ICT MATERIAL REFERENCE

ICTMATERIALREFERENCE
Version1.09
January06,2013
TABLEOFCONTENTS
PSYCHOLOGY
ICTTRADINGPLAN
TOPDOWNANALYSIS(BIASANDDIRECTION)
DETAILEDTOPDOWNANALYSISRULES
UNDERSTANDINGCOMMITMENTOFTRADERS(COT)
MARKETPROFILES
SUPPORT/RESISTANCEAREAS
AREASOFCONFLUENCE
FIBONACCI
OTEPATTERNS
SESSIONTRADING
PRICEACTION
HIGHPROBABILITYPRICEPATTERNS
TRADINGSWINGS
ICTTRADINGCONCEPTS
ICTTRADINGMETHODS
INSIDERSTRADINGMETHODS
PROFESSIONALSUSEOFINDICATORS
MISCVIDEONOTES
TRADERULES
RISKMANAGEMENT
TRADINGINSIDETHERANGE
PETERSICTVIDEONOTES
ICTTERMSANDABBREVIATIONS
TIONS
PSYCHOLOGY
Belowisbasicpsychologyatraderneedstounderstandbeforebeginningtotrade.Ensurethefollowing
conceptsareunderstoodandplannedoutbeforetrading:
1. Understandtheassetclassyouaretrading(i.e.dontfollow20pairsatonce)
2. Thinkindependentlyanduseyourownanalysis(turnofftheTVandrumorsites)
3. Developandadheretoyourpersonaltradeprofileandcompressivetradeplan
4. Utilizeandexerciseimpeccableequitymanagement(11.5%riskpertradefornew,2%forexp.)
5. Dontassumetoknowwherepricewillgo(i.e.nopredictions),setupyourtradesperyouranalysisin
anticipationIFthemarketmovesinyourdirection
6. Thinkintermsofprobabilityandnotabsolutes,therearenoabsolutesintrading
TradelikeaSniper
TraderswholearntopickandchoosetheirtradeslikeaForexsniperaretypicallytheoneswhosucceed.
Traderswhofailactlikemachinegunsbyshootingateverythingtheysee(overtrading)and/ortendtorunout
ofammo(money)veryquickly.
1. LessisMore
Waitpatientlyforanticipatedtargettocomeintoviewasaresultofyourownanalysis.
Actonlywhenyoursetofcriteriaaremet.
3. HigherTimeFrames
Thehigherthetimeframethemorereliablethetarget,informationispresented.Lookingat
MonthlyorWeeklytimeframesonlydoesnotgiveyouenoughtargetstotrade.
BasemostofyouranalysisoffofDailyand4Hourchartstoidentifyhighvalue,probability
targets.
Workwiththelowertimeframes(1Hourand15Min)tomanagethecircumstancesaroundthe
trade.
4. Patience
Mostbeginningtraderslosemoneyinthemarkets,andmostbeginningtradersarealso
anythingBUTpatient.
Forbeginnertraders,fightthetendencytomakeyourselftradebecauseyouhavetheideathat
tradingwillearnyoumoney.Onlysmarttradingwithaplancanmakeyoumoney.
Waitforconfirmationbymultiplefactorsbeforejumpingintoatradetoavoidfalsemoves.
5. FearandGreed
Combatnaturaltendenciesoffearandgreedbydocumentinganddiligentlyfollowinga
tradingplan.
Maketradingaboutfollowingrules,plans,andriskmanagement.NOTaboutemotions.
ICTTRADINGPLAN
EverynightatMidnight(NewYork)IcalculatenewdayPivotPointsfortheCable(GBP/USD)andpostthem
onmycharts.IthennotekeysupportandresistancelevelsfromMonthlychartsdowntofiveminutecharts.
IdeterminemytradebiasforthenewsessionandwhileIdolookfortradesinthisdirection,I'mnotmarriedto
thenotionthemarketmustbendtomyexpecteddirection...Iamflexible.ThemarketisalwaysrightandIcan
acceptbeingwrongeverydayaslongasIcanbewillingtochangemybiasbasedoncurrentpriceaction.
IfwearetradinginthePivotlevelsabovetheCentralPivotlevel...Idemandalotforbuys.IdeallyIfocuson
tradesthatshowashorttermoverboughtconditionandpriceintheareaatoraboveR1orR2forshorts.Thisis
evenmorepowerfulifthepreviousdayshighisslightlybelowtheR1orR2level.
Inotherwords,IlookforfalsebreakoutsabovepreviousdayshighsatR1andorR2levels.Iusestopsand
limitstogetmeinatthelevelsandusea30pipstoporlessinitially.Asthetrademakesthespreadupand
movesinmyfavor,Ilooktoreducetheriskandtightenthestop.Myexitsarepredeterminedandcanbeat
marketifthingsgethairy.
Iusecandleformationsandbasicchartpatternstodeterminelowrisktradesandtargetsaretypically2530
pipsbeforescalingoutsomeoftheposition.Igenerallytrytoholdfortheaveragedailyrangeinpipsbefore
exitingfortheremainingportion.
Thereversecanbesaidforbuys.IlikeshorttermoversoldconditionsandpriceintheS1andorS2levels
undertheCentralPivot.Ilikebuyingpreviousdaysloworafalsebreakunderthislevelgiventheconditions
warrantabounce.
Iliketradingatthefigure,themarketslikeroundnumbersandoptionsgettrippedatthesepointssotheyarean
easytrademultipletimespermonth.Youcantradeforalivingjustdoingthatasamethod,newtraders!
SohereiswhatIwillbedoingthisweek:
Iwillshortpreviousdayshighsandbuypreviousday'slows.IfIgetstoppedoutandthemarketfindssupport
abovethepreviousdayslow,Iwillbuy.Ifthemarketfindsresistanceatthepreviousdayshighafterbeing
penetratedIwillshortit.
Itaketwotradesperdaymax,ifIwinonthefirstIcloseshopandbankthewins.IfIloseonthefirstItryto
capturethetradeasdescribedabove...ifitlosestoo,Icloseshop.Noemotions,nomussnofuss.
IfaPivotlevelfindsitselfattheFigure,sayCable1.51,Iwilllooktobuyitatthatpointifpricehastraded
downtoitandconverselyforpricetradinguptoit.IjustfoundtheMeetPips.comsiteandcreatedanaccount.I
willdomybesttohighlighttradeswiththisasitapparentlygivesrealtimeorclosetoittracking?
TOPDOWNANALYSIS(BIASANDDIRECTION)
1. TheBasicTopDownAnalysis:
a. StudyUSDollarIndexforgeneralmarketdirection
b. RefertotheCOTreportandnotetheCommercialTrader'snetposition
c. ConsidertheCommercialTradersasthe"SmartMoney"thustrytopositionliketrades
d. Refertoandmonitordailythe2,5,10,and30yearnotelinechartoverlay
e. OntheTreasuryNoteoverlay,lookforfailureswingstoprovidecluestothefuturedirection
oftheUSDollar
f. Iftheyieldsaredroppingandoneofthethreeyieldsfailtomakealowerlow,lookforUS
Dollartobounce
g. Ifyieldsarerisingandoneofthethreeyieldsfailstomakeahigherhigh,lookforUSDollar
toslidelower
h. AbullishUSDollartranslatestolowerforeigncurrencies
i. AbearishUSDollartranslatestohigherforeigncurrencies
j. Lookatthemonthly,weekly,anddailychartsofthecurrencypairstraded,notingkeysupport
andresistancelevels
k. Determinethemarketflowonthedaily,4hour,and1hourchartsviaswinghighsandlows
l. Trytotradeinlinewiththelongterm(topdown)directionalbiasandwhenthe4hourmarket
flowisinsync.Thiswillfiltermanyfalsesignalsandassistusinhighprobabilitytradesetups
m. Whenthereisnocleardefinabledirection,remainflatandsidelineduntilthereisaclearbias
3. MarketBias
a. Biasisdeterminedbyswings,usefractalstohelpquicklyandvisuallyidentifyswingareason
thedaily,4hr,1hr
b. Wanttohaveconfluenceofdaily/4hror4hr/60m,orall3intermsofswings
c. Whenswinglowfractalisformed,thePAmusttradebelowthatlowfractaltothedownside
formarketflowtobeconsideredshort
d. Ifpricedoesnottradebelowthelowfractalformed,thenpriceactionislong
e. Onlyconsiderfractalstotheimmediateleftofthepriceaction,priorfractalsarenolonger
valid
4. HigherTimeFrameAnalysis
a. HigherTimeFrametoLower
i. MonthlyChart>IdentifykeyS&Rlevelsanddirection
ii. WeeklyChart>IdentifykeyS&Rlevelsanddirection
iii. DailyChart>IdentifykeyS&Rlevelsanddirection
iv. 1HourChart>Spendmostofyourtimeherelearningtendenciesofhourly
v. 15MinChart>Timeframewheremosttrends,projections,objectivesaremade.Trade
managementtimeframe
vi. 5Min>Entertradesat5min
b. StopsIftherearetradesthatrequiremorethana30pipstoploss,probablyletthattradego
andlookforanotheropportunitytoenter
c. RespectableSwingWhenlookingforswingstodrawFib,etc.,lookforpricemovesof40
pipsorgreater
d. SeasonalTendencies
i. USD
1. TypicallytopsoutinthemiddleofFebruaryanddeclinesintomidMarch.
2. LasthalfofMarchisusuallystrongandthensellsoffinApril(andlastbitof
March).
3. BeginningtomiddleofMayisastrongtimefortheUSD.
4. MiddleofJuneusuallymarksashorttermhighandtheUSDdeclinesintothe
endofAugust.
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5. RallyfrombeginningofAugusttoearlytomidSeptember.
6. Afterthisthelinesbecomedivergentmeaningsignalsarelessclearandno
strongseasonalpatternsareblatantlypresent.
ii. EUR
1. TheEurotypicallyformsabottominmidFebruaryandthenmoveshigher
intomidmarch.Apullbackthenoccursthenweseeanotherclimbintothe
endofApril.
2. AnotherlowinJunewhichclimbsintolateJuly/earlyAugust.
3. UsuallyadeclinefromearlyAugusttoearlySeptember.
4. EarlytolateSeptemberbeginsabullishtrendforEurothroughyearendwith
apullbackinOctober.
iii. GBP
1. ThePoundtypicallyformsabottominearlyMarchandthenmoveshigher
intotheendofApril.
2. EarlyMaytomidMayisusuallyabearishtime.
3. AbottomtypicallyformsagaininmidMayweseeamovehigherintoearly
August.
4. PriceusuallypeakearlyinAugustanddeclineintomidSeptember.
5. PricepeaksinearlyNovemberandthepriceslidesintomidtolateNovember.
6. PricesbottominlateNovemberandrallyintotheendoftheyear.
DETAILEDTOPDOWNANALYSISRULES
1. LongTermAnalysisUseUSDXGeneralmarketdirection
a. USDXisameasureofthevalueoftheU.S.dollarrelativetomajorityofitsmostsignificant
tradingpartners.Basketindexof6currencies(theeuro,Japaneseyen,Canadiandollar,British
pound,SwedishkronaandSwissfranc.)
b. RiskOffEnvironmentIfUSDIndexispoisedtogohigher(lackofrisktolerance),foreign
currenciesmayseesellingpressure.Example:GBP/USDwouldmovelower
c. RiskOnEnvironmentIfUSDIndexispoisedtogolower(risktolerance),foreigncurrencies
mayseebuyingpressure.Example:GBP/USDwouldmovehigher
2. COT(CommitmentofTraders)
a. ConsidertheCommercialTradersastheSmartMoney.Examineactualpositionsoftraders
andthenetchangefrompriorreport(commercials)
b. Lookforextremenetpositionsinthedata,warnofmajortrendchange
c. Commercialsentimentiscontrarytocommercialactivity(i.e.hedging)
i. Whensentimentisbearishwhilecommercialhedgesholdlargenetlongs,expecta
rallytounfoldortrendchangelong
ii. Whensentimentisbullishwhilecommercialhedgesholdlargenetshort,expect
sizabledeclinetounfoldinthemarket
iii. Whenaboveisnotineffect,tradethetrendwithLargetraderscommercialsare
hedgersonothersideofpositions,largetraderswillhavelargestnetonatextreme
levels,lookforextremesbetweenlargeandcommercialpositionsforclueofmarket
change
4. BondYieldAnalysisTNoteAnalysis
a. DebtInterestRates
i. Increasinginterestrates,increasedforeigncurrencyvalue,decreasedlocalcurrency.
ii. Decreasinginterestrates,decreasedforeigncurrencyvalue,increasedlocalcurrency.
b. BondYieldDivergenceMonitoryieldsof2,5,10,and30yearnotes.Identifydivergenceof
oneormoreoftheyieldsasachartoverlay.
c. Asyieldsmovehigher(orlower)atsomepoint,1willformafailuresignasoneyieldfailsto
posthigherhighsorlowerlowsonthelinechart,thisissignalconfirmationthatUSDXpoised
tochangedirection
5. MarketFlowFractals
a. SwingHighsIdealsetupishavingtwolowerhighcandlesoneachsideoftheFractalHigh
candle.MostrecentSwingHighisthePivotPointandmustbebreachedtotheupsidebefore
MarketFlowturnsup.
b. SwingLowsIdealsetupishavingtwohigherlowcandlesoneachsideoftheFractalLow
candle.MostrecentSwingLowisthePivotPointandmustbebreachedtothedownside
beforeMarketFlowturnsdown.
c. OnlythemostrecentSwingHigh/LowareutilizedfordeterminingMarketFlowwithold
Swingsdisregarded
d. ThereisstrongagreementofMarketFlowifDaily,4Hour,and1Hourtimeframesareinline.
Focuson4HourMarketFlowforconsistency.
e. Fractalsbydefinitioncanbeidentifiedfromthehighertimeframeondowntoeachlowertime
frame.YoushouldbeabletofindanOTEateachtimeframedowntothelowerones.(July12
ProTradersClub32:00)
6. FuturesContracts
a. Lookatfuturecontractclosingandwhethertheleadmonthclosedhigherthan2ndmonth(i.e.
thismonthscontractclosedhigherthannextmonthscontract)
b. Backwardationwhen2ndmonthcloseslowerthanleadmonth,indicatesthatpremiumisno
leadmonthandthereforethereisstrongdemandforthecontract
c. Ifahugedifferenceincloseprices,canindicateachangeinpricemovementthefurtherthe
pricedifferenceinthefuturescontractthemorepricewilllikelychangetowardsthefuture
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price
7. OpenInterest(OI)
a. Thisisthetotalnumberoflongsandshortsmovingintothefuturesinstrument
b. IfincreaseinOI,indicatecommercialsincreasingnetshorts,whenOIdecreases,commercials
reducingnetshorts(i.e.pricewillgoup)
c. OIusefulinthefollowingcase:wanttoseemarkettradeindirection,gointoconsolidation,
thenseeOIdroporrisearound15%suddenlyduringconsolidation
i. Ifmarkettradesup,consolidates,andOIdrop,probabilitymarketwillmoveup
ii. Ifmarkettradesdown,consolidates,andOIincreases,probabilitymarketwillmove
down(ascommercialsareaddingtohedge)
d. CannotuseOImovebyitself
KEYPOINTS:
Tradeinlinewiththelongterm(TopDown)directionalbiasandwhenthe4hourMarketFlowisin
sync.
Whenthereisnocleardefinabledirection,weremainflatandsidelineduntilthereisaclearbias.
