True Reversals (2-Stage CiC Logic) — Transcript

Full transcript

1. 0:02The reason your swing points are
2. 0:04failing, the reason you are unable to
3. 0:06get on side with intraday moves, and the
4. 0:09reason why reversals often come back
5. 0:12against you is because you are
6. 0:14neglecting to use true reversal logic.
7. 0:17The idea of true reversal is rooted in
8. 0:20SMT or Kraken correlation logic, and
9. 0:23today I'm going to be expanding on the
10. 0:25idea of how swing points form, how we
11. 0:28can utilize our understanding of SMT and
12. 0:31PSP, and how we can combine these
13. 0:33concepts into trading the highest
14. 0:35probability reversal fractals in a
15. 0:38market.
16. 0:39So, before we hop into this lecture, I
17. 0:41want to preface a few statements.
18. 0:43First of all, when I say true reversal,
19. 0:46I'm referring to a swing formation with
20. 0:49a two-stage Kraken correlation. If some
21. 0:51of this logic or some of these words
22. 0:53don't make a lot of sense to you at the
23. 0:54moment, it is because you're probably
24. 0:56missing some foundational components
25. 0:58which can be found on mine and J's
26. 1:00YouTube channel, in addition to our
27. 1:02course which covers things like SMT,
28. 1:05consecutive candle SMT, and precision
29. 1:07swing points. If you understand that
30. 1:09logic, then you're in the right place
31. 1:11now, and we can now start to talk about
32. 1:13true reversals.
33. 1:15These reversals are going to be the ones
34. 1:17that I trade away from on intraday time
35. 1:20frame. They're also going to be the
36. 1:21reversals that form higher time frame
37. 1:24wicks, and they're going to be the
38. 1:25reversals which allow me to engage a
39. 1:28candle two.
40. 1:29So, without any further ado, let's jump
41. 1:31right into the formations of true
42. 1:33reversals and how I utilize them on an
43. 1:36intraday time frame to place
44. 1:38high-quality trades.
45. 1:41Let's quickly step back and analyze this
46. 1:43idea of true reversal in context of my
47. 1:45trading plan. Now, this trading plan is
48. 1:48built out in depth within Lathyrus, but
49. 1:51what I want to focus on is swing
50. 1:53formations, okay? What I want to tell
51. 1:55you today is how I'm going to get on
52. 1:57side with high-probability swing
53. 2:00formations in conjunction with daily
54. 2:02profiles and draws on liquidity. So,
55. 2:04we're really going to be focusing on the
56. 2:06formation of candle twos and candle
57. 2:09threes, and we're going to be utilizing
58. 2:11the true reversal logic to get on side
59. 2:13with these specific swing formations.
60. 2:16Okay.
61. 2:17Let's take a look at variant one.
62. 2:19So, assuming you've understood what a
63. 2:21precision swing point is, and if you
64. 2:22don't, I will link J's video in the
65. 2:24description in addition to some Lathyrus
66. 2:26course content, what you can see is that
67. 2:29the first variant of a true reversal or
68. 2:32a two-stage Kraken correlation at a
69. 2:34swing point is when first a precision
70. 2:37swing point forms. This means that
71. 2:39candle one trades into some key level,
72. 2:42right? It could be internal range,
73. 2:44external range, and then we see candle
74. 2:46two in here form some sort of sweep of
75. 2:50the previous candle high and closure as
76. 2:52a precision swing point. You can see
77. 2:54here this logic is true on both asset
78. 2:57one and asset two. This could be any
79. 3:00correlated assets in a triad, okay?
80. 3:03Then, the second stage of of um Kraken
81. 3:06correlation or divergence forms when we
82. 3:08see a consecutive candle SMT between
83. 3:11that precision swing point, okay? That
84. 3:14functionally results in one asset
85. 3:17creating a new C2, which you can trade
86. 3:19as a reversal lower,
87. 3:21and the other asset creating a
88. 3:23continuation lower. Now, I expand on
89. 3:26this logic in addition to some concepts
90. 3:28of strength switch within my course, but
91. 3:31it is important to notice that in this
92. 3:33variant, right, where we have an SMT
93. 3:36confirming our precision swing point, we
94. 3:39are able to engage both candles two and
95. 3:42candles three lower, right, if we had
96. 3:44more consecutive candles to the right
97. 3:46here. In this variation, the two-stage
98. 3:49Kraken correlation is being formed at
99. 3:51the candle two high on asset two, and of
100. 3:54course we have a candle three
101. 3:56continuation on asset one.
102. 3:59Let's take a look at the second variant.
103. 4:02This is where we are unable to trade
104. 4:04candle two as a reversal because it
105. 4:06lacks a two-stage crack until the candle
106. 4:09closes.
107. 4:11As you can see from this variant, which
108. 4:13is where precision swings confirm SMT
109. 4:16logic, this is when we first have a
110. 4:19Kraken correlation between relevant
111. 4:22swings or consecutive candles.
