ICT Mentorship Core Content

2016
MONTH 5
Contents
MONTH 5 – said by ICT to be the most important .......................................................................... 4
EPISODE 1 – Quarterly Shifts & IPDA Data Ranges 1.1 – LINK..................................................... 4
The quarterly market shift ....................................................................................................... 4
What is a quarterly shift .......................................................................................................... 7
The look back .......................................................................................................................... 7
The cast forward .................................................................................................................... 11
EPISODE 2 – Quarterly Shifts and Open Float 1.2 – LINK .......................................................... 17
The quarterly shift ................................................................................................................. 17
EPISODE 3 – AUDUSD – IPDA Data Range Example – Case Study 1.3 – LINK ............................ 25
EPISODE 4 – Defining Open Float Liquidity Pools 1.4 – LINK ..................................................... 45
EPISODE 5 – Defining Institutional Swing Points 1.5 – LINK ...................................................... 57
The stop run ........................................................................................................................... 57
The failure swing ................................................................................................................... 62
EPISODE 6 – Using 10 Year Notes In HTF Analysis 2.1 – LINK.................................................... 67
Example 1 .............................................................................................................................. 69
Example 2 .............................................................................................................................. 71
Example 3 .............................................................................................................................. 72
EPISODE 7 – Qualifying Trade Conditions With 10 Year Yields 2.2 – LINK ................................ 75
EPISODE 8 – Interest Rate Differentials 2.3 – LINK ................................................................... 81
Central Bank Interest Rates ................................................................................................... 82
Selecting a pair for trading .................................................................................................... 82
EPISODE 9 – How To Use Intermarket Analysis 3 – LINK........................................................... 89
The four major groups of intermarket analysis: .................................................................... 89
Intermarket analysis overview ............................................................................................... 90
US Dollar vs. Commodities ................................................................................................... 90
Bonds vs. Commodities ......................................................................................................... 91
Bonds vs. stock market .......................................................................................................... 92
EPISODE 10 – How To Use Bullish Seasonal Tendencies In HTF Analysis 4.1 – LINK ................ 94
EPISODE 11 – How To Use Bearish Seasonal Tendencies In HTF Analysis 4.2 – LINK ............. 101
EXAMPLES OF SEASONAL TENDENCIES – NZDUSD weekly charts ....................... 105
EPISODE 12 – Ideal Seasonal Tendencies 4.3 – LINK ...................................................... 111
EPISODE 13 – Money Management and HTF Analysis 5 – LINK .............................................. 115
EPISODE 14 – Defining High Timeframe PD Arrays 6.1 – LINK ................................................ 117
The hierarchy of the PD arrays ............................................................................................ 123

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 PREMIUM PD arrays in the level of their importance – to sell from ................................. 124
DISCOUNT PD arrays in the level of their importance – to buy from ............................... 126
EPISODE 15 – Trade Conditions and Setup Progressions 6.2 – LINK ....................................... 128
EPISODE 16 – Stop Entry Techniques For Long Term Traders 7.1 – LINK................................ 139
Buying with stop orders....................................................................................................... 139
Selling with stop orders ....................................................................................................... 140
BUYING EXAMPLE .......................................................................................................... 141
SELLING EXAMPLE......................................................................................................... 145
EPISODE 17 – Limit Entry Techniques For Long Term Traders 7.2 – LINK ............................... 147
Buying with limit orders ...................................................................................................... 147
Selling with limit orders ...................................................................................................... 147
BUYING EXAMPLES ....................................................................................................... 148
EPISODE 18 – Position Trade Management 8 – LINK .............................................................. 150
Bullish market conditions .................................................................................................... 150
Bearish market conditions ................................................................................................... 151
STEP BY STEP SIMPLIFIED RISK MANAGEMENT FOR LONG TERM TRADES ... 151
EXAMPLES ........................................................................................................................ 152

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MONTH 5 – said by ICT to be the most important
EPISODE 1 – Quarterly Shifts & IPDA Data Ranges 1.1 – LINK

The quarterly market shift

A. IPDA data ranges
a. 3 – 4 months major market shifts.
b. Smart money accumulation for buy programs
i. Manipulation in underlying vs. benchmark
ii. Benchmark makes lower low – underlying makes higher low
iii. Underlying makes a lower low – benchmark makes a lower high
iv. Benchmark makes a higher high – underlying makes a higher low
c. Smart money distribution for sell programs
i. Manipulation in underlying vs benchmark
ii. Benchmark makes a higher high – underlying makes a lower high
iii. Underlying makes a higher high – benchmark makes a higher low
iv. Benchmark makes a lower low – underlying makes a lower high

The underlying is what you are actually trading and the benchmark is what you are measuring the
potential manipulation or lack thereof.
Those details are specific for forex pairs and must be seen on daily charts, nothing below daily
timeframes

If that got you confused, see the following:

B. IPDA data ranges
a. 3 – 4 months major market shifts
b. Smart money accumulation for buy programs
i. Manipulation in underlying vs. benchmark
ii. USDX makes lower low – USDCHF makes higher low
iii. EURUSD makes a lower low – USDX makes a lower high
iv. USDX makes a higher high – EURUSD makes a higher low
c. Smart money distribution for sell programs
i. Manipulation in underlying vs benchmark
ii. USDX makes a higher high – USDCHF makes a lower high
iii. EURUSD makes a higher high – USDX makes a higher low
iv. USDX makes a lower low – EURUSD makes a lower high

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USDX monthly chart – divided every 3 months – basically one full year of trading

January
April
July
October
January

USDX monthly chart – divided every 4 months

January
May
September
January

This gives a really good context of where the market structure is and what market shift should
take place next. The red lines are from January to January.

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Weekly USDX chart with 4 months divisions for quarterly shifts.

Daily USDX chart with 4 months divisions for quarterly shifts. Calendar start of each month was used.

ICT chart has the dates as:

• 1st of January 2016
• 1st of May 2016
• 1st of September 2016
• 1st of January 2017

Anyway… look at how many time the market shifts back and forth and how many price swings
you can see during the course of a full year. On the daily timeframe you are not getting a great deal of
setups and that is the main reason why many people do not trade this timeframe. But this is a
timeframe that is supportive to all other disciplines of trading. See how the market gives, in fact, a very
good macro view of the marketplace where it gives you framework and structure to work within so
that way you can trade on one side of the marketplace and focus primarily there.

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What is a quarterly shift
On your chart put a line at the beginning of the most recent past month. For example if you are
in January now, put a line at the beginning of December. If you are in May, put a line at the beginning
of April. To be easier to understand this, ICT uses an example of January to January.
You are going to view that as an anticipated quarterly shift. You do not know if that is going to be
true, but you are going to do some things to arrive at how you could calibrate that level.

The look back

Again, if you are in January, look at December. If you are in February, look at January and so
on. Use the most recent past month versus the real date you are on right now and put a vertical line
on the first day of trading of the most recent past month. From that point on you are going to look
back to the left of that vertical line.
• You will look back 60 – 40 – 20 trading days – the algorithm will reach back about 3 months of
trading worth of data in average. Sometimes it goes further, but this is the most salient points of
reference on the daily chart. Delineate those 20, 40 and 60 trading days starting from the first
trading day of the past month to the left as the first day of trading. Remember it has to be trading
days, not calendar days.
• Identify institutional order flow - What was the market doing 60 days ago to now?
• Refer to recent institutional reference points
o Old price high
o Old price low
o Bearish orderblocks
o Bullish orderblocks
o Fair Value Gaps or Liquidity Voids
Look for old price highs and lows for potential liquidity pools. Observe if those highs and lows
have a lot of wicks to look for rejection blocks. If not big wicks, still consider that low or high for
potential liquidity pools. Those reference points will be checked for in the time zone areas of the last
20, 40 and 60 days.
• Anchor a vertical line to a previous market shift - once you identify the reference points over
the last 60 trading days, you are using the previous closed calendar month as your beginning
reference point and you will place a vertical line on it and then look 60, 40 and 20 trading days
to the left of it [if today is 4th of November, I would look at 2nd of October and place a vertical
line on it as that is the first trading day of October]. Look at where is the high and where is the
low. If the market has been trading higher you are going to frame everything off of the market
low. If the market has been trading lower you are going to frame everything off of the market
high.

I repeat, you are looking left 60 trading days at the maximum. Over those last 60 trading days
you are determining what was the institutional order flow over those last 3 months or so. Was it trading
higher or lower collectively? Sometimes you will have large trading ranges. For now concentrate on
what is most significant – was it a significant intermediate term low formed in the last 60 trading days
or was it a significant intermediate term high formed? Whichever is true and obvious to you, then you
put your vertical line on that high or low. Now you calibrated to the market structure that is in place

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right now. Once you do that, what you are doing is anchoring a line to a previous market structure
shift.

The example
This chart with lines from 1st of January 2016 to 1st of January 2017 becomes…

…this

If you are looking at the market on the 1st of January 2016 you will do what was explained
previously and you will be moving to the first trading day of December 2015 vs 1st of January 2016.
You moved to the left and noted that high. Use the first calendar day of the month. Always use
that reference point to calibrate and begin. The algorithm works on data ranges and it is going to use
calendar days and it has to reference how far to look back because it is a numerical reference point so
now you know how to calibrate just how the algorithm will define it in sense of – every 3 months there
is a shift. Also in the last 3 months where is the liquidity?

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 As now you are anchored, look back to the last 20, 40 and 60 days from the vertical line from
st
1 of December 2015 and observe what happened.

Key
low

In the last 60 trading days the market traded higher from around October 2015 so it made an
intermediate term low. The market traded up and created that short term or intermediate term high
around 1st of December 2015.
In the last 40 trading days to the left of 1st of December 2015 you can also see that there was
consolidation and then expanded once more time higher.
Int the last 20 trading days the market just kept pressing higher.

Institutional order flow was bullish so where is the liquidity at? It is going to be below the
marketplace because the market has already trade higher and that is reference point in the yellow
shaded area, right below that October low. The market trades lower after or to the right of 1st of
December 2015.

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 Once the market trades lower, in between these reference points once you identified where
the market structure starts to break now, meaning a key low was broken, any retracement higher or
movement higher at this moment, you are going to be anticipating moves lower because the market
has already moved bullishly, you have seen a market structure break lower and now you are going to
anticipate a potential moves lower in the dollar index. It could be a consolidation sideways but you are
still expecting a measure of bearishness on the dollar index post December 2015.

The 60, the 40 and the 20 days, when you are looking back like this, you are focusing primarily
on where has the market traded from. What was the institutional order flow at that point? At this time
you can clearly see that October, November and December the market had been trading bullishly. You
do not care about the long term trend right now. All you are doing is looking at quarterly shifts and
this will give you a great deal of context on how you can do a lot of different trading, but it will help
you frame position trades. Without understanding this you cannot incorporate the trend to get
yourself on the right side of the marketplace. For now just observe how the market shifts back and
forth in both directions. The markets are not always in big long term trends on the higher timeframe
charts. They may be in a larger range. In that larger range will be trends that will look dynamic on a 1h
or 15m timeframe, but on the higher timeframe you are still within a well-defined range.

By using this higher timeframe, the daily chart, when you see the market structure shift
bearishly, you are now expecting the next 3 months to be a potential correction.

The reference points you looked for are things that were already discussed:
• Orderblocks
• Fair Value Gaps
• Liquidity Voids
• Old highs and lows

You are anticipating a move back into institutional reference points and then moving lower
looking for that same event to occur and looking for lower levels institutional reference points. In other
words the price should be drawn down to a logical level, not randomness, from an institutional vantage
point where you can see where they would want to absorb liquidity or engineer new liquidity into the
marketplace.

Using these last 60, 40 and 20 days back idea, you want to look at what the price created in those
ranges. Here the market moved higher, so prior to 1st of December 2015 the marketplace had an
institutional order flow that was moving bullishly. That means that as the market was moving higher,
every short term low is going to have sellside liquidity or sell stops below that. In each one of these
ranges what you can do is to define the range, find the low and then you can note that as where the
sellside liquidity is – see the next chart.

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The cast forward
Once you have the most recent line calibrated to the most recent market structure shift and
you have done the look back and defined all the liquidity reference points 20, 40 and 60 days back to
the left and you identified institutional order flow and referred to all the recent institutional reference
points that were previously mentioned, the cast forward will now be done.
The cast forward is when you look ahead with the same parameters you used when you looked
back.
• Anticipate market shift in 20 to 60 trading days – because you understand and your belief is
that the market will have a new directional bias or a shift in sentiment OR, as ICT calls it, you
will have a quarterly shift.
• Cast forward 20 days to the right of the vertical line when the last shift was 40 days ago – if
you have seen a market structure shift after a vertical line was delineated, if you see the
market shift in the last 40 days to the left where you are right now, you cast forward 40 more
days because you are always using a reference point of 60 days.
• Cast forward 40 days to the right of the vertical line when the last shift was 20 days ago –
because 60 days of range that you are always using. This is done until you reach the extreme
of the projected 3 months limit.
• Project 3 months limit – there would be another vertical line drawn on your chart or capping
3 months.

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 This is how would look here:

Now you have the 60, 40 and 20 days added to the right of 1st of December 2015 delineation.
What you have now is a future day range or a data range. The algorithm is going to anticipate doing a
shift in the marketplace in that range between 60 and 20 days. If you see the market structure break
down as you saw here, then you are looking for a market move going lower to fill in a potential liquidity
void as seen in the yellow shaded area. In the range of 60 days to the right of the market structure
shift delineation that you have here at 1st of December 2015, you expect a setup on the chart in the
next 60 days. That tells you a time horizon that you will have to wait, sometimes, as long as 60 trading
days. This may not suit you if you do not have the capacity to wait for that next trade. But you can use
this to get daily bias context, short term setups or you can get long term objectives of where the market
should be moving over weeks and months versus limiting your scope on a short term basis.