UNDERSTANDINGCOMMITMENTOFTRADERS(COT)
1. WhytheCOTReport?
Itisdifficulttoquantifyvolumetradedateachpricelevelsincethecurrencymarketisdecentralized
andthereisnosingleexchangethattracksalltradingactivities.Inplaceofvolumebasedtrading,
manytraderslooktotheCommodityFuturesTradingCommission's(CFTC)CommitmentsofTraders
(COT)reportformoreinformationonpositioningandvolume.Ifusedwisely,theCOTdatacanbea
prettystronggaugeofpriceaction.Thecaveathereisthatexaminingthedatacanbetricky,andthe
datareleaseisdelayedasthenumbersarepublishedeveryFridayforthepreviousTuesday'scontracts,
sotheinformationcomesoutthreebusinessdaysaftertheactualtransactionstakeplace.
2. ReadingtheCOTReport
Hereisaquicklistofsomeoftheitemsappearinginthereportandwhattheymean:
CommercialDescribesanentityinvolvedintheproduction,processing,ormerchandisingof
acommodity,usingfuturescontractsprimarilyforhedging
LongReportIncludesalloftheinformationonthe"shortreport",alongwiththe
concentrationofpositionsheldbythelargesttraders
OpenInterestThetotalnumberoffuturesoroptionscontractsnotyetoffsetbyatransaction,
bydeliveryorexercise
Noncommercial(Speculators)Traders,suchasindividualtraders,hedgefundsandlarge
institutions,whousefuturesmarketforspeculativepurposesandmeetthereportable
requirementssetforthbytheCFTC
NonreportablePositionsLongandshortopeninterestpositionsthatdon'tmeetreportable
requirementssetforthbytheCFTC
NumberofTradersThetotalnumberoftraderswhoarerequiredtoreportpositionstothe
CFTC
ReportablePositionsThefuturesandoptionpositionsthatareheldabovespecificreporting
levelssetbyCFTCregulations
ShortReportShowsopeninterestseparatelybyreportableandnonreportablepositions
SpreadingMeasurestheextenttowhichanoncommercialtraderholdsequallongandshort
futurespositions
Taking a look at thesamplereport,wesee that openinterest onTuesday June 7, 2005, was193,707

contracts, an increase of 3,213 contracts from the previous week. Noncommercial traders or
speculators were long 22,939 contracts and short 40,710 contracts making them net short.
Commercial traders, on the other hand, were net long, with 19,936 more long contracts than short
contracts (125,244 105,308). The change in open interest was primarily caused by an increase in
commercialpositionsasnoncommercialsorspeculatorsreducedtheirnetshortpositions.
3. ThreePrimaryPremises
a. Flipsinmarketpositioningmaybeaccuratetrendingindicators.
b. Extreme positioning in the currency futures market has historically been accurate in
identifyingimportantmarketreversals.
c. Changesinopeninterestcanbeusedtodeterminestrengthoftrend.
4. COTCommitmentofTraders
a. CommercialsMostinformedgroupandprovidecountertradepositionforthemajorityof
openinterestinthemarket.ThesearetheSmartMoney.
i. StandardCommercialAccumulationPhase:
ii. Commercialsarethelargestshortsellersinthemarketplacebecausetheyarehedging
theirbusinessneeds.
iii. Commercialscontrolthelongtermtrendbasedon12monthor4yearextremes.
1. Comingfrom12monor4yrextremenetshort,we'reinsellprogram.
2. Comingfrom12monor4yrextremenetlong,we'reinbuyprogram.
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b. LargeSpeculatorsLargefirmtraders,funds,andhighlevelprivatespeculatorswhoforthe
mostparttrendtrade.Generallyontherightsideofthemarket
c. SmallSpeculatorsMajorityoftraders.TheyaretheDumbMoney.Consistentlywrongon
thesideofthemarket.
6. OpenInterestinCOTData
a. Openinteresttendstoincreasewhennewmoneyispouredintothemarket,meaningthat
speculatorsarebettingmoreaggressivelyonthecurrentmarketdirection.Thus,anincreasein
totalopeninterestisgenerallysupportiveofthecurrenttrend,andtendstopointtoa
continuationofthetrend,unlesssentimentchangesbasedonaninfluxofnewinformation.
b. Conversely,overallopeninteresttendstodecreasewhenspeculatorsarepullingmoneyoutof
themarket,showingachangeinsentiment,especiallyifopeninteresthasbeenrisingbefore.
c. Inasteadyuptrendordowntrend,openinterestshould(ideally)increase.Thisimpliesthat
longsareincontrolduringanuptrend,orshortsaredominatinginadowntrend.Decreasing
openinterestservesasapotentialwarningsignthatthecurrentpricetrendmaybelackingreal
power,asnosignificantamountofmoneyhasenteredthemarket.
d. Therefore,asageneralruleofthumb,risingopeninterestshouldpointtoacontinuationofthe
currentpricemove,whetherinanuptrendordowntrend.Decliningorflatopeninterestsignals
thatthetrendiswaningandisprobablynearitsend.
e. Whenopeninterestrisesordropsquickly,likelypricemovesintheoppositedirection.
f. ConventionalPriceRelationship:
i. OpenInterestUp,priceupisbullish
ii. OpenInterestUp,pricedownisbearish
iii. OpenInterestDown,priceupisbearish
iv. OpenInterestDown,pricedownisbearish
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MARKETPROFILES
1. ConsolidationRangeProfile
a. ConsolidationRangeProfileUnderstandwhereyouareinthemovethatmayalreadyexist.
Ifinbearishmarketenvironment,duringaconsolidationrangeyoucanidentifyfalse
breakoutstotradeagainstoropportunitiestoentershortwithanOTE.
b. EstablishPositionDuringConsolidationPeriodsofconsolidationaretypicallythe
opportunitytoestablishyourpositioninanticipationofwherethetrendwillgo.Lookfortimes
candles/barsaresmalltoentertrades.
c. TradeEntryonOpposingCandleYouwanttoentertradeswhenthebar/candlegoesagainst
themarketprofiledirection.Ifprofileislong,entertradesonadowncandle.
d. ICTPreferenceICTprefersnottofollowtradesintonewterritoryasitusuallytriestocome
backdowntotherange.Basetradingonknownlevels.
2. BreakoutValid&FalseProfile
3. TrendingProfile
4. ReversalProfileTheprofilewillformaselldayduringabullishAsian,LondonandpossiblyNY
sessionbutfailtoholditsrallyandreverselower.ItwillformabuydayduringabearishAsian,
LondonandpossiblyNYsessionbutwillfailtoholditslowerpriceslideandreversehigher.Typically
NYO,LCandlateNYsessionwillpostthereversal.
a. SwingDown
i. Swingdowntoakeyweeklyand/ordailysupportandbreakthroughbeforeturningup
andreversing.
ii. Reversalmaybreakintonewsessionhighsbeforeitsettlesintoatradingrangefora
newtradingday.
b. SwingUp
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i.
Swinguptoakeyweeklyand/ordailyresistanceandbreakthroughbeforeretracing
down.
ii. Reversalmaybreakintonewsessionlowsbeforeitsettlesintoatradingrangefora
newtradingday.
5. Search&DestroyTrendingSidewaysMarket:Bankswilllooktoclearoutstopstogainadditional
liquidity.
a. Arangeformsafterswinglowandswinghigh.SupportandResistanceareasareformedinthe
range.Marketwilllooktotakeoutthelongsbydippingbelowtheestablishedsupportlevelof
therange.
b. Nextthemarketwilllooktotakeouttheshortsbyshootingbackupabovetheresistance
levels.
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c. Dealerswillthentargetthestopsaroundtheswingpointsandshootaboveprevioushighsto
triggerthestopsoftheshorts.
d. Tradersthinkingthatthepreviousmovefinallysignalsabuybreakoutwillthenbefooledas
thedealerswilllooktotakeoutthestopsaroundthepreviousswinglowpoint.
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SUPPORT/RESISTANCEAREAS
1. Support(Demand):Thisisanareawherebuyersarelikelygoingtooverwhelmsellerscausingthe
markettogoup.Whenamarketfallsdowntoapriorlow,itismoresignificantthanwhenamarket
fallsdowntoapriorhigh.
2. Resistance(Supply):Thisisanareawheresellersarelikelygoingtooverwhelmbuyers,causingthe
markettogodown.Whenamarkettradesuptoapriorhigh,itismoresignificantthanwhenamarket
tradesupapriorlow.
3. Supportcanbecomeresistanceandresistancecanbecomesupportifpricesbreakthroughtheseareas.
4. ConfluenceofS&Rareasisakeyconcepttothetradeentry.Thelistingsbelowareconsideredkey
S&Rareastoconsiderforconfluence.Thereisnorightorwrongconfluencesetup,themore
confluenceyouhavethehighertheprobabilitythetradeoutcome.TheeasiestwaytofindKeylevels
toanticipatereactionsinthefutureistobeginwiththelongtermchartsandworkyourwaydownto
thelowesttimeframeyouintendtotradefrom.
5. NaturalS&RLevels
a. High/Lowsbasedoff:12monthsrollingQuarterlyMonthlyWeeklyDaily4hr
i. MonthlyChartsNotethehighsthemarketturnedatandthelowsthemarketturned
at.Theselevelsaretheobviouslevelsthatanyquickglancewouldreveal.Donot
strainyoureyesandwastetimewonderingifaspecificlevelisaKeylevel...itis
becauseitisobvious.Thesemarketturningpointsareobvious...donotoverthink
them.
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ii. WeeklyChartsThelongtermMonthlyKeyS&Rlevelswillappearonthesecharts
aswellasnewKeyLevelstheMonthlytimeframewasnotsoapparenttosee.
iii. DailyChartsThisiswherethebanksworkfrom.AllthelongertermMonthlyand
WeeklyS&RlevelsaretobeplottedonthisDailytimeframe.TheDailychartwill
presentitsownKeyS&Rlevelsandtheseneednotingaswell.
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iv. IntradayTimePeriods(4hour,1hour,and15min)Thesewillshowexcellent
reactionlevelstoanticipatetradestosetuponfarinthefutureandthisisthekeyto
propertradeselectionanddevelopingpatience.NotetheKeyS&Rlevelsonyour
individualintradaychartsyouliketouse.
b. SessionHighsandLows(Asiamostimportant)
i. AsianSessionsetstheparametersforthefollowingLondonsession
1. Begins:7pmESTor12amGMT
2. Ends:4amESTor9amGMT
3. Allowupto1hourbeforeandafterthesetimes
ii. LondonSessionsetstheparametersforthefollowingNewYorksession
1. Begins:3amESTor8amGMT
2. Ends:12pmESTor5pmGMT
iii. NewYorkSessionsetstheparametersforthefollowingnewtradingsessionstrading
1. Begins:8amESTor1pmGMT
2. Ends:5pmESTor10pmGMT
c. IntradayFractal(moneyflowandITLorITH)Usethe15minuteasagotochartfor
monitoringshorttermswingsforlowerriskentriesandfinetuningstopplacementonopen
positions.
d. TrendLineAnalysis(channels,obvioustrends)
6. ImpliedS&RLevels
a. FibLevels
i. Retracement
ii. Extensions
b. PivotPoints
i. MonthlyPivots
ii. WeeklyPivots
iii. DailyPivots
7. OtherS&RLevels
a. PreviousDayClose/Open
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b. InstitutionalPriceLevels(IPL)InstitutionalTradersmaydeterminetimingoftradesaround
100pippricelevels(0.20,0.50,0.80,etc.)
c. Tradingtoapriorloworhigh
d. DailyADRhigh/low
KEYPOINTS:
Themoretimesasupportandresistanceareaishit,themoresignificantitis.
OnlythemostrecentSwingHigh/LowareutilizedfordeterminingMarketFlowwitholdSwings
disregarded.
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AREASOFCONFLUENCE
1. MarketStructureAsmarketsdeclineandmakelowerlows,eachnewswinglowerinpriceis
anchoredordirectlyreactingtoanotherswinghigherorlower.Everyswinginpricehasanequal
counterswingitisunfoldingfromandattemptingtofulfill.
a. AnyShortTermLong(STL)thathasahigherSTLonbothsidesofitisconsideredan
IntermediateTermLow(ITL).AnyITLthathasahigherITLonbothsidesofitisconsidered
aLongTermLow(LTL).
b. AnyShortTermHigh(STH)thathasalowerSTHonbothsidesofitisconsideredan
IntermediateTermHigh(ITH).AnyITHthathasalowerITHonbothsidesofitis
consideredaLongTermHigh(LTH).
c. Tradeprimarilyonthesideofthetrend.Longonbullishandshortonbearish.
2. SwingPointsMarketdeclinesandmakeslowerlowsoneachnewswinglowerinprice,thepriceis
anchoredordirectlyreactingtoanotherswinglower
a. Eachswinginpricehasequalcounterswing
b. PAneedstomoveatleast40pipstobeconsideredaswing(onGUatleast)
c. Markettradesfromshorttermlows(STL)toshorttermhighs(STH)backtonewSTL.At
STLandSTH,PAwilldevelopmarketstructures
i. Intermediatetermlow(ITL):STLthathashigherSTLoneitherside
ii. Intermediatetermhigh(ITH):STHthathaslowerSTHonbothsides
iii. Longtermlow(ITL):ITLthathashigherITLoneitherside
iv. Longtermhigh(ITH):ITHthathaslowerITHonbothsides
d. Swings:lookatswingsandunderstandeverymoveisanchoredtopreviousloworhighand
PAbecomesclearitispivotingona50%basisofthepreviouslowsandhighs
i. Ifswingmoves50pips,afterconsolidationifitcontinueshigherandbreachesthe
swinghigh,anticipateanother50pipsmoveaddedtothelowduringconsolidation
ii. IfPAfailstotradeabovethepreviousswinghigh,anticipateadeclineof50pipsfrom
thehighmadeonmostrecentrally/consolidation
3. SessionHigh/Lowthehigh/lowofthe3differentsessions.Asiaismostimportantandthehigh/low
usuallysetsthedaysS&RforLondonandUK.
a. SessionTimeAsia7pmEST9pmEST(124GMT)London3am12pmEST(917
GMT)NY8am5pmEST(1220GMT)
b. Whendrawingthehigh/lowofAsia,usethehardbodiesandnotthewicks.Onlyusewicksifa
candleisastronghammer.
5. RangeExpansion/ContractionDailyrangestypicallyswingfromlargerangedaystosmallrange
daysandviceversus.
5. InstitutionalPriceLevel(IPL)Pricelevelswherecommercialsusuallyenterthemarket.Theyare
00,.20,.50,.80locatedbetweenevery100pipmarking(e.g.1.0100,1.0120,1.0150,1.0180)
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a. TheFigureTermusedbytraderstorefertoa100point/piplevelorevenamidpointtothe
Figure.Example,1.5550,1.5450,and1.5350.
b. BasicBigFigureModel
i. Pricecantradetoandbounce/retracefromabigfigurelevel.
ii. Lookforconfluenceofsupportinglevels,OTE,etc.AlwaystaketheFigureinlightof
wherewestandintheoverallmarketflow,structure,andtrend.
c. AnticipateSweepsAnticipatepricesweepinghigherandlowerthantheFiguretotakeout
stopsaboveandbelowthelevel.
6. TradingtoPriorLoworHigh:
d. OnLong,whenmarketfallsdowntopriorlow,thismoveismoresignificantthanwhen
marketfallsdowntopriorhigh
e. OnShort,whenmarkettradesuptopriorhigh,thismoveismoresignificantthanwhenmarket
tradesuptopriorlow
f. FibsDrawfibsusingtheswings,sweetspotisthe6279%levelwith72%beingmostoptimal
g. RangeCycleCalculations
i. Marketcyclesinlargeandsmallranges,asdailystartstoclosenearpriorcloseitisa
smallrange
ii. Forswinghighranges,countday/barsbetweenpreviousswinghighsandmultiplyby
1.28,thencountforwardthat#.Shouldindicatewhereanewhighwillunfold
iii. Forswinglows,countdaysbetweenpriorlowsandmultiplyby1.28
7. PivotPointsTypically,whenpriceistradingabovecentralpivot,it'stimetosell.Whentrading
below,it'stimetobuy.Ifpricehasnotgonebelowcentralpivotfortheday,itmayactassupport.It
mayactasresistanceifpricehasnotgoneabovecentralpivotfortheday.