112. 4:25Followed by that Kraken correlation
113. 4:26between consecutive swings or a relevant
114. 4:29level, it could be a higher low to the
115. 4:31left here, we then see that candle that
116. 4:34forms SMT close as a precision swing
117. 4:37point. So, the first Kraken correlation
118. 4:40is a SMT, which is a one-stage Kraken
119. 4:43correlation, and the second Kraken
120. 4:45correlation is the formation of a PSP.
121. 4:49It is extremely important to note here
122. 4:51that we cannot engage in this candle two
123. 4:55formation on this asset because at the
124. 4:57time at which it forms SMT, we only have
125. 5:01a one-stage Kraken correlation.
126. 5:03Once this candle closes, we now have
127. 5:06confirmed a two-stage crack with the
128. 5:08formation of a precision swing. Please
129. 5:11pay attention to this in context of the
130. 5:14first variant where we have a precision
131. 5:16swing, and then the second phase of
132. 5:18divergence is SMT, enabling us to engage
133. 5:22this candle two lower at the relevant
134. 5:25two-stage reversal. Here, we wait for
135. 5:28candle three and trade the opposing run
136. 5:30and closure intra candle SMT towards our
137. 5:33draw on liquidity. In this case, we're
138. 5:35focused on candle three.
139. 5:38The final variant which I will share to
140. 5:40you today of the five variants that
141. 5:42exist are going to be two-stage PSPs
142. 5:46with a two-stage SMT divergence. So,
143. 5:49this is combining our logic of precision
144. 5:51swing points, specifically two-stage
145. 5:54precision swing points, with also our
146. 5:56understanding of two-stage SMTs. This
147. 5:59functionally is a three-stage Kraken
148. 6:01correlation, and that might sound a bit
149. 6:03complex, but I will walk you through
150. 6:05some of this logic. So, the first Kraken
151. 6:08correlation is when we see a consecutive
152. 6:10candle SMT, as in the case, right, of
153. 6:14previous
154. 6:15uh variants of this logic, right? We see
155. 6:17this consecutive candle SMT form first.
156. 6:21Now, once that consecutive candle S T
157. 6:24forms or SMT with a key swing to the
158. 6:27left, we now see a precision swing point
159. 6:29close. So, this is identical to the
160. 6:32variant two you see here.
161. 6:35The only difference to this variant
162. 6:37three is that once we have this
163. 6:40two-stage PSP form, where the candle
164. 6:43closes as a PSP after forming SMT, we
165. 6:47see a two-stage SMT of that high,
166. 6:50wherein we get a strength switch
167. 6:52typically, and we see the candle two,
168. 6:55which closes as a reversal here, right,
169. 6:57on one of the assets, be swept out by
170. 7:00the opening of the next candle. In this
171. 7:03scenario or variant, we can still focus
172. 7:06on trading this candle two in here with
173. 7:09a strength switch framework,
174. 7:11or we can focus on trading this as a
175. 7:14continuation candle asset two, right, C3
176. 7:17logic. So, these three variants are
177. 7:19exceptionally common in the market, and
178. 7:21I will not trade away from a swing point
179. 7:24utilizing my daily protocols, including
180. 7:27daily profiles, draw on liquidity, and a
181. 7:29universal model variant, without seeing
182. 7:32one of these three swing formations.
183. 7:35Now, I will be building in depth on my
184. 7:37daily protocol. This is just a very
185. 7:38rough flowchart. It's not developed in
186. 7:41depth yet. However, for now, we're going
187. 7:43to be focusing on just swing formations.
188. 7:46So, now that we better understand these
189. 7:48three types of swing formations with
190. 7:50respect to true reversal logic, let's
191. 7:53hop on to a chart and really see how
192. 7:54this stuff prints. I'm going to do one
193. 7:56example of each, and I'm just going to
194. 7:58do this in one take.
195. 8:01So, I've done I've made the liberty of
196. 8:03annotating some things already for us.
197. 8:05We're going to focus on some recent
198. 8:06price action. This is the week of, you
199. 8:08know,
200. 8:09uh last week that we were working with,
201. 8:10and then I'm going to look at some
202. 8:11examples from September for some of the
203. 8:13other uh logic. So, let's take a look at
204. 8:15this example in here. We're going to
205. 8:17start on the daily chart. So, the first
206. 8:19thing we want to notice is on a day like
207. 8:22this Tuesday and Wednesday, right? I
208. 8:25don't know why my TradingView is in
209. 8:26Spanish here, but on this day like
210. 8:28Tuesday or Wednesday, we want to be
211. 8:30trading expansions higher in the market.
212. 8:33You can see in this case, we have a
213. 8:36two-stage SMT.