You can look at the EURUSD in the same way

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If you are expecting bearishness on the dollar index, it means that you are expecting bullishness on the
EURUSD pair. And the 20, 40 and 60 days from the same date as you did on DXY and you will have the
delineations that would be necessary to frame out how far the IPDA data range would go. Notice how
on the previous chart the high that was formed on the EURUSD landed on the 60th day IPDA data range.
Think about what you are doing here. You are mapping out where the highest probable TIME range
should be influential in regard to where the setups occur. You need to understand when the setups
occur. If it is something that is not random and it is, in fact, manipulated and controlled, there should
be characteristics that repeat themselves and should be measurable and you should be able to see
things repeat themselves based on a criteria.
The algorithm will seek to do something in the first 20, 40 and up to 60 days after the most
recent market structure shift.
Here you saw a high formed on the dollar index and expected the market to move lower
because it broke its market structure bearishly. The EURUSD made a low and price moved higher
breaking market structure bullishly for it.
In between the vertical lines once you have calibrated your market structure on a quarterly
basis you are expecting bullishness on the part of the EURUSD after December 2015, that means that
all the way up to March 2016 you have a stance that the bearishness in the dollar index should bode
well for bullishness on the EURUSD.
In between December 1st and March 1st you would be expecting a bullish signal to form in the
EURUSD and a bearish signal to form on the dollar index.
The scenario would be, even looking at the daily chart, that there is going to be a manipulation
that takes place even on the higher timeframe – daily.

Those highs on the dollar index are formed inside of the data range of 60 days to the right of
1st of December 2015. These highs here are seen AFTER the market structure was broken and the
retracement higher was to fill in the liquidity void. When the LQV was closed in inside of the data range
of 60 days you have to measure – is it all of this justified? You can look at the lows that were forming
on the EURUSD.

Liquidity void

Liquidity void closed

MSS

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 Look at the lows in the EURUSD here all the way up to the 60 days data range. The lows were
higher and this means that the EURUSD was under accumulation. The underlying [EURUSD] is failing
to make a lower low…

…and at the same time the benchmark [DXY] was making higher highs. By all standards this looks like
bullishness every time a new high is formed and it looks like it is trying to go higher. But all it is doing
is reaching up to close the LQV – the reference point discussed at the beginning of this teaching.

Those higher highs in DXY are not being seen with lower lows in EURUSD. It is also occurring in
between where the market structure shift was delineated + 3 months. On the daily chart you are
looking for it to happen withing 60 days of a new calendar month. IPDA data range will go out and
project that.

What you are essentially doing is to frame the market quarterly and that gives you a context
to look at the market modularly so you can take the price action and look inside of it and look for
setups instead of just being lost in a whole grand scheme of things looking at the candle’s highs and

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lows and all of that business… You have to understand that there is a rhythm and a method behind
how price is delivered, even on daily charts like this. Every 3 to 4 months there is going to be a shake
off in the market. There is going to be a sentiment shift, a change in trend, excitement injected into
the marketplace to cause interest in a specific asset class, especially if it is an asset class that has been
dormant for a while and it has not been traded much. They tend to take those markets and shake them
up.
By looking at the market and breaking it down like this it gives you a great deal of context, it is
specific, it is measurable, it gives you a very clear indication of what you are doing and how long it
should take to form and the looking for the signs to create those setups.

Daily timeframe - DXY

MSS

You can see here at the lows that DXY had a market structure shift that was bullish. The highs
were taken out on the upside. Prior to that high on the daily no highs to the left were violated. So
institutional order flow broke to bullishness there because of the shift in market structure. The market,
then, traded lower passed and another divider [vertical line] at 1st of June 2016.

***TIP – once you have one vertical line you can place the other ones. You can calibrate them as you
see fit based on what the market is doing. In this case, once you see that that MSS you can go back to
1st of May 2016 and use that as a delineation and then start going 20-40-60 days to the right of it and
then draw a vertical line every 3 months or so.

Look at what the DXY did. There are 3 lows that can be seen, but at the same time the EURUSD
should have made 3 higher highs.

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 On the EURUSD chart this is not happening. You can see a higher high there, but you have to
look at every institutional reference point. There is an old high and to the right of it there is a high that
is not higher. It is lower. This is a market that is heavily being distributed. The run up on the 3rd high is
just a run on buyside liquidity taking the buy stops on short players and then the market trades lower
and that happens in between the vertical lines that delineate the next market shift.

BSL

Remember that there is a quarterly shift that takes place every 3 or 4 months and you can see
that these smart money accumulation and distribution programs are very easy to see in price action,
but you have to define it in such a way where you now look for it to occur.

All of what you are doing is you are looking for an obvious break and shift in the marketplace.
An example is that if you are looking at the market in February, you can go back to January 1st, put the
market there and then go right 20, 40 and 60 days and you get something there.
Looking back you can see where the liquidity is resting.
Looking forward, or to the right, is to get the very next setup in terms of data range.

Let’s say it is November 2016. What month would you calibrate your vertical line to? It is
October 1st. You want to go back to the previous closed month. You want to go back one full calendar
month where it traded from the first day of trading to the last day of trading. By doing that you
calibrate yourself and you will be able to see what IPDA is doing reference wise and then you start
waling forward from there.

*** this video had 55 minutes and I think it took me more than 5 hours to actually finish it. Play, scroll
back, play, scroll again, listen a few times, listen again and so on. I am not sure I understood exactly
how the quarterly shift works. ICT mentioned that some more details will be shared for this month. Let’s
see what the next teaching. If the writing is not clear, please watch the video yourself. Maye it will be
clearer for you.

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EPISODE 2 – Quarterly Shifts and Open Float 1.2 – LINK

The quarterly shift

A. Open float
a. Open float is the current „open interest” above and below current market price.
Those will be in the form of:
i. Pending buy orders [buy stops] above old highs or it could be just resting
above market price; does not have to be old highs.
ii. Pending sell orders [sell stops] below the market price by a little bit in terms
of pips or it could be below significant lows. There is open interest in the form
of sell stops for entry orders and sell stops for collapsing long positions.
All of these are equating to open float. It is the total interest of the players that are in the market
now or hope to be depending on where the price goes relative to those standing orders.
b. Shorts us protective buy stops above last bearish shift
i. Buy stops above short term highs – weekly or monthly high.
ii. Buy stops above the highest high in the last 3 months.
iii. Buy stops above the current 6 month high.
iv. Buy stops above the current 12 month high.
You can be inside that 12 month high and low range for a long time.

The one that you will focus on here is the buy stops above the highest high in the last 3 months.
And because you are looking at the quarterly shifts that is going to be a very significant price level
where buy stops would be resting. Every 3 months you want to be noting where the high is and there
are going to be buy stops most likely getting targeted if there is a bullish market structure shift. They
are going to aim for those buy stops above the 3 month highs. Any run above buy stops above a short
term high, monthly or weekly high will give you a strong prognostication for a short term volatility.

c. Longs protective sell stops under last bullish shift

i. Sell stops below short term lows – weekly or monthly low.
ii. Sell stops below the lowest low in the last 3 months.
iii. Sell stops below the current 6 month low.
iv. Sell stops below the current 12 month low.

How do you know if the market is going to stop just above an old high or just below an old low
and then reverse or keep on going? The ideas to reach that conclusion will be shared further.
The next chart is outlining the same level you had for the quarterly shifts and every 3 months the
intervals are shown here.

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Daily timeframe – EURUSD
The significant highs and lows on this chart the following, so you have 2 runs above an old high
and below an old low.

Draw you attention to that short term low on the left. When price traded below that low, that
was a break in market structure. There was a market shift below that low and it continued trading all
the way down until it got to the 1.0530 level.
When you see a bearish shift lower in price your eyes need to go right to the high from which
it just came from. On the daily chart that will have a lot of liquidity above it. The liquidity is in the form
of a liquidity pool for buy stops. The folk that were fortunate enough to be short from that old high
trading down into 1.0534 their positions would have a run on the buy stops that are residing holding
on to a long term position.

“But what retail in the right mind would have a buy stop on a short held on that long just to see
it coming back there and getting knocked out?” – well, the market is not trading against the retail
trader. It is trading against large liquidity offered by the big funds. Because the funds are, traditionally,
long term following traders, these reference points on the daily timeframe are going to be salient to
understanding how open float has a big impact on where future price movements are going to take
you.

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 After the price created a low at 1.0534 the market does, in fact, have one more structure shift
and send the price higher. Pay attention to the quarterly shift markers that are on the chart. Every 3
months there is a significant run on liquidity.
The move off of the 1.0534 level has a break in market structure [MSS] and you can see the subsequent
retracement back to the short term high and then the price rallies away and fills in the liquidity void
from October. After filling the LQV the price retraces again and takes the buy stops above the daily
high.

Buy stops

LQV

MSS
Retracement
Retracement

On the lower side of the chart there is a low where there is going to be a large liquidity pool
on the daily timeframe. It is not for the retail traders, it is going to be for the large funds.

Sell stops

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 Let’s take a look at what takes place and how you can use the open float and answer some of
the questions you might have about why the market should be expected to go to a certain level and
then retrace or reverse and how you can look forward to one side of the market being predominantly
controlled and staving off any continuation after the move blows through an old high or below an old
low.

2nd STH

1st STH

Deeper retracement
Retracement

As you see here there is an STH. The market retraces down into the 1.0750s. The buy stops
that would be resting above that 1st STH are targeted. The market runs through that and also fills in
the LQV left behind from October. It then retraces deeper.
When the market moves above the 1st STH taking the stops out, a new STH is formed. That 2nd
STH gets ran as well making a run on the buy stops that are resting above that.
What buy stops would be resting above that? Buy stops of people who want to sell short every
time the price makes an impulse price swing. There is always, invariably, going to be orders that want
to be selling there. Funds will go in and start working their positions early and sometimes they get
knocked out and that is exactly what is happening here. Many times you are seeing that same
phenomenon you end up going through.
It finally makes the run on the 1.15 big figure clearing out the buy stops above the October’s
high.

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How do you know when the market is going to reach for one side of the liquidity or the other?
Notice how the market was moving from the low at 1.0534 all the way up to 1.15 big figure.
There was not any significant move on the sell stops at all. They were driving the price up to take the
liquidity out at 1.15 – above October’s high in this case. Once that liquidity was taken out in the form
of a buy stops raid at 1.15 the market broke down and created a violation of a short term low [STL].
The STL had trailing sell stops resting below it. Those sell stops would now be violated and canceled.
Any longs would be knocked out at this point.

STL

Pay attention to this STL and that run on the sell stops. This is your first clue that they are
probably going to work to the sellside of the liquidity. You do not know it at the time when it first
forms. You have to start watching what price does. You already know you have a strong rejection above
the 1.15 level and it came a long way from 1.0534 with none of the sell stops taken, except for this one
here – the STL area.

Here is an STH that is violated just briefly.

Old high

STH

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 The question is: That short term violation of the STH is making new ground for new highs? No.
It did not even challenge the old high.

Look at the strong rejection right above that high. It creates another lower low. So the STL also
sees its liquidity in the form of sell stops being ran out as well.

STL

Lower low

At this moment in the red shaded area the price is at the midpoint [equilibrium] between the
1.0534 and the 1.15 level. The chances of this creating a higher high are not likely and this is because
it is showing indication that it cannot create new ground once the buy stops side of the liquidity is
taken. It is also because it is creating new lower ground every single time a short term low is violated.
It gathers up more momentum and more distance between 1.15 and 1.0534.
Every time it drops, it drops a little bit more and every time it rallies it fails to make a new high.
Even if it takes a short term high out it is not gaining any more ground on the upside. Every rally is
being distributed.
There is an STH here, as well, and the buy stops are ran out. Does it rally above a short term
high to create a new high? No. It cannot get even above the previous failed attempt for a new high.

Failed attempt for a new high

STH

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 Once again there is a rally through an old high. Does it gain new ground? No. But it is quickly
rejected and trades lower and then it violates 2 times it goes below the 1.0910. Once it did it briefly
before the rally, rejecting that level and then dropping below the 1.0850s.

Rally

1.0910

The rally here was on the heels of the US elections in 2016. It was a strong dollar and the
market quickly rejected it.
The movement below every short term low and gaining more ground on the down side is the
indication you are looking for regardless of the timeframe you are looking for, especially on the daily
timeframe. You are looking for clues that it wants to gain more momentum on one side of the market
or the other. You will reference where the buy stops are above old highs and where the sell stops are
below old lows.
If you notice where the intermediate term highs [ITH] are and if intermediate term highs keep
creating lower ITHs intermediate term lows [ITL] and short term lows [STL] keep going lower each time
it is telling you that it wants the open float below the marketplace – it wants to seek the sellside of
liquidity.

This way of seeing the market will give what you are looking for in terms of how to know what
side of the market it is going to make the run on – buy stops of sell stops. Think about what timeframe
you are looking at here – daily. If the daily chart is indicating that it wants to run lower because it has
no problem getting down below short term lows, but every rally is a failure to make new ground and
it cannot make a higher high. And when it does make a higher high, it is punished immediately. The
high that it makes is just above a short term insignificant high. Every time it does this it solidifies an
ITH that is now lower than the previous ITH.
An ITH is any high that has an STH to the left and to the right of it. Think of it like a head and
shoulders top formation. Every time you see an ITH that has a LTH to the left of it and an ITH to the
right of it, that is actually an LTH in the middle.

23
 Around the 1.0680 level there was a liquidity void. It filled that in all the way down to the short
term low at 1.0534. It bounced a little bit and then, ultimately, once breaking that low at 1.07 it reached
down below to take the sellside liquidity out.

LQV left unfilled previously

When you study the daily charts like this you can look at a lot of example but they require
time and, unfortunately, they do not give you a lot of turnaround time for study. In hindsight you can
go back and look at a plethora of really nice trading examples where liquidity was ran on one side, the
market was drawn up for 3 to 6 months.