DailyPivots
Usepivotsasatooltofindanticipatedlevelstotradeoninthefuture.Drawnbyhandorindicator
from12amEST.CentralpivotactsasananchorforPA.PAactslikearubberbanditmovesaway
21
fromcentralpivotandthenpullsbacktowardsit.However,likearubberband,oncetrendtakesoffit
willsnapandfly.Usedbestinrangetradingperiods.
a. BuyZoneAreabelowcentralpivot
b. SellZoneAreaabovecentralpivot
c. Youcanbuyinasellzoneifyouaretradingbetweenpivotsopposedtotrendtrading
8. OTEOptimalTradeEntryDeepFibRetracementThe~62and~79retracementlevelsbecause
theyarealmostatthefull100%retracement.OTEwouldberoughlythe50%levelbetweenthe62and
79levels.
22
FIBONACCI
TradersusetheFibonacciRetracementlevelsaspotentialsupportandresistanceareas.Sincesomany
traderswatchthesesamelevelsandplacebuyandsellordersonthemtoentertradesorplacestops,thesupport
andresistancelevelstendtobecomeaselffulfillingprophecy.
TradersusetheFibonacciExtensionlevelsasprofittakinglevels.Again,sincesomanytradersarewatching
theselevelstoplacebuyandsellorderstotakeprofits,thistooltendstoworkmoreoftenthannotdueto
selffulfillingexpectations.
TheFibonaccitoolworksbestwhenthemarketistrending.Theideaistogolong(orbuy)onaretracementat
aFibonaccisupportlevelwhenthemarketistrendingup,andtogoshort(orsell)onaretracementata
Fibonacciresistancelevelwhenthemarketistrendingdown.Inordertofindtheseretracementlevels,you
havetofindtherecentsignificantSwingHighsandSwingsLows.Then,fordowntrends,clickontheSwing
HighanddragthecursortothemostrecentSwingLow.
Foruptrends,dotheopposite.Clickonthe
SwingLowanddragthecursortothemostrecentSwingHigh.
1. PreviousThreeDaysReferencethepreviousthreedayswhentryingtodeterminepointstodrawFibs
attheHighs/Lows.
2. SessionHighsLowsYoucanuseaSessionHigh/LowwhendrawingFibs.Notjustonlydaily
highs/lows.
UPTREND
DOWNTREND
23
1. TargetingUsingFibRetracement
a. UpsideObjective:PullFibfromrecentswinghightotheswinglow.Firsttakeprofitwouldbe
aroundthe100levelandthenthe200level.
b. DownsideObjective:PullFibfromrecentswinglowtotheswinghigh.Firsttakeprofitwould
bearoundthe100levelandthenthe200level.
c. Alwayslooktotheleftofpricetoidentifyotherkeypricelevelswhichmaycoincidewiththe
targetedpriceobjective.
2. TargetingUsingFibExpansion
a. UpsideObjective:Pullfromthebuypointontheswinglowtowardsthepreviousswinghigh.
Thiswillshowtheexpansionlevels.
b. DownsideObjective:Pullfromthesellpointontheswinghightowardsthepreviousswing
low.Thiswillshowtheexpansionlevels.
24
3. ProlongedTargetingUseFibRetracementandinsteadofpullingfromhightolowandthehighsits
onthe100level,raisetheFibtoolsothatthehighsitsonthe50level.You'llseetheextensionlevels
movehigherforalongerrangepriceobjectiveinatrendinghighermarket.
25
OTEPATTERNS
1. StandardOTE
a. OTEPatternLong:Dontreacttopricemovements,anticipate.Anticipateandtradeinto
keysupportlevels.Buyaspricegoesdownandapproachestheswinglow.Ifbar"wicks",you
canmovestopsortaketradesofftobreakeven.
v. Anticipatepricetogodowntosupportlevelandbounceup.Thetouchofthesupport
is#1.
vi. Bounceuptoashorttermhighatpoint#2.Anticipatetradetogobackdownand
retestsupport.
vii. Looktoenterlonginthe""SweetSpot""(Between62and79levels~70.5)
viii.Firsttakeprofitpointwouldbewhentradereachespoint#2priceor20pips.
ix. Protectivestoplossis10pipsminimumbelowpoint#1.
b. OTEPatternShort:Dontchasepriceaction.Ifpricegoesup,dontassumeitwillalways
moveup.Anticipateandtradeshortintokeyresistancelevels.Sellaspricegoesupand
approachestheswinghigh.Ifbar"wicks",youcanmovestopsortaketradesofftobreak
even.
x. Identify,anticipatepricetogodowntoresistancelevelandretracesdown.Thetouch
oftheresistanceis#1.
xi. Retracedowntoashorttermlowatpoint#2.Anticipatetradetogobackupandretest
resistance.
xii. Looktoentershortinthe"SweetSpot"(Between62and79levels~70.5)
xiii.Firsttakeprofitpointwouldbewhentradereachespoint#2priceor20pips.
xiv. Protectivestoplossis10pipsminimumabovepoint#1.
2. ICTReflectionPatternTheAntiOTE
a. BuyExample:You'llhaveasignificantlowandyouanticipatethemoveistochasestops
belowthelevel.Inordertoapproximatethepriceleveltoenter,drawaFibfromlowtohigh
26
andlooktogolongatthe100level.Whenlookingtotheleft,itwillappeartobeanOTE
Reflection.
YoucanpulltheFibfromthehightolineupthepreviouslowattheOTElevelandyou'llsee
howtherecentlowatthe100levelwasspoton.
b. SellExample:You'llhaveasignificanthighandyouanticipatethemoveistochasestops
abovethelevel.Inordertoapproximatethepriceleveltoenter,drawaFibfromrecenthigh
tolowandlooktogoshortatthe100level.
YoucanpulltheFibfromthelowtolineuptheprevioushighattheOTElevelandyou'llsee
howtherecenthighatthe100levelwasspoton.Whenlookingtotheleft,itwillappeartobe
anOTEReflection.
3. HiddenOTE
YoucandrawFibsfromotherimportantareasofconfluencelikerecenthighs/lowsorsessionhighs
lowstofindanOTE.
27
28
SESSIONTRADING
1. AsianSessionTheAsianRangedeterminesthedirectionalbiasorlikelydirectionforthemajorityof
theLondon&NYsessions.WherethemoneyispositionedinAsiandictatestheprofitreleaseonthe
tradingday.TypicallytradescountertheNYsessiondirectioninacorrectivebounce.
a. AsianKillZone
i. 6:00pm10:00pmESTistypicalAsianKillZonefortrades.KillZoneisthetimeof
daywhereyou'dideallylookforatrade.
ii. AsianSessionisbetterforpositiontradinginlongtermpositions.
b. WhiplashShort&CatapultBuy
i. SundayOpenGapHigherfromFriday'sClose
ii. WaitforinitialattemptstocontinuehigherandwatchSMTforNegativeorBearish
Divergence.
iii. ShortnearSundayOpeningandlookforexitattheFridayClosingRange.
iv. ForbullishenvironmentsyoucanbuytheSMTPositiveorBullishDivergenceinside
andorattheFridayclosingrangeupongapfilling.
v. Takeprofitsat20pipsandsetremainingportiontobreakevenandlookforLondon
continuationintoNYsession.
c. WhiplashBuy&CatapultShort
i. SundayOpenGapLowerfromFriday'sClose
ii. WaitforinitialattemptstocontinuelowerandwatchSMTforPositiveorBullish
Divergence.
iii. BuynearSundayOpeningandlookforexitattheFridayClosingRange.
iv. ForbearishenvironmentsyoucanshorttheSMTNegativeorBearishDivergence
insideandorattheFridayclosingrangeupongapfilling.
v. Takeprofitsat20pipsandsetremainingportiontobreakevenandlookforLondon
continuationintoNYsession.
29
d. LazyAsianSessionSessiondoesnttypicallyattempttobreakintonewhighs/lows.
e. AsianSessionBuyTypicallytradescountertheNYsessiondirectioninacorrectivebounce.
i. AsianSessionrarelyseesfollowthroughonnewlows.
ii. OnhighertimeframeslikeWeekly,Daily,4Hour,andor60minutecharts,noteKey
SupportLevels.
iii. AnticipateOTEBuystoforminAsianSessionwhenpricetradesdownintoSupport.
iv. TakeprofitsatOTElevelsforNYSwingandleaveportionforcontinuationinto
London.
f.
AsianSessionSellTypicallytradescountertheNYsessiondirectioninacorrectivebounce.
i. AsianSessionrarelyseesfollowthroughonnewhighs.
ii. OnhighertimeframeslikeWeekly,Daily,4Hour,andor60minutecharts,noteKey
ResistanceLevels.
iii. AnticipateOTESellstoforminAsianSessionwhenpricetradesupintoResistance.
iv. TakeprofitsatOTElevelsforNYSwingandleaveportionforcontinuationinto
London.
30
2. LondonOpen
a. LondonOpenKillZoneSweetSpot7:30am8:30amGMT
b. LongOpportunityRaidStopsthenShootforSupport
i. GoalistodialinontheLowofthedaytogolongfrom.
1. FirstobjectiveafterLondonOpenistoraidAsianHighstops.
2. Afterstopsaretakenout,pricemoveslowertestingkeysupportlevels&
OTE.
3. FromLondonOpentoCloseor18:00GMT,theDailyRangeisputinandyou
shouldnotusetighttrailingstops.
ii. InBullishconditionsyoumayleaveaportionofthetradeonbeyond18:00GMTfor
shorttermovernighttradesthatcanpaywellwithonly1020%oforiginalposition.
c. ShortOpportunityRaidStopsthenShootforSupport
i. GoalistodialinontheHighofthedaytoshortfrom.
1. FirstobjectiveafterLondonOpenistoraidAsianLowstops.
2. Afterstopsaretakenout,candlesmovehighertotestkeyresistancelevels&
OTE.
3. FromLondonOpentoCloseor18:00GMT,theDailyRangeisputinandyou
shouldnotusetighttrailingstops.
31
ii. InBearishconditionsyoumayleaveaportionofthetradeonbeyond18:00GMTfor
shorttermovernighttradesthatcanpaywellwithonly1020%oforiginalposition.
d. LondonOpen
i. DuringahigherTFconsolidation,wewaitforthedailyrangetocontract.Monitorthe
hourlychartsforconsolidationnearkeyS/Rlevels.Theidealsetupwouldleadto
rangeexpansionwhichmeansthatthepreviousdayisusuallyashortrangeday.Use
thehigh/lowofpreviousdaytomeasureOTE.
ii. Thesetupusuallyoccursafteradailyfractalformsatakeylevel.Lookforconfluence
ofSupport&Resistance,weeklypivotsandprojectiontargets.Numberthebarsofthe
Head&Shoulderspatternfrom1to5,3beingthehead.Inaperfectworlddays3&4
areshortrangedaysandIwoulduseBar#4asthegreenlighttoanticipaterange
expansionondays5&6.
iii. ThesetupoccursmorefrequentlyduringahigherTFrangeexpansion.Inthis
environmentsentimentisamajorcatalystforfrequentLOsetups.Iusea30Period
Williams%Ronthe4Hrcharttogaugeshorttermsentiment.
iv. Priceisrelentlesslyreachingforakeylevel.LookforconfluenceofSupport&
Resistance,weeklypivotsandprojectiontargets.IfpriceretracesduringLO,toretest
aS&Rlevel,therunisusuallyshortlivedandaswiftmovetowardsourtargetcanbe
expectedatNYO.
v. DuringasmallerTFrangeexpansion,Iusethe50period%Ronthe30Minchartasa
sentimentmeter.AlsousedtogaugecountertrendexhaustionandkeyoffofS/Rrole
reversals.
3. LondonClose
a. LondonCloseKillZone
i. LondonCloseat11amESTApprox.
ii. KillZoneisbetween10am1pmEST.
iii. Generallythemarketwilllooktoencounterprofittakingaround11amESTasLondon
tradersclosetheirtradingdayandNYtradersaretakinglunch.
b. TwoDominantTradeTypes
i. CounterTrendTrade:Quick1520pipscalpusing5minchartforshorttermmarket
exposure.
ii. LondonCloseTrendTrade:Trendtradeentrytogetinsyncwiththedailytrendor
32
longtermpriceswing.
c. AverageDailyRange
i. Identify5,10,and20dayADRtogetanideaofthepipstradinginthecurrent
environment.
ii. Use5dayADRaroundNYOpenwhichiswhenthemarkethas""pricedin""thehigh
orlowoftheday.Addthe5dayADRtothehighesthighandlowestlowtoADR
highsandlows.
d. OptimalTradeEntry
i. P.Stopisplaced10pipsbeyondtheHighorLowonFib.
ii. Firstobjectiveis1520pipsprofit.
iii. LastprofitistakenattheHighorLowoftheswing.
iv. TheEntryPointisthe6279%levelsorbetweenthem(~70.5)
e. LondonCloseCounterTrendBuy
i. ReferencetheUSDollarIndexanddetermineifithasmetits5dayAverageDaily
Range
ii. Determineifthepairtradedhasmetits5dayADR.
iii. PriortotheLondonCloseKillZonewindowdeterminehighertimeframeWeekly,
Daily,4hour,1hourS&Rlevels.
iv. Notetheprevious3dayshighsandlows,SessionHighs/Lows,andPivotPoints
v. AspricedropsdownintotheADRlevelandKillZone,lookatthe5minlowsfora
bounceoffofoneofthelevels.
f.
vi. Afterthebounce,pullaFibovertheshorttermupswingandconsiderbuyingthepair
atOTEonthe5minchart.
vii. Risk10pipsunderthelowusedfortheFibandtakeprofitson1520pipsandholdfor
thehighoftheFibbasedswing.
viii.Ideally,bettertradesformonswingsmeasuringatleast15%20%ofthedailyrangeof
thetradingday.
LondonCloseCounterTrendSell
i. ReferencetheUSDollarIndexanddetermineifithasmetits5dayAverageDaily
Range
ii. Determineifthepairtradedhasmetits5dayADR.
iii. PriortotheLondonCloseKillZonewindowdeterminehighertimeframeWeekly,
Daily,4hour,1hourS&Rlevels.
iv. Notetheprevious3dayshighsandlows,SessionHighs/Lows,andPivotPoints
v. AspricerisesupintotheADRlevelandKillZone,lookatthe5minlowsfora
bounceoffofoneofthelevels.
33
vi. Afterthebounce,pullaFibovertheshorttermdownswingandconsidersellingthe
pairatOTEonthe5minchart.
vii. Risk10pipsabovethehighusedfortheFibandtakeprofitson1520pipsandhold
forthelowoftheFibbasedswing.
viii.Ideally,bettertradesformonswingsmeasuringatleast15%20%ofthedailyrangeof
thetradingday.
g. LondonCloseSetup
i. DuringahigherTFconsolidation,wewaitforthedailyrangetoexpand.Monitorthe
hourlychartsforrangeexpansiontowardskeyS&Rlevels.Theidealsetupwouldlead
torangecontractionwhichmeansthatwearecomingoffaLOprofitrelease.
ii. Thesetupusuallyoccursduringtrendexhaustionatakeylevel.Lookforconfluence
ofS&R,weeklypivotsandprojectiontargets.LCsetupsarecountertrendtrades.Use
the30periodWilliams%Ronthe4hrchartandtrytosticktheweeklyhigh/lowon
Bar#3.
iii. DuringahigherTFrangeexpansionthissetupisnotrecommended.