214. 8:38This two-stage SMT is what forms at this
215. 8:43reversal candle low in here, right? You
216. 8:45can see in here we have a reversal
217. 8:47candle low with a two-stage SMT. So,
218. 8:49this would be a C3 closure on our
219. 8:52Nasdaq, and it would be a C2 reversal on
220. 8:55our Dow coupled with a
221. 8:58Let's look at the S&P. The S&P as well
222. 9:01is going to be a C3 closure, right? And
223. 9:03if you don't know what these mean,
224. 9:04please refer to the core concepts in
225. 9:06Lathyrus, right, for types of candle
226. 9:08closures.
227. 9:09Now, what we're going to see here, if we
228. 9:11zoom down a time frame, is the logic for
229. 9:14two stages that I have taught you. So,
230. 9:17on this day, you can see we have
231. 9:19the low of day in here that is already
232. 9:22formed with this two-stage SMT.
233. 9:25Now, as this new daily candle opens, let
234. 9:28me use the replay function here.
235. 9:34Right? As this new daily candle opens,
236. 9:36I'm going to see if I can quickly change
237. 9:37my language. I don't know why it's in uh
238. 9:40Spanish.
239. 9:42Okay.
240. 9:44Let me reload this in English, guys.
241. 9:48As this new daily candle opens, we're
242. 9:51going to be studying price as it refers
243. 9:53to a true reversal. So, we have this
244. 9:56daily true reversal form with this
245. 9:58two-stage SMT. And now look at this
246. 10:00daily open, okay? What do we notice?
247. 10:03Well, price opens here, right, at 6:00
248. 10:06p.m. and creates a low.
249. 10:08Now, on the YM before we expand, I want
250. 10:11you to pay attention to the price action
251. 10:13signatures.
252. 10:15Let me grab my
253. 10:19tools.
254. 10:21You can see in this case, we have an SMT
255. 10:24that forms right here on our 4-hour
256. 10:26chart below these swings, okay?
257. 10:30So, we have SMT that forms the low of
258. 10:32the day at this 4-hour swing on the YM,
259. 10:36Nasdaq, and the S&P. Now, in this case,
260. 10:39you can see we also have now a two-stage
261. 10:41forming on the 4-hour chart, correct?
262. 10:44Between this swing and this swing.
263. 10:49Like so.
264. 10:52Right?
265. 10:53And then this swing and this swing. So,
266. 10:55this is a two-stage on the 4-hour. Now,
267. 10:58let's see if we can use this logic for a
268. 11:01true reversal away from this 6:00 a.m.
269. 11:04low once this two-stage 4-hour forms.
270. 11:07Again, we're going to be looking for the
271. 11:09signature of a precision swing point,
272. 11:11either variant two or variant one.
273. 11:15I'm going to hop down to a 1-hour chart.
274. 11:19So, once this two-stage SMT forms, you
275. 11:22can see in here I have no relevant PSPs
276. 11:25or anything like that for this 6:00 for
277. 11:27this 6:00 a.m. candle, right? This 6:00
278. 11:29a.m. candle's low, as you can see, is
279. 11:31formed with this two-stage 4-hour,
280. 11:34right? Which is again a two-stage crack
281. 11:36in correlation that you've learned.
282. 11:38Now, if I want to trade the 10:00 a.m.
283. 11:40candle, I'm going to apply the same
284. 11:43logic for continuations higher. So, let
285. 11:46me mark out the 10:00 a.m. open and
286. 11:47let's utilize this logic together to see
287. 11:50if we can find a lower timeframe
288. 11:51fractal,
289. 11:52right, as a continuation utilizing that
290. 11:56two-stage logic. Again, the logic here
291. 11:58is very consistent. We're going to be
292. 11:59looking for the same things on both our
293. 12:01higher timeframe
294. 12:02reversals and our lower timeframe
295. 12:05continuations. So, 10:00 a.m. opens
296. 12:07here.
297. 12:08And I'm going to use a 1-hour or
298. 12:1030-minute fractal. Now, what I want you
299. 12:12to pay attention to is how we drive
300. 12:14lower here. And again, we form a
301. 12:17one-stage SMT,
302. 12:19right?
303. 12:20This SMT in here is away from our true
304. 12:23reversal,
305. 12:24the two-stage that forms at the 6:00
306. 12:26a.m. low, 4-hour low.
307. 12:29However, this is just a single-stage
308. 12:31reversal, right? It's a single-stage
309. 12:32crack in correlation. So, what I will do
310. 12:34is I will wait for the formation of a
311. 12:36two-stage. I already have the previous
312. 12:384-hour candle offering a two-stage. Now,
313. 12:41I will wait for this 4-hour candle to
314. 12:42offer a two-stage, which you can see if
315. 12:45you're looking. It's quite choppy, but
316. 12:46you can see forms right in here.
317. 12:49So, I see price
318. 12:52trade below,
319. 12:54right?
320. 12:55Uh the previous candle low and also
321. 12:58below this swing low here.