On the chart above look at the move from the December low of 2015 to the high made in May
2016. It is about 6 months. Then the move from that high from the spring of 2016 it traded all the way
down to a low made in December of 2016. Again that is around 6 months or so. But you are seeing the
effect of how the quarterly shifts take place and the implementation of open float.

Open float is the study of how the market reaches for the buys and the sells that are above
and below market price. Knowing where orders will be building and staking above old highs and below
old lows, that will give you the framework to map out what side of the marketplace the market makers
and smart money are seeking to make a run on. If you can determine that on a daily chart like this, it
will give you trend, daily bias, long term bias and prognostication for having smart money perspectives
and institutional vantage points.

24
EPISODE 3 – AUDUSD – IPDA Data Range Example – Case Study 1.3 – LINK
This lesson will be focused on key concepts emphasized by ICT in his journals. Pay close
attention to the specific points highlighted here and observe how price movements unfold. Regardless
of your trading style, it is essential to understand these concepts, whether you are considering them
in advance or analyzing them in hindsight. Anticipating market movements and patiently waiting for
them to unfold is a vital skill, one that cannot be quickly mastered just by looking at past examples.
When you study the charts and direct your attention to specific factors beforehand, you will
realize that time plays a crucial role. Waiting for market to develop requires patience. Even if you
identify levels, orderblocks, or price targets, the main lesson lies in waiting for these setups to
materialize. The challenge lies in resisting the impatience that the market often triggers. It offers
opportunities and experiences, but learning to wait for these opportunities to fully develop is the key
to successful trading.

ICT shares here the underlying daily chart of futures contract for AUDUSD.
I found the AUDUSD futures contract on Tradingview as 6A1! in the futures area. M6A also.

Before diving into forex trading, it's crucial to examine futures contracts. Understanding the
underlying futures price can provide valuable insights. Take the AUDUSD pair as an example. Studying
the futures contract alone can be incredibly influential. Recognizing the significance of this study
seamlessly transitions into trading in the foreign exchange market, bridging the gap between the two
and enhancing your trading expertise.
If you never traded futures or forex, maybe 80% or more of the people never referred to the
opposite in terms of the analysis. If you are a futures trader you have never considered what the
foreign exchange markets are doing or if you are a forex trader you have never considered what the
underlying futures contract is doing. It is imperative to understand what they are both doing. To get a
complete picture you want to look at both.
You would assume that this is the same thing. There are some certain data points that you
cannot get by looking at the forex market. The forex does not give you volume like you can get volume
from the underlying futures contract.

25
Futures contract for the AUDUSD for March 2017

When you look at your daily chart, just simply go through and look at the last 3 months
whatever the timepoint you are looking at right now. Consider it is the first day you are looking at this
chart like you would be a brand new trader and to those concepts. How would you go about looking
at the where the IPDA data ranges are?
As you are looking here at the AUDUSD, you want to go from today’s candle, which is the last
one on the chart, the most recent market shift in the last 3 months occurred back in November. You
might say that it is in hindsight. But this is when hindsight is gold. You need to know what will be shown
in this teaching because it will clarify what the IPDA data ranges are actually supposed to be doing for
you. It will not call the high and low in 20,40 or 60 days away. Sometimes it can occur, but that is not
what its job is.

When you are looking at orderblock toto buy from or sell into or you look for an area of buy
stops and sell stops, which one should you expect them to go after? Which one are they going to
respect? How do you know if it is not to keep on going through an old high and not be a turtle soup
setup? If you are just patient and wait, all those questions will be answered.

Going back in November you can see that there was a clear market shift. That gives you a great
deal of insight. You cannot go back in time and go short there, but you can use the information that
the daily chart is telling you there. That means that there was a great deal of displacement by the large
players or smart money.

What you see in November is the underlying futures contract of the AUDUSD having a market
shift that is a quarterly market shift. Over the last 3 to 6 months that is the most obvious one and can
be clearly seen. Great! You can see it in hindsight. What do you do with that information? If the market
really is influenced or controlled by smart money or by an algorithm, it is not random and it is
predetermined and running on a script that refers to specific data points that will go back over and
over again.

The IPDA data range are the 20, 40 and 60 days look back and cast forward range. What ICT
suggests is if you are looking at price and you see a market structure shift like the one shown in the

26
previous chart and the quarterly shift occurs in November, that means that now the market is in a sell
profile from that point until it gets to a level of significant counter direction. What would cause it to
change its direction or consolidate? The consolidation is the gray area of the analysis. Sometimes you
will not see a clear retracement or correction in the opposite direction. And it does not need to be a
counter trend move like you see in the chart. It can be a consolidation.

So… back in November there was a high made. What is really going on here? That low is broken, it has
a shift in market structure and it breaks lower. You know that and you can see it because it has taken
out an area of equal highs and it pierced above a buy stops liquidity pool. That is the basis and
framework of what caused the market structure shift. The quarterly effect comes into operation at
that moment. Your eyes go immediately back to November because you can clearly see the shift.

When you see that and delineate that on your chart it means that you are identifying the
beginning of November as you need a basis point. Where is it? Where did it all begin? You need do get
in sync with what the IPDA did [Interbank Price Delivery Algorithm]. This means that you will need to
delineate where the most obvious market shift has been in the last 3 months and then cast out 20 days
from the beginning of the month in which the market shift took place.

MSS

27
 It may not even be 20 days. You may look at the chart and say that “Hey, this is an obvious one
here. Something is going on”. If you do that you are really doing too much anticipation. Remember
that you need to go back to the most obvious one and this may require to go back 3 months. Find the
more recent one where the market structure shifted and there was a move that took place and it was
obvious.

If you put lines on March, June, September and December your eyes will go right to where
these quarterly shifts are happening. They do not always occur on these months, there is a little bit of
gray area, this being the reason why you look back and cast forward. As a trader you are going to mimic
what the algorithm is doing. It is looking for liquidity in the range of 60 days in the past.

Where are the buy stops and sell stops in the last 60 days?
Where are the FVGs where price did not deliver efficiently?
Where are the liquidity voids where the price was delivered only on the upside and has to
come back to efficiently deliver price and balance it out by going back down and close that range?
OTEs, that is where it comes from.
Where are the EQ price points?
Does it have to return back to EQ?
Did we get too far ahead of ourselves?
Do we extend too far?
Do we have to come back and retrace minor retracement before we see the next leg lower?

By looking the market structure shift that takes place in this November time period you are in
an instance saying that this is a quarterly shift, therefore because of the daily chart this is going to give
you insight about what the market should do on a 3 month timeline, as much as 6 months. For now
you are looking for about 3 months time horizon.

When you find the clear market structure shift that happens every 3 to 4 months, you identify
the beginning of that month. Why do you have to go back to that 1st day of the month? Because the
algorithm works with data points. For it to be effective it has to know where to look at to find stops.
They do not see orders. The orders are executed by traders at the bank level. The algorithm just
permits the price to move to that level which gives the opportunity for the traders to execute on that
run.
The algorithm will look back 60 days and it will find what is the highest high in those last 60
days. There are going to be buy stops above that high. Where is the lowest low in the last 60 days?
Ther are going to be sell stops below that low. In the last 40 days what was the last high and the last
lowest low?
Looking back in the range to the left from that November red line, where are the stops below
and above those highs inside the range of 20, 40 and 60 days?

What happens if there is a low that is really obvious that is just outside the range of 60 days?
That is when the open float will move aggressively and go outside the normal parameter of 60 days.
The market will jump and skip right down into that low that is outside the 60 days range. This is when
you will have an explosive move. The large fund have their orders above and below these old highs

28
and lows. You will work in a 60 days range just like the algorithm works. Look back the last 60 days and
then you cast forward 60 days.

!!! THIS DOES NOT GIVE YOU DIRECTIONAL BIAS. THE ALGORITHM NEEDS TO USE THESE
REFERENCE POINTS TO FIND WHERE THE STOPS WOULD LOGICALLY BE.

Artificial intelligence cannot think for a human. But because the human nature says that we,
as traders, put the sell stop below a low and a buy stop above an old high, that is all the algorithm is
doing. It is seeking take price to that level. When it gets to that level THEN your broker and the central
bank can do a wild spike and send it above 10 to 20 pips. Now it becomes logical why they do those
big spikes intraday, huh? It first has to get to those levels based on a daily chart in the range of a 20,
40 or 60 days. Look back and cast forward.
What you have is a 120 days of range from past and going forward. You have to have these
data points to know why the market is going to go at an old low or old high. Note those levels of 20,
40 and 60 days before because they are going to run right for those levels.

If there is not anything that has not been traded to in the last 60 days and everything has been
wiped out above and below the marketplace – all the buy and sell stops in the last 60 days during your
lookback were cleaned out – it has to create a new expansion. In this case you need to identify what is
the next high and low outside the 60 days range looking back. That is going to tell you where they are
going to draw price on the daily timeframe. It is more confirmed when you start applying it to the
weekly and monthly chart and you will start seeing things align where that old low that is just outside
of the last 60 days looking back is an old low that may not be on the chart.

Cast forward 20 days

This is casting forward 20 days from the first day of November. Inside this 20 days range there
is going to be a significant setup that you can use for your trading. The price is moving up into the old
low that was formed in October and it goes into consolidation. This is a condition when the market did
not create any significant shift.

29
Cast forward 40 days
As the 20 days cast forward did not give any significant shift, you will cast forward the 40 days
range. Again, you are looking for a potential major shift. It can happen at that point.
This 40 days extreme did not give the lowest low. If you go back to the left 2 trading days from
th
the 40 trading day, the lowest low of the 40 days range is a bit to the left.

Remember – at the 20, 40 or 60 days range you are anticipating a potential change in direction. That
is the range. It is not always going to do what you see in the previous chart where the price started to
move around in the opposite direction around the 40 days range.
You study what happens. You may say “The price is going to move 20 days and I can see
something. It does not happen in 20 days… OK… the next 20 days up to 40 days from where the market
structure last shifted I am going to anticipate that in the realm of the next 20 days it might happen”.
You are looking for signs that it is going to happen. If you do not do these things you are going to marry
the idea that the market is going to keep going lower and never turn around. The market never trades
in straight lines.

So, at the beginning of that of the 40 days out from the beginning of November a very
significant price move occurred from that price – 0.7150.

You do not need an indicator to see when the price changes direction. An oscillator will lag and
the market already moved when the stochastic crossover happened. With these 20, 40 to 60 days
ranges you may get a turnaround in the 21st, 31st or 61st day or on the 19th, 39th or 59th day. But this is
not what you are relying on. It is important that while that may have magic in your chart sometimes,
you may see it happen, it might do the very thing of turning on the 20th, 40th of 60th day. The market
do not turn every 20, 40 or 60 days, but it can and sometimes do that.
What you are looking for are those quarterly shifts that take place. Once you identify one, that
is your beginning point. And you have to roll back to the beginning of that month it occurs in. In the
case studied above it occurred in the 2nd week of November. So now you are calibrated. Now you can
start going forward until you see an equal or counterparty to that move going lower that has to be a
significant retracement, correction or reversal. It is indicating that here in the last week of December.

30
Why is it doing that? Because it has taken out December’s high. It is trading at a level where if this was
continuously bearish it should not be where it right now today [the last candle on the chart].
Draw you attention here that the 40th day did not make the lowest low. Look at the low in
proximity to the lowest low that was formed there. That low was inside the range of the 40 days. The
turning point could have happened anytime in the last 40 days. Every 3 months the price is going to be
pushed around. It is going to be drawn to a level or repel from a level. It is based on seeking large fund
liquidity.

Long term moves, monthly and yearly, are all driven by real fundamental things like interest
rates. But every quarter there is going to be an ebb and flow that takes places, a rally and a decline.
When this occurs, that is short term in nature. When you look at long term trends that go for 5-10
years, 3 months are nothing. That is like a 5m chart on the scheme of a weekly chart. Long term macro
fundamentals are not impacted by a 3 months cycle. They can be used to get in sync with long term
macro fundamentals, but the only fundamental you are going to get from here are the interest rates.

As you casted forward 40 days and you have the line on your chart, that is where you have the
expectation of a shift. As you can do that in advance, you can now look back 20 days from where the
40 days range ended. Where are the lows and highs? Think about that.

Count back 20 days from the end of the 40 days range. The 40th day is the first to start counting
from. The 20th candle back from the 40th is the last day before you get to December. What is the highest
high formed between the 20th and the 40th day? It is going to be the high formed in mid-December
where it made those equal highs. What is resting above that? Buy stops. The IPDA algorithm is going
to seek that liquidity going up there.
If you were asking which swing to look for, that is your answer, the high of December.

20 days back from

the end of the 40th day
High of
December

40th candle

Low of
November

31
 This low is 40 days inside the 40 days range. That is a significant turning point, it is not the
lowest low but you can see that the low was formed 2 days before reaching the 40 days range. Then
the market has a shift and starts to go into the opposite direction of what was put in place in
November.

Now… from the 40th day you can count further 20, 40 and 60 days until you see an obvious
shift quarterly, a major structure shift that can be bullish or bearish – it does not matter. You are not
trying to forecast that. You will only anticipate another significant move in price on the daily chart. And
this happens every 3 months. The IPDA data ranges give you a means of looking back 20, 40 and 60
days from specific days and price points. Only then you will know what stops they are reaching for
above old highs and below old lows.
It is not just that you are looking for the most recent and obvious high and low. It is not like
that at all. You need to look back in a range of 20, 40 and 60 days and then if all those levels have been
cleared out, then you need to look outside that range and you may see a big move.

The low of the last 40 days is the one from November. ICT says that this low was not random
and suggests looking back on the chart at the 0.7300 level on the 4h, 1h and 15m timeframes and
observe it. I was able to go down to a maximum of 4h timeframes and this is what I think he refers to:

• there is a leg down on the left side of the chart.