4. TradingtheNewYorkSession
a. NYOpenKillZoneSweetSpot11:00am13:00GMT
b. RangeExpansionSmallrangeorseriesofsmallrangedays/barswillsuggestanupcoming
largetradingrangeday/bar.
c. CloseProbability
i. 80%oddsoftheclosebeingatornearthehighorlowfortheday/bar.
ii. Ifinabearishscenario,~75%oddsthattheopenisnearthehighandthecloseisnear
thelow.
d. NYOpenEasiestsessiontotrade.Londonhigh/lowalreadyinplace.
e. IdealEntry
i. ForShorts,Sellonamoveup.
ii. ForLongs,buyonamovedown.
f. SettingaStopwhenideallevelistoomanypipsWhentheidealstopistoomanypipsaway
fromthe2030pipstoplevel,gotosmallertimeframesandidentifyastoplevelonwhatprice
istellingyouonthesmallerlevel.
g. NYSessionTradesNotes:
i. Getinsyncwithwhatthehigherleveltimeframesaretellingyou.Majorityofthetime
thetradeswillfollowthattrend.
ii. Iflookingatdailytimeframeandmarketopenednearthedayshighsandhastrended
lower,we'dlookformoreshortstopushtoaday'slow.LondonSessioncreatedthe
day'shigh.
iii. LondonClosecoincidingwithNYSessionlunchtimeallowedforacountertrade
opportunity.Takeprofitatthe38%retracementlevelofthefulldaysrange.
34
PRICEACTION
WhatisPriceAction?
Verybasically,PriceActioniseverythingthattradersaredoingandhowtheyarebehavingplacedontoachart
forotherstoanalyze.PriceActioniseverythingthatpriceisdoingandhasdoneonaForexpairortrading
instrumentforatradertoseeonachart.Allpricerepresentsonachartiswhattradershavedoneandhowthey
havebehavedgivenacertainsituation.Forexamplepricegetstoasupportareaandpricebounceshigher.This
istradersbuyingupatalevelinthemarketwheretheythinksupportis.
AnotherexampleofpriceactionatworkonachartisaPinBar.Pricegetstoacertainlevelinthemarket
beforerejectingthatlevelandsnappingbacktheotherway.OnachartweseeaPinBarbutthatPinBarwas
madeupoftradersallaroundtheworldbuyingorsellingatthesameareaandrejectinghigherorlowerprices.
Thisisamethodthathasbeenaroundforalongtimeandwillbearoundforalongtimetocome.Unlikeother
rubbishindicatorsorblackboxsystemsPriceActiontradingdoesnotstopworkingwhenthemarketdynamics
change.
HowcanweusePriceActiontoprofit?
Tradersandhumansareveryhabitualandwilldothesamegiventhesamecircumstances.Astraderswecan
begintorecognizepatternsthatformonthechart.Thesepatternswilltendtorepeatthemselvesandhavethe
sameoutcomes.Notwotradeswilleverbethesameandnooutcomeswillevermatchaprevioustrades,but
byperfectingthesehighprobabilitypriceactionpatternswecanbegintoplacetradesthatovertimewillgive
usanedgeinthemarket!
Traderscanlearnandperfectthesetradingpatternsandbegintoimplementstrategiesthatwillovertimegive
themanedgeonthemarket.Anedgeissimplysomethingthatgivesatraderabetterchancethan50/50of
placingawinningtrade.
35
HIGHPROBABILITYPRICEPATTERNS
1. TheDojiFormwhenopenandclosearevirtuallyequal.Dojialoneisneutral.Bullishorbearishbias
isbasedonprecedingpriceactionandfutureconfirmation.Bestusedasconfirmationofanticipated
action,changesindirection.
2. TheHammerakaPinbarFormwhenpricemovessignificantlyloweraftertheopen,butralliesto
closewellabovetheintradaylow.Worksintheoppositedirection(bullishandbearish).Ideallylike
seeingthesepatternsatOTEoratkeySupport&ResistanceLevels.
3. TheTweezerLowLookslikeconsecutiveBullishPinbars.Indicatesthatpriceheldtwiceatthe
exactsamelevel.Sellersnotabletopushpricelower.Thelongerthewicksthebetter.Preferenceis
toseethepatternat4Hourand1HourchartsathighertimeframeS&Rlevels.IfaccompaniesSMT
Divergence,looktotrademaximumriskexposure!
4. TheTweezerHighLookslikeconsecutiveBearishPinbars.Indicatesthatpriceheldtwiceatthe
exactsamelevel.Buyersnotabletopushpricehigher.Thelongerthewicksthebetter.Preferenceis
toseethepatternat4Hourand1HourchartsathighertimeframeS&Rlevels.IfaccompaniesSMT
Divergence,looktotrademaximumriskexposure!
36
5. RailroadTracksTwocandlestickswithsmallerwicksforhighs/lowswheretheprecedingcandle's
bodymatchesthatofthecurrentcandle'sbodyintheoppositedirection.Lookfortheseatkeylevels
tosignifyanengineeredreversal.Verystrongpattern.
6. Head&ShouldersTopFormationSellingPattern
a. Typicallyoccursatintermediateorlongtermhigh.
b. Priceobjectivefromhighesthighofheadtothelowsattheneckline.Measurefromhightothe
necklineandpriceobjectivewouldbethatdistanceextendingbelowtheneckline.
c. SellingPattern.
7. ThreeIndiansClimaxReversalPattern
a. Threeprogressivelyhigherpriceslopehighsreachingatopnearanareaofresistance.This
wouldbeasellpatternaswe'dreasonablyexpectpricetofall.LookforOTEatalowertime
frame.
b. SellingPattern.
37
8. Triangles&HowICTTradesThem
a. Noteakeyresistancelevelwhereyoufindconsolidationandsupport/resistance.Plotageneral
trendlinefromlowpointtoitsintersectionwiththekeyresistancelevel.Measurefromlow
uptotheresistancelevel.
b. Usethewidestportionofthetriangleandaddthatpiprangetothelowpointdipsalongthe
trendline.Noteachlevelasitprogressesandtheselevelswouldbewhereyou'dexpecttake
profitpointsinthefutureduringabuyprogram.
9. InvertedHead&ShouldersBottomFormation
a. Typicallyoccursatintermediateorlongtermlow.
b. Priceobjectivefromlowestlowofinvertedheadtothehighsattheinvertedneckline.Measure
fromlowtotheinvertednecklineandpriceobjectivewouldbethatdistanceextendingabove
fromtheinvertedneckline.
c. BuyingPattern
10. BullFlagContinuationPatternLookfortheflagpolewhichwouldbeasharppricerunup
followedbydescendingrangeofpricebetweenchannel.Priceobjectivewouldbedonebygettingthe
piprangefromlowtohighandaddingthatdistancetothelowestlowoftheflagandtothebreakoutof
theflag.Therewouldbeareasonableexpectationthatpricewillappreciatetomeetthoselevels.
38
11. BearFlagContinuationPatternLookfortheflagpolewhichwouldbeasharppricerundown
followedbyascendingpricerange/channel.Priceobjectivewouldbedonebygettingthepiprange
fromhightolowandaddingthatdistancetothehighesthighoftheflagandtothebreakoutlowerof
theflag.Therewouldbeareasonableexpectationthatpricewilldepreciatetomeetthoselevels.
12. CoilExpansionPattern
a. Drawtrendlineoflowerhighsandtrendlineofhigherlowtoapointwheretheylookto
intersect.Aspriceapproachestheintersection,we'dexpectpricetorangehigherorlower
fromthatpoint.
b. Usehighertimeframeanalysistogetinsyncandanticipatewhichdirectionpricewilldueto
directionalbias.Ifpatternoccursatkeysupportlevel,anticipatepricetorangehigher.
c. Measurerangefromthelowtothetouchpointoftheuppertrendlineoflowerhighsaboveit.
Addtherangetotheupperorlowertrendlinetoidentifyapriceobjectiveoncepricebeginsto
rangeoutofthecoil.
13. TurtleSoupReversalPatternTurtleSoupiswhenpricetakesoutstopsbeyondanoldhighorlow
andimmediatelyreversesdirection
a. Identifythelowestlowandhighesthighinthelast20periods/candlesticks.
b. Golongatthetimepricegoesbelowthelowestlowintheprevious20periods.Thisisdone
39
onthenotionthatthepricemovebelowisafalsebreak.
c. Goshortatthetimepricegoesabovethehighesthighintheprevious20periods.Thisisdone
onthenotionthatthepricemoveaboveisafalsebreak.
14. RiptideReversalAnysignificanthighorlowbroken/rejectedoveranyperiod,numberofcandles
shouldmoveintheoppositedirectionafterbroken.
15. OutsideDaywithDownClose
a. Patternwheresecondcandlehasahigherhighandlowerlowthantheperiodbeforewitha
downclose.BullishscenariowhenitoccursatanoversoldperiodusingWilliams%R.
b. Getlongatthefollowingbarusing30and70levelsfortheindicatortodetermine
overbought/oversoldand10period.
16. InsideDayPatternwhenthesecondcandlehasahigherlowandalowerhighthanthepreviousday.
Uponthecloseofthecandle,itsignifiesatrendingdayorlargerangeexpansiondaytofollow.
40
TRADINGSWINGS
1. TheJudasSwing
a. JudasSwingAnengineeredpriceswingmeanttoleadreactionarytradersintothewrong
direction.Typicallyafalserallythatappearsinitiallytoemotionaltradersasthenextbigrun
inprice.Inthemarket,tradersthatfollowthisswingfindthemselvestrappedonthewrong
sideandpaytheprice.
b. WhenJudasSwingFormsEssentiallyisastopraidthatmanytimestradesinto:
i. KeyS&RLevel
ii. PreviousHighorLow
iii. CounterSwingtoFormOTE
iv. RaidthePreviousWeekHigh
v. RaidthePreviousWeekLow
vi. RaidthePreviousSessionStops
vii. RaidingSessionStops
1. IftradingLondonOpen,lookforAsianstopstoberaided.
2. IftradingNYSession,lookforLondonOpenstopstoberaided.
2. MarketSwingPoints
a. 10:00GMT@5minChart
i. StandardJudasSwing
1. Useopeningpriceonmidnightcandle,drawopenlineintotheday.
2. IfBearish,lookforshortsatpointsabovetheline.
b. JudasSwingOnceEvery24Hour
i. TheSwingshouldhappenatleastonceina24hoursession.
ii. Swingshouldbeintheoppositedirectionofwhatthetrendforthedayhasbeen.
c. ConfluenceofS&RUse15pipbufferwhenlookingforconfluenceofS&R
d. TradeAfterSwingHigh/Low
i. Ifmarketistradinglower,thenlookforasellafterarecentswinghigh.
ii. Ifmarketistradinghigher,thenlookforabuyafterarecentswinglow.
e. TwoTrendsinaDay
i. MorningTrendthatisthemarketopentoaround11amandconsolidatestoaroundthe
NYlunchperiod.
ii. Around1pm2pm,thingsheatuptofulfillthePMtrendfortheremainingportionof
thedailyrange.
41
ICTTRADINGCONCEPTS
1. TheTrader'sTrinityInnerCircleTrader'sExclusiveOverboughtOversold&S&RConcept
Day11
a. TradersTrinity
i. UpperPortionOverboughtzone.Lookforshorts.
ii. MiddleoftheRangeFairvalue/Equilibrium
iii. LowerPortionOversoldZone.Lookforbuys.
b. MonthlyTrinity
i. LookforperiodswherepricehasbrokenoutoftheTrinityRangetothelowandhigh
usingthedailychartassectionedoffbyMonthlyTrinity.
ii. Referencethe3previousperiodsinthetimeframetolookbackforrelevant
levels/information.
c. TrinityLevels
i. Upperboundarypricelevelswouldsignifyanoverboughtareaandweshouldlookfor
opportunitiestosell.
ii. Lowerboundarypricelevelswouldsignifyanoversoldareaandweshouldlookfor
opportunitiestobuy.
iii. Alwaysseeifthisisinagreementoragainsthighertimeframeanalysis.
iv. PricewilltypicallycomebacktothefairvaluezonesinthecenterareaoftheTraders
Trinity.TrynottotradeintheFairValueZone.
d. BrokenTrinity
i. WheneverseeingabrokenTrinity,preparethelikelihoodofamajorhighorlow
forminginthemarketplace.
ii. WhenpricebreaksoutabovetheTrinity,useFibbytakinghighofTrinityandbring
downtothelow.Whenbreakingtothelow,useFibbytakinglowandbringdownto
thelow.Thetwolevelstofocusonarethe162and200extension.Thesetwolevels
willusuallyhaveareactionorcorrectiontobeusedtogettargets.
iii. Lookforcorrectionatthebreakouthigh/lowpoint.
iv. 162and200ExtensionTheselevelsshouldholdtrueastargetsuntiltheyare
reached.Ifpricedoesnotreachtheselevelsandpullsaway,youmaythinkthatthe
levelsarenotvalidanylongerbuttheytendtostillholdtrueinthelongertimeframe.
42
v. PreviousWeekTradersTrinitySamepremiseasMonthlyTrinity.Identifyareas
wherepricebreaksoutoftheTrinitytotheLoworHigh.UseFibtoproject162and
200extensionlevelstoestimatewherepricemaygo.
2. TradingSmartMoneyCorrelationConceptsDay12:Smartmoneyactionsgetrevealedthrough
cracksinthemarket.Theyleavefingerprintsastheyswitchthetideofthecurrentpriceswing.When
thecorrelationmaterializesatpredeterminedsupport&resistancelevelswecanbeconfidenta
reactionwillunfold.
a. USDXSMTDivergence:Giveninversecorrelationofpairs,whenpriceononehaslower
lows,itisexpectedthattheothershouldreachhigherhighs.Whenthisdoesnotoccur,we
haveSMTDivergence.Thisissuggestiveofmajoraccumulation/consolidationinadvanceof
amajormoveintheoppositedirection.
b. CorrelatedPairSMTBullishDivergence:Shouldoccuratandconfirmpredetermined
SupportLevels.Ifonepairfailstomakealowerlowwhiletheothersucceeds,thenexpect
bothpairstoshoothigheratakeysupportlevel.
i. WhenlookingatSupportplaysor"buys"considerthepairthatfailstomakethe
lowerlowrespectively.Premisebehindthis:Thepairthatfailstodroplower,itis
beingboughtandhence,notwillingtogolower...thisisessentially"Demandin
Operation"...anticipateHigherprices.
ii. EUR/USDismakinghigherlowswhileGBP/USDismakinglowerlows>Buy
EUR/USD
c. CorrelatedPairSMTBearishDivergence:Shouldoccuratandconfirmpredetermined
ResistanceLevels.Ifonepairfailstomakeahigherhighwhiletheothersucceeds,thenexpect
bothpairstoshootloweratakeysupportlevel.
i. WhenlookingatResistanceplaysor"sells"considerthepairthatfailstomakethe
higherhighsrespectively.Premisebehindthis:Thepairthatfailstorallyhigher,itis
beingsoldandhence,notwillingtogohigher...thisisessentially"Supplyin
Operation"...anticipateLowerprices.
ii. EUR/USDismakinghigherhighswhileGBP/USDismakinglowerhighs>Sell
GBP/USD
43
d. RealExampleofCorrelatedPairSMTDivergence(GBP/USDvs.EUR/USD):GBPmadea
higherhighwhileEURfailedtomakehigherhighs.Thissignaledareversalforbothpairs.
3. TradingAccumulation/Distribution
a. OpportunitiestotradeAccumulation/Distributionindicatoroccurwhenpricedivergeswith
thedirectionoftheindicatorandissupportedbytheoverbought/oversoldWilliams%R(10
period)indicator.
b. Bullish/LongSetup
i. Pricemakesalowerlow.
ii. Accum/Distrforsameperiodmakesahigherlow
iii. Williams%Risinoversoldzone
iv. Giventimeandpriceaction,findopportunitytogolong
44
c. Bearish/ShortSetup
i. Pricemakesahigherhigh
ii. Accum/Distforsameperiodmakesalowerhigh
iii. Williams%Risinoverboughtzone
iv. Giventimeandpriceaction,findopportunitytogoshort
4. MACDDivergence
a. Type1BullishDivergencePricemeetsalowerlowwhiletheMACDreachesahigherlow.
