, what else can we use? Gap size,
  420. 17:02right? So, if we have a strength switch
  421. 17:04on the higher time frame, we might also
  422. 17:06see a lagging asset draw into that same
  423. 17:10high through asset synchronization via
  424. 17:12larger fair value gaps that are created
  425. 17:14at that reversal, right? Smaller fair
  426. 17:17value gaps on the leading asset, which
  427. 17:20already manipulated the high. Again,
  428. 17:22these lower time frame signatures can be
  429. 17:24paired with our higher time frame cracks
  430. 17:26in correlation that we've talked about.
  431. 17:29Okay, let's talk about continuation
  432. 17:32sequences and really the framework by
  433. 17:34which assets synchronize through
  434. 17:37strength switching to break SMTs. Okay?
  435. 17:41So, here's some rule of thumbs before we
  436. 17:43get into this.
  437. 17:44If both the leading and the lagging
  438. 17:46asset have an open draw, a strength
  439. 17:49switch is not mechanically required.
  440. 17:51Mechanically meaning we need to see it
  441. 17:53before we can trade.
  442. 17:55In the case that the leading asset has
  443. 17:57no relevant swings to continue trading
  444. 18:00towards, we are going to prefer a
  445. 18:03strength switch. So, for example, if we
  446. 18:05are trading, right, to towards a higher
  447. 18:09low and there's no relevant levels to
  448. 18:11the left, right? So, there's no higher
  449. 18:14levels in that daily range, we're going
  450. 18:16to prefer a strength switch because
  451. 18:18there's nothing for the leading asset to
  452. 18:19draw into in continuation.
  453. 18:22Now, the third case is when we trade
  454. 18:25away from a failure swing SMT, which is
  455. 18:28the sequences I taught you here.
  456. 18:31Okay? Failure swings.
  457. 18:33At the year of the range high or the
  458. 18:35range low. When we have a failure swing
  459. 18:38SMT, guys, that is when I require a
  460. 18:41strength switch. These types of SMTs
  461. 18:44that form deep in the range are low
  462. 18:47probability. A strength switch makes
  463. 18:50that reversal or that SMT higher
  464. 18:53probability. What makes it even highest
  465. 18:55probability is waiting then for
  466. 18:58displacement away from a failure swing.
  467. 19:00So, I have an example here where you see
  468. 19:02price expand away from this failure
  469. 19:05swing. If it were to create a gap, which
  470. 19:08we will see in some examples later, we
  471. 19:10can then trade a universal sequence away
  472. 19:13from that gap as the highest probability
  473. 19:16failure swing sequence.
  474. 19:19So, let's take a look at one stage
  475. 19:21continuations. These are going to be
  476. 19:24strength switch SMT fills from gaps. So,
  477. 19:27in the case we have a true reversal,
  478. 19:28right? Look up here. We have this asset
  479. 19:30which was once stronger forming that
  480. 19:33PSP, right? So, that that indicates that
  481. 19:36this failure swing is going to hold.
  482. 19:38Now, in order to validate this as
  483. 19:40opposed to trading this leg in here, we
  484. 19:43wait for expansion, right? Away from
  485. 19:47this high,
  486. 19:49a gap to be created, and then we trade
  487. 19:51the universal sequence from a gap using
  488. 19:54that strength switch SMT fill, right?
  489. 19:58So, this asset in here has both have
  490. 20:01open draws, so we don't demand it, but
  491. 20:04you can see we get that universal
  492. 20:05sequence paired with that strength
  493. 20:07switch SMT fill. So, you want to be
  494. 20:09trading this asset, the weaker asset,
  495. 20:12strength switching, right? It was once
  496. 20:14stronger, now it is weaker towards the
  497. 20:17low. This was once, right? Weaker, and
  498. 20:20now it is stronger, so we anticipate
  499. 20:23that this asset here will hit the draw
  500. 20:25first.
  501. 20:26That is a one stage continuation
  502. 20:28strength switch SMT fill.
  503. 20:31Now, let's take a look at the case where
  504. 20:33we have the draw being met by the
  505. 20:36leading asset. So, this asset in here
  506. 20:39reverses, and then expands towards the
  507. 20:42high. Now, here we'll use asset
  508. 20:45synchronization
  509. 20:46via strength switching for this SMT to
  510. 20:49break in this candle. So, you can see
  511. 20:52this asset hits the high. Now, we're
  512. 20:54expecting to see some universal
  513. 20:57sequence, and we have a strength switch
  514. 21:00SMT fill in the gap, right? In this
  515. 21:04candle that expands now into the high
  516. 21:07for the next candle, we want to be
  517. 21:08trading this asset, right? The lagging
  518. 21:11asset, because we're getting asset
  519. 21:13synchronization or SMT break via a
  520. 21:16strength switch, right? So, when the
  521. 21:18draw is met, we prefer to see this
  522. 21:21sequence form to trade higher.
  523. 21:25Let's take a look at some two-stage
  524. 21:26examples using that same logic.
  525. 21:28Sometimes we will see, right? If the
  526. 21:30draw is met on the leading asset, we
  527. 21:32will see a retracement,
  528. 21:34right? Which is not a reversal
  529. 21:36signature, there's no V-shape here.
  530. 21:38We'll see a retracement, and then we
  531. 21:40will see some sort of SMT fill paired
  532. 21:43with that PSP indicating a retracement
  533. 21:46of this leading asset, and then again,
  534. 21:48we will get continuation to a draw. This
  535. 21:50would be a two-stage, right? Strength
  536. 21:53switch continuation.
  537. 21:56And here's the bullish case again,
  538. 21:57right? So, we see that there is an open
  539. 21:59draw actually on both assets. So, we
  540. 22:02want to be trading the leading asset.