• price is retracing into a premium area from high to low inside of a 4h FVG in the premium area of
the leg.
• the 0.73 level might be referred to as an institutional number, meaning „big figure / round
number”.
• the price reaches into the 4h FVG and beyond its 50% zone to take liquidity until it finally breaks
down and takes out the 0.7300 level that was left behind as a liquidity pool.

32
Weekly timeframe – AUDUSD
Why the 0.7150 level is significant?

33
 In February 2016 there is a weekly down close candle that has a wick and the wick has a range
in it. ICT mentions that the high of that specific candle will be significant and sensitive all the way down
into the weekly opening range, meaning the open price of that candle. The chart will look like this:

Notice the first comeback of price in the orange area. There is a bearish candle at the bottom
of the range and the next candle rejects the level going higher. The last bearish candle becomes an
orderblock.
Going into that last portion of 2016 the last down candle in December would be a bullish
orderblock as well. Looking at the high and open of that candle would give you significant price points
to go forward.
Look what happens when the price hits the 0.7150 level – it has been down there before and
it was repelled aggressively away from it. In the end the market hit that range twice and moved out.
Once it moves out from that level they are going to be looking to push the price above these candle’s
bodies, the wicks are next as there is buyside and price can, potentially, trade up into the last up candle
from the last week of October 2016 – that is a bearish orderblock.

Daily timeframe – AUDUSD

ICT presents here the futures chart of the AUDUSD and asks to look at the chart for a second.
He also mentions Larry Williams’ book from the 70s and the open interest Larry Williams thought about
in his book.

Think about this:

If there is 100% control over price it means that there has to be someone controlling it – Smart
Money. If they are controlling it why would they want to control it? – greed. They want to make money
just like anyone else does. Banks are not in the business to go out of business. Banks are in the business
to buy and sell money or to provide means for you to borrow money to pay them interest on the usage
of that money.
There is also the speculation. That is the most misunderstood realm because it is not widely
talked about. You have to be in that arena to know anything about it and you are forced not to talk
about anything.

34
 At this moment ICT says that he had to create a language to talk where the things he
understood are effectively communicated and also this does not put him out there where he can be in
trouble. The thing that ICT quickly learned and were apparent in the marketplace is that there is an
entity out there that is 100% interested in offsetting large funds because they have real huge orders
in the marketplace and if they can upset them or take them out of the marketplace they know that
their viewpoint will, eventually, get back in line with because they are trend following in nature. They
can take them out of the move and take their seat in that position. OR they can take them into the
wrong side of the move and then reprice aggressively the other way. They are not looking at OANDA
or FXCM books and punish the retail. The retail is just following the blind leader of all these text books.

PRICE IS MOVING BASED ON WHERE THE LARGE FUNDS ORDERS ARE.

Wherever that open float is on these higher timeframe charts, that is what is drawing price.
The price is going to allow the bank level traders to get in and build positions in, otherwise if it was
really just the Central Banks repricing it will be like all the time big moves. The trades have to have an
opportunity to work inside that position and capitalize on that move that IPDA is engineering for them.

How do we know when the banks / smart money are actually going in and buying? If you know
that is a likelihood of that 0.71500 level on the AUDUSD is potentially bullish, what evidence is there
that there is, in fact, smart money buying it? Inside the blue shaded area is the answer. What you see
here cannot be seen on forex. This is related to Larry Williams’ book - How I Made One Million Dollars
Last Year Trading Commodities.

Consolidation range

Rally

Open interest is declining

0.71500 level

This occurs every 3 months this pattern occurs.

As price was heading towards the 0.71500 level the open interest, which is the purple line on
the chart, was declining. Why is the open interest declining when the price is dropping down? What

35
does that significances? Open interest is the total open longs and shorts that are in the marketplace
right now. If the Central Bank is the store house for price and you are trying to buy currency, it means
that the currency has to be made available to you and it is going to come from a bank. If you are buying
the Australian Dollar this has to come from somewhere and it comes from the bank. So if they are the
liquidity provider for the price of AUDUSD, if that bank is providing you the basis of valuation on
Australian Dollars, they are, essentially, the counterparty to most of the large funds.
View open interest as every trade that the Central Bank is providing counterparty to. This is,
basically, what a small brokerage firm would do with their own clients. They are the liquidity provider.
In this case the Central Bank is the liquidity provider for the Australia Dollar.
If you see the open interest increasing that means that the Central Bank [CB] is taking ON risk.
It is providing liquidity for buyers of the AUDUSD. If the open interest has a 50% drop or change lower
while the price is sideways, this is bullish. What this is doing is that every time that open interest
increases it indicates that they have provided liquidity for a buyer. If they are not trying to provide
liquidity for a buyer and they are trying to reduce their holding or exposure that means that they are
doing what? To offer liquidity to a buyer they have to be a seller. Open interest reflects the selling side
of a provider of liquidity. If the open interest declines aggressively this indicates that they do not want
to hold the heavy short position they would be having by being a provider for those that want to buy
the AUDUSD. You see it rally, then.

Look carefully!
The extended trading range is months long. What is going on that whole time? From mid-
September they start building in positions. They are selling it as it is creating higher highs. Every peak
in the open interest created in mid-September is a high in price. Matching up the peaks of the open
interest to the highs of price you can actually see where they did their sell programs.

Think about it!

If they sold it there, at the highest high and there is market shift, are they going to hold on to
their short positions if they are naturally a hedger? The open interest is reducing by the natural order
of things as the price is going lower because they are covering their short positions.

36
 At this specific moment when the open interest dropped drastically, the CB got rid of any of
their remaining short positions and completed their sell program. Now they are ready for buyers to
come in, they have reset themselves and there is no exposure on the upside against them by holding
heavy shorts.
Now they can start offering liquidity from the low end because they made their book from
0.7750 all the way down to 0.7150. 600 pips.

The high is here

20 days
mark

1st of
November 40 days
mark

From this point on where the 40 days delineation was made and looking back 20 trading days,
that means the high is here and that is where they are seeking to take price.

What does this mean for forex trading?

This is what was seen in terms of what the price did.

37
 At the bottom is the 40 days cast forward day from the first trading day of November. Price
goes higher from there and creates a down close candle. It then moves above it and it becomes a
bullish orderblock. You can be a buyer if the price ever comes back.

Some bullishness should be seen above the highlighted candle because on the left side of the
curve is the sellside curve and now, if it is going to be bullish, you will look at the buyside of the curve
on the right and look at every down candle.

38
 On this down candle if the price had a retracement down into the previous shown orderblock,
you can look for buys down there. As the price did not retrace and blew out the high of this down close
candle, this down candle becomes the new bullish orderblock. Its high comes at 0.7350, price comes
down and hits this level, finds some sensitivity there expanding up and closing in the range.

High

-OB

The context of the move for AUDUSD was to come higher into the bearish orderblock and it
has now confirmed that it wants to go higher relative to the things that were discussed and based on
the weekly chart and on the futures contracts on its own daily chart.
The mean threshold on the chart above is the mean threshold of the bearish orderblock
formed out of 3 up closing candles on the left – look at the open of the 1st candle up to the close of the
3rd candle. The price moved through that so, now, it is indicating that it wants to go higher and reach
for a clear run above the high because that is where the buy stops are resting.
They are not going to take just to that level and be satisfied. If they are going to allow that
move to take place, they are going to punch it through.

These higher timeframe ideas that you are learning you have to learn to trust them on these
monthly, weekly and daily and apply the open interest to levels that you would expect to see
bullishness.
Every 3 months, the point at which these 3-4 months moves that take place, every quarter
there is a major shift in market structure and while that may not undo the long term bullish or bearish
moves, they are executable in a way where you can make a great deal of money. You can take a lot of
money out of positions if you are properly aligned.
If you are not aware of this, they will take you by surprise. There is no worse feeling than
expecting a move to go hard one direction and then see it go the opposite way.

39
 On the next chart ICT specifies he would expect price to move into the 0.7650 as likely upside
objective.

The analysis on the AUDUSD was made before the red line from the chart below and, as you
can see, the price indeed went higher above buyside and did not just touch it, it punched through it.

40
 The large funds do not see you, but they do see these large pending orders above old highs
and below old lows in the last 60, 40 and 20 days. Once you find a time marker where you can delineate
when there is shift that has taken place or when you cast forward 60 days, at that moment you know
that in the future, 60 days from that market structure shift quarterly, you know that is a delineation in
the future so you can already anticipate a significant move 20 days from that one back from it. That
would be not 40 days, but 20 days back from that new market delineation.
By having those things on your charts you will be able to look backwards and forwards and
looking for the ranges just like the IPDA algorithm will look for where the most recent 20, 40 and 60
days stops are. If they had been cleared out on both side of the marketplace in the price is an
equilibrium area, you have to look at where next range high and low is outside of the last 60 days. That
will tell you where the next big significant move is going to be. If you combine that with the weekly
and monthly chart, it is almost like a no brainer. You just have to wait for it to happen. It takes time for
that to unfold. And most of us, by human nature, are not patient.

Liquidity pools – find the highs and lows in the last 20, 40 and 60 days.
Fair values – find where the gaps are in the last 20, 40 and 60 days.
Equilibrium – find the consolidations in the last 20, 40 and 60 days. The market is not going to move
and it is going to gravitate and hang around EQ levels.

When you saw ICT saying “I’m not doing anything today. The market is going to be sideways”
and all of you are “How did you know that” it was this – EQUILIBRIUM.

How you use the data ranges tell you what you should be doing.
Should you be expecting range expansion on the upside or downside? That is directional bias. Are you
bullish today or array you bearish today?
If you are not in a range where it is going to expand and you are hanging around equilibrium
in the last 20, 40 and 60 days, in other words what that looks like – if you go back 60 days and you see
where price has made a small little trading range, divide that range in half. That is equilibrium. If you
price right now, today, and the dollar index is not trying to move, that means it is going to be a Z day;
meaning it is going to go up a bit, down a bit and hang around the middle of the range until it gets
some kind of manipulation. What is going to cause that? High impact news.

Draw all the things you have been exposed so far throughout the mentorship and apply the
IPDA data ranges now. You have to use those ranges looking back and see where the highs and lows,
FVGs and EQ is. It will tell you where the institutional reference points are. It is up to you to execute
on them when they get to those levels based on what the weekly and daily chart are indicating. Just
because it goes above an old high it does not mean to sell. It could be a confirmation it is going to the
next buy stop level above it. That is the next stage for the next lessons.

How do you analyze charts on different timeframes, such as monthly, weekly, and daily? What
steps do you take, and what indicators guide your trading decisions? IPDA specializes in recognizing
recurring patterns in price movements. Think of it like a computer program: if IPDA can analyze
historical data and determine today's date, it can also look back 60 days and identify the highest value
an asset reached during that period. This information helps predict potential price levels where
significant market activity may occur. When the price approaches these levels, bank traders often

41
position themselves, and this is when interventions and manipulation by central banks and brokers
may occur. Brokers don't suddenly cause large price swings; instead, they respond to market
movements driven by central banks getting close to specific levels.
You can read price and it is very predictable. And if it is that predictable on the short term then
it has to be that predictable on the higher timeframe. It is all time and price.
Time is date on the higher timeframe. It is not time of day, it is calendar days that the market
trades. You know there is a range of 20, 40 and 60 days that the algorithm will look back and then you
know what high and low you should be focusing on. If the market structure is bearish, what does that
tell you? Where is the low in the last 20, 40 and 60 days? That is what it is going to be reaching for.
What happens if it has 2 lower lows that have not been traded to? And it trades down below
the one in the last 20 days and takes it out? And in the 60 days back range is a low but the price does
not go there and it rejects and breaks market structure bullish. That tells you that you have a quarterly
shift. Now it is bullish and you have to find the highs in the last 20, 40 and 60 days. Then you will know
what IPDA is doing. Everyone else will be looking at it thinking it is a downtrend and look for that old
low 60 days out, and not because they are doing what you are doing, but because they are going to
see classic support and resistance ideas, they are going to hold on to it, marry the idea, “it kept going
down so therefore it must continuously keep going down”. They just watch the market grind against
them and all of a sudden they see what you are seeing in the chart right now, the AUDUSD going higher.

By using the higher timeframe you can align yourself with smart money. Everyone that is on
YouTube is teaching smart money on the 1m timeframe. The smart money is not even looking at that,
not even at the 5m. They are looking at the orders on the daily chart. That is what is driving price.
Outside of that they are looking for liquidity pools and ideas around a 15m timeframe. 5 minutes…
again, they are not looking at that. But you can use the 5m chart to find where there is a small little
gap that would not appear on a 15m or 1h chart.
All those things are dovetailed nicely, but you will not appreciate that until you start getting in
there and spending some time looking at price that is already happened.
You want to be focusing on what has happened on that left side of that chart. Once you
understand all that, it is going to repeat itself. Because if, in fact, there is a smart money entity and
they are manipulating and they are controlling things because they are motivated by money and greed,
they are not going to change their MO. Their motive is going to be the same thing going forward. It is
the same business model every single day. It does not change. It is not going to stop working.
By sharing this knowledge with others will simply become common knowledge, not because it
will stop working. You want to be part of that small group that is profitable. This is not gambling. You
are not rolling the dice. You are waiting a scenario where those individuals that controls price are in
play, they are moving price, and you are on the same side as them, by default you have no other way
except for seeing positive results.

It is hard to change directions [bias] a lot on the daily and weekly chart compared to how your
bias is changed when you are looking at the smaller timeframes. That is why you have to start with the
higher timeframes. If you start with the lower timeframes you are changing your mind 20 times inside
of the day. That is someone who has no idea of what is going on. By having the higher timeframe
premise, by looking at monthly, weekly and daily charts and focusing on the daily charts you are
framing it like a bank does.