DrawFibfromtheswinglowwherethedivergencewasestablishedtotherecentswinghigh
andlookforOTEtoenterlong.
45
b. Type1BearishDivergencePricemeetsahigherhighwhiletheMACDreachesalower
high.DrawFibfromtheswinghighwherethedivergencewasestablishedtotherecentswing
lowandlookforOTEtogoshort.
5. ICTGrail(MarketReview7/15~32min)
TheICTGrailformsattheOTEwhenthereisaType2TrendFollowingDivergenceofpricevs.the
StochasticOscillator.Oscillatorsettingis%K@10,%D@3,Slowing@3.
a. BuySetupPricefindsahigherlowattheOTElevel.Forthesameperiod,theindicator
findsalowerorequallowatthesametime.
46
b. SellSetupPricefindsalowerhighattheOTElevel.Forthesameperiod,theindicatorfinds
ahigherorequalhighatthesametime.
6. ICTStinger(Day15Notes~20:30)
Type1and2Combined(STINGER)Overaperiod,pricemoveswiththehightimeframe
trendbutdivergeswiththeindicator.Thiscombinedwithasmallerperiodwherepricemoves
againsttrendanddivergeswithindicator.Verypowerfulindicationofpricetakingoff.
a. Type1Lowerlowinpricebutahigherlowinthestochastic(yellowlinesinchart)
b. Type2Trendfollowingdivergenceahigherlowinpricebutlowerreadinginthe
stochastic(greenlinesinchart)
c. MostpowerfulwhenthisoccursatkeysupportandresistancelevelsandOTE.
47
7. InterestRateYieldTriad(MarketReview7/29)26:15
a. US10yearyieldvstwocorrelatedcountrys10yearbondyields.
b. Risingyieldsmeansrallyingprice(rising)asthehigheryieldsdrawattractiontothe
currency.
c. LookfordivergenceamongthecorrelatedcurrenciesandtheUSbondyield
d. Theyieldthatwasunwillingtogolowervs.theothertwoyields,identifiesthe
currencywhichwillbeattemptingtogohigher.
e. Whenonecurrencygoeshigher,itshouldaffecttheothercorrelatedcurrencyinthe
samemanner.
48
ICTTRADINGMETHODS
1. 20PipPerDayScalpingMethodDay19
a. KeystoProfitableScalps
i. UnderstandPriceActionTheory
ii. FirmGraspofKeyS&RLevels
iii. TradeHigherTimeframeBias
iv. TakeProfitsRoutinely&Often
v. TradeOneorTwoPairsatMax
b. BasicScalpingBuyMethod
i. Identifyakeysupportlevel
ii. AnticipateaJudasSwingLower
iii. LookforOTEaroundkeysupportleveltogolong
iv. Risk20pips
v. LookforSMTDivergencetoanticipatelowofday
vi. Takefirstprofit@20pips
vii. EnteronDoubleTap
viii.LetsecondportionrunandholdforDailyRange
ix. LookforTimeofDayObjectivearoundNYO,LOC,and18:00GMT.
c. EnteronDoubleTap
i. Assumingtotalriskontradeis2%ofEquity,Take50%ofpositionoff@~2030pips
for1%gain(Scalp).Remaining1%portionwillbeheldforthedailyrange.Lookfor
timeofdayobjectiveandkeepprotectivestopoutsidethedailyrange.
ii. ProtectivestopatBreakevenaftertakingprofitonfirsthalfoftrade.
d. BasicScalpingSellMethod
i. Identifyakeyresistancelevel
ii. AnticipateaJudasSwingHigher
iii. LookforOTEaroundkeyresistanceleveltogoshort
iv. Risk20pips
v. LookforSMTDivergencetoanticipatehighofday
vi. Takefirstprofit@20pips
vii. EnteronDoubleTap
viii.LetsecondportionrunandholdforDailyRange
ix. LookforTimeofDayObjectivearoundNYO,LOC,and18:00GMT
49
2. ShortTermIntradayMethodDay20
a. Method
i. PlotEMA(40)andEMA(18)
ii. BuySignalsLookforperiodswherethe18periodEMAisabovethe40periods
EMA.BuyprogramwhenyouseethewideningoftheareasbetweenEMA
iii. SellSignalsLookforperiodswherethe18periodEMAisbelowthe40periods
EMA.SellprogramwhenyouseethewideningoftheareasbetweenEMA
iv. Oncepricemakesafractal,swinglowduringBuyProgram,lookforopenafterthe
fractalisformedandgolongoncepriceattemptstomovedown(JudasSwing)
v. Take70%offwhenyoucanandlettheremainingrun.
b. HigherTimeFrameStopsAspricemoveshigher,bringstopto~10pipsbelowthenext
fractallowoncetwonearfractalsform.
3. SwingTradingMethodDay21
a. ICTSwingTradeSetup
i. QuarterlyShiftinFlows
ii. OldHighs&Lows
iii. SMTDivergenceonDaily
iv. MarketStructure
v. SwingPointAnalysis
vi. OptimalTradeEntryStrategies
vii. SwingProjectionforProfitObjectives
50
b. HigherTimeframeResistancePricewillswinghigherintoakeyresistanceandtheshortwill
betradedonthe4hourand/or1hourchartforsetup.Theentrywillbetakenonthe5min
chartTurtleSoupSelland/orOTESellPattern.WhendailyFractalswinghighforms,lookfor
Judasralliestoshortintofornewentrypoints.
4. HowToCaptureExplosiveFOREXProfitsDay25
a. WeeklyHighs/LowsTheWeeklyHighorLowforms80%ofthetimebetweenSunday's
Open&Tuesday'sLondonOpen.Whenitfails,itwilllikelyformbetweenTuesday'sLondon
OpenandWednesday'sLondonOpen.
b. Week'sOpeningPrice
i. IdentifytheOpeningPricefortheWeekandkeepitnotedonthechartthroughthe
tradingweek.Ifwe'rebullishonmarketconditions,welookforanopportunitytogo
longwhenthelowfortheweekisformed(likelytoformbeforeTuesday'sLondon
Open).Thesameistrueforshorts.
ii. IfithasnotformedbyTuesday'sLondonOpen,thenverylikelytooccurbetween
Tuesday'sLondonOpenandWednesday'sLondonOpen.
51
INSIDERSTRADINGMETHODS
1. TheFourMarketGroups
a. Domestic&ForeignBondandorInterestRates
i. 30YearTreasuries
ii. 10YearTreasuries
iii. 5YearTreasuries
iv. 2YearTreasuries
b. StocksandEquities
i. DowStocks
ii. S&P500Stocks
iii. NASDAQStocks,etc...
c. CommoditiesandFutures
i. CRBIndex
ii. Agricultures
iii. Financials
d. Currencies
i. TheUSDollar
ii. ForeignCurrencies
2. InflationaryEnvironmentIntermarketRelationships
a. APOSITIVErelationshipbetweenbondsandstocks
b. AnINVERSErelationshipbetweeninterestratesandstocks
c. BondsusuallychangedirectionBEFOREstocks
d. AnINVERSErelationshipbetweencommoditiesandbonds
e. APOSITIVErelationshipbetweencommoditiesandinterestrates
f. APOSITIVErelationshipbetweenstocksandcommodities
g. CommoditiesusuallychangedirectionAFTERstocks.
h. AnINVERSErelationshipbetweentheUSDollarandcommodities
3. DeflationaryEnvironmentIntermarketRelationships
a. AnINVERSErelationshipbetweenbondsandstocks
b. APOSITIVErelationshipbetweeninterestratesandstocks
c. AnINVERSErelationshipbetweencommoditiesandbonds
d. APOSITIVErelationshipbetweencommoditiesandinterestrates
e. APOSITIVErelationshipbetweenstocksandcommodities
f. AnINVERSErelationshipbetweentheUSDollarandcommodities
52
4. BigEventsinthemarket(i.e.EUcrisis)canthrowcertainrelationshipsoutofwhack.
53
PROFESSIONALSUSEOFINDICATORS
1. RevisitingtheMarketProfiles
a. ConsolidationRangeProfile
b. BreakoutValid&FalseProfile
c. TrendingProfile
d. ReversalProfile
2. Overbought&Oversold
a. FocusonOversoldinMarketProfilesthatsuggestpricesarebullishisOptimal
b. OverboughtinMarketProfilesthatsuggestPricesareBearishisOptimal.
c. Stoch(14,3,3)thatsayswe'reoversold.We'dexpecttoseeapricerise.Otherexamplesof
overboughtandwe'dexpecttoseeapricefall.
3. FalseSignalsOverboughtsignalswerenolongersuggestiveofpricemovementsbecausepricetraded
offofahighertimeframesupportlevel.
4. PriceDivergenceClassicusewithindicatorsistolookforDivergencebetweenpriceandthe
indicator.Pricereachesnewlowbutindicatordoesnotreachanewlow.Thisisadivergencebetween
priceandindicator.
54
a. Type1Divergence(ReversalinNature)Pricemovesoppositethehighertimeframetrend
anddivergeswithindicator.Pricemovesoppositethehighertimeframetrendanddiverges
withindicatorbecauseitisasignofareversalbynature.
i. BullishType1Divergence:Pricefindsalowerlowwhiletheindicatorfindsahigher
highforthesameperiod
ii. BearishType1Divergence:Pricefindsahighhighwhiletheindicatorfindsalower
lowforthesameperiod.
55
b. Type2TrendFollowingDivergenceDivergencefromindicatorwhenpricefollowsthe
trendbutdivergeswithindicator.
i. BullishType2Divergence:Pricefindsahigherlowwhiletheindicatorfindsalower
lowforthesameperiod
ii. BearishType2Divergence:Pricefindsalowerhighwhiletheindicatorfindsa
higherhighforthesameperiod.
56
MISCVIDEONOTES
1. 3.1InterestRateOverlayTutorial
a. Stockcharts.comEODYields
b. FreeCharts>PerfChart>$UST2Y,$UST5Y,$UST10Y,$UST30Y
2. 3.2InterestRateOverlayTutorial
a. SMTSmartMoneyTool
b. EUR/USDvs.GBP/USDcorrelation.Divergencemayindicatefavorinonevs.theother.
3. 4.3SwingProjectionApplication&FibConfiguration1.28Projection
a. DailyHigh/Lows90%chancethatthedailyhigh/lowisestablishedinthefirst4hoursof
tradingafterNYmidnight.
b. RangeExpansion/ContractionCycleYoucantypicallyexpectbigrangesontimeframes
aftersmallrangesandviceversus.
c. Open@Hivs.CloseatLow?
i. Whenhigh/closeiscloserinproximityafterwiderangesaspricegoesup,it'smore
likely/suggestiveyou'reatatop.
ii. Whenlow/closeiscloserinproximityafterwiderangesaspricegoesdown,it'smore
likely/suggestiveyou'reatabottom
d. 1.28ProjectionMeasureswinglowtoswinglow,countthedays.Multiplethatnumberby
1.28(rounddown)andaddthatnumberofbarstotheswinghighinthemiddleofthetwo
swinglows.Thisshouldbringyoutothenextswinghigh.
4. Day14ThePowerofThreeAccumulationProfitReleaseDistribution
a. 3MajorMarketCycles
i. AccumulationPhaseSmartMoneyaccumulatinglongsorshorts
ii. ProfitReleasePhaseRangeexpansionwhereprofitispermitted
iii. DistributionPhaseSmartMoneydistributeslongorshorts
b. TheOpenSmartmoneydistributesabovetheopenandaccumulatesbelowtheopen.
c. 3BarPattern
i. Sell@SwingHighAhighwithtwolowerhighsoneachside.Looktogoshorton
thefirstbarafterthecloseofthe3rdlowerhighbar.Lookforthisactionatkey
resistancelevels.
ii. Buy@SwingLowAlowwithtwohigherlowsoneachside.Looktogolongonthe
firstbarafterthecloseofthe3rdhigherlowbar.Lookforthisactionatkeysupport
levels.
d. PriceTargets
i. NYOpen12:00GMT(7AMEST)
ii. LondonClose15:00GMT(12AMEST)
iii. And18:00GMT
e. Williams%R(10period)Ifitgoesoversold,lookatthenextday'strading.Ifweopen/start
rangingattheAsianrangeandittradesdown,thereisan80%likelihoodthatitwillbea
tradabledaytogolong.LookforanexitaroundNYOpenorLondonClose.
f. AnticipatingFalseRallyIfyoudon'tgetthehighmadeinAsianSession,it'llformin
London.IfitdoesnotforminLondon,you'llseetradingrangeandJudasswinginNY
Session.
g. TradingJudasSwingAfterFractalHigh/Low(55:001:00:04)
57
TRADERULES
1. Risk
a. Riskpertradewillbelimitedto1.5%orlesspertradeoranoverallopenriskof1.5%orless
b. Valueperpipdeterminedbyrisk:riskpertrade/SLamount=$/pip
i. e.g.5kaccount,2%risk=$100risk,SLis25pips::100/25=$4/pipor4minilots
2. TradeEntry
c. Time:Lookforentriesneartheopen/closeofasessionoptimalentriesareLondonopen,NY
open,Londonclose
d. Wantbiasconfluenceondaily/4hror4hr/1hrorall3regardlesstradewithbiasdirectionof
4hr
e. OptimalTradeEntry(OTE)
i. Drawfibfromswingofthedayoryesterdayhigh/lowtotodayshigh/low(canusethe
4hrfractalsasquickshowingoftheswing)
ii. Lookfortradedirectioninbiasof4hr
iii. WanttoseeconfluenceofkeyS&Rareas(listedin5)betweenthe6279%fibzone
iv. Doublecheckpivottradezone
f. DealersSpreadIncludethedealerspreadwhendeterminingthepricetoenteratradeto
ensureitiscovered?
g. TradeIntoOpposingDirectionEntertradesonPAthatisoppositetheanticipatedprice
direction.Enterlongondowncandles.Entershortonupcandles.
3. TakeProfitGoals
h. UsingthefibtodrawOTE,127and168%aregoodTPzones
i. UsingthefibtodrawOTE,movethefibsothatthe50%isatthetopoftheswing(iflong)and
use100%asTP
j. AnyconfluenceofmajorS&Rareasthatmightexist,notnecessarilyaTPareabutsomething
tomonitor
4. ExitMonitortraderiskuntiltradeisclosed
k. 3050%oftradetakenoffat30pipsintomove,remainderatultimateTP
l. Exittradeiftradebiaschangesduringtradeoranalysissuggesttradeisnolongervalid
5. StopLoss
m. SLplace1020pipsbelow/aboveswingusedforFib
n. MoveSLtoBEwhenPAtradesabove/belowthepreviousswinghigh/lowusedtodrawthe
Fib
o. Donotusetrailstops,onlymanualstops
RISKMANAGEMENT
1. HandlingLosses&InevitableDrawdownsDay13
a. 2%RiskNeverriskmorethan2%pertrade.
b. CuttingRiskAtfirstloss,cut2%riskpertradeto1%riskpertrade.Ifconsecutivelosses
continue,cutriskagainto0.5%pertrade.
c. WalkingBack
i. Stayatthedecreasedrisktieruntilyoumadeback50%ofthepreviousrisklevel
drawdown.
ii. Ifyoulostat2%,stayat1%leveltillyou'vemadebackhalfofthe2%tierloss.
iii. Ifyoulostat1%,stayat0.5%leveltillyou'vemadebackhalfofthe1%tierloss.