  541. 22:05And a good rule of thumb is that we want
  542. 22:08to trade the leading asset until the
  543. 22:12draw is met, at which point we want to
  544. 22:16look for asset synchronization via
  545. 22:18strength switching to trade the lagging
  546. 22:20asset. So, in here you can see that even
  547. 22:23though this asset forms the,
  548. 22:25you know, bearish SMT, this forms the
  549. 22:27bullish SMT, this is still the asset we
  550. 22:30want to be trading towards our draw
  551. 22:33because it is in closer proximity to the
  552. 22:35draw, and it is the bullish asset,
  553. 22:38right? Even though it forms that
  554. 22:40strength switch signature. This is just
  555. 22:42telling us that all assets are very
  556. 22:44likely to hit that high, and this asset
  557. 22:46is, right? Is having liquidity dispersed
  558. 22:49into it to then break the SMT once it
  559. 22:52forms.
  560. 22:53Okay? So, now let's talk about that
  561. 22:55idea, right? That we just mentioned of
  562. 22:57lagging assets redistributing and
  563. 23:00breaking SMTs via strength switching.
  564. 23:02So, here is our generic example. We have
  565. 23:05a leading asset trading to a key level,
  566. 23:07this high, and it puts in a continuation
  567. 23:11signature. Recall from my last lecture
  568. 23:13that is going to look like a
  569. 23:14consolidation or a retracement, not a
  570. 23:18V-shape.
  571. 23:19We will then evaluate if there is going
  572. 23:22to be liquidity dispersing into the
  573. 23:24middle and lagging assets to break the
  574. 23:26SMT via a strength switch, okay? So, at
  575. 23:30the lows, you can see we had a strength
  576. 23:32switch SMT.
  577. 23:33We expanded away, and now we have this
  578. 23:37SMT at the highs. And we're going to see
  579. 23:38what happens, right? What phase of price
  580. 23:41argument can be given, and if we get any
  581. 23:43strength switching to get to that high.
  582. 23:46Right? So, we're going to ask ourselves,
  583. 23:47how does that sequence look like? Or is
  584. 23:50Or are we going to form the SMT and
  585. 23:51reverse? The answer lies in strength
  586. 23:54switching. Strength switching validates
  587. 23:57if a reversal will hold or if we will
  588. 23:59get a break of that SMT level. So, in my
  589. 24:03last lecture, I taught you the ideal
  590. 24:05sequence. This is when we see the
  591. 24:08leading asset trade into a key level,
  592. 24:10and it forms this PSP, which is
  593. 24:13signifying that it's not reversing, but
  594. 24:15it's either consolidating or retracing
  595. 24:17because it leaves a gap.
  596. 24:19Then we trade the lagging asset via a
  597. 24:23strength switch SMT towards that SMT
  598. 24:26break. So, what you're seeing in this
  599. 24:28circle right here for the middle asset
  600. 24:30is exactly what you're observing on the
  601. 24:32lower time frame here [snorts]
  602. 24:33to reach that key level.
  603. 24:36Why is this the ideal sequence? The
  604. 24:38strength switch PSP tells us that the
  605. 24:41leading asset, once it trades into the
  606. 24:44key level,
  607. 24:45right? Is failing to reverse or V-shape.
  608. 24:49We know that because it's creating a
  609. 24:50gap, and we can look at the lower time
  610. 24:52frame signatures. At the risk of jumping
  611. 24:55back and forth between my lecture
  612. 24:56slides, I want to point you back to this
  613. 24:59part, okay? These lower time frame
  614. 25:01signatures are going to be confirming
  615. 25:04whether we're reversing or not. Are we
  616. 25:06getting SMTs out of the range faster?
  617. 25:09Are we getting consolidation,
  618. 25:11right? Are we creating gaps or are we
  619. 25:13not creating gaps? This is going to be
  620. 25:15signatures of strength switching, and if
  621. 25:17we do not see reversal, then we're going
  622. 25:20to be anticipating a ideal sequence
  623. 25:23formation. Once we get this SMT, the
  624. 25:26strength switch SMT paired with this
  625. 25:28PSP, that gets us the lagging asset into
  626. 25:32the high, where we can then ask
  627. 25:34ourselves the same questions. Say, are
  628. 25:35we going to reverse or is the
  629. 25:38lagging asset, right, the weakest asset
  630. 25:40going to do that same thing and hit the
  631. 25:41high? Maybe it'll form another sequence
  632. 25:43to get to the high. Okay? So, this is
  633. 25:46why it is the ideal sequence. The fair
  634. 25:48value gap is telling us about
  635. 25:49displacement, and the strength switch is
  636. 25:51telling us about liquidity dispersing
  637. 25:54into the weaker assets. And then you can
  638. 25:56trade your universal sequence. ICT has
  639. 25:59taught us that, right? Towards that high
  640. 26:00or that low.
  641. 26:02Okay. So, this is the universal approach
  642. 26:05to strength switching. You now
  643. 26:06understand the core logic and how to
  644. 26:09apply strength switching to asset
  645. 26:11synchronization cases of lagging assets
  646. 26:14and to validate reversals either away
  647. 26:16from SMT breaks or away from failure
  648. 26:19swings. You've also learned how to use
  649. 26:22equilibrium and conditions around
  650. 26:24equilibrium with strength switching. So,
  651. 26:27what I'm going to do now is hop into
  652. 26:29some chart examples that will go through
  653. 26:31several unique cases of strength
  654. 26:33switching that validates the frameworks
  655. 26:35you've learned today. Let's do that now.
  656. 26:38Okay, let's hop into our first example
  657. 26:41here. And this example is going to be
  658. 26:43the case of that advanced premium and
  659. 26:46discount sequence paired with our
  660. 26:48strength switch for a continuation
  661. 26:52of the lagging asset. So, what I want
  662. 26:54you to first consider here is this two
  663. 26:58um asset
  664. 26:59um chart. Okay? So, we have the Nasdaq
  665. 27:02here, and we have the Dow Jones here.