42
 You are learning here which low and which high to go to. There is a specific phenomenon that
repeats itself over and over again. By having that as your routine every single day to sit down with your
daily charts and ask yourself:
• Where are we at in the current range?
• Where are we at with respect to the lowest low and highest high in the last 20, 40 and 60 days?
• Have we cleared both side of the board?
• Have we taken all the buy stops in the last 60 days and the most highest high?
• Have we rejected all that and cleared out and we are back in the middle of the range? This means
study. You have to see if you are at longer term EQ and price could stay sideways for a while or
now it is going to the sellside looking for the lows outside the 60 days range.

By having that and start implementing inter market analysis, commodities market, equities
market, bonds, all those things will start giving you more information and then they will tell you where
the opportunities really are.
For example the Canadian dollar. If the crude oil is acting and behaving a certain way, the
Canadian dollar is going to have a direct response to that. And when crude oil is not of any effect, the
CAD will move just like other currencies will. But crude oil has a great deal of influence over CAD.
Having intermarket analysis and relative strength analysis together and applying SMT studies like
that dollar index and the interest rate you will have very little opinions about what the higher
timeframes are telling you. And when you do that you are in line with what the institutions are doing
because you are not changing your mind every day.

You should not care if you see 2 down days on a daily timeframe chart. Nothing is changed. It
means it has retraced and it is coming back for some more orders to buy more.

You want to be a big time trader?

You want to be consistently profitable?
You want to know when not to trade and lose money?
You want to know how to frame a trade before price ever gets there?
You want to be a day trader?
You want to be a short term trader?
You want to be a swing trader?
You want to be an options trader?
You want to be a trend trader?
You want to be a breakout artist?

IT IS ALL HERE IN THIS MONTH!

You will not appreciate it until you get to the supplementary teachings, but everything that leads
you being effective doing those other things stems for what you understand and being taught in
January – month 5 of this mentorship. All the content is being delivered here.

43
 For your peace of mind using the IPDA, there is an indicator developed by toodegrees that can
help you see the 20, 40 and 60 days for the look back:

44
EPISODE 4 – Defining Open Float Liquidity Pools 1.4 – LINK
IPDA data range example – USDCAD
ICT started this lesson by presenting the Canadian Dollar futures contract for March 2017. I
have found it on TradingView as 6C1! And then the USDCAD, both on daily timeframe.

Canadian dollar futures contract

USDCAD

When you are looking at price what you would to do is to identify on a higher timeframe where
are the liquidity pools for the large funds. The liquidity pools for the large funds is, largely where the
market will reach for. Apart from long term fundamentals on an intermediate term basis, 3-4 months,
the large funds open float – the liquidity that is above old highs or below old lows – will be, generally,
targeted every quarter. How do you go about which ones to be focusing on, you will have to
incorporate a technique called open float.

45
 OPEN FLOAT is, simply, just taking the last months or taking the last month and a half to the
next month and a half in the future and encapsulate in time and, basically, you are looking at 3 months
of data. By doing that it will give you a range to look for the highest high and the lowest low on the
daily chart which will lead you to where the large funds liquidity pools are above and below the market
price.
***The count forward here is different to what I saw for the AUD futures contract. The first day of
trading, being the 1st of the month, is not considered as candle number 1.

60
40
Here ICT counted 20
forward 20, 40 and 60
days without counting
the first candle.

Here ICT counted back

20, 40 and 60 days
without counting the
20 first candle.
40
60

For example let’s assume that it is 1st of August 2016 and you can look back and see where the
highest high was in the last 60, 40 and 20 days prior to 1st of August 2016.
You can also identify the lowest low and the highest high in the first 20 trading days to the
right of August 1st. Then 40 trading days out – what is the high and low of that range? Then 60 trading
days out - what is the high and low of that range?

When you have that range – 60 days back and 60 days cast forward – that is open float. You
want to find the highest high and the lowest low in between those 2 reference points in time.

46
 On a near term basis you can look and see what is the last high and low in the last 60 trading
days. Casting forward those levels you can see that, eventually, during the month of September 2016
those highs that were formed in the latter portion of July 2016 were raided. The market was drawn to
the buy stops on the fund level at those July highs.

Extending it out, meaning 60 days back and 60 days forward you can see what the total open
float is with the low end and the high end. The market drove forward reaching for the buy stops ABOVE
the October highs of 2016.

Looking at the market like this you can identify where significant short term and intermediate
term highs and lows are.
If you look at the last range of 20 days behind and 20 days casting forward expecting a new
high or a new low to form, you have ideal times to look for in terms of intervals.
Looking back for the most obvious buy stops and sell stops, do not just look for the highest
high and lowest low in the last 60 days. Look also where is the near term high and low in the last 20

47
days, where is the short term high and low in the last 40 days and where is the intermediate term high
and low in the last 60 days.

That same thing can be done casting forward for looking at the 1st of August 2016. You can cast
forward 20 trading days and expect a range of high and low to form. Noting what that high and low is
on that particular range will give you the liquidity pools that are on the near term basis. Those are the
easiest ones for the market to reach for.
When you are looking at short term trades and day trades, that range is going to be easy and
helpful for you for intraday scalps and day trading.

When you look out 40 days it gives you a little bit more of a short term basis for defining the
liquidity pools on the daily chart. Looking for the last high and low in the last 40 days, buy stops would
be above that high and sell stops would be below that low.

Obviously, 60 trading days casting forward from the 1st of August 2016 would give you the
boundary point of at which the open float ends in terms of time, not in terms of price.

So you are bracketing the market 60 days forward in time and you are looking back in the past
60 days. You have 120 trading days of what would be called open float. You are looking for the highest
high and the lowest low in that range.

Every 20 days there is a high and a low formed. One of the most powerful patterns ICT likes to
trade is the “turtle soup”. The turtle soup is a false break above an old high and a false break below an
old low. The pattern he learned about this was taught in the “Street Smarts” book. The idea of false
break above or below based on the turtles trading pattern, which is a long term trading pattern or
system that allow the long term trends to pay out the turtle traders. Richard Dennis taught them the
concepts of trading and he used a long term trading model and he taught that a buying a breakout
above a 20 day high holding for long term trends or selling short a 20 day low holding for long term
trends…while they had a lot of losing trades, their winners were monstruous. It is a trend following
system which is what ICT teaches that the large funds do in the forex market. They are long term trend

48
following because these markets are highly linked to interest rate markets which are the underlying
fundamental driver for the marketplace. Long term trends are fundamentally driven currencies but
because the system was based on buying on a breakout of the 20 days period high or selling below the
20 days period low, that breakout was, many times, false and itself gives you an edge.
If you look at every interval of 20 trading days you can encapsulate where the next high and
the next low is on price and where the highest and lowest low on each 20 days interval – going forward
and looking back – you will know where the buy stops and sell stops are so that way you can take
respective trades based on that.
Also if you noticed that the buy stops keep getting hit and rarely do the sell stops keep getting
hit, by default that teaches you institutional order flow is bullish. It keeps looking for higher prices. It
keeps drawing on the buy stops above the marketplace.
Conversely, if you notice that the sell stops keep getting ran and very rarely do the buy stops
keep getting hit that tells you that the institutional order flow is bearish so, therefore, the banks are
making a move on the large funds liquidity below the lows or running their sell stops.

Moving forward 1 month, this is September 2016

The same thing is done here. You identify where the ranges are in terms of the look back – 60,
40 and 20 trading days from the beginning of September and you also identify the 60, 40 and 20 trading
days cast forward. You then look for the lowest low in the last 60 trading days prior to 1st of September
2016 and the highest high in the last 60 trading days. The range between the high and the low here is
the open float.
***I observe that even if the 60th candle in the lookback has a lower low compared to the 20 days range
low, that 60th candle’s low is not considered by ICT. So the lowest low in the 60 trading days look back
remains the low seen in the first 20 trading days.

49
Moving forward 1 month, this is October 2016

SSL

Here you have the look back period 60 days and the cast forward of 60 days. The open float is,
again, identified here.
The highest high in the last 60 trading days prior to 1st of October 2016 and the lowest low in
the last 60 trading days is identified. So the open float on the large fund level are referenced by those
2 points. The high is where the buy stops are and the low is where the sell stops are. They are looking
for the buy stops above the marketplace and they keep taking those buy stops out.
Notice that in the first 20 trading days to the right of 1st of October there is a low that forms.
It takes the lows out in the form of bodies of the candles made in the last portion of September. It
rejects it and trades higher. You have one attempt there to clear out the sellside liquidity.

Moving forward 1 month, this is November 2016

The open float range for November 2016 is referenced, again, by the highest high and the
lowest low formed in those 60 trading days prior to the 1st of November. Going forward into November

50
you can see that the high was taken out. They keep taking the buy stops out and the institutional order
flow is indicated as bullish.

Moving forward 1 month, this is December 2016

Buy stops taken

Lower low made

This is the 60th trading day back.

Its low was not considered.
You need 3 candles for a swing to be formed

The lowest low and the highest high are identified once again. The open float is defined here
between those 2 reference points.
Notice that in the first 20 trading days of December 2016 they made a low and the price ran
up blowing out the buy stops of the November high. They ultimately made a run down into a lower
low in January and was formed in the first 40 trading days after the 1st of December 2016.

Moving forward 1 month, this is January 2017

The lowest low and the highest high are identified for the last 60 trading days. It already
violated the lowest low and this means that the sell stops at the large funds level are taken. Now you
can look forward in time for a new rice leg to retrace higher and see if they want to take it lower
because it is indicating that they want to take out the sellside liquidity now.

51
Daily timeframe – USDCAD
3 4

5
1 2 6

Let’s apply some of these ideas on the daily chart.

1. On the left side of the chart you can see the body of the candles. The price went down below
the 1.3050 level and retraced a little bit. That is where the sell stops are resting on an
intermediate term basis because you are looking at a daily timeframe.
2. Price eventually does trade down there and takes the sell stops out of the marketplace and
quickly runs away.
3. Again, look at the candles’ bodies. The price wicks through it as buyside was resting just above
that.
4. Large funds have their buy stops taken out here and then it is quickly rejected.
5. A low formed with the body of the candles can be seen here. Sell stops are resting below that.
6. The market does, in fact, sweep down there and takes the sellside liquidity out.

What makes these false breaks higher and lower so lucrative is the fact that we understand that
large traders in the form of a fund trader have their buy stops and sell stops above and below these
levels.
Every 20 trading days there is going to be a new pool of liquidity formed. It is going to be on the
buyside and on the sellside. You just have to identify where those ranges are in respective terms to
where the most obvious swing high and low are formed. And then frame that going forward – where
is the next 20 days high and low? Keep going out.
Looking back in the last 60 days and looking forward 60 days gives you a range for the open float
as the highest high and the lowest low. In that range of 120 days, that is what the large fund macro is.
In other words… it is where they are aiming for the large fund buy stops and sell stops, they are going
to be derived at looking at where the range high and low is on the last 120 days.

If it makes a higher high in the next 60 trading days you do not know where that high is going to
be. You do not know if it going to create a high or if it is going to make a lower low. You just monitor
as price creates new swings on highs and lows, where are you in relative terms to the last 60 trading
days? Is it making a higher high and then the highest high or is it making a lower low and then the
lowest low in the last 60 days?

52
 You look forward 60 trading days into the future and you keep moving that basis forward each
new month. Eventually you arrive at the institutional order flow.
By default you can see where they are running the market – they are taking out buy stops
continuously and rarely taking out sell stops? That is telling you that they want to press the market
higher; they keep grinding against those large funds.
If it is seen as an opposite, you keep seeing the sell stops being ran out and very rarely the buy
stops get taken out; institutional order flow is bearish so, therefore, as long as you continuously see
the market making new lows, you keep watching that range of the last 60 days and where the price is
in relationship to that. Is it above or below it? If it is above it you have to continuously keep seeing buy
stops get taken out. If it is below it you have to keep seeing sell stops get taken out; or probably making
a quarterly shift.
If the price is below the last 60 days low, that is really oversold in a deep discount market; and if
you start seeing buy stops getting hit and very rarely now you see sell stops taken, it is probably forming
a market structure shift or a quarterly shift for a new direction in the marketplace. That is, in fact,
happening here with the CAD.

Let’s take that information and go back to the futures market

This is going to be the price action of the futures contract which is inverted from what you can
see when studying the dollar index versus the CAD. Look at the same reference points that were shown
in the previous chart. Here you will do the opposite as this is the futures market.

1
3

53
 1. You can see the bodies of the candles here being ran out in December and then quickly
rejected.
2. You can see the bodies of the candle made in November being raided in December and quickly
rejected.
3. After being rejected it runs for what? The bodies of the candles from December where buy
stops would be resting.

Prior to that big run up off of that 0.7350 – 0.7365 level take a look at this – the blue shaded area
at the bottom of the chart.

In the Australian dollar teaching you saw how you can use these quarterly shifts to take place
and open interest off of support and resistance ideas on a higher timeframe basis. When you are
looking higher timeframe charts you are identifying clues and seeking evidences you can see that they
are about to move on one side of the marketplace.
You understand what is making that short term fluctuation – it could be largely attributed to
just running the stops on funds. But it is not always that. The market are moving based on very long
term fundamentals as it relates to higher timeframe charts. Every 3 months there can be a
manipulative phase in the marketplace that can still be a catalyst for us to be a trader taking high
probability entries and looking for high probability exit points. By looking where the logical fund traders
buy stops and sell stops would be and looking for evidence that the market is showing participation by
smart money – banks – if the market is trading down to a support level at 0.7380 to 0.7360 you have

54
a clue here that once the market started trading lower from the 0.7500 to 0.7460 – 0.7440 level to
0.7400 0.7380 level by that point the open interest already tanked.
You only need a 15% decrease to have a massive indication that there is a huge institutional
sponsorship behind the move that you are expecting.
If the open interest is declining, what they are saying is that they are not willing to offer sellside
liquidity to buyers. So they are scaring those individuals by dropping the market quickly and open
interest declines rapidly.
The open interest only declines as an evidence that the smart money are not willing to be
heavily short.
High open interest is an indication that there is a massive liquidity program that has been
offered for buyers. The bank is offering that as a risk. They are holding the risk on that.