322. 13:01And I see SMT
323. 13:04right here
324. 13:08in the market.
325. 13:10So, in this case, we can see that the
326. 13:12SMT is the first stage crack in
327. 13:14correlation, right? SMT forms first. And
328. 13:17then the closure of this candle offers a
329. 13:20precision swing point. I can now trade
330. 13:23away from this low
331. 13:25using a true reversal logic for the
332. 13:2710:00 a.m. candle, right?
333. 13:30And I can trade
334. 13:31higher. So, you can see in this case, we
335. 13:33can trade away from this swing
336. 13:35formation,
337. 13:36right? And we can trade towards the
338. 13:38external range high here. So, again, to
339. 13:40take an entry, what I would focus on in
340. 13:42this permutation or this variant is
341. 13:45candle three's open and looking to get
342. 13:47on side with that.
343. 13:49So, what I want to do is I want to wait
344. 13:51for the next candle to open and utilize
345. 13:53a intercandle change in state of
346. 13:55delivery to get on side.
347. 13:58So, wait for a low to be printed,
348. 14:02right? And if if you're asking why I'm
349. 14:04choosing YM here, there is a logic to
350. 14:06this. This is going to be a lagging
351. 14:07asset distribution, which is not the
352. 14:09context of today's lecture, but I would
353. 14:11be getting on side with the YM here.
354. 14:13Waiting for that intercandle change in
355. 14:14state of delivery like so.
356. 14:18Right? Now, I want to be entering here.
357. 14:21I can utilize the body here as my stop
358. 14:23loss, and I can target the 2R, right?
359. 14:27And you can see
360. 14:29that price then tags us in. It
361. 14:30consolidates for quite a while. It's a
362. 14:32bit choppy, but eventually we do get
363. 14:34that expansion, right? 2R draw on
364. 14:36liquidity up here. So, this is an
365. 14:37example of utilizing Let's break this
366. 14:40example down one more time. What we have
367. 14:42is first
368. 14:43a two-stage divergence on the 4-hour
369. 14:45chart, which means we can trade away
370. 14:47from this 6:00 a.m. swing point, right?
371. 14:51Because it has a two-stage crack.
372. 14:53SMT between
373. 14:56swings
374. 14:58twice, which we know as a two-stage SMT,
375. 15:01right? SMT between these swings twice is
376. 15:03a two-stage. We trade away from this low
377. 15:06given a reversal context. Now, inside of
378. 15:09this candle, I did not catch that
379. 15:10reversal, which is fine because, as you
380. 15:13can see, it was quite choppy and no good
381. 15:14fractals were offered to me. But then
382. 15:1610:00 a.m. gives me a new two-stage
383. 15:19invalidation,
384. 15:20which in this case is where PSP confirms
385. 15:23the SMT, variant two.
386. 15:26And I can trade away from that swing
387. 15:28higher.
388. 15:29Let's take a look at another example.
389. 15:32So, that's one example done. I'm going
390. 15:34to do three examples today for this
391. 15:35video so you have something to refer to
392. 15:37while you study by yourselves.
393. 15:40Let's take a look at another example.
394. 15:42I think I have another one entered on my
395. 15:44chart right in here. So, this is going
396. 15:46to be on the daily chart. Again, we're
397. 15:48starting our analysis here. And you can
398. 15:50see the first stage crack in correlation
399. 15:53that forms on this daily chart is
400. 15:55actually going to be a precision swing
401. 15:57point. Now, why is this relevant?
402. 16:00Because this trades above a key level,
403. 16:03right, which is this all-time high.
404. 16:05So, we come in above this key level, and
405. 16:08we're anticipating a new phase of price
406. 16:09potentially.
407. 16:10So, we take out this high, and this
408. 16:12market closes as a precision swing
409. 16:16point. As you can see, the Nasdaq in
410. 16:18here
411. 16:19price is a down close candle. And the YM
412. 16:21price is an up close candle along with
413. 16:23the ES placing a down close candle. Now,
414. 16:26the next day, price opens, and you can
415. 16:30see it opens and takes out
416. 16:34the previous candle's low and high,
417. 16:37right, on the assets. Those divergence
418. 16:38there. So, let's see how we would
419. 16:40approach trading this from the context
420. 16:42of the next day. So, let's take a look
421. 16:45at that next daily open.
422. 16:49Right?
423. 16:50So, there is our precision swing point
424. 16:52on the daily chart. Just let this load
425. 16:53for 1 second.
426. 17:02As you guys know, my TradingView gives
427. 17:03me a little bit of issues when I'm in
428. 17:04replay mode.
429. 17:06I think it's to do with the cache, but
430. 17:08it's okay. We have some time. We can be
431. 17:09patient. So, if we look at the next day
432. 17:11open, we now have that precision swing
433. 17:12point. We are waiting for a two-stage
434. 17:15formation, right?