  666. 27:04And this was today, actually, Thursday,
  667. 27:06the 12th of March. What we see first is
  668. 27:09that the leading asset, the Dow Jones,
  669. 27:12trades into a relevant swing, this daily
  670. 27:16low down here. Now, why am I calling
  671. 27:18this a relevant swing? It's because the
  672. 27:20distance between this swing and this
  673. 27:22swing is great enough,
  674. 27:24right? That it is relevant. This is also
  675. 27:26a relevant swing down here. A new phase
  676. 27:29of price can be anticipated at this
  677. 27:31swing.
  678. 27:32As you can see, Nasdaq is a lagging
  679. 27:35asset to that swing. It is yet to trade
  680. 27:37into here. So, on Thursday, on this day,
  681. 27:40we actually get that lagging asset
  682. 27:42redistribution via strength switching.
  683. 27:44This is how we get asset
  684. 27:46synchronization. They get back into sync
  685. 27:48and expand together towards the low,
  686. 27:50right? Through strength switching. So,
  687. 27:52let's take a look at the higher time
  688. 27:53frame chart here.
  689. 27:55And we're going to look at our daily
  690. 27:56open, and we're just going to play out
  691. 27:58this entire daily chart, right? Give you
  692. 28:00an example. So, here's where we are,
  693. 28:02right? To start Thursday. We have these
  694. 28:04relevant swings, and don't mind of this
  695. 28:06clutter here. This is just from the
  696. 28:07lower time frame what I'm going to be
  697. 28:08showing you. But you can see, 6:00 p.m.
  698. 28:11opens,
  699. 28:12and the leading asset expands into the
  700. 28:15draw. Now, in this case, right? We can
  701. 28:18expect a new phase of price here. So, as
  702. 28:21long as this asset does it not V-shape
  703. 28:25back into the range, right? If we see
  704. 28:27that V-shape back into the range, that
  705. 28:29would be a reversal with a SMT, and
  706. 28:32potentially, what could we see down
  707. 28:34here? Some sort of strength switching,
  708. 28:36right? Where the lagging asset, right?
  709. 28:39Or the leading asset to the downside
  710. 28:40becomes momentarily stronger via
  711. 28:43strength switch, and then expands. Look
  712. 28:45at what happens here on the lower time
  713. 28:47frame, okay?
  714. 28:48We'll hop down to an hourly chart to
  715. 28:49show you.
  716. 28:50We immediately see in this case, we do
  717. 28:52not have any form of strength switching
  718. 28:55in here, okay? We see this leading asset
  719. 28:58to downside stay quite bearish, right?
  720. 29:00Forming a lower low.
  721. 29:03This asset is still bullish forming the
  722. 29:05higher lows. So, we know that this move
  723. 29:08back into the range because there is no
  724. 29:10strength switch signature is likely a
  725. 29:12retracement, okay?
  726. 29:14So, then you can see price, right? Takes
  727. 29:16out the low here again. We keep
  728. 29:17expanding lower.
  729. 29:20Right? This asset here has traded
  730. 29:22through this relevant swing, right? Down
  731. 29:25here.
  732. 29:25And now we see some reversal in the
  733. 29:27London session off the lows, okay? In
  734. 29:30this case, you're going to be able to
  735. 29:31see we have that strength switching
  736. 29:34signature right in here. So, you can see
  737. 29:37I pull up my screen here.
  738. 29:40We have this asset.
  739. 29:43Where is my toolbar? This asset here
  740. 29:45forms that PSP.
  741. 29:49Right?
  742. 29:50And this SMT, so we have a two-stage,
  743. 29:54right? Strength switch SMT and then the
  744. 29:57PSP and then we expand back in the
  745. 30:00range, okay? Look at Nasdaq. Bearish
  746. 30:02close.
  747. 30:03Trades lower despite being the stronger
  748. 30:06asset in the range. So, this validates
  749. 30:09this local retracement back into the
  750. 30:12range. Not necessarily a reversal of the
  751. 30:14daily range, but a retracement. You can
  752. 30:16see is validated by this hourly strength
  753. 30:20switch, right? Below the lows. And you
  754. 30:22can see this in here forms the low of
  755. 30:25this candle at 10:00 p.m. So, the 4-hour
  756. 30:28power of three is open low high close.
  757. 30:31Now, what do we end up doing? We end up
  758. 30:32retracing
  759. 30:34into what?
  760. 30:35A gap. So, this becomes my new
  761. 30:37invalidation if the daily candle is
  762. 30:40going to expand lower from its open.
  763. 30:44And we are not going to have a delayed
  764. 30:46protraction where we see price
  765. 30:48return back to the open, right? This
  766. 30:51candle has a very large wick. So, we do
  767. 30:53not anticipate that candles with large
  768. 30:55wicks are going to form
  769. 30:58a reversal into expansion candle
  770. 31:00printing another body here. So, any
  771. 31:02deviation up in here should be seen as a
  772. 31:05potential to go lower, especially if we
  773. 31:07fail to reprice the opening price here,
  774. 31:09okay? So, here is the opening price.
  775. 31:13We have this large wick, but we are
  776. 31:14still bearish because we have a new
  777. 31:16invalidation. Now, look what forms here
  778. 31:18at 6:00 a.m.
  779. 31:20It's exactly that sequence that that we
  780. 31:21talk about, right? We have this small
  781. 31:24opposing run inside of the gap, okay?
  782. 31:28So, this is our C2 reversal into
  783. 31:31expansion candle.
  784. 31:33And what do we see? We see this asset
  785. 31:35expanding now towards the low. So, now
  786. 31:38we can anticipate that we're going to
  787. 31:39break this SMT. So, we want to see some
  788. 31:42form of strength switching, right? How
  789. 31:45can we observe that?
  790. 31:46Well, look at this.