Look at what was happening in November 2016. The CAD futures contract rallied from around
0.7380 up to 0.7640, which is a respectable range. Price comes back down; it runs the bodies of the
candles that that were formed as a low in November 2016. Price comes down again looking for another
shift in the marketplace, it runs out the sell stops below the 0.7380 level with an old low.

Remember… you look back in the higher timeframe institutional order flow reference points
as learned in month 4 of the mentorship.
• Liquidity pools
• Orderblocks
• Fair Value Gaps
• Equilibrium

You look for those reference points in your higher timeframe charts. You are seeing a liquidity
pool in the form of a sell stop resting around 0.7380. They make that run on low open interest as
support level, they are indicating that it is going to go up higher.
If the futures contract for the CAD is indicating that there is very low open interest at a support
level at a time when the stops have been running out below the marketplace, that is indicating
potential strength and you can see the price action that transpired after that.

Using open float, casting forward 60, 40 and 20 days, notice also that every 20 trading days the
high and the low becomes very obvious. You can start circling these as you create new highs and every
time it makes new highs, note that and then wait for price to come back down to an old 20 days low.
Study that. Every 20 days high and low is going to have buy stops above the high and sell stops below
the low.
If you do this as an exercise going forward you will see clearly what side of the marketplace it
is seeking. If it keeps taking out the buy stops or the highs, the market is moving higher, meaning that
the institutional order flow is on the buyside. You do not want to be selling short in these conditions.
If the market is taking out the sellside liquidity continuously and rarely taking out the highs, that means
that the institutional order flow is indicated lower and you want to focus primarily on being short.

What is an obvious change in direction

If the price starts trading to the lowest low in the last 60 days, it will probably be very oversold
and it is in deep discount. Even if the price bounces a little bit, on a higher timeframe like this it can

55
bounce a great deal – 150 to 200 pips sometimes, and then roll over and continue going lower. You do
not want to be caught on the wrong on the wrong side of the marketplace trading on a higher
timeframe and not see the evidences that the market has given.

You have to have all these things in mind looking for where the liquidity is. The easiest way to
do it is to look for a revolving continuous range of 120 days and whatever day you are looking at, you
look back and forward 60 days and continuously monitoring where is the highest high and lowest low
in that range. That is where the buy stops and sell stops would be on a large fund level.

The look back phase is where the actual buy and sell stops are going to be.

If you are looking forward studying new price action as it occurs, you need to be mindful where
you are in the last 60 days range. Are you near a high or near a low? That is also indicative of where
you will see the next quarterly shift.

• The near term open float is where the highest high and lowest low is in the last 20 trading
days.
• The short term open float is where the highest high and lowest low is in the last 40 trading
days.
• The intermediate term open float is where the highest high and lowest low is in the last 60
trading days.

Knowing where you are in that range and what side of the marketplace keeps getting taken out
will give you clues as what the next shift in price is going to be. Once it starts to break down you know
you are going to have a significant price move and you can trade that accordingly. Even on a daily
timeframe where you do not need to go down to a lower timeframe for entries. You can execute purely
off of the daily chart.

56
EPISODE 5 – Defining Institutional Swing Points 1.5 – LINK
Defining institutional swing points
• The market trades to a key level or just short of it but fails to immediately react indicating another
run deeper before a reversal.
• After a reversal the opportunity is best taken when the short term market structure is retested.
• First run on stops in a market in an intermediate term price swing is ideal – smart money will look
to unseat the aggressive trailing stops.

Think at institutional swing points in terms of concept: What is going on behind the scenes?
There are only 2 forms of swing points in the marketplace as it relates to institutional trading:
• Stop run.
• Failure swing.

The stop run

On the left of the upper image is, essentially, the breaker. This is a breaker where the market
will, generally, make a HH fail, then break down and have a rejection at the highs. Many times this is a
very surprising and deflating pattern for some traders. Everyone has experienced it sometime in their
development where they bought a specific price point with the expectation that it is going to go higher,
it initially does, and once it makes that higher high it breaks lower aggressively.
This pattern is the most powerful, the most dynamic, the most significant price pattern that
you need to learn about conceptually and you need to understand where it forms.
What generally happens is when you have a selling scenario the market will, generally, make a
rally up to an area of old resistance. That resistance can come in the form of how WE interpret
resistance as a bearish orderblock, a breaker, a mitigation block, an old low or an old high it is returning
to. It may fall short – not touching it – just by a few pips or points, initially, and start to trade lower.
Retail traders think that this is most likely going to be when the market would break down aggressively
and start trading lower and lower prices are expected. Well… the market makes one more pass higher
driving out that short term high it creates and it spooks the marketplace and upsets those traders that
are already short. It ultimately goes to the level at which you would have expected it to trade to the
first time, which is that bearish orderblock.

57
 When you see price hovering just below a key institutional reference point, you anticipate price
trading to them to the pip or into them a little bit like it happens for an orderblock. Once you see the
levels as on the next image on the left. The short term high that forms prior to that higher high, that is
what gest many traders caught. If you understand the orderblock, many times the bearish orderblock
is just above and the price did not trade to it. Or it leaves an FVG, the price comes up and falls short of
filling it in and then it finally drives up and closes the FVG. That is when you get this breaker swing
point.

Bearish

Bullish

Why is it a breaker?
The fact that it creates that little short term low in between the higher high and the previous
high for the sellside diagram on the left, when the market breaks down and takes out that short term
low prior to the new high, that is indicating that the market has broken those individuals that were
initially short and now they are trapped. When that move takes place, what you are seeing is the
opportunity for the marketplace to move aggressively away from the level, it was an initial fake out
and then the buy stops are also targeted. It could be an orderblock, an FVG, a liquidity void getting
closed in that did not get closed in the initial time and it searched up the second leg up.
Many instances by looking at your charts you will have a plethora of examples and gaining of
experience by looking at hindsight examples of how that occurs.
The one of the benefits of looking at the intraday charts is that it gives a lot of examples of where these
types of events take place. This very pattern here materializes every single day.

When the bias of being bullish as the sell stops are ran out below a short term low, once it hits
the level or falls short of a support level, the market many times will drive lower and go right into that
level.
When you look at price it is important to have the institutional reference points already on
your charts. If you do not see them already outline you are not going to be able to capitalize on the
opportunity that these patterns present themselves with.
So… if you see sell stops being ran out or an FVG below the marketplace or a liquidity void that
did not fill in the first pass lower and then drives lower and closes it in… all those scenario can lend
well to this pattern. By itself, conceptually, it does not do you any good. You have to go into the charts

58
and literally pull out examples where a short term high was passed through just a little period of time
right after that and then it creates that rejection or reversal high. The same thing is said for the buyside
of the breaker pattern.
These swing points, if you look at them, they many times offer outstanding entry points. What
makes them scary is the fact that “how do you know if you are going to see it reverse if you sell above
the previous high?”. That comes by experience with trusting the institutional reference points that
were taught in month 4 – orderblocks, breakers, mitigation blocks, liquidity voids, FVGs.
Having these ideas in your charts you will be able to anticipate these patterns unfolding before
they actually do. If you do not have the levels on you chart you are going to be surprised by those
things.
Once you see the pattern break down like in the bearish example below, when that high is
broken and it takes out that short term low between the market structure shift breaking point, that
becomes your trigger. If price ever comes back up to that level, you can be a seller. The beautiful things
that you already have a stop run on this pattern.

SL

STH

STL Trigger

Think institutionally – there is a short term high, the market comes down creating a short term
low and then rallies up taking out the short term high blowing out the buy stops, closing in the liquidity
void that did not get filled completely when the first pass came up OR it came into a bearish orderblock
or it is a simply an old high, the price comes back above the STH and rejects and trades lower.
You do not have to fear this pattern. Still, if you do not have the confidence to sell as the price
trades through that level, wait for it to break down and take out the short term low. When the market
trades back up to that trigger point, that is when you would be looking to be a seller.
The wonderful thing about this pattern is that it already had the stop run. There is no reason
for it to want to trade back up again. The stop loss will be above or at that high.
When you look at price you are looking for this pattern. This is the highest and most probable
condition to be a short seller in the marketplace because it has a built in advantage even though tit is
the most fearful thing right now as you are not willing to sell above an old high because you have not
practiced enough, you have not seen the effects of looking at institutional order flow on a higher
timeframe or any other timeframe for that matter that frames the support ideas around these
particular reads on stops.

59
 The same things is said just in opposite terms for when you are looking to be a buyer.

STH MSS
Trigger

STL

SL

You want to see a short term low formed at or just above a key support level – it can be a
bullish orderblock, a liquidity void that had not filled in on the first pass and does it lower, it can be an
old low that it just simply runs down below. If it is an old low there is no limit to time between the
previous low and the new low that is formed. It can be 6 months and then trade below the low and
then it runs. Ideally you want to see something that has just recently created a low, came back a little
bit a few days or a week and then it drives one more time through it and hits your bullish institutional
reference point as previously mentioned for the bearish example.
You want to think institutionally about accumulating those sell stops. If they are going to sell
it to you, you are going to be a buyer and you are going to buy at a deep discount with the expectation
that you want to see an immediate response away from that level. You do not want to see it trade
down below that STL and hang around for a while.
The problem you are going to encounter is because you are trading on a daily timeframe as a
position trader, you are going to wait a long time for that confirmation. It may require the whole entire
daily range before the daily candle creates the wick as see in the sell stops area.

Candlestick traders trade the candlesticks that have formed.

Institutional traders trade it when it is a bold face candle before it becomes that wick or that
hammer or Doji candle. It takes a great deal of confidence to be a buyer down there below an old low.
Retail trades they all have reasons to justify why something should be done after some form
of confirmation. If you are demanding confirmation you are not going to get that entry down there.

You can get a favorable entry point by waiting for a market structure shift. So when the market
structure shifts on the bullish side your eyes must go back to the STH. You are not worried about
coming back down again below the low where the SL would be. You are concerned simply for a return
to the trigger. The price action below the STL is a raid on sell stops, the stops were already taken and
there is no reason or expectation to believe that the market needs to go down to that level again. It
already did its work. It has cleared the sell stops and the market is quicky rejected.

60
 If the market does give you an opportunity to come down into this breaking point you can be
a buyer there with the exception that it might be a bullish orderblock to the left. Hence it does not
have to get all the way down to the breaking point. If the price does not come back it is just a missed
opportunity.

+OB

Breaking point

Think about the marketplace as follows:

You have a breaker swing point which is what is described here above – a turtle soup, a false
break above an old high, rejection and quickly moves away. If you do not get the entry as you wanted
[in the red area], you can always get the opportunity to get back into the breaking point. It is more like
a 2 chance setup. This is ICT’s favorite setup. Many times you do not have 2 chances in trading. You
either miss it and never get it again or you take it and you lose money. This pattern is the best pattern
in ICT’s view when you are looking for institutional evidences to what should be taking place in price.
When you see this pattern unfold and you learn to anticipate it you are going to have the
highest probable entries for your setups because you are actually entering at the lowest possible point
for buys and at the highest possible point for sells.
It takes a great deal of conviction to do that but it also does it demand it? You can wait for this
pattern to give it to you by waiting for the break above the market structure – the breaking point. You
do not get that same forgivingness with the next pattern that will be discussed, which is the failure
swing.

61
The failure swing
The failure swing is the 2nd form of institutional swing points. You probably understand this a
little bit, but here you will get some additional points because if you are going to start breaking the
market down into modular form where you can go in and start utilizing these things, not just speak
about them in broad terms, narrow your focus to only 2 ways of viewing the marketplace when it turns.

The failure swing is when you identify when there is a resistance level and it trades through it,
it breaks down and comes back and retests it. It cannot make another pass through that resistance
level. The resistance level could be even higher at the top if this depicted price move and just touching
it and then fail to make another pass through. It is the same condition. Here you are focusing primarily
on the ability for the market to go back to that high, make a higher high OR the fact that it makes a
failure swing.

High

Resistance level

Support level

Low

You do not ever know with great deal of conviction if you are going to get the breaker setup.
So while this may be unfolding you could be anticipating the high being taken to be a seller above it.
Many it times what will happen is that the market will come up and fall short and then break lower.
That is a missed opportunity. You cannot be a seller at a high price. You may have second
guessed the retest as a short BUT you are demanding a BREAKER to occur which would be selling above
the old high.
The same things can be said for the buy side. There is a support level, the market trades down
into it, it may trade through it OR the support level could be right at the low. It is not important as it
relates to where that actual level is. What you are anticipating is the that market is probably going to
make another pass thorough and retest the low.

62
 2nd guess … but you are
BB demanding the
as a short
break above to
create a
breaker block

You are aiming for and trying to get breaker swing points. If you do not get the breaker swing
point, that is not a problem, you have an opportunity to trade off of this pattern as well.

If you get to buy a setup like this and it retraces off of the level you are anticipating seeing
support at and it comes back and fails and makes one more pass up or down, if it takes out STH or the
STL, depending on what you have on your chart, you have another opportunity.

Fails to
go higher

Resistance level

STH

STL

Support level

Fails to
go lower

What you have here is the market that has already shown a willingness to run an area of
liquidity out and it has trapped trades above or below; they are stuck now. They [Smart Money] are
not giving them an opportunity to get out as they are quickly repricing. When you understand that,
meaning having someone longing above the resistance level or selling below the support level, if you
can reprice the market and go lower with it and leave them holding the bag, you will sit down and wait.

63
 You understand that, for example, this movement could have been a bullish orderblock or an
old low to the left of the chart.