435. 17:17And given the proximity to its low on
436. 17:20these two assets, we are potentially
437. 17:22considering something like this forming,
438. 17:25right, with SMT divergence.
439. 17:27Now, we're going to be studying this and
440. 17:28waiting for one of these variants now to
441. 17:30form where we're going to have SMT
442. 17:33confirming that precision swing point,
443. 17:35right? So, we can trade away from that
444. 17:37true reversal.
445. 17:40So, the next daily candle will give us
446. 17:41some information as it opens.
447. 17:55Right? Our next daily candle, we have
448. 17:56failure swing put in
449. 17:58here at the open,
450. 18:00and we start to trade higher.
451. 18:02Let's play out some more candles to get
452. 18:03more information.
453. 18:11Okay. Let's Let's actually rewind right
454. 18:14until we get that two-stage formation.
455. 18:17So, you can see
456. 18:19we have a strength switch away from
457. 18:21these lows on Nasdaq. So, this Nasdaq
458. 18:24candle closed as a bearish precision
459. 18:26swing point.
460. 18:27Right? I'm I'm going to be switching to
461. 18:29my uh ethernet really quickly here. I
462. 18:30think it'll maybe improve the Wi-Fi. As
463. 18:33you can see, I'm doing this in one take.
464. 18:41Let's see if that helps at all.
465. 19:00All right. Let's go back into the charts
466. 19:03to our specific example.
467. 19:10Okay. Let's use the replay function and
468. 19:12look at how this formation
469. 19:15occurs.
470. 19:17So, as you can see, we have a strength
471. 19:19switch away from this daily candle,
472. 19:21which is a precision swing point, right?
473. 19:24We understand that this daily candle
474. 19:25here closed, first of all, as a PSP in
475. 19:29that key level, and now we're seeing the
476. 19:31YM drop lower into the previous day low,
477. 19:35which is going to be forming our true
478. 19:37reversal signature.
479. 19:39As you can see in here, we're also going
480. 19:41to form an SMT, right, with this swing
481. 19:45while a lower timeframe PSP forms.
482. 19:49So, now I can clearly see that this is
483. 19:52going to be my long opportunity once the
484. 19:54true reversal forms, right? Again, we're
485. 19:58going to evaluate if this low is taken
486. 20:00and we can trade higher. Okay?
487. 20:06Perfect. So, as you can see
488. 20:09right? We run the previous candle's low.
489. 20:12And in this case, you can see all three
490. 20:13assets end up taking out this previous
491. 20:164-hour low. So, this PSP to me is no
492. 20:19longer relevant as it's not a two-stage
493. 20:21PSP, but I can see that Nasdaq is going
494. 20:24from internal range liquidity targeting
495. 20:27external. The ES, likewise, is going
496. 20:30from this internal range of liquidity
497. 20:32targeting the external. And the YM is
498. 20:34going from external to potentially
499. 20:36target the external, right? With these
500. 20:38failure swings here.
501. 20:40This now at 10:00 a.m. becomes a true
502. 20:43reversal, right? I have that PSP
503. 20:47formation on the daily.
504. 20:48I now have a two-stage divergence at the
505. 20:51lows, right? So, you can see in here
506. 20:53we have the SMT forming between our
507. 20:55swings.
508. 20:57Right? Like this. Okay? Previous daily
509. 20:59low and that daily two-stage context as
510. 21:02well. Okay?
511. 21:04And again, the 4-hour is offering a true
512. 21:06reversal
513. 21:08with the two-stage
514. 21:09SMT.
515. 21:10So, the daily candle
516. 21:13is giving us the variant that we just
517. 21:15talked about.
518. 21:16Which is right here, right?
519. 21:18SMT confirming the PSP at the lows.
520. 21:21Now, the 4-hour is confirming this
521. 21:23narrative with its own two-stage.
522. 21:26Right? Again, we need to trade away from
523. 21:27a two-stage on our lower time frame
524. 21:29fractal as well. And that is going to be
525. 21:31SMT.
526. 21:33SMT, okay? I can involve myself in this
527. 21:36reversal candle.
528. 21:39All I need to do
529. 21:40is find a fractal to get on side with.
530. 21:43Which you can see
531. 21:44again, the logic is going to keep
532. 21:46printing, right? So, below the previous
533. 21:494-hour low, which is this line right
534. 21:52here. I am going to be looking for a
535. 21:55fractal with two-stage. I know the
536. 21:574-hour has formed a two-stage cracking
537. 21:59correlation.
538. 22:01Right? I know the daily has formed a
539. 22:02two-stage cracking correlation. Now, I
540. 22:04need to wait for a 1-hour or 30-minute
541. 22:06to get on side with. Well, look at this,
542. 22:09right?
543. 22:10We have this 10:00 a.m. candle in here
544. 22:13closing as a what?
545. 22:17Precision swing point, okay?
546. 22:19This is the nuance, guys.