  791. 31:48Look at how this reversal candle high is
  792. 31:49made. We see this asset here form a
  793. 31:52mechanical reversal at the high
  794. 31:55with a 4-hour swing point
  795. 31:58being created with a one-stage crack in
  796. 32:01correlation. So, because it's just a
  797. 32:03one-stage crack in correlation,
  798. 32:05I'm not going to trade this reversal,
  799. 32:07but what do we create?
  800. 32:08We create a range, have a failure swing,
  801. 32:12and now we can draw back into this range
  802. 32:14and expand lower trading
  803. 32:16internal
  804. 32:17to external, right? And what do I want
  805. 32:19to see in here?
  806. 32:21Ideally, some form of strength switching
  807. 32:23with this asset showing me a willingness
  808. 32:25to trade towards the low, right? And
  809. 32:28displace lower since YM is already
  810. 32:29paired this low and is still fairly far
  811. 32:32away from the next relevant swing,
  812. 32:34right? Even this swing down here, look.
  813. 32:37Still fairly far away from it, right?
  814. 32:39And NASDAQ wants to break that SMT. So,
  815. 32:40we can observe what happened in the New
  816. 32:42York session.
  817. 32:44So, we open up here.
  818. 32:45Sorry, let me go on the lower time
  819. 32:47frame, actually. It might be even
  820. 32:48better.
  821. 32:49So, we have a new 4-hour candle opening
  822. 32:51up here. This is the 9:00 a.m. candle in
  823. 32:52here.
  824. 32:54Let's go to a lower time frame.
  825. 32:56We'll see there's a couple forms of
  826. 32:58strength switching in here that actually
  827. 32:59put us on side with this logic. Okay, so
  828. 33:02we have our reversal up here.
  829. 33:04Now, look what happens at the open,
  830. 33:069:30.
  831. 33:07I'm going to get rid of this gap just so
  832. 33:09we know that's where we're reversing
  833. 33:10from.
  834. 33:10At 9:30, we see this leading asset
  835. 33:13becomes which is stronger, right? In the
  836. 33:15range, notably stronger. It sweeps out
  837. 33:18the previous candle's high. So, this in
  838. 33:20here, right? Is a consecutive candle SMT
  839. 33:24inside of this small volume imbalance in
  840. 33:25here, okay? This small little volume
  841. 33:28balance area in here. Now, more
  842. 33:30importantly, what we see is that once we
  843. 33:32form this SMT with this asset being
  844. 33:35weaker, right? We know that the new
  845. 33:3710:00 a.m. candle is opening and we can
  846. 33:40expect it, right? 6:00 a.m.
  847. 33:41continuation. Have we hit the draw? No,
  848. 33:45right? Look at the 4-hour candle, we
  849. 33:46haven't hit the draw. So, 6:00 a.m.
  850. 33:47reversed here, actually. And now we can
  851. 33:49expect 10:00 a.m. to continue towards
  852. 33:51the draw.
  853. 33:52So, we know we're opening up 10:00 and
  854. 33:54we have this swing point. So, look at
  855. 33:57what happens in the lower time frame at
  856. 33:5810:00 a.m.'s open.
  857. 34:02We see this asset, right? Which was once
  858. 34:05the lagging or the leading asset to the
  859. 34:07downside, become momentarily stronger as
  860. 34:09it breaks that SMT.
  861. 34:11Remember I talked to you about that
  862. 34:13example and I can probably flash it on
  863. 34:15the screen right now of where we see
  864. 34:18that SMT breaking, right? Paired with
  865. 34:21this asset reversing thereafter. So, now
  866. 34:24it's becoming stronger
  867. 34:28while this asset becomes weaker.
  868. 34:30And we actually end up getting a
  869. 34:32two-stage variant here, which I showed
  870. 34:34you in the previous diagram.
  871. 34:37Where NASDAQ, right? Puts in these equal
  872. 34:40highs. Well, how can I trade away from
  873. 34:42equal highs? I need to see a strength
  874. 34:45switch, right? So, you see this is that
  875. 34:48local two-stage variant where we see at
  876. 34:51the reversal with this premium and
  877. 34:53discount sequence, right? From this high
  878. 34:55to this low, it's already reversed. Now,
  879. 34:57it's retracing into EQ.
  880. 35:00Forming this two-stage and you can see
  881. 35:02ES here, the third asset gives us that
  882. 35:04SMT, right? ES runs out that high. So,
  883. 35:07this is a two-stage variant with the
  884. 35:08S&P.
  885. 35:10Now, we can trust these equal highs to
  886. 35:11hold. I actually did take this trade
  887. 35:13today. If you look at my Twitter, I
  888. 35:14actually have the execution and whatnot.
  889. 35:16Um, but you can see we open at 10, we
  890. 35:19expand higher.
  891. 35:20We form that SMT sequence and now I can
  892. 35:23trade this away from the failure swings.
  893. 35:25And if you look at lower time frame,
  894. 35:26this is verbatim what I showed you in
  895. 35:29the lecture slides, right? We have this
  896. 35:32stronger asset reversing, creating a
  897. 35:34displacement range, this range. Then we
  898. 35:38have a gap being retraced in here, you
  899. 35:40can see.
  900. 35:41It's actually in the 5 minutes a bit
  901. 35:41clearer. We have these gaps being
  902. 35:43retraced.
  903. 35:44And what do we see inside these gaps? We
  904. 35:46see this advanced premium discount
  905. 35:48sequence where the lagging asset or in
  906. 35:50this case the leading asset breaks the
  907. 35:51SMT.
  908. 35:54Right? And once it breaks the SMT, at
  909. 35:56the point of reversal at 10:15, this new
  910. 35:5915-minute open right in here,
  911. 36:04we see the two-stage occurs as well,
  912. 36:05okay? Two-stage at the high, strength
  913. 36:08switch.