You are seeing the evidences that they have already did the manipulation down there. You do
not know that for certain until you see the retracement back up. You do not know for certain if this is
going to stop there or if it is going to continue up and give you a breaker swing point. The same things
apply for the long setup from the right.

Retracement
back up

Retracement
back down

You never know for certain. You anticipate the most optimal entry but the market may not
give that to you. If it does not and starts to run out of the way, you will focus here for a sell or a buy.

64
 If you cannot get a retracement back up here on an idea for a short, which can happen, you
will wait for this swing here to be violated and then you are going to aim for the lower level for a sell.
If you are going to sell at that level you can have great confidence that you can be protected with a
buy stop – stop loss – right above the STH. The STH is inside the area at which they had already ran the
stops out on the form of buy stops. So if your stop loss is there, they are not going to come back and
give them opportunity to get off. They are not going to let them out.

65
 The institutions go into the marketplace to trap or knock off. They are in the business of
knocking the funds out when they are going to be correct and they like to put them in on the wrong
side when they have pending orders that would allow them to be offside.

When you look at price think in 2 institutional swing points theories

You have a breaker which is the ideal and most optimal trade entry pattern there is in the
marketplace because it is absolutely the deepest discount buy and the absolute most premium to sell
from. Do not think in terms of classical chart patterns like head and shoulders or bear flags / bull flags.
Only try to convince yourself that there are only 2 real ways that the market is going to turn around. It
is going to be the breaker where they run stops or there is going to be a failure swing. Both of them
are indicating a manipulation but both of them must be used slightly differently. The first one is the
breaker swing point which is the ideal one and you want to look for that scenario all the time, any
timeframe, not only the daily timeframe.
If you cannot get the breaker do not fear or be upset about missing that move because it still give
you the opportunity to get in there as they are only going to turn the market one of these ways. It is
nothing else happening in price.

You are limited to just 2 conditions of the marketplace and nothing else
If you are a seller you will sell at an old high or you are going to be selling it on a retracement back
to a break in market structure.
If you are a buyer you will buy at an old low or on a retracement back to a market structure break.

66
EPISODE 6 – Using 10 Year Notes In HTF Analysis 2.1 – LINK
10 year treasury note – seem to be January 2015 to January 2016

Take a look at the seasonal tendency chart and try to see where the most significant price
swings occur.
You can see, primarily, that there is a January February high, it trades down into a June low
and June low trades up into December’s highs.
There are 2 dominant cycles in the seasonal for treasury notes and it is bearish for the first half
of the year and then bullish for the 2nd part of the year. In this teaching is going to give you example
where that takes place and also you are going to see when the seasonal tendency does not have an
influence on the market. You are also going to see when the market actually performs adversely or
contrary to the seasonal tendency.

TAKE NOTES
• Charting 10-year Treasury prices – www.barchart.com
• Charting 10-year Yields Treasury – www.investing.com
• Both websites are free.

Treasury Prices are inverted to its Yield

• As Treasury prices drop [the futures contract] – Treasury Yields increase.
• As Treasury prices rise [the futures contract] - Treasury Yields decline.

Long term funds seek yield – that means that the money will be placed or allocated in areas in which
it will seek the majority or most return on investment.
• US dollar index can rally when yields increase – treasury prices drop.
• US dollar can decline when yields decrease – treasury prices rise.

10 year treasury note

67
 Take your attention to the first portion of the seasonal tendency. From January to February
there is a high that generally forms and it trades down until around June or middle of the year. Around
June to July or, really, the last week of May if you look at tit. It rolls into the first week of July; usually
makes a seasonal low there and then, usually, the 10-year treasury notes rally the rest of the year.

Now… if you have the seasonal tendency on the underlying futures contract price, meaning on
the treasury prices – this is not the yield; the yield would be inverted – if you are watching the June –
July low and prices on the 10-year are rallying that means that the interest rates are actually dropping;
it is going to be an adverse effect or inverted effect on the yield.
If you see this occurring in the 10-year treasury you should be seeing WHAT in the dollar index?
If you could have the dollar index as a seasonal tendency, should this be occurring at the same time
that you see the June July rally, should that be occurring with a bullish or bearish move in the dollar
index.

Seasonal tendency for the dollar index

You can see that around the January February there is usually a rally that takes place which is
contrary to what you saw in the 10-year treasury note – declining.

68
 There is a significant high forming between June and July and then the dollar index typically
trades down the rest of the year and usually making a low around the last week of October to first
week of November and creates a small little bounce on the November time period.

The primary 2 trends in this market for the dollar that is in alignment with the seasonal
tendencies seen in the 10-year is:
1. There is a bearish tone to the marketplace for the dollar index mid-June to July and
2. Then you also see some rallying on the dollar index in the beginning of the year going into
March.

There is a seasonal tendency for dollar to decline from March into May but that would have to
be in bearish markets. In bullish markets you could expect to see November being a buy, May being a
buy and January being a buy for the dollar index. The sales come in that March, June, July and there is
one in September; and it usually creates a short high in the latter portion of November.

Getting back to the 10-years treasury notes you can see there is a strong contrast between the
two and that means that there is a high probability scenario for the case in which the 10-year treasury
notes are rallying in the futures price that means that the yield will be doing the opposite – going down;
interest rates will be dropping. Interest rates dropping will cause the tendency for yields seeking
traders or investors to avoid the dollar index. Because the interest rates are dropping that is not going
to incite wanting to buy dollar based assets.
The reason why you are seeing this adverse effect here is because there is a direct inverted
effect relationship between the two. So if you have this blending of these two markets it gives you a
context to work with if you are going to be looking for quarterly shifts in the marketplace.

Example 1
10-year treasury note – September contract of 2015

Remember that you saw the seasonal tendency to form a low in June – July in the 10-year
treasury note contract for September – the contract name was ZNU15. In the previous chart you ca
see that the prices started to rally in June. That means that the yields are going to be declining and
that is going to be bearish for the dollar index.

69
Dollar index

In June – July the dollar index made a short term high, it traded lower, it violated the low in
May and then look what happened between mid-June into July and August. The dollar index had a bit
of a rally.

At the same time the 10-year treasury notes was rallying with the seasonal tendency

If they are moving in tandem that means they are actually going to be a large consolidation
and it is not going to be a trending environment and that means you want to look for previous highs
and lows to be violated and back to the middle of the range. You can see that was the effect here after
July and August. In the late part of August it came all the way down and took out the May – June lows.
The market for the dollar index moved sideways.

70
Example 2
10-year treasury note – September contract of 2016

Again, you can see that from the last week of May going into June the 10-year treasury notes
rally all the way up into July and that should give you a bearish stance for the dollar index at the same
time.

Dollar index

As you can see it did have a bearish decline in the last week of May going into June. It gave one
more lower low in the latter portion of June.

But look what happens again. The dollar index had a rally one more time and look how there
was a slightly higher high going into Jully for the 10-year. There was a higher high also in the dollar
index in the latter portion of July. Again… this is going to be an indication that the markets are going
to be in a large consolidation.

Think about what was shown here

If the market is showing the tendency to be in a large consolidation because both the yield and
the dollar index are moving in the same direction, what you are looking at is long term indecisiveness.

71
 For foreign currencies this means that it puts you in a long term consolidation because the
dollar and treasury is in consolidation. If you see times when the treasury market is, in fact, moving in
its seasonal tendency and the dollar is supporting that same seasonal tendency, then you have a strong
probability of a directional long term trend and that is where the large funds place their money.

Example 3
10-year treasury note – March contract of 2017 – It created a high in November

Presidential
election

Here is the seasonal tendency, once again, for the 10-year treasury note. To the far right where
the green line is, that delineates the beginning of the trading for the March delivery contract. That,
actually, makes the high of the March contract and starts to trade off lower from that price point.

The seasonal tendency to create the high for the March contract is going to be influential for
you in the 10-year treasury note – March contract of 2017 – previously shared.

In 2016 there were the presidential elections in US. It happened on 8th of November 2016 when
Donald Trump won the elections. The seasonal tendency for the March contract could create a high
and you can see that came into effect in November. While you are looking at the end of that uptrend
for the seasonal tendency for the 10-year treasury note, you are looking at the beginning of a seasonal
high and that gives you that movement going lower into the latter portion of December. If you see this

72
occurring and is now trending and not in consolidation – it is down trending for the 10-year treasury
notes – that is going to provide the opportunity for the dollar index to do the opposite but also do it in
a fashion that is in a trending mode – see the next chart.

Dollar index

You can see that in November there was the same fact, just in the opposite terms, where the
election shown the selloff in the 10-year treasury notes. That selloff shows an increase in the interest
rates which means there is going to be an interest to buy the dollar now because it is going to go
higher. As the 10-year treasury is dropping, interest rates are increasing which means that there are
going to be buyers that are going to be seeking yield by buying the dollar index.
You can see that the market did, in fact, have a trending environment trying to trend higher
then creating a shot term low in December and finally making its high in the first portion of December.

The moral of all of this is that if you study the 10-year treasury notes and its price action it is
either going to be moving in its seasonal tendency OR if the dollar index moves in tandem with it that
suggests that you are going to be in a large consolidation.
If you look at all the currency pairs that you trade in the form of the GBPUSD, the EURUSD,
those pairs were in big consolidation all through the mid portion of 2016. That was attributed to the
consolidation that you saw in the 10-year treasury note and the dollar index because they are,
basically, moving in the same direction, but they were range bound. That is going to translate into
range bound trading, as well.
ICT mentions here that the only caveat is going to be until the Brexit vote and that is obviously
going to be the big impact for the latter portion of the summer months. Prior to that everything in the
marketplace you saw was all range bound for currency trading.

When are you looking for a trade that is going to be explosive and trending?
• When the 10-year treasury notes seasonal tendency is in effect, you see it happening and it is
supported with the contrary in price action you see in the dollar index as it was described here. If
they are not showing that, the chances are that it is going to be in a range bound consolidation
and that means you are going to be focusing on very short term moves. That means it is going to
be high probability for short-term trades and day trades and highly unlikely for long term position
trades. Long term position trades are going to be favorable in the conditions that were shown

73
here when you see the 10-year treasury notes moving in trending environments that is going to
put the dollar index into a trending environment.

Also, if you see the absence of seasonal tendency the strongest in the form of the buy signal
for 10-year treasury notes around June – July, if that is not occurring, then you are going to be
focusing on where the highs form seasonally in the seasonal tendency for the 10-year treasury
notes to get yourself in sync with the opposite scope. In other words, just because the seasonal
tendency is strongest as a buy in June – July for the 10-year treasuries, that does not mean that
when that is not the case, because the markets are not always doing the same thing every single
time, you can focus primarily being a bearish 10-year note trader which would give you the
November high as it was indicated in this lesson.

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EPISODE 7 – Qualifying Trade Conditions With 10 Year Yields 2.2 – LINK
In the previous teaching you looked at the 10-year note seasonal tendency where it has a strong
tendency to rally in June.
Here you are looking at the 10-year note for September 2015. You can see how during the month
of June 2015 the 10-year note did, in fact, make a low in June and while the seasonal tendency is in
force.

How do you know the seasonal tendency is most likely to occur?

The first step is that you start looking to qualify the swings in relationship to the dollar index.
That is seen by looking at these lower lows. The delineation begins at the beginning of June 2015 and
the subsequent lower lows that transpired after June 2015 began. You start seeing a slide in price, it
took out the low from May.
Individually there was 5-6 different candles that progressively kept making lower lows in the
first half of June. That is being delineated here with the short little trendline.

75
In the dollar index this is going to be ideally seen with a series of higher highs. That is how the market
symmetry should be posted and delivered in price.

At that same moment you can see that the dollar index for June 2015 immediately to the right
or after June 1st trading day it was making lower highs. It is a crack in correlation and you have
confirmation, now, that there is a trade idea unfolding in the 10-year treasury note against the dollar
index.

It is further confirmed by seeing he interest rate market declining at that time. As the yield
declines, the futures price on the 10-year note was actually rallying.

Consolidation

Also note the consolidation the yield stayed in and led to a consolidation in the dollar index,
10-year treasury and foreign currencies at the same time in 2015.

76
June 2016 – seasonal tendency of the 10-year note

The market was making equal lows that should be seen in the dollar index with equal highs.

Dollar index

Going into June 2016 the dollar index makes higher highs and this is a crack in correlation. The
market shown a willingness to go higher in the dollar index but it was not seen in the form of going
lower on the 10-year notes. That is a qualifying condition that there is an underlying trade on the way.

77
 This is further confirmed by visually seeing the interest rate market declining in the 10-year
yields.

Consolidation

Notice the consolidation. If you zoom in really tight it looks like an uptrend but it still is, rather,
a large consolidation and that is attributing factors to why the currency markets had a consolidation
this period of time.

10-year treasury note March contract of 2017

Ignore the wick and focus on the market structure alone without that wick. There is a lower
high formed in the first days of November relative to the mid-October highs. That should be seen
supported in the dollar index, as well, just contrary.

78
 In fact you see a lower low in the dollar index.

For the dollar index to have a lower low here you should have seen a higher high in the 10-
year note and that did not happen. You see the opposite with a lower low in dollar index and you do
not see a higher high in the 10-year treasury notes as you would expect to see with a lower low in the
dollar index.

It is going to be a mirror image of everything you see for perfect symmetry. When that
symmetry is broken it indicates that there is an underlying trend or manipulation on the way. You can
also see the open interest decline in November supporting the idea that there was short covering by
the smart money and the dollar index moved up as a result.

Again… because the 10-year note was in a move that was trending and it had more range to
go lower that supports the trending move on the dollar index where ICT was allowed to trade for two
complete months. As you can see it is supported with the increase in the interest rates yield on the 10-
year note during that time when the dollar rallied. The markets seeks yield and if the interest rate is
increasing therefore the dollar has a strong tendency to want to rally as well.