58
TRADINGINSIDETHERANGE
1. MonthlyRangeOverview
a. DetermineMonthlyRangeMarketStructure
b. IdentifyMonthlyRangeSwings/TurningPoints
c. HighlightKeyS&RLevels
d. TradeinDirectionofthePrimary
2. WeeklyRangeOverview
a. DetermineWeeklyRangeMarketStructure
b. IdentifyWeeklyRangeSwings/TurningPoints
c. HighlightKeyS&RLevels
d. TradeinDirectionofthePrimary
e. LookforNewOTEReversalsAnticipate
3. DailyRangeOverview
a. DetermineCurrentRangeMarketStructure
b. IdentifyDailyRangeSwings/TurningPoints
c. HighlightKeyS&RLevelsMonthlyWeekly
d. TradeinDirectionoftheSwingPoint
e. LookforNewOTEReversalsAnticipate
4. AsianRange
a. NotetheInitialRangeHigh&Low
b. NarrowFocustoHigherMarketTrend
c. NoteKeyS&RLevelsOldHighs&Lows
d. TradetheDirectionofDailySwingPoint
e. AnticipateLondonStopRadeFadeIt!
5. ADR(AverageDailyRange)
a. AlignTradeExpectationto5DayADR
b. OnceTradeEntryStalkADRObjectives
c. BlendTimeofDay&PriceTheory
d. AnticipateProfitObjectivesNearADR
e. Expect15:0016:00GMTandADRConvergences&OtherTechnicalstoConfirm
ProfitTakingObjectives
6. EntryConcept
a. FocusonOptimalSetups
b. ApplyPowerofThree&RangeExpansion
c. IfBullish,anticipateBankstoSELLfirst
d. IfBearish,anticipateBankstoRallyupfirst
e. ExplaintheRaidsofOldSwings&ExpectPatternstoFormtoConfirmEntries(High
ProbabilityTradingPatternsVideo)
7. ProfitObjective
a. IfADRis100pips,takeprofitat80pips
b. AlwayslooktoScaleOutofTrades
c. ADRdoesNOThavetobefulfilled
d. DevelopProfessionalMindsetinTargeting(PreservationofCapitalisgoal#`1)
e. LeaveGreedoutoftheProcess
8. ProfessionalOrderPlacement
a. TryKeepingEntry&ExittoLimitOrders
b. MarketOrdersareLastDitchProtection
c. DoNottrytogetthebestEntryPrice
d. DoNottrytoexitattheveryHighorLow
e. AlwaysFactortheSpreadPlus23pips
59
60
PETERSICTVIDEONOTES
SMTDivergence(SmartMoneyTool):
InnerCircleTrader'sTradePlanDevelopmentPart5YouTube(at57:50mins)whichpair,weakersister
InnerCircleTrader11/04/12YouTube(at24:54mins)
InnerCircleTrader'sMarketReview06/24/12YouTube(at30:30mins)withTurtleSoup
InnerCircleTrader'sMarketReview06/01/12YouTube(at17:40mins,and20:10mins)
InnerCircleTrader'sMarketReview07/15/12YouTube(at48:00mins)confirmsbearflag
InnerCircleTrader'sPTC09/14/12YouTube(at9:00mins)
SeasonalTendencies:
InnerCircleTrader'sMarketReview07/15/12YouTube(at8:00mins)
InnerCircleTrader'sPTC09/14/12YouTube(at1:50min)referencetoMooreResearch
InnerCircleTrader'sPTC09/08/12YouTube(at23:00mins)everythingtradablehasaseasonaltendency
InnerCircleTrader'sTradePlanDevelopmentPart5YouTube(at53:00mins)
MarketStructure/Flow:
InnerCircleTrader'sPTC09/14/12YouTube(at6:00mins,and9:50mins)breakandsuspectrally
InnerCircleTrader11/04/12YouTube(at14:35mins,and22:20mins)
InnerCircleTrader11/12/12YouTube(at12:30mins)breakandsuspectrally
InnerCircleTrader11/28/12YouTube(at21:00mins)breakwithswingtrade
InnerCircleTrader'sTPDSPart7YouTube(at25:00mins)
DivergenceintheBondMarketandUSDXTriadDivergence:
InnerCircleTrader'sTradePlanDevelopmentSeriesPart1YouTube(at26:00mins,39:50mins,and45:00mins)
InnerCircleTrader'sPTC09/04/12YouTube(at4:50mins)checkthisdateshoulditbe11/07/12?
SessionHigh&Lowsimportanceof:
InnerCircleTradersPTC09/17/12YouTube(at7:50mins)
FractalAnalysis:
Turningpointsinmarket:
Bias:
InnerCircleTraderMarketMappingYouTube(entirevideo)
InnerCircleTrader'sPTC09/24/12YouTube(at11:00mins)useofUSDX
InnerCircleTrader'sPTC10/04/12YouTube(at2:00mins)useofUSDXanalysistoachievebias
61
StopRaidsoftenwithJudas:
InnerCircleTrader'sPTC10/04/12YouTube(at16:20mins)natureofJudas
InnerCircleTrader11/04/12YouTube(at14:35mins,and24:50mins)withSMT
InnerCircleTradersPTC09/17/12YouTube(at37:50mins)aggressivemoveafterraid
InnerCircleTrader'sPTC10/01/12YouTube(at14:00minscleanareaand17:00minsstopraidbeforenews
release)
ICTStingerType1&Type2divergence:
HowProsUseIndicatorsInnerCircleTraderYouTube(at21:00mins)
InnerCircleTraderMarketReview03/06/12YouTube(at13:50mins)
ICTHolyGrailType2divergenceswithOTE:
ShortTermTradingInnerCircleTraderYouTube(at27:30mins)pricereaching18ema
InnerCircleTrader'sMarketReview07/15/12YouTube(at29:40mins)introductiontoHolyGrail
ICTReflectionPattern:
InnerCircleTrader'sMarketReview06/16/12YouTube(at3:00mins)introductiontoreflectionpattern
InnerCircleTrader11/08/12PTCYouTube(at2:00minspricehoveringatresistanceat8:40minshowtovary)
InnerCircleTraderPTC09/06/12YouTube(at11:30mins)withlimitorder
InnerCircleTrader'sPTC10/04/12YouTube(at20:50mins)withlimitorder
InnerCircleTrader'sMarketReview07/15/12YouTube(at21:00mins)goodviewofP/A
InnerCircleTrader11/18/12YouTube(at18:00mins)livetradeinaction
InnerCircleTrader12/02/12YouTube(at3:00mins,and9:00mins)onUSDX
TurtleSoup:
InnerCircleTrader'sMarketReview06/24/12YouTube(at18:00mins,and36:00mins)howoftenICTuses
ADR(avgdailyrange)useof.
InnerCircleTrader'sTPDSPart7YouTube(at1:05mins)useoffibonADR
InnerCircleTrader'sMarketReview07/26/12YouTube(at12:40mins,and18:25mins)
InnerCircleTraderPTC09/06/12YouTube(at15:00mins)
InnerCircleTradersPTC09/17/12YouTube(at14:00mins,and18:00mins)
TheLondonCloseTacticInnerCircleTraderYouTube(at5:30mins)
ICTsuseofthe3barswingpoint:
InnerCircleTrader'sPTC10/04/12YouTube(at2:00mins)useofUSDXanalysistoachievebiaswith3barswing
ShortTermTradingInnerCircleTraderYouTube(at14:20mins)
ShortTermTradingInnerCircleTraderYouTube(at30:30mins)forICT,theholygrailofintradaytrading
InnerCircleTraderFibonacciConceptsInForexYouTube(at9:00mins)howtotradethe3barpattern
COTDataexamplesofuse:
InnerCircleTrader'sMarketReview07/22/12YouTube(at16:00mins)callingtheEurolow2daysinadvance
exampleofthepowerofCOTdata
62
OpenInteresthowtoread:
InnerCircleTrader'sPTC09/08/12YouTube(entirevideo)includesCOTandvolume
InnerCircleTrader12/06/12YouTube(at1:00min)endofcontracteffectonOI
InnerCircleTrader'sTradePlanDevelopmentPart5YouTube(at38:00mins,and59:00mins)settingup
Barchart.com
InnerCircleTrader'sPTC09/14/12YouTube(at7:30mins)OIincreaseatresistanceasellsignal
Trendcontinuationprofile:
SwingpointpowerfulP.A.:
AscendingTriangle:
InnerCircleTraderMarketReview06/12/12YouTube(at6:00mins)
SymmetricalTrianglewindupbelowresistance:
MarketReversalInAction:
InnerCircleTrader'sPTC10/04/12YouTube(at17:15mins)includesPowerofThree
BabypipsCalendarhowtosetup:
08/06/12
RangingMarkettips3mins&14minsoscillators&pivots
InnerCircleTrader'sMarketReview08/06/12YouTube
Seek&DestroyZDayexamples:
09/17/124.00mins
InnerCircleTradersPTC09/17/12YouTube
09/19/124.30mins
7.20minsUseofTradersTrinity
12.15minsHi/LotakenoutineitherL.O.orNYOaggressivemoveahead
13.00minsZDaycanbemorethanoneday
13.50minsSearch&Destroyequilibrium
InnerCircleTrader'sPTC09/19/12YouTube
30/09/1229.50minsSeek&destroynotlimitedtoonetimeframe
MarketMappingvideoat17.10notlimitedtooneday
InnerCircleTraderMarketMappingYouTube
Aimingfortheweeklyrange:
08/26/12(allofvideoisvalid)
11.30howtoreadfibreweekly
13.30weeklyroadmap
26.20previousweekshi/lozoomedinweekly
63
34.30MShowtoanticipaterangeexpansion
48.40Howtobuythedipsinabullmarket
49.00Longcable&shortfibreatsametime
51.40Weeklycharthowtoapplyfordailybias
09/09/128.00minsuseofpreviousweekshi/loforentrybyICT
InnerCircleTradersMarketReview09/09/12YouTube
09/30/12at28.00minswhennottotryforweeklyrange
11/18/12Tradecapturingweeklyrange
MS/MFbreakdownat18.00mins
InnerCircleTrader11/18/12YouTube
Thelast3dayshi/loimportant:
09/13/1208.40mins
FibConceptsvideoat2.10mins
InnerCircleTraderFibonacciConceptsInForexYouTube
Howtoexpectabounce:
09/16/12at4.00mins
SessionHi/LoOTEnextday:
09/17/12at19.00mins
InnerCircleTradersPTC09/17/12YouTube
USDXatequilibriumonbothHTFandLTF:
MeansintradaytradingforICT09/30/121.00min
SlopingTrendLine:
09/24/12at08.00mins
09/30/12at09.00mins
Trinityanduseof:
08/08/12at09.00mins
08/13/12at11.15Buy/SellwithTrinity
OTE(Hidden)(FibFROMknowns/rlineorbig/midfigure:
10/23/1213.00and20.00mins
10/25/12at8.00mins
11/04/12at8.15minsand19.40mins
11/12/12at11.15mins
08/04/12at8.00minsfroms/rline
64
12/06/12at32mins
MACDDivergenceUsuallyStochs10,3,3:
07/22/12at59.40
12/06/12at27.00mins
ICTToolswhentouse:
11/04/12at13.00mins
Pivotsanduseof:
09/25/124.15minsand13.10mins
10/04/12at07.50mins4pivotsfulfilled
TPDSPart411.30mins
Useofmonthlypivotson4hrchart
InnerCircleTrader'sTradePlanDevelopmentPart4YouTube
RangeExpansion:
07/26/12at11.50mins
SwingTrading:
06/01/12at07.00mins
09/10/12at07.20minstrailingstops17.00mins
09/30/12at39.00minsOTEwithinOTE
MarketMappingVideoat42.20mins
InnerCircleTraderMarketMappingYouTube
Howtocutlosses&letprofitsrun:
ShortTermTradingat19.00howtotrailastop
ShortTermTradingInnerCircleTraderYouTube
HowtolastinForex:
ShortTermTradingat43.40mins
ShortTermTradingInnerCircleTraderYouTube
65
ICTTERMSANDABBREVIATIONS
Certainwordsandphrases,below,areitalicizedtoindicatethattheyaredefinedseparately,elsewhereintheGlossary.In
thefollowingdefinitions,twoabbreviationsareusedfrequently:i.e.,meaning"thatis"ande.g.,meaning"forexample".
A
accumulationsmartmoneybuyingeither(1)toenterlongpositions,or(2)tocovershortpositions,atornearaswing
low(i.e.,smartmoney"buyinglow")
AD(orA/D)accumulationand/ordistribution
ADR(seeaveragedailyrange)
AKZ(seeAsianKillZone)
anticipatorytradeanalysisphasetopdownanalysis,phase2:seasonaltendencies,SMTdivergences(yields,USDX,
etc.),COTreport,andkeyS/Rlevels
AsianKillZonenominally8am12pmTokyotime(thistimeperiodmaybeexpandedatthediscretionofthetrader)
thisisoneof4killzones
Asianrangethistermmayreferto(1)the9am2pmTokyotimeperiod,(2)theHLpricerangewithinthatperiod,or
(3)priceactionwithinthatHLrange
Asiansession9am7pmTokyotime(alowvolumetradingsession,typicallycharacterizedbypriceconsolidation
withinarestrictedrange)
ATR(seeaveragetruerange)
AUAUD/USDpair
AussienicknameoftheAUD/USDpair
averagedailyrange(ADR)theaverageofthemostrecentdailyHLrangestypically,thelast5dailyHLrangesare
averagedtoyieldtheADRforday6
averagetruerange(ATR)dailyATRissimilartoaveragedailyrange(ADR),exceptthatATRaccountsforpricegaps
(e.g.,Sundaygaps),butADRdoesnot
B
banks(or"bigbanks")toptierinvestmentbanks,participantsintheinterbanknetwork,engagedinhighvolume
currencytradingseelistonpage4
bazooka(orICTbazooka)Michaelsometimesreferstoastandardtype2oscillatordivergenceasa"bazooka",to
contrastitwiththemorepowerfulstinger
BE(seebreakeven)
bearflagafairlytight,fairlyshortdurationconsolidationpatternformedatthebottomofasharpdownmove,marking
apauseinthedownmove
bias(seedirectionalbias)
bigfigure(seefigure)
breakeventhepriceatwhichclosingaposition(eithermanually,orbybeingstoppedout)resultsinzeroprofitand
zeroloss
BSTBritishSummerTime(BST=GMT+1),thetimezoneintheU.K.andIrelandbetweenMarchandOctobersee
Londontime
bullflagafairlytight,fairlyshortdurationconsolidationpatternformedatthetopofasharpupmove,markinga
pauseintheupmove
buyprogramatrendingmarketprofileinwhichthedirectionalbiasisup(bullish),andtradesinthedirectionofthe
trendarelong(buys)
buyzonegiveneither(1)aHTFbullishbias,or(2)arangingmarket,abuyzoneisthepricerangebelowthepivot(P),
orbelowtheTTfairvaluezone
C
cableoneofthenicknamesoftheGBP/USDpair
centralbanktheentityresponsibleforoverseeingthemonetarysystemofanation,orgroupofnationsseeliston
page4
CFTC(seeCommodityFuturesTradingCommission)
ChrisLoriathlete,fundmanager,Forextrader,andteacher/mentoroftenmentionedpositivelybyMichael
CityofLondon(orTheCity,orTheSquareMile)thefinancialdistrictinLondon
66
classicAsiansessionbuysignalasignaltogolongafter(1)alateNYsessionpricedecline,and(2)anAsiansession
pricebounceoffakeysupportlevel
classicAsiansessionsellsignalasignaltogoshortafter(1)alateNYsessionpricerise,and(2)anAsiansessionprice
bounceoffakeyresistancelevel
coilexpansionpatternaconsolidationpattern(thecoil)whichisfollowedbyabreakout(theexpansion)whoseextent
dependsonthedimensionsofthecoil
commercialslarge(futures/options)hedgerswhosepositionsizesrequirereportingtotheCFTCtheirnet(aggregate)
positionappearsintheCOTreport
CommitmentofTraders(report)weeklyCFTCreportonpositionsheldby3classesoftradersinindividualfuturesand
optionscontracts(incl.currencies)
CommodityFuturesTradingCommissionU.S.regulatorofcommodityfuturesandspotForextheCFTCcompilesand
publishestheCOTreport
confluenceoccurrenceoftwoormoresignificanttechnicallevels(e.g.,apivotlevelandanOTE)atthesame(or
nearlythesame)priceonachart
consolidationatimeperiod(consolidationperiod)inwhichpricemovesinanarrowrange(consolidationrange),
typicallyboundedbyshorttermS/Rlevels
correlatedpairstwocurrencypairswhosepricesmoveroughlyintandem(example:EUR/USDandGBP/USD
anotherexample:AUD/USDandNZD/USD)
COT(orCOTreport)(seeCommitmentofTradersreport)
CRBIndexCommodityResearchBureauIndexof19commodities(agriculturals,metals,oil&gas)theIndexisused
asoneelementofintermarketanalysis
D
daytrade(orintradaytrade)atradeinwhichtheentryandexitareexpectedtooccurwithinthesametradingday,and
theprofittargetis30100pips
DD(seedrawdown)
demoapracticeplatform,practiceaccount,orpracticetrade,etc.