  914. 36:10Right? So, this is that strength switch
  915. 36:11that we really need to see. This is also
  916. 36:12that strength switch here, right? This
  917. 36:14is that strength switch SMT.
  918. 36:17Now, we can trade away from this and all
  919. 36:19I need to do, the only entry technique I
  920. 36:21took was just this 3-minute CISD.
  921. 36:24Like this. And now, what am I targeting?
  922. 36:27The SMT break, right? That relevant
  923. 36:29swing. So, what did I say before? We
  924. 36:31trade the leading asset until the draw
  925. 36:34is met.
  926. 36:36Okay?
  927. 36:37Once that draw is met, we look to see
  928. 36:39some form of strength switching and then
  929. 36:41trade the next asset because look how
  930. 36:42far away from the low
  931. 36:44this next swing is.
  932. 36:46Here, right?
  933. 36:47All the way down here, right? These
  934. 36:48swings are a bit closer, but you can see
  935. 36:50Nasdaq clearly is weaker now, right?
  936. 36:52Much weaker. We can trade this asset
  937. 36:55right, towards the low like I did. And
  938. 36:57again, I'll put my executions on Twitter
  939. 36:58so you can see. Get a really nice 3R
  940. 37:00trade to that low.
  941. 37:03I don't know my TradingView is doing
  942. 37:05this thing where it lags out. That's not
  943. 37:07ideal.
  944. 37:09Maybe I can
  945. 37:10go to a higher time frame, for example,
  946. 37:12and play out another candle. There you
  947. 37:14go.
  948. 37:15You can see we hit that low and that's
  949. 37:16exactly where we spend the rest of the
  950. 37:18day inside this range, more or less,
  951. 37:20just chopping, right? You can see we
  952. 37:22break that SMT, that relevant swing, and
  953. 37:24the rest of the day we just spend So,
  954. 37:26that's the first example. I'm now going
  955. 37:28to hop into another example, okay?
  956. 37:34All right, let's get into the second
  957. 37:35example. In the second example, we see
  958. 37:37another variation of that concept I
  959. 37:40taught you about trading away from
  960. 37:42failure swings utilizing strength
  961. 37:45switching once again. So, look here.
  962. 37:47Here I have it all annotated for you,
  963. 37:48right? Just for the sake of time, right?
  964. 37:50We come into this 4-hour level right
  965. 37:52here. This is an internal range of
  966. 37:54liquidity on the 4-hour chart. YM takes
  967. 37:58out the low and Nasdaq forms this rather
  968. 38:01deep range, right?
  969. 38:03SMT. So, this becomes a low probability
  970. 38:09divergence because it's so close to
  971. 38:10these lows. And also, look at the S&P
  972. 38:12here, right? I want you to pay attention
  973. 38:14to the third asset here.
  974. 38:17Look how close to these lows
  975. 38:20the the is. These are pretty much equal
  976. 38:23lows down here, right? These are not
  977. 38:25relevantly spaced in the market at all.
  978. 38:27Look, it's equal lows here, right? So,
  979. 38:30what we want to see, in order to trade
  980. 38:32away from this, the only way we can
  981. 38:34is if we can see some sort of strength
  982. 38:36switching. And again, I took this trade
  983. 38:37as well, and I took this trade live,
  984. 38:39actually. So, you can uh go watch that.
  985. 38:41I think it was on my Funded Futures. Um
  986. 38:43but, you can go watch that. And uh you
  987. 38:45can see in here, once we put in this
  988. 38:48failure swing SMT, Nasdaq has equal
  989. 38:50lows. I am not interested,
  990. 38:53right, in trading away from this unless
  991. 38:55I see some form of strength switching.
  992. 38:56So, look at the candle here aligned with
  993. 38:59the new 4-hour open at 10:00 a.m.,
  994. 39:02right? This 4-hour open, which is
  995. 39:04forming this SMT.
  996. 39:06So, we have this key level being
  997. 39:08diverged at. We have this failure swing,
  998. 39:10and then 10:00 a.m. opens right in here.
  999. 39:13The new 4-hour puts in this 4-hour
  1000. 39:16divergence.
  1001. 39:17This is a sequential SMT on the 4-hour
  1002. 39:21charts.
  1003. 39:22But, more importantly, look at this.
  1004. 39:24That SMT that's made is a strength
  1005. 39:26switch PSP. And then, what do we get? We
  1006. 39:30get that two-stage variant, which puts
  1007. 39:32in these equal lows, right? Let me get
  1008. 39:34rid of these. Look at these equal lows.
  1009. 39:37That equal low there is only a
  1010. 39:40permissible to trade away from it
  1011. 39:41because we have the strength switch SMT
  1012. 39:46paired with that PSP. So, when we get
  1013. 39:49that signature, despite the fact that we
  1014. 39:51have
  1015. 39:52failure swing here, okay?
  1016. 39:55Failure swing here, and failure swings
  1017. 39:57down here, we can trade away from this
  1018. 39:59if we see that V-shape signature. Now,
  1019. 40:02look at the lower time frame. We start
  1020. 40:04to expand higher here.
  1021. 40:07I'm going to play this out uh again.
  1022. 40:08Sorry, my uh TradingView is not
  1023. 40:11cooperating with me very much today in
  1024. 40:12the replay mode. I go down to a higher
  1025. 40:15time frame.
  1026. 40:18Try and play one more candle. There we
  1027. 40:19go. That works. We can just pop down to
  1028. 40:21a lower time frame I can show you how we
  1029. 40:23get to this high up here, right? So,
  1030. 40:25what we want to do is we want to trade
  1031. 40:26this asset, which is the lagging asset
  1032. 40:29towards these highs. So, I forgot to
  1033. 40:31show you this, but on the higher time
  1034. 40:32frame
  1035. 40:34we're seeing the strength switch, which
  1036. 40:35makes sense in context of the universal
  1037. 40:37model, right? Remember what we said? We
  1038. 40:38have this leading asset trading to this
  1039. 40:41high, failed to reverse. Now, we're
  1040. 40:44getting this the strength switching from
  1041. 40:46what?