547. 22:22And this 10:00 a.m. candle
548. 22:24closes as a precision swing point
549. 22:26with what?
550. 22:28An SMT of the previous candle low.
551. 22:32So, now I can trade this third candle
552. 22:35higher because a two-stage reversal has
553. 22:38been confirmed here.
554. 22:40On the Nasdaq, you're going to see that
555. 22:42we get a variant three formation on the
556. 22:4430-minute. We have that two-stage PSP
557. 22:47and then a two-stage SMT as well. Look
558. 22:49at this.
559. 22:50Right? Nasdaq
560. 22:52forms a down close candle with SMT.
561. 22:56And then we form a two-stage around it
562. 22:59and we can now trade this 10:30 candle
563. 23:01on Nasdaq as a C2 away from the low. And
564. 23:06we can trade YM as a C3 in a
565. 23:07continuation away from the low. So,
566. 23:10you're seeing this logic is fractal and
567. 23:12I will use it on every associated time
568. 23:15frame to frame high quality swing
569. 23:18points. So, how would I trade this?
570. 23:20Well, let's take a look at how I trade
571. 23:21it on both assets.
572. 23:23So, on the Nasdaq, let's start off with
573. 23:25the reversal. This is how I would trade
574. 23:27the C2.
575. 23:28Well, once I get this
576. 23:30variant three
577. 23:32look how similar this looks to this,
578. 23:34except on the lows, right?
579. 23:37I'm seeing the asset that made the
580. 23:38bearish candle trade a lower again and
581. 23:41then it's switching strength higher,
582. 23:43which is the strength switch phenomenon.
583. 23:46I will trade this using a change of
584. 23:48state delivery entry function
585. 23:50and targeting a 2R right? Or
586. 23:54you know, the relevant draw, right?
587. 23:55Whatever that is. Okay? That's how I
588. 23:57trade Nasdaq. And then for the YM, I'm
589. 24:00trading the 10:30 candle as a
590. 24:01continuation. So, look in here. 10:30
591. 24:04opens and we form this SMT. This
592. 24:07two-stage again, right?
593. 24:13Okay?
594. 24:13So, this is where we're forming the SMT
595. 24:15for this 30-minute continuation while
596. 24:16Nasdaq trades lower. And you can see all
597. 24:19I need to do is wait for that divergence
598. 24:21to form, which happens right in here.
599. 24:25And now I can trade a continuation of
600. 24:27this candle, right?
601. 24:31Again, in this case, you just take a
602. 24:33change of state delivery entry function.
603. 24:35You risk that true reversal low.
604. 24:38And you can target, right? Your 2R.
605. 24:43Look, YM puts in a double bottom here at
606. 24:44the true reversal low.
607. 24:48And you can target your 2R. Now, in this
608. 24:50case, because YM doesn't offer a deep
609. 24:52retracement and there's not a bulky
610. 24:54opposing run, I'm much more inclined to
611. 24:57trade Nasdaq as the reversal candle. As
612. 24:59you can see, this is a concept known as
613. 25:02strength switch.
614. 25:03Right? Or asset desynchronization and
615. 25:06resynchronization utilizing a trigger
616. 25:09because this asset goes from expansion
617. 25:12into consolidation. You can clearly see
618. 25:14that with phase of price.
619. 25:15We go from expansion
620. 25:17into consolidation into expansion. Or
621. 25:20this could be a retracement even, right?
622. 25:22Leaving failure swings.
623. 25:24For this asset going from a reversal
624. 25:27into an expansion. So, I would much
625. 25:28rather be trading this phase of price.
626. 25:31However, that is a topic for a new
627. 25:33lecture in the future. Or if you're in
628. 25:34Lathers, of course, we have some
629. 25:35concepts of I advanced premium discount
630. 25:37and asset sync in there already. Okay?
631. 25:40So, that's the second example, which is
632. 25:42leveraging the idea of a variant three
633. 25:45two-stage PSP and two-stage SMT with a
634. 25:48variant two, the classic two-stage PSP.
635. 25:50Let's take a look at one more example
636. 25:52and then I'll then you guys will have at
637. 25:53least, you know, a few examples to study
638. 25:55on your own.
639. 25:57Just at this point, if you're finding
640. 25:59this video helpful, if you have any
641. 26:00questions for me, please leave them in
642. 26:01the comments. I read them all. I really
643. 26:03do want to make this knowledge as
644. 26:04accessible as possible for you. Um just
645. 26:06give me some indication as to what
646. 26:08questions you still have after you've
647. 26:09watched it or if there's anything I
648. 26:11missed or anything that's still
649. 26:12uncertain to you, okay?
650. 26:14And I'll do my absolute best to try and
651. 26:16make sure I answer answer those
652. 26:17questions in the next video or in a
653. 26:18follow-up video.
654. 26:21Okay. Let's take a look at this example
655. 26:22in here and then we'll call this video.