directionalbiascurrentdirectionofpricemovement(asdeterminedonHTF's),deemedtobethetradeabletrend(see
buyprogram,andsellprogram)
distributionsmartmoneysellingeither(1)toentershortpositions,or(2)toliquidatelongpositions,atornearaswing
high(i.e.,smartmoney"sellinghigh")
dojiacandlestickhavingaverysmallrealbody(ornorealbody),withupperand/orlowerwicksofanylengthitoften
indicatesaswinghighorswinglow
doubletapgivenanOTEretracementfromaSH(orSL),adoubletapinvolvestaking1stprofitattheSH(orSL),and
2ndprofitatahigherprofittarget
drawdownameasureofaccountdepletionduetoaccumulatedlosses
dumbmoney(seestreetmoney)
E
EDTEasternDaylightTime(EDT=GMT4),thetimezoneintheeasternU.S.andCanadabetweenMarchand
NovemberseeNewYorktime
EJEUR/JPYpair
EMA(seeexponentialmovingaverage)
equitymanagement(seeriskmanagement)
ESTEasternStandardTime(EST=GMT5),thetimezoneintheeasternU.S.andCanadabetweenNovemberand
MarchseeNewYorktime
ETEasternTimeintheU.S.andCanada(NewYorktime)ETiseitherESTorEDT,dependingontimeofyear
EUEUR/USDpair
europropernameoftheEuropeanUnionsinglecurrencyalso,oneofthenicknamesoftheEUR/USDpair
exponentialmovingaverageamovingaverageofdatafromnnumberofperiods,weightedexponentiallytogive
greaterweighttomorerecentdata
F
fairvaluethemedianpriceinapreviousHLpricerange(e.g.,apreviousDailypricerange,oraTrader'sTrinityprice
range)seenoman'sland
fibshorthandforFibonaccitool,orFibonaccilevel(note:incommonusage,Fibonacciissometimescapitalized)
FibonacciextensioncontinuationofaFibonacciretracementscale,beyondthe100%retracementlevel,typicallyto
127.2%,161.8%,200%,etc.
67
Fibonacciretracementascaleformeasuringretracementsaspercentagesofapricerange,typically0%,23.6%,38.2%,
50%,61.8%,76.4%and100%
Fibonaccitoolapricemeasuringtoolwhichdividesapricerangeintopercentages(seeFibonacciretracement,and
Fibonacciextension)
fiberoneofthenicknamesoftheEUR/USDpair
figshorthandforfigure
figurepriceoftheformx.xx00(alsocalledfig,bigfigure,fullfigure,and00's)
fractal(def.1)oneofthemanypricepatternswhichrepeatthemselvesinallmarkets,onalltimeframesfrom1minute
(orlower)to1Month(orhigher)
fractal(def.2)apatternof5consecutivecandles,inwhichthecentercandlehasthehighesthighofthe5candles,or
thelowestlowofthe5candles
fractalhighina5candlefractalpattern,ifthecentercandlehasthehighesthighofthe5candles,thenthathighisa
fractalhigh
fractallowina5candlefractalpattern,ifthecentercandlehasthelowestlowofthe5candles,thenthatlowisa
fractallow
fundamentalanalysisanalysisofmacroeconomicfactors(interestrates,inflation,GDP,unemployment,etc.)which
influencelongtermcurrencytrends
G
generalmarketanalysisphasetopdownanalysis,phase1:analysisofinterestrates,USDX,Treasuries,stockindices,
CRBIndex,andgoldandoil
GJGBP/JPYpair
GLGTGoodLuckandGoodTrading(signatureusedbyMichael,andothers)
GMTGreenwichMeanTime,theworld'scommercialreferencetimezone,towhichallothertimezonesarerelatedby
"offsets"(e.g.,GMT1,GMT+1,etc.)
GMTpivotsseeLondonpivots
GUGBP/USDpair
H
H&S(orHS,orHS,orH/S)(seeheadandshoulderstop)
H1,H4,D1,etc.charttimeframes(1hourchart,4hourchart,Dailychart,etc.)expandedlist:m1,m5,m15,m30,
H1,H2,H3,H4,H6,H8,D1,W1,M1
hammeracandlestick(ofeithercolor)havingashortrealbody,averyshortupperwick,andalonglowerwickit
typicallyoccursfollowingadownmove
hangingmanacandlestickidenticaltoahammer,exceptthatittypicallyoccursfollowinganupmove
headandshoulderstopanITH(the"head")precededby,andfollowedby,alowerITHoraLTH(the"head")
precededby,andfollowedby,alowerLTH
HHhigherhigh
hiddendivergencetrendfollowingdivergence(seetype2divergence)
hiddenOTEinastrongdowntrend,apricemovefromoneSTLtothenextSTLmayresultina"hidden"OTE
retracement(or,inastronguptrend,useSTH's)
highprobabilitypricepatternsselectedcandlestickpatternsandchartpatternswhichreliablysignalpricedirection
seelistonpage4
highertimeframeformostdaytradersandshorttermtraders,HTFmeansatimeframehigherthan1hour(e.g.,
4hour,Daily,Weekly,orMonthly)
HLhigherlow
HLhighlow(orhighminuslow)referringtoapricerange(e.g.,DailyHLrange,WeeklyHLrange,etc.)
HolyGrail(orICTgrail,orICTholygrail)anOTE(eitherbuyorsell)confirmedbyatype2(hidden,trendfollowing)
oscillatordivergence
HTF(seehighertimeframe)
I
ICTInnerCircleTrader(mayrefertoMichaelHuddleston,hismethodology,histools,hisforumthreads,orhisvideos)
Indi(seeindicator)
indicatoraderivativeofrecentpricedata,computedbyalgorithm,whichpurportstorevealcertaintrendsortendencies
regardingfutureprices
insidedayadailycandlewithalowerhigh,andahigherlow,thanthepreviousdailycandleusuallyitsignalsatrend
continuation
68
institutionallevel(orinstitutionalpricelevel)priceoftheformx.xx20(the20level),orx.xx80(the80level)
interbanknetworkagroupoftoptierbanks,electronicallylinkedthroughEBSorReutersforcurrencytradingamong
themselvesandwithmajorclients
intermarketanalysisanalysisofcorrelationsbetweeninterestrates,equities,commoditiesandcurrenciesduring
conditionsofinflationordeflation
intermediatetermhighafractalhighprecededby,andfollowedby,alowerfractalhigh
intermediatetermlowafractallowprecededby,andfollowedby,ahigherfractallow
invertedheadandshouldersbottomanITL(the"head")precededby,andfollowedby,ahigherITLoraLTLpreceded
by,andfollowedby,ahigherLTL
ITH(seeintermediatetermhigh)
ITL(seeintermediatetermlow)
J
JSTJapaneseStandardTime(JST=GMT+9),thetimezone,yearround,throughoutJapanseeTokyotime
Judasswingafalsepricemove(bysmartmoney)torunstopsandlurestreetmoneytothewrongsideofthemarket,
aheadofthereal(opposite)move
K
KenRobertstradingandlifestyleguru,author,andlecturerMichaelcreditsKenRobertswiththe62%79%
retracementconcept(whichMichaelcallsOTE)
keyS/R(orKSR)(seekeysupportandresistancelevels)
keysupportandresistancelevelsS/RlevelsidentifiedonHTFcharts(H4,D1,W1),andthentransferredtotheLTF
chartsbeinganalyzedortraded
killzoneoneof4highprobabilitytimeperiods(typically2hourseach)inwhichtofindtradesetupsusingICTtools
seeAKZ,LOKZ,NYOKZ,andLCKZ
KiwinicknameoftheNZD/USDpair
KZ(seekillzone)
L
largerangedayadaywhoseHLpricerange(theday'shighminustheday'slow)substantiallyexceedstheday'sADR
largespecslarge(futures/options)speculatorswhosepositionsizesrequirereportingtotheCFTCtheirnet(aggregate)
positionappearsintheCOTreport
LarryWilliamswellknownmillionairecommoditytrader,author,andlecturerMichaelreferstoLarryWilliamsas
oneofhismentors
LC(seeLondonClose)
LCKZ(seeLondonCloseKillZone)
LHlowerhigh
LLlowerlow
L/NYoverlapLondon/NewYorkoverlap(bothmarketsopen)1pm5pmLondontime,8amnoon,NewYorktimesee
LondonsessionandNewYorksession
LO(seeLondonOpen)
LOKZ(seeLondonOpenKillZone)
LondonClose5pmLondontime,theendofthenormalbusinessdayinLondon
LondonCloseKillZonenominally4pm6pmLondontime(thistimeperiodmaybeexpandedatthediscretionofthe
trader)thisisoneof4killzones
LondonOpen8amLondontime,thebeginningofthenormalbusinessdayinLondon
LondonOpenKillZonenominally7am9amLondontime(thistimeperiodmaybeexpandedatthediscretionofthe
trader)thisisoneof4killzones
LondonpivotsdailypivotlevelsbasedonmidnightLondontimeasthestartofeachForextradingday
Londonsession8am5pmLondontimethefinal4hoursofthissession(theL/NYoverlap)aretypicallythe
highestvolumeperiodofthetradingday
LondontimeGMT(OctoberMarch),orBST=GMT+1(MarchOctober)Note:MichaelalwaysreferstoLondontime
asGMT,regardlessoftimeofyear
longtermhighanintermediatetermhighprecededby,andfollowedby,alowerintermediatetermhigh
longtermlowanintermediatetermlowprecededby,andfollowedby,ahigherintermediatetermlow
loonienicknameoftheUSD/CADpair
lowertimeframeformostdaytradersandshorttermtraders,LTFmeansatimeframelowerthan1hour(e.g.,
30minute,15minute,or5minute)
69
LTF(seelowertimeframe)
LTH(seelongtermhigh)
LTL(seelongtermlow)
M
MA(orSMA)(seemovingaverage)
MACDamomentumindicatorwhichtracksthedifferencebetweentwoEMA's,comparesthatdifferencetoathird
EMA,andshowstheresultasahistogram
majormarketanalysis(MMA)(seeintermarketanalysis)
marketflowmarketdirection(trend)indicatedbythemostrecentbreakofafractalhighorlowonaHTFchart(H1,
H4,D1)comparetomarketstructure
marketmakeratoptierbank,amemberoftheinterbanknetwork(wherethecurrencymarketisliterally"made")see
banks,andsmartmoney
marketmakerprofile
marketprofileoneof4currentmarketenvironments:consolidationrangeprofile,breakout(realorfalse)profile,
trendingprofile,andreversalprofile
marketstructureananalysismethodbasedonpatternsofSTH's,STL's,ITH's,ITL's,LTH'sandLTL'sonhighertime
frame(HTF)charts(H4,D1,andW1)
MF(seemarketflow)
MichaelMichaelHuddleston(screennameInnerCircleTrader),veteranAmericanstock/commodity/currencytrader,
contributor/teacherontheBabypipssite
midfig(seemidfigure)
midfigurepriceoftheformx.xx50(the50level)
MillionaireTraders'GuildMichael'sthreadonthe"ShowMetheMoneyDaytrading"forum,emphasizinga
planbasedapproachtousingtheICTtools
MMdef.1(seemarketmaker)
MMdef.2(seemoneymanagement)
MMAmajormarketanalysis(seeintermarketanalysis)
MMP(seemarketmakerprofile)
momentumindicatoratechnicalindicator(e.g.,MACD)whichmeasuresthestrengthofaprevailingtrenditcanbe
usedinsteadofapriceoscillator
moneymanagementtheproperuse(inplanningatrade)ofpositionsize,stoploss,andR/R(reward/risk)ratioinorder
tolimitlossesandpreservecapital
movingaverage(orsimplemovingaverage)theaverageofthedatafromthemostrecentnnumberofperiods,not
weighted(comparetoEMA)
MR1,MR2,etc.intermediateresistancelevels(computedfrompivotpointformulas)seeICTPivotPointFormulas
onpage4
MS(seemarketstructure)
MS1,MS2,etc.intermediatesupportlevels(computedfrompivotpointformulas)seeICTPivotPointFormulason
page4
MT4aretailtradingplatform,licensedworldwidetobrokers,popularforitsMQL4scriptinglanguageallowing
creationofEA's,customindicators,andscripts
MTG(seeMillionaireTraders'Guild)
N
negativelycorrelatedpairstwocurrencypairswhosepricesmove(roughly)inoppositedirections(example:
EUR/USDandUSD/CHF)
nestedOTEanOTEwithinanOTEasmaller(LTF)priceswingwithanOTEretracement,nestedwithinalarger
(HTF)priceswingwithits(larger)OTE
NewYorkOpen8amNewYorktime,thebeginningofthenormalbusinessdayinNewYork
NewYorkOpenKillZonenominally7am9amNewYorktime(thistimeperiodmaybeexpandedatthediscretionof
thetrader)thisisoneof4killzones
NewYorkpivotsdailypivotlevelsbasedonmidnightNewYorktimeasthestartofeachForextradingday
NewYorksession8am5pmNewYorktimethefirst4hoursofthissession(theL/NYoverlap)aretypicallythe
highestvolumeperiodofthetradingday
NewYorktimeEST=GMT5(NovMarch),orEDT=GMT4(MarchNov)Note:MichaelalwaysreferstoNewYork
timeasEST,regardlessoftimeofyear
newsshorthandforscheduledeconomicdatareleases,whosereleasedates/timesareknowninadvance,andwhose
70
metricsareforecastinadvance
NFP(seeNonFarmPayrollreport)
NickVanNiceoriginatoroftheconceptofhiddendivergence(whichMichaelreferstoastype2divergence)
noman'slandonaTrader'sTrinitychart,noman'slandisthemiddle25%ofthe(previous)HLpricerangethe
centerofthiszoneisthefairvalueprice
NonFarmPayroll(report)U.S.employmentreport(oftenamarketmover),releasedonthefirstFridayofeachmonth
bytheU.S.DepartmentofLabor
NYO(seeNewYorkOpen)
NYOKZ(seeNewYorkOpenKillZone)
O
OB/OSoverboughtoroversold(thistermusuallyreferstoreadingsgeneratedbyapriceoscillator)
OHLC(orOHLC)Open,High,LowandClose(the4priceswhicharedisplayedgraphicallyoneachcandle,oreach
pricebar)
OI(seeopeninterest)
OneshotonekillICTsnipertactic:Lieinwait(forasetup),takeaim(atthesetup),pullthetrigger(enterthetrade),
nailthetarget(collectpips)
openinterestthenumberofopencontracts(thosenotyetoffsetordelivered)inaspecificcommodity/deliverymonth
oneofthemetricsinaCOTreport
opentradereactionphasetopdownanalysis,phase4:marketfailuretomove,pricerejectionatS/R,newsreleases,
globalevents,and/ortraderissues
optimaltradeentryentryzonebetweenthe62%and79%retracementlevelsnotethat62%and79%arenot
standardfibretracementlevels
OTE(seeoptimaltradeentry)
oscillatoratechnicalindicator(e.g.,RSI,stochastics,orW%R)whichplotspriceasapercentage(from0%to100%)
ofsomevariable
outsidedaywithadowncloseanengulfingDailycandlewithalowercloseifconfirmedbyanoversoldindicator,it
signalsareversaltotheupside
overboughtapricewhichappearstohavemovedtoofarcountertoabearishbias(asindicatedbypivots,Trader's
Trinity,oranyofvariousoscillators)
oversoldapricewhichappearstohavemovedtoofarcountertoabullishbias(asindicatedbypivots,Trader'sTrinity,