  1042. 40:47The fair value gap, which is a key
  1043. 40:49level. Now, we're trading this ideal
  1044. 40:52sequence, right? With some sort of
  1045. 40:53strength switch with this internal range
  1046. 40:55towards the high. Okay? So, now we want
  1047. 40:59to get up to this high
  1048. 41:00and you can see that once we form that
  1049. 41:03reversal signature here,
  1050. 41:05right? Get that V shape.
  1051. 41:08You can take entry.
  1052. 41:12Cover the low and you can get all the
  1053. 41:14way up to this high with really nice R,
  1054. 41:16right? Around three and a half R or four
  1055. 41:17R. Now, I didn't actually take this
  1056. 41:19trade. What I took was the continuation
  1057. 41:20later in the day, right? So, I let the
  1058. 41:22reversal from Remember I said, you don't
  1059. 41:24trust the If you do not trust the
  1060. 41:25reversal, wait for a gap. Now, look at
  1061. 41:28this.
  1062. 41:29What do I have in here? Look. I have
  1063. 41:31this leading asset put in this ideal
  1064. 41:34sequence, right? We take out the highs.
  1065. 41:37We print a gap.
  1066. 41:40Now, I have a two-stage
  1067. 41:42PSP, right? So, this is a PSP.
  1068. 41:47And you can see we have this SMT fill
  1069. 41:50that forms
  1070. 41:51right in here. It's on the lower time
  1071. 41:53frame.
  1072. 41:55So, we actually do we don't get that. We
  1073. 41:56don't get the continuation here on
  1074. 41:57Nasdaq. My apologies, it wasn't the
  1075. 41:58two-stage variant. It's just the
  1076. 41:59one-stage variant.
  1077. 42:01We get this SMT fill inside the gap
  1078. 42:05that looks like this. Okay? And this is
  1079. 42:07a strength switch. So, the asset that
  1080. 42:10was weaker down here and strength
  1081. 42:12switching bullish to break the highs.
  1082. 42:14Right? We get that strength switch SMT
  1083. 42:17fill.
  1084. 42:18We get a V-shape. Let's see the V-shape
  1085. 42:19signature on the lower time frame.
  1086. 42:22We go down to our 1 or 3-minute time
  1087. 42:23frame here. And again, this is very
  1088. 42:25clear, right? So, we have that SMT
  1089. 42:27strength switching
  1090. 42:29for the fill.
  1091. 42:30We get this really nice balanced price
  1092. 42:33range in here, right? And then you can
  1093. 42:35take with the trade I took was the intra
  1094. 42:37candle
  1095. 42:38continuation or propulsion block.
  1096. 42:41Target Stop loss to the low and then
  1097. 42:43target the high, right? And you get
  1098. 42:44three R nicely to that high. So, it's
  1099. 42:46another very good example, right? Of us
  1100. 42:49trading away from the failure swings,
  1101. 42:51confirming this failure swing divergence
  1102. 42:53that we're seeing right in here.
  1103. 42:55Failure swing divergence. Essentially
  1104. 42:58equal lows here and look at look at ES.
  1105. 43:00Equal lows down here, too, right? With
  1106. 43:03that strength switch concept, okay?
  1107. 43:06Right here. That gives us high
  1108. 43:08confidence in that reversal. And then
  1109. 43:10the continuation also gives us SMT fill,
  1110. 43:12which is another very nice sequence. So,
  1111. 43:14that is the second example. Now, let's
  1112. 43:16move on to the third.
  1113. 43:17So, in this third example here, I'm
  1114. 43:19going to walk you through two days of
  1115. 43:20price, starting with this Thursday,
  1116. 43:22okay? So, you can see we have a failure
  1117. 43:25swing SMT at these highs.
  1118. 43:29Now, what you see is that this daily
  1119. 43:30candle here opens, expands into this
  1120. 43:33previous day high, but it leaves, right?
  1121. 43:35This failure swing. This is not a
  1122. 43:38relevant swing. It's too close in
  1123. 43:39proximity. And what we don't see here is
  1124. 43:42any form of strength switching. So, look
  1125. 43:44at this 10:00 a.m. open. When we form
  1126. 43:46that failure swing at the previous day
  1127. 43:48high, we're seeing this asset is stays
  1128. 43:50weak. Now, this asset is strong, and
  1129. 43:53there's no lower time frame strength
  1130. 43:55switching signatures. So, I don't trust
  1131. 43:57this reversal, okay? I don't like this
  1132. 43:59reversal. What I instead want to see,
  1133. 44:01you can see we have this just regular
  1134. 44:02SMT between candles, which forms the
  1135. 44:05high. But again, it's no strength
  1136. 44:07switch, and we have failure swings. So,
  1137. 44:08I cannot trade this asset in the
  1138. 44:11reversal. As I said to you, I need to
  1139. 44:13see a strength switch. So, instead what
  1140. 44:14I will do is that we'll wait for some
  1141. 44:17sort of sequence to form.
  1142. 44:19I want to see some sort of universal
  1143. 44:20sequence like I talked to you about to
  1144. 44:22validate that's going to hold. Let me
  1145. 44:23see if my candles will play out here.
  1146. 44:29Yes. So, when we form this failure swing
  1147. 44:31SMT,
  1148. 44:32I now understand that I'm waiting for
  1149. 44:35some sort of sequence, right? And the
  1150. 44:36sequence I get in here is right like
  1151. 44:39this. So, I want to be trading which
  1152. 44:42asset? I have the I have the draw marked
  1153. 44:44out, okay? So, this is the draw on
  1154. 44:45liquidity.