656. 26:24Just got to want to be too long. So,
657. 26:26this example in here is going to be a
658. 26:29candle where we can trade candle two.
659. 26:31So, this is going to be a variant one
660. 26:33where the SMT formation
661. 26:36right? Is the second phase crack or the
662. 26:38second crack in correlation. And then
663. 26:40the precision swing point is actually
664. 26:41the first crack in correlation. So, what
665. 26:43we want to notice first of all is the
666. 26:45universal model variant. What are we
667. 26:47doing?
668. 26:48Well, you can see on the Nasdaq and the
669. 26:50S&P, we are reaching into this fair
670. 26:52value gap, these fair value gaps, right?
671. 26:54So, we're going from internal we
672. 26:56potentially can be targeting external
673. 26:58range liquidity, right? The range high.
674. 27:01Now, once we have this idea of a
675. 27:03universal model variant, what do we see
676. 27:06print?
677. 27:07Well
678. 27:08we see in here
679. 27:10that we have a
680. 27:12PSP
681. 27:14right?
682. 27:19And this PSP confirms the SMTs. My
683. 27:23apologies. This is going to be an
684. 27:25example of the variant two. I did a
685. 27:27couple of examples of these. These ones
686. 27:28are the harder ones. I think when SMT
687. 27:30confirms PSP, it's quite easy to trade.
688. 27:33Um
689. 27:34we can find a quick example of that as
690. 27:36well after. That's going to be when you
691. 27:37have SMT at swing at a PSP level. So,
692. 27:41let me quickly see if I can find one for
693. 27:43us.
694. 27:45Um
695. 27:45on the daily chart specifically.
696. 27:54Ah, right in here. So, an example of the
697. 27:57first we can actually do this day cuz we
698. 27:59already did an example two. This one
699. 28:01here you can see is a precision swing
700. 28:03confirming the SMT variant two. So, the
701. 28:06next day candle, we can expect
702. 28:07expansion.
703. 28:08Right?
704. 28:09On this asset, which we get, which is a
705. 28:10very clean daily example, right? Let's
706. 28:13take a look at example of example one,
707. 28:16which is right up in here, okay?
708. 28:22Cool.
709. 28:23So, in this example, I want to show you,
710. 28:25right? Variant one, which is where an
711. 28:27SMT confirms a PSP.
712. 28:30And what we're going to notice here
713. 28:35right here
714. 28:37is that we price in
715. 28:39this precision swing point in the market
716. 28:41right in this candle, okay?
717. 28:44So, again, this candle drives into a
718. 28:46relevant level, which is SMT with this
719. 28:49high.
720. 28:51Hm? So, we have SMT formation.
721. 28:56Here, okay? And we we price in this
722. 28:59precision swing point, okay?
723. 29:03Let's draw it out on the middle asset as
724. 29:05well, which is the S&P.
725. 29:06Now, the next day
726. 29:09what do we notice?
727. 29:11Well, these assets here
728. 29:13the Nasdaq and our S&P, this should be
729. 29:16the S&P.
730. 29:22Petition to make TradingView a little
731. 29:23bit
732. 29:24more reliable for me in backtesting
733. 29:25mode.
734. 29:28Right? You can see we have that
735. 29:29precision swing point form. Right? This
736. 29:31asset's already shown a reversal off the
737. 29:34high.
738. 29:35Right? So, we have another PSP actually
739. 29:36in here, which we can use the same logic
740. 29:38for.
741. 29:39So, this comes in, drives into a
742. 29:44Okay?
743. 29:45Now, the next day
744. 29:48based on the closure of this asset in
745. 29:50the proximity to these highs, it comes
746. 29:52above and we're forming SMT at that
747. 29:55high. So, this is an example where we
748. 29:57can trade
749. 29:58right? The SMT is the second phase crack
750. 30:02and the PSP is the first. I can trade
751. 30:05this Nasdaq candle lower. So, how would
752. 30:07I do that?
753. 30:08Well, look.
754. 30:09I'm going to use the same logic as
755. 30:10before, okay? So, YM is running above
756. 30:13the previous day high here.
757. 30:18And let's look at the daily open and how
758. 30:19we'd approach trading it.
759. 30:25Again, we want to be trading Nasdaq
760. 30:26lower here.
761. 30:33I apologize for the delays in my trading
762. 30:34to you guys. It might be my uh internet
763. 30:36as well. I'm in a rural area at the
764. 30:38moment, so
765. 30:39here you can see
766. 30:41the YM drives above the previous day
767. 30:43high at the daily open. Nasdaq is
768. 30:45staying in respect, right? Of this first
769. 30:48stage crack, right? At 2:00 p.m. that
770. 30:50formed like this.