oranyofvariousoscillators)
P
P(orPP,orCP)pivot,orpivotpoint,orcentralpivot(computedfrompivotpointformulas)seeICTPivotPoint
Formulasonpage4
PA(seepriceaction)
Pacmanslangtermreferringtosmartmoney"gobblingup"stops(likePacMangobblinguppacdotsinthe1980's
arcadegame)
PB&Jpeanutbutterandjelly
PerfChartPerformanceChart(StockCharts.com),tracks%changeinpriceoveraselectedtimeperiod,startingfroma
0%baselineseelistonpage4
pinshorthandforpinbar
pinbaracandlestick,ofeithercolor,havingalongupperorlowerwick(orboth),signalingmarket"hesitation"inthe
directionofthelongwick
positiontradeatradeinwhichtheentryandexitareexpectedtooccurweeks,months(orevenyears)apart,andthe
profittargetis1,000pipsormore
poundinformalnameoftheU.K.currency(propername:poundsterling)also,oneofthenicknamesoftheGBP/USD
pair
PowerofThreeentryimmediatelyafterthecloseofathreebarhigh(orlow)atakeyresistance(orsupport)levelona
Dailychart(advancedtechnique)
priceactionamethodofanalyzingand/ortradinganymarket,basedonlyonpricepatternsandsimplepricemeasuring
tools,butexcludingindicators
profitreleasephaseinatypicalaccumulation/distributionscenario,thisisthepricerangebetweentheaccumulation
phaseandthedistributionphase
ProTraders'CluboneofMichael'sthreadsonthe"NewbieIsland"forum,devotedtodailyreviewsandICTtool
application
PTC(seeProTraders'Club)
71
pullafibuseaFibonaccitooltodelineateapriceswing(frominitialpricetofinalprice)showingFibonacci
retracementlevelsandFibonacciextensionlevels
R
R1,R2,R3,etc.resistancelevels(computedfrompivotpointformulas)seeICTPivotPointFormulasonpage4
rangecontractionthetendencyforaseriesoflargerangedaystobefollowedbyoneormoresmallrangedays
rangeexpansionthetendencyforaseriesofsmallrangedaystobefollowedbyoneormorelargerangedays
reflectionpatternapatterninwhichpriceretracesbeyondtheOTEzone,the100%fibretracement,andthe127%fib
extension,creatinga"reverse"OTE
regulardivergencetrendreversaldivergence(seetype1divergence)
reversalprofileanearlydaypriceswing(upordown),takingoutakeyDailyorWeeklyS/Rlevel,followedbya
reversalandalargerlatedaypriceswing
riptidereversalsimilartoaturtlesoupreversal,butbasedonafalsebreakoutofaSHorSLwhichformedmorethan
20periodsprior
riskmanagement(orequitymanagement)thecombinationofmoneymanagementplustrademanagement
riskoffwidespreadtraderattitude(orsentiment)inwhichhighriskpositionsareabandonedinfavorof
lowerrisklowerreturnsafehavenpositions
riskonwidespreadtraderattitude(orsentiment)inwhichlowrisksafehavenpositionsareabandonedinfavorof
higherriskhigherreturnpositions
RR(orR/R,orR:R)risk/rewardratio(e.g.,SL/TP),orreward/riskratio(e.g.,TP/SL),dependingontheorderinwhich
thenumbersarestated
RRtracksrailroadtracks(referstotwo,long,sidebysidecandlebodies,withoppositecolors,denotinganengineered
pricereversal)
RSI(relativestrengthindex)oneof3priceoscillators(RSI,stochastics,andW%R)includedintheICTtoolsetuse
oneofthese(orMACD)
S
S1,S2,S3,etc.supportlevels(computedfrompivotpointformulas)seeICTPivotPointFormulasonpage4
scalp(orscalpingtrade)atradeinwhichtheentryandexitareexpectedtooccursecondsorminutesapart,andthe
profittargetis30pipsorless
searchanddestroyasmartmoneytactic(whichsavvyretailtraderscanimitate)ofsystematicallygunningstopsabove
andbelowaconsolidationrange
seasonaltendenciestendenciesofmanymarkets(currencies,equities,commodities,bonds)tomakeLTH'sorLTL'sat
specifictimesofyear
sellprogramatrendingmarketprofileinwhichthedirectionalbiasisdown(bearish),andtradesinthedirectionofthe
trendareshort(sells)
sellzonegiveneither(1)aHTFbearishbias,or(2)arangingmarket,asellzoneisthepricerangeabovethepivot(P),
orabovetheTTfairvaluezone
sessiondailyperiodofhighvolumeForextradinginaparticularmarket,generally8am5pmlocaltime(seeAsian
sessionforanexceptiontothisrule)
SH(seeswinghigh)
shortertimeframeatimeframeshorterthanthetimeframebeingdiscussed"shortertimeframe"isnotnecessarily
synonymouswithlowertimeframe(LTF)
shorttermhighafractalhighwhichhasnotevolvedintoanITHoranLTH
shorttermlowafractallowwhichhasnotevolvedintoanITLoranLTL
shorttermtradeatradeinwhichtheentryandexitareexpectedtooccurwithin2to5tradingdays,andtheprofit
targetis100300pips
SLdef.1(seestoploss)
SLdef.2(seeswinglow)
SM(seesmartmoney)
SMAsimplemovingaverage(seemovingaverage)
smallrangedayadaywhoseHLpricerange(theday'shighminustheday'slow)fallssubstantiallyshortoftheday's
ADR
smartmoneylargebanksandcertainotherinstitutionswhichhaveinformationonresting(stopandlimit)orders
informationnotavailabletostreetmoney
SmartMoneyToolanoverlayoflinechartsof2(or3)correlatedinstruments,onwhichshorttermpricedivergences
arereadilyseenseelistonpage4
SMT(seeSmartMoneyTool)
72
SMTdiv(seeSMTdivergence)
SMTdivergencedeviationfromthenormalpositiveornegativecorrelationbetween2instrumentsonanSMTchart,
signalingapotentialpricemove
sniperatrader"lyinginwait"foratradesetuptocomeintorange
S/R(orSR,orS&R)(seesupportandresistance)
sterlinginformalnameoftheU.K.currency(propername:poundsterling)also,oneofthenicknamesofthe
GBP/USDpair
STF(seeshortertimeframe)
STH(seeshorttermhigh)
STL(seeshorttermlow)
stingerinanupmove,abullishtype1divergencenestedinsideabullishtype2divergenceinadownmove,nested
bearishtype1andtype2divergences
stoch(seestochastic)
stochasticoneof3priceoscillators(stochastics,RSI,andW%R)includedintheICTtoolsetuseoneofthese(or
MACD)
stophuntapricemoveengineeredbysmartmoneyinordertotriggerstopandlimitordersrestingaboveorbelowthe
currentmarketprice
stoplossthepricelevelatwhicharestingorderhasbeenplacedtocloseapositionatalossor,theanticipatedloss,in
pips,whenthatpriceishit
stopsloosetermreferringtobuystoporbuylimitordersrestingabovethecurrentmarket,orsellstoporselllimit
ordersrestingbelowthecurrentmarket
streetmoneymarketparticipantsotherthanthesmartmoneystreetmoneyisnotprivytotheinsideinformationon
whichsmartmoneytrades
SundaygappricedifferencebetweenFriday'scloseandSunday'sopen,representingpricemovementoverthe
weekend,whiletheretailmarketwasclosed
supportandresistancesignificantlevelsbelowandabovethecurrentmarketwherepricehasreactedinthepast,and
mightdosoagaininthefuture
sweetspotthecenterofthetargetareaforanOTE,atthe70.5%retracementlevel(whichismidwaybetweenthe62%
and79%retracementlevels)
swinghighanyofthefollowing:athreebarhigh,astandard5barfractalhigh,anintermediatetermhigh(ITH),ora
longtermhigh(LTH)
swinglowanyofthefollowing:athreebarlow,astandard5barfractallow,anintermediatetermlow(ITL),ora
longtermlow(LTL)
swingpointwhenpricebreaksaswinghigh(orswinglow)forthefirsttime,thatswinghigh(orswinglow)becomesa
swingpoint
swingtradeatradeinwhichtheentryandexitareexpectedtooccuraweekormore(uptoseveralweeks)apart,and
theprofittargetis3001,000pips
SwissynicknameoftheUSD/CHFpair
T
TA(orT/A)(seetechnicalanalysis)
takeprofitthepricelevelatwhicharestingorderhasbeenplacedtocloseapositionwithaprofitor,theanticipated
profit,inpips,whenthatpriceishit
technicalanalysismarketanalysisbasedonpriceaction,withorwithouttechnicalindicators,butnotutilizing
fundamentalanalysis
TF(seetimeframe)
threebarhighatruncatedfractalhigh,containing3bars(insteadof5),withthecenterbarhavingthehighesthighof
the3bars
threebarlowatruncatedfractallow,containing3bars(insteadof5),withthecenterbarhavingthelowestlowofthe
3bars
threeIndiansclimaxreversalaseriesof3closelyspacedimpulsepricemoves(higherorlower),followedbyaprice
reversal
timeandpricetheorytheuseof(1)highertimeframes(H4,D1,W1,andM1)tofindkeyS/R,MS,andMF,and(2)
confluences(onLTF's)totimetrades
timeframeusuallyreferstoacharttimeframe,suchasa5minutechart,a4hourchart,etc.
timezoneadesignatedgeographicalareawhosetimeofdayisdeterminedinrelationtoGMTtime(orUTCtime)
example:Moscowtime=MSK=GMT+4
Tokyosession8am5pmTokyotimecomparetoAsianSession,whichincludestheTokyosessionplusthe
73
(GMT+8)SingaporeandHongKongsessions
TokyotimeJST=GMT+9(yearround)Japandoesnotobservedaylightsavingtime
topdownanalysis(1)generalmarketanalysisphase,(2)anticipatorytradeanalysisphase,(3)tradeexecutionphase,
and(4)opentradereactionphase
topdownapproach(seetopdownanalysis)
TP(seetakeprofit)
TPDS(seeTradingPlanDevelopmentSeries)
tradeexecutionphasetopdownanalysis,phase3:markettone,riskonoroff,buyorsellprogram,HTFS/Rlevels,MS,
MF,timeandprice,andtradeentry
trademanagementmanagementofopentradesto(1)reducetraderisktozeroandprotectprofitsonprofitabletrades
or(2)cutlossesonlosingtrades
Trader'sTrinitychartdividingaDaily,WeeklyorMonthlyHLrangeintozones:lower25%(oversold),middle25%
(fairvalue),andupper25%(overbought)
tradingplanwrittenrulesspecifyingthepairs,sessions,timesofday,etc.,tobetradedandtheanalysismethods,
moneymanagement,etc.,tobeused
TradingPlanDevelopmentSeriesavideoseriesdetailingtheuseofriskmanagement,plusfundamental,intermarket,
technical,andtopdownanalysis
trendlineanupwardslopinglinebelowaseriesofprogressivelyhigherlowsoradownwardslopinglineabovea
seriesofprogressivelylowerhighs
triangleaconsolidationpatternboundedbyupperandlowerlineswhichconvergeatapointsomewheretotherightof
thecurrentcandle
TT(seeTrader'sTrinity)
turtlesoupasmartmoneytradeplacedcounter(opposite)toatypical"turtletrade",anticipatingafailureoftheturtle
trade(i.e.,theturtlesget"eaten")
tweezersreferstotwo,long,sidebyside,upper(orlower)candlewicks,withoppositecolors,typicallyataswing
high(orswinglow)
type1divergencepriceandoscillatordiverge,signalingaprobabletrendreversalbullish:priceLL,oscillatorHL
bearish:priceHH,oscillatorLH
type2divergencepriceandoscillatordiverge,signalingaprobabletrendcontinuationbullish:priceHL,
oscillatorLLbearish:priceLH,oscillatorHH
TZ(seetimezone)
U
UJUSD/JPYpair
U.S.DollarIndextheUSDmeasuredagainstaweightedbasketof6currencies:EUR57.6%,JPY13.6%,GBP11.9%,
CAD9.1%,SEK4.2%,andCHF3.6%
USDX(seeU.S.DollarIndex)
USDXtriaddivergence
UTCCoordinatedUniversalTimetheworld'sscientificreferencetimezone(forourpurposes,thefollowingare
equivalent:UTC=UT1=Zulutime=GMT)
W
W%R(orWilliams%R,orWilliams%Range)oneof3priceoscillators(W%R,stochastics,andRSI)includedin
theICTtoolsetuseoneofthese(orMACD)
WallStreetthefinancialdistrictinLowerManhattan(NewYork)
WhatEveryNew&OrAspiringForexTrader...StillWantsToKnowMichael's"sticky"threadonthe"NewbieIsland"
forumstartingpointforICTinstruction
whiplashlongandcatapultshorttradinglong,thenshort,whenSunday'sopengapslowerthewhiplashfillsthegap
thecatapultextendsthedownmove
whiplashshortandcatapultlongtradingshort,thenlong,whenSunday'sopengapshigherthewhiplashfillsthegap
thecatapultextendstheupmove
Y
yenpropernameoftheJapanesecurrencyalso,nicknameoftheUSD/JPYpair
Z
Zconfigurationafractal(def.1)priceconsolidationpattern,seenonalltimeframes,ofwhichtheZdayisthemost
oftenobserved
74
Zdayadayofpriceconsolidationwithinadefinedrange,clearlyboundedbyS/RlevelsZdaysareoftenfollowedby
searchanddestroystophunts
NumericalItems
00'sx.xx00pricelevel(seefigure)
1.28projectionthisrulesaysthat,ifthe2mostrecentSL'swerendaysapart,thenthenextSHwillform(approx.)
1.28xndaysafterthemostrecentSH
18EMA18periodEMAtogether,the18EMAandthe40EMAcompriseamovingaveragecrossoverindicator,
usefulfordaytradingandshorttermtrading
20levelx.xx20pricelevel(seeinstitutionallevel)
40EMA40periodEMA(see18EMA,above,foranexplanationofitsuse)
50levelx.xx50pricelevel(seemidfigure)
62levelshorthandforthe62%retracementlevel(notastandardfibretracementlevel)
70levelshorthandforthe70.5%retracementlevel,whichistheOTEsweetspot(notastandardfibretracementlevel)
79levelshorthandforthe79%retracementlevel(notastandardfibretracementlevel)
80levelx.xx80pricelevel(seeinstitutionallevel)
PerfChartabbreviations(apartiallist)
$USDU.S.dollarindex(seeUSDXinthealphabeticallisting)
$XEUtheeuropricedinU.S.dollars(PHLXpricing,notspotForexpricing)
$XBPtheBritishpoundpricedinU.S.dollars(PHLXpricing,notspotForexpricing)
$XJY100yenpricedinU.S.dollars(PHLXpricing,notspotForexpricing)note:thischartistheinverseofa
standardUSD/JPYForexchart
$UST1MU.S.Treasury1monthtreasurybill
$UST1YU.S.Treasury1yeartreasurybill
$UST2YU.S.Treasury2yeartreasurynote
$UST30YU.S.Treasury30yeartreasurybond
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Taking a look at thesamplereport,wesee that openinterest onTuesday June 7, 2005, was193,707

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