  1155. 44:47You can see, I want to be trading the
  1156. 44:49leading asset to the downside
  1157. 44:51cuz it's staying weak
  1158. 44:53until the draw is met. So, what do I see
  1159. 44:56in here? I see a gap printed away from
  1160. 44:58the reversal. I don't trust the reversal
  1161. 45:00cuz the failure swing, obviously. So, I
  1162. 45:02wait for a gap.
  1163. 45:04Wait. Now, not all three assets need the
  1164. 45:07gap. In this case, I only need one of
  1165. 45:10the three assets to form the gap as
  1166. 45:12price manipulates above this 90-minute
  1167. 45:15high, I'm seeing my two-stage
  1168. 45:20right? continuation. So, there is no
  1169. 45:24strength switching here, and I do not
  1170. 45:26need to see strength switching. I do not
  1171. 45:29need to see strength switching for this
  1172. 45:32continuation.
  1173. 45:34The leading asset has a draw intact.
  1174. 45:39I do need to see
  1175. 45:41I do need to see strength switching at
  1176. 45:44this reversal
  1177. 45:46which does not happen, so I do not trade
  1178. 45:49it. Simple as that. I'm filtering out
  1179. 45:52trading this reversal because it is a
  1180. 45:55failure swing SMT to the relevant level.
  1181. 45:59I'm anticipating this high. So, I wait
  1182. 46:01for a gap. All right, I see this asset
  1183. 46:03is still stronger. Look,
  1184. 46:05there is a bullish candle close here and
  1185. 46:07a bearish candle close here. This is the
  1186. 46:09stronger asset still and it's still far
  1187. 46:11away from the lows. So, I don't trade
  1188. 46:14this asset. I trade the relevant weaker
  1189. 46:17asset that's staying weak to the draw,
  1190. 46:20okay?
  1191. 46:21So, what do I see? SMT fill. I took this
  1192. 46:24trade as well, posted on Twitter, full
  1193. 46:25executions and everything, right? None
  1194. 46:26of this is hindsight, guys. I'm taking
  1195. 46:28trades that I've actually done so you
  1196. 46:29can see I use this concept. So, I get
  1197. 46:31this SMT fill that I taught you in my
  1198. 46:33last lecture, right? We have a
  1199. 46:35continuation. We have a change in the
  1200. 46:37state of delivery and again,
  1201. 46:40enter,
  1202. 46:41stop loss,
  1203. 46:42TP is that low, right? And you can see
  1204. 46:45we get down to that low very nicely for
  1205. 46:46a 3.5R trade. So, now let's jump ahead a
  1206. 46:50bit and we're going to see what happens
  1207. 46:51at this low.
  1208. 46:53Here's another example, okay?
  1209. 46:55Whoops, a little bit too far.
  1210. 46:58So, in here, you can see at this low, we
  1211. 47:00form this SMT divergence. I want to show
  1212. 47:04you the lower time frame. We form this
  1213. 47:06SMT divergence in here after this SMT
  1214. 47:08fill and whatnot and you can see I'm
  1215. 47:10going to delete this side of the curve
  1216. 47:11now.
  1217. 47:14Price in here stays weak. Look, at the
  1218. 47:18low, at this reversal at 1:00 p.m., I do
  1219. 47:20not see a strength switch PSP. There is
  1220. 47:22no strength switch PSP. There is also,
  1221. 47:26right? Bearish SMT, bullish SMT. So,
  1222. 47:28this asset still stronger.
  1223. 47:30So, I want to be trading this asset
  1224. 47:32higher if we reverse. Now, because there
  1225. 47:34is no strength switch, I must trade the
  1226. 47:37continuation on this leading asset
  1227. 47:40higher if I want to trade it higher. So,
  1228. 47:42I do not trade at this point of
  1229. 47:44reversal. There is no strength switch.
  1230. 47:46So, I must trade continuation. How do I
  1231. 47:48trade continuation? What did I say?
  1232. 47:50[clears throat] Wait for a gap, right?
  1233. 47:51There's no strength switch so you can't
  1234. 47:52trade the reversal.
  1235. 47:54Let's find a gap in here and trade an
  1236. 47:56SMT fill sequence, right?
  1237. 47:59So, in here I just wait for some sort of
  1238. 48:02SMT fill sequence, which might look like
  1239. 48:05this, guys. Look.
  1240. 48:07We expand.
  1241. 48:08I have a draw on liquidity. All right,
  1242. 48:10this is a relevant swing
  1243. 48:13to this high.
  1244. 48:14Here is my universal model, model within
  1245. 48:16a model. I have an gap.
  1246. 48:18What do we see in here? Here is where we
  1247. 48:20see that strength switching, right?
  1248. 48:23So, but not this asset This asset
  1249. 48:24doesn't have the gap. It's just this
  1250. 48:25one. And what we see is that we get a
  1251. 48:27divergence between
  1252. 48:29these candles. Look.
  1253. 48:32Oops.
  1254. 48:33We get a divergence. This is a strength
  1255. 48:35switch SMT. The weaker asset, and let's
  1256. 48:38mark out that same high here.
  1257. 48:43The weaker asset is getting momentarily
  1258. 48:46stronger after reversing, right? That
  1259. 48:48was that sequence I showed you. We had a
  1260. 48:49reversal. We have a gap. And now this
  1261. 48:51strength switch in here is showing me
  1262. 48:53this continuation is very likely to
  1263. 48:55hold, right? So, there we go. I have a
  1264. 48:59uh single stage SMT between consecutive
  1265. 49:04candles inside of a gap. I need a
  1266. 49:06V-shape signature, and I want to trade
  1267. 49:08towards this high. And I believe the
  1268. 49:09best asset trade towards this high is
  1269. 49:11going to be the Dow, right? Look at the
  1270. 49:12proximity to the high and look at the
  1271. 49:13strength switch.
  1272. 49:14So, we're going to look for a
  1273. 49:16CISD signature,
  1274. 49:19which is going to look like this.