771. 30:53Now, let's see if we get some sort of
772. 30:54reversal and we can look how we will
773. 30:56trade that using the same logic. So, the
774. 30:57daily chart now has the two-stage PSP,
775. 31:00right? Crack in correlation one
776. 31:03is equal to the PSP. Crack in
777. 31:05correlation two
778. 31:06is equal to SMT. So, we can trade C2 on
779. 31:10the daily on YM, C3
780. 31:14on the daily on NQ lower, which is why
781. 31:16we're looking to trade this lower,
782. 31:18right? This asset lower. Now, I'm going
783. 31:20to use that same logic on the lower time
784. 31:22frame, okay?
785. 31:24So, you can see in here we have a
786. 31:25reversal here at 2:00 a.m., right? Now,
787. 31:28does this reversal have any sort of SMT?
788. 31:30Well, it does, right? We have a
789. 31:32two-stage divergence forming.
790. 31:34So, not only with this previous day high
791. 31:36and 2:00 p.m.
792. 31:38we're also forming a divergence at this
793. 31:40high of day
794. 31:42and like this
795. 31:44where London drives above these previous
796. 31:48highs.
797. 31:49Same with the S&P, you're noticing that.
798. 31:52And you can see we now distribute lower.
799. 31:56And so, how would I approach trading
800. 31:57this? Let's play out the whole day and
801. 31:58I'll show you how I would approach
802. 31:59trading this, okay? So, in here I want
803. 32:02to be trading in this 6:00 a.m. candle.
804. 32:04So, for me, I'm going to be looking for
805. 32:06a new fractal as a continuation away
806. 32:08from the high of day, which is London
807. 32:11towards maybe this low, right? Just the
808. 32:13low-hanging fruit.
809. 32:15So, now I'm going to drop down and use
810. 32:17my 30-minute or 1-hour fractals and the
811. 32:19same two-stage logic for this new 4-hour
812. 32:22candle.
813. 32:27So, I'm trading away from the two-stage
814. 32:28high.
815. 32:29We open up this new 4-hour candle.
816. 32:33Let me see if I get any sort of good
817. 32:34logic or any sort of clean two-stage
818. 32:36reversal here.
819. 32:38This is very nice on the 30-minute
820. 32:39chart. I can see it right away.
821. 32:41So, 9:00 a.m.
822. 32:43is a precision swing point in here.
823. 32:47Okay?
824. 32:48This is a precision swing point close
825. 32:51with the S&P.
826. 32:55And more importantly, this asset
827. 32:58right?
828. 33:00In here, which is a precision swing
829. 33:01point
830. 33:03trades into a key level. That key level
831. 33:06is these highs, okay? Like this high
832. 33:08right in here on a lower time frame.
833. 33:09Now, if I can find any sort of two-stage
834. 33:11around this, I can now trade lower. And
835. 33:14what do you notice in the next candle?
836. 33:17So, if I use the replay function in
837. 33:18here, you're going to be able to see in
838. 33:19the next candle I get offered my
839. 33:22two-stage entry signature. So, now I can
840. 33:23qualify the high of this fractal
841. 33:27with what? SMT confirming PSP variant
842. 33:32one. And I can trade this as a C2
843. 33:35on YM towards this obvious draw where I
844. 33:38can trade this as a C3 on Nasdaq towards
845. 33:41the draw on liquidity. I'm going to
846. 33:42favor trading C3 here on Nasdaq and
847. 33:44that's a topic for another video in the
848. 33:46future, which is relative strength and
849. 33:47why I would trade this market. But
850. 33:49again,
851. 33:50the logic is quite simple. I wait for
852. 33:52that two-stage to form
853. 33:55which does right here.
854. 33:57Once that two-stage forms, I have a
855. 34:00obvious area where I want to get
856. 34:01involved, which is this inefficiency.
857. 34:04And you can see this imbalance in here,
858. 34:05SIBI.
859. 34:06All I need to do is take a market sell
860. 34:08at the SIBI
861. 34:09right? Covering the high and targeting
862. 34:11the low.
863. 34:12Or I can use a 2R. So, this is how I'd
864. 34:15approach trading
865. 34:17this 4-hour candle. The 6:00 a.m. 4-hour
866. 34:20candle, right? Is forming its high in
867. 34:22here with that two-stage. Again, it's
868. 34:25fractal. I'm trading away from a daily
869. 34:27two-stage, a 4-hour two-stage, and then
870. 34:30a 1-hour candle or 4-hour candle is
871. 34:32giving me that 30-minute two-stage as
872. 34:34well.
873. 34:34So, I hope today's video made some sense
874. 34:37for you guys. Let me know what questions
875. 34:39I still have to answer, right? What
876. 34:41components you're still a little bit
877. 34:43unsure of. This stuff is extremely
878. 34:44powerful and I utilize it extensively in
879. 34:47my trading model. So, yeah, put your
880. 34:49comments in the section below. Leave a
881. 34:51like if this helps. Subscribe to the
882. 34:52channel if you're not already. And yeah,
883. 34:54I'll see you guys in the next video.
884. 34:55Peace.