  1275. 49:22Boom.
  1276. 49:24Right?
  1277. 49:25Simple as this.
  1278. 49:28Take this CISD.
  1279. 49:30We're going to target the
  1280. 49:32draw on liquidity.
  1281. 49:34And you get a very nice 6R trade here.
  1282. 49:36If you want to be even safer, wait for a
  1283. 49:39propulsion block to form.
  1284. 49:41Okay? And then you can take the second
  1285. 49:43CISD with very similar nice RR. Both are
  1286. 49:46valid, right?
  1287. 49:48I like to get involved early in the
  1288. 49:49range, right? I trust my invalidation,
  1289. 49:50cuz if I'm wrong, it's going to come
  1290. 49:51down take all these lows anyways. Going
  1291. 49:53to take all these lows if I'm wrong.
  1292. 49:55Right? If it's not going to form this
  1293. 49:56swing point, it's not going to form here
  1294. 49:59as a failure swing. If it won't, it's
  1295. 50:01going to take out all these lows.
  1296. 50:03So then this is an example of how we use
  1297. 50:04our strength switch SMT fill.
  1298. 50:07Strength switch SMT
  1299. 50:11fill
  1300. 50:12to trade the once weaker asset
  1301. 50:16getting stronger to hit that draw on
  1302. 50:18liquidity, right? So this is a strength
  1303. 50:20switching on the buy side of the curve.
  1304. 50:21We don't trade here because there is no
  1305. 50:23strength switch. We can trade here in
  1306. 50:26high probability to get to that high.
  1307. 50:28And you can see Nasdaq puts in a failure
  1308. 50:30swing to that high, right?
  1309. 50:32Okay. So very, very nice stuff here with
  1310. 50:35this third example. And I'll do one more
  1311. 50:36example here for you guys just showing
  1312. 50:38you again that ideal sequence, right? So
  1313. 50:41look here.
  1314. 50:42Nasdaq comes into this high. There is
  1315. 50:45nothing relevant in this daily range for
  1316. 50:48us to trade into, okay? So look at the
  1317. 50:50daily open.
  1318. 50:53We are not going to expand
  1319. 50:55from here to here, right? Without any
  1320. 50:58new phase of price. This is very far
  1321. 51:00away, but look at the lagging asset in
  1322. 51:02here. The lagging asset, which is YM,
  1323. 51:05can draw into the same high that we are
  1324. 51:07failing to manipulate here on Nasdaq.
  1325. 51:10How do we know we're failing to
  1326. 51:11manipulate? We're consolidating. This
  1327. 51:13consolidation signature shows me we're
  1328. 51:15not V-shaping and strength switching
  1329. 51:17lower, right? To validate that as a
  1330. 51:19reversal. Now look what happens on the
  1331. 51:21new 4-hour candle,
  1332. 51:23right? We have this
  1333. 51:25advanced premium and discount sequence
  1334. 51:27that I taught you. Remember the slides?
  1335. 51:29I can show you again on the screen.
  1336. 51:31And then we also have this two-stage,
  1337. 51:34right? Ideal sequence.
  1338. 51:36So look.
  1339. 51:37We get a reversal
  1340. 51:39at these lows, which is a bearish SMT in
  1341. 51:42the gap, right? With this asset. Now
  1342. 51:44this asset takes out the high and is
  1343. 51:46just consolidating for the most part.
  1344. 51:47Now you see on the new 10:00 a.m. 4-hour
  1345. 51:50open, we trade and we form a 4-hour
  1346. 51:53divergence
  1347. 51:55with these lows.
  1348. 51:57It's current low of day actually. We
  1349. 51:58form this divergence.
  1350. 52:00Right? With the 4-hour candles, you'll
  1351. 52:02see. 10 and 6, 10 and 6. And we also
  1352. 52:05have on the lower time frame this
  1353. 52:07advanced premium and discount sequence.
  1354. 52:09So look, we have a gap here on that on
  1355. 52:12YM.
  1356. 52:16Right? In You hear this? In discount of
  1357. 52:19this range. So we expand at 9, putting
  1358. 52:21in a failure swing. These are decoupled
  1359. 52:23moves. Look, up close, down close again.
  1360. 52:25How our market is going to
  1361. 52:26resynchronize? They're going to
  1362. 52:28resynchronize via strength switching.
  1363. 52:30Right? That's how assets will get back
  1364. 52:32in sync and expand.
  1365. 52:34So look in here.
  1366. 52:3510:00 a.m. Diverges with the 9:00 a.m.
  1367. 52:37low inside of this gap. I get a V-shape
  1368. 52:41signature. This is the ideal sequence I
  1369. 52:43showed you. Again, I can put the slide
  1370. 52:45here for the ideal so you can see.
  1371. 52:50And what do I need to see?
  1372. 52:51Simple as I need to see a change in the
  1373. 52:54state of delivery. Right? There's that
  1374. 52:56advanced premium discount.
  1375. 53:00Once I form my CISD,
  1376. 53:03I have a very nice draw on liquidity.
  1377. 53:10Okay? I can take YM to that high. So now
  1378. 53:12you have several clear examples of how
  1379. 53:14we utilize this sequence for both
  1380. 53:16reversals and continuations. I really
  1381. 53:19hope you guys enjoyed today's lecture. I
  1382. 53:21hope you learn something. If you found
  1383. 53:23it helpful, um you can support me by
  1384. 53:25using code lab with prop firms or even
  1385. 53:27just giving a like and a comment on this
  1386. 53:29video. I really appreciate all the
  1387. 53:31feedback you guys give me. Let me know
  1388. 53:33if there's some other concepts you want
  1389. 53:34to see me explain, and I really look
  1390. 53:36forward to my next video with you guys.
  1391. 53:38Thank you very much, and I'll see you
  1392. 53:39soon.

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