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SIDE NOTE – when you see these things occurring in the price you want to be blending these ideas
with the quarterly shift concepts that were previously though. So if you are looking for the next 3 to 4
months potential next swing, not that you are holding for that period of time; your time horizon is 3
months out. Generally it is going to be half of that timeframe for the trade setups to come to fruition
and complete. Sometimes the trades will last longer and go a full duration of 3 months and sometimes
a little bit longer, but as mentioned in this mentorship, the time horizon is about 3 months. This is as
realistic as you are going to get because long term trends, while they are generally staying in the long
term trending environment, they can reverse and you do not want to be trying picking the top in an
uptrend.
Focus on the time horizon of 3 months with the expectation that you will trade with a position
that may go up 3 months but rarely you will hold so long. Usually it is half of that timeframe.

You can go in and look at these timeframes when the seasonal aligns and there are qualifying
SMT divergences between the dollar index and the 10-year note. When they have that pattern there
you can also qualify it with an interest rate triad or you can go into a forex currency pair and look for
an SMT divergence against the dollar index. Those ideas blended together, not that you need both of
them, but one of them will give you a qualification for a trade idea that may be unfolding for a quarterly
shift.
By getting in sync with the marketplace like this and viewing the higher timeframe charts with
these tools in alignment it give you trades of high probability and it filters out a lot of the noise. Even
if you do not trade in a long term position capacity you can use these ideas to get in sync with higher
timeframe trend or order flow. By doing that it puts all your swing, short term, day trades and scalps
in line with the institutional order flow. With that is very hard to go wrong; not perfect, but it certainly
puts the odds in your favor.

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EPISODE 8 – Interest Rate Differentials 2.3 – LINK
Below is the global currency interest rates from the Central Banks. The list can be taken from
www.fxstreet.com. When you look at the list there is going to be a higher interest rate among the
currencies vs another. You will look for a currency or country, in this case, that has a high interest rate.
The highest you can see in the image presented by ICT is for New Zeeland. The 2nd in that high interest
rate is the Reserve Bank of Australia and the lowest one is the Bank of Japan, Swiss Bank and the
European Central Bank is zero.

Today it looks like this.

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Central Bank Interest Rates
The macro perspective has to begin with Central Bank Interest Rates. These rates are set to
stimulate or instigate inflation in a country’s economy.
The long term macro concept is to look for a high interest rate country and pair that with a low
interest rate economy. The respective currencies when coupled as a forex pair is fundamentally poised
for strength in relative terms against all others.
The reverse is said for low paired countries with high interest rates coupled with a high interest
rate country. These pairs would be viewed as fundamentally poised for weakness in relative terms
against all others.

If we are looking at this, this is going to cut to what fundamental basis there is to buy or sell a
particular currency. You cannot get more fundamental than interest rates.
If you pick, for instance, a currency that you want to be a buyer of, obviously money seeks yield
so it makes perfect sense to be a buyer of the Australian Dollar or New Zeeland currency.
If you are expecting weakness in a particular country’s economy you can see that in the form
of a weak interest rate for that particular currency or country.

Taking a look at these countries you can build a model on a higher timeframe basis on long
term macro trades which have the most opportunity to move based on a fundamental establishment
of interest rates being utilized for the selection process.
Funds will seek to trade high yielding currencies and place that against their week yielding
currency. They will look to buy strong currencies and sell against weak currencies and they will look to
sell against currencies and buy against strong currencies. In other words they are going to be buying
strong pairs and selling weak pairs.

Selecting a pair for trading

1. Select a country that has a high interest rate.
2. Select a country with a low interest rate. It does not have to be the lowest of the low or the
highest of the high. It can be a just a very strong difference between the 2 interest rates.
3. Determine the forex pair coupling for trades based on those 2 respective countries.
4. For example – Australia 1.5% vs US 0.75% – AUDUSD.

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 5. Look for strong support on HTF charts. You are thinking long term macro perspective. You are
only looking for large moves in a fund level trend following idea. Before you get to that you
have to expect some sizeable move that is going to be positioned with big flows behind it.
Fundamentally you are aligning with the Central Banks interest rates. You are coupling a pair
based on a high yield interest rate of 1.5% vs a 0.5%.
6. Wait for smart money clues it is being bought.
7. Seasonal tendency and/or open interest confirm. Here are 2 elements of smart money tools
that you can use. You do not have to use every possible scenario. You only need 1 or 2 to
confirm.
8. USDX directional confirmation qualifies.

EXAMPLE
This is the cash price for the Australian dollar – A6Y00. The blue line is a long term support
level, old low in the form of 0.7150.

Next is the March contract of 2017 for the Australian dollar as the active contract that you
would be trading at the end of December 2016.

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 The price is at that 0.7150 level. You can see that the price has traded into that as support.
Take a closer look at what is going on with the open interest. It has been declining. Also notice that big
reduction where the purple line is dropping. That is a massive reduction in open interest. Open interest
is going to be an indication that there is a short covering by way of the smart money or large
commercial traders.
If they are short covering that means that they are not trying to assume the other side of the
trade for buyers. They want to reset themselves because they anticipate what? If they do not want to
be short, they are anticipating sharply higher prices and that is what you get here off that 0.7150.
Look at the magnitude of the move seen with the Australian dollar here.

Remember that the pair that you are trading in the forex market is AUDUSD. The Australian
dollar has that higher 1.5% interest rate. The Federal reserve was offering 0.5% to the latter part of
December where it was adjusted for another 25 basis point pike up to 0.75% for the Federal Reserve.
It is still half of the interest rate that is yielding on the Australian Central Bank.
Consider how much this pair has moved from the 0.7150 level. 400+ pips have been seen from
this rally off of a higher timeframe support level 0.7150.
Now… just because it trades in a higher timeframe support level it does not mean that it is
going to trade higher. But when you couple that 0.7150 level which is a higher time support level or an

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old low, and you also notice that the market has seen this sudden reduction in open interest – short
covering on the part of smart money AND you couple the idea fundamentally that the higher yielding
interest rate of 1.5% from the Australian Central Bank coupled against the weaker 0.75% or the 0.5%
rate, you are getting a higher yield off of the Australian currency vs the dollar. That is why you have
seen such a sharp rally and why ICT have been talking about the Australian dollar going higher as a
basis of his teaching.
The fundamentals were aligned with the Central Bank interest rate of 1.5% coupled against
the weaker Federal Reserve of 0.75% interest rate for the US dollar. When you have that basis and you
have technicals to support it and you are looking at a higher timeframe chart, it lines your pockets with
opportunities to continuously take large moves out of the marketplace; and you do not need to be
trading a lot. By looking at these higher timeframe interest rate yield scenarios coupling it with high
odds probability technicals you get yourself in sync with the most significant price moves that are going
to, most likely, surprise many of the neophyte traders.

You can see, also, that you had a higher high in the dollar index when the Australian dollar
failed to make a lower low.

Selecting pairs for trading

1. Select a country with a low interest rate.
2. Select a country with a high interest rate.
3. Determine the forex pair coupling for trades.
4. For example: US 0.75% vs Japan -0.15% [USDJPY] – looking at the list below, the Japan interest
rate had to be updated from -0.1% to -0.15%.
5. Look for strong resistance on higher timeframe charts.
6. Wait for smart money clues that it is being sold. This means waiting for the Japanese yen hitting
resistance levels and show indication that it wants to sell off.
7. Seasonal tendency and/or open interest confirm the trade.
8. USDX directional confirmation qualifies the setup.

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 You have the expectation that the weaker currency is the Japanese yen interest basis against the
stronger one, which is the dollar that has a higher yielding Central Bank rate. You are going to see that
US dollar vs the Japanese yen pair actually go higher because you are buying dollar and selling yen.
For expecting weaker JPY because of the weaker lower interest rate that means that the pair you
have coupled for foreign exchange trading, the DOLLAR vs YEN is the one that you are going to be
trading. So even if you are looking for weakness in yen, you are looking for the opposite of that for the
pair the way it is formed. So the dollar vs yen pair [USDJPY] is actually going to strengthen or go up in
your charts.
As it relates to the CASH you can see the weekly chart here and a bearish orderblock at the
0.9800 level and that would set the stage for a move.

Weekly J6 – Japanese yen

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Daily J6Y00 – Japanese yen

The price trades up into that 0.9800 level and weakness is seen from that point on. This wick
was seen on the heels of Donald Trump election. Roughly a 1200 pips move.
This was based on the Central Bank interest rate and the differential between the two and by
having that coupled with strong technicals, seasonal tendency, understanding that the market was
expected for volatility because of the election, this massive decline seen in the CASH price of the JPY
[J6Y00 on barchart.com] is also seen in the understanding because of the ICT’s analysis as he was calling
the USDJPY higher back in 2016.

You are not using those concepts to day trade or to facilitate short term trades. But if you trade
in that direction it is obvious that your trades will be a lot higher probability. Those concepts are more
inclined to be used on a higher timeframe basis because the large funds, as they are trend following in
nature, they are going to look at fundamental reasons to trade specific currencies. If you look at the
moves that has transpired in the last 3 to 6 months [talking here from December 2016] all of the big
moves come by way of the information that has been drawn by the differentials that were discussed
in this lesson here + the method of using those Central Banks interest rates.

Pegging them together, the interest rates, to get specific currency pairs and having technicals
aligned you will be able to see that footprint of large flows and funds pouring money into a particular
currency.

If you look at the USDJPY in relationship to this, in November you would see a strong buy or a
low in that particular currency pair.

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 Below is the USDJPY weekly chart from May 2015 up to July 2018. The red dot is the are
specified by ICT earlier as November.

Go through your charts and look at the interest rate differentials between all the weaker and
higher yielding currencies on the Central Bank level and look back over the 6 months and see what
pairs you see and find through as a homework. Look for setups that took place higher timeframe
support and resistance levels, institutional order flow ideas, try to incorporate the open interest and
then justify WHY, even if it is hindsight, the fundamentals were in alignment with those significant
price moves. Again, you are looking back 3 to 6 months for currency pair moves to take place.
ICT does not recommend to trade exotic pairs like EURCHF or something like that. But look at
some of those currency pairs to have a higher yielding interest rate vs a lower interest rate and how
you would pair them up in a forex pair and look at the respective price action in the last 3 to 6 months
on those pairs viewing the information from the Central Bank level at the interest rate.
This is a really simplistic approach to trading long term and it is coupled with a fundamental
application of how the funds would go in and move large scale into a particular currency or out of a
currency based on the interest rate information covered in this lesson.

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EPISODE 9 – How To Use Intermarket Analysis 3 – LINK
This is going to be, predominantly, conceptualized thinking, meaning no charts.

Intermarket Analysis
1. World markets are directly linked to one another.
2. Understanding them all collectively aids in analysis.

The four major groups of intermarket analysis:

1. Bonds and interest rates.
2. Commodities.
3. Stock market.
4. Currencies.

Those groups together are closely related to one another. They do not move lockstep to one
another. Since you are looking at long term macro and analysis concepts there is going to be a certain
measure of lead and lag time for some of these market relationships.

The benefit of this is you can use an “Economist Theory” which is no need to study CPI or
employment trends.
Focusing on those 4 major groups it will give all the insights that THAT data, CPI and
employment trends, will ultimately give for a fundamentalist.

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Intermarket analysis overview
The four major groups of intermarket analysis:
1. Bonds and interest rates
Bonds and stocks generally move together – if you are seeing a bond market rallying and it is the
bond price, not the yield, generally that is going to be helpful and supportive of a bull market for stocks.
Conversely if you see the bond market trending lower it will be very hard for stocks to rally in that
environment. It does not mean that it cannot rally. It means that the underlying trend of the bond
market moving lower is going to have an effect and wait of that stock market rally.
2. Commodities
Commodities move opposite to bond prices – if you see the bonds moving higher, the
commodities will be moving lower in relationship to that move.
3. Stock market
Stocks move together with bond prices – you have to constantly refer to the market indices for
stocks and the bond market. Or if you are a stocks trader you can use the information that is gleaned
from the bond market. Preferably, if you are going to be a stock market trader, you want to be looking
at the bond market as an indicator that you have underlying strength in the bond market. If bond prices
are going higher and you are a buyer of stocks, then you can go in with a great deal of confidence that
you have the fundamentals behind you that lower interest rates with the bond prices rallying, the
stocks like that. If the bonds are trading lower, the stocks do not like higher interest rates and that is
what is going to happen if you see the bond prices dropping, that means that the interest rate yields
are actually increasing. Bonds do not like a high interest rate environment.
4. Currencies
Currencies are influenced by commodities – the effects of exports sales and production in
relationship to certain commodities will have a direct impact on specific commodities and specific
currencies.

US Dollar vs. Commodities

Inversely related relationship – they move opposite to each other.
USDX UP = commodities DOWN
USXD DOWN – commodities UP

• Grains and agricultural exports diminish with strong USDX – Grains and agricultural are very
export sensitive. If you have a strong dollar, that is going to diminish the desire or demand for
exports in the form of grain and livestock agricultural markets – grains and meats.
• USDX weakness increase grain and agricultural exports
• USDX UP – stocks and bonds UP
• USDX DOWN – stocks and bonds DOWN
• USDX UP – commodity currencies DOWN
• USDX DOWN – commodity currencies UP
• USDX vs. CRB index – Commodity Research Bureau Index. ICT mentioned CRBTRADER.COM but
I could not find the site.

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Bonds vs. Commodities
Inversely related – they move opposite to each other
• Bonds UP – commodities DOWN
• Bonds DOWN – commodities UP

Inflationary focus
When you are looking at the relationship between bonds or treasury bonds like the 30 year
treasury notes and the commodity market, what you are really focusing on is inflationary impact. If
you are following along and looking for signs of inflation it is going to be noticed in the markets that
are commodities. Commodities are the leading indication for inflationary environments.
• Lead and lag time in changes long term 6 – 12 months – because you are dealing with a long
term macro perspective on these 2 assets, they can take 6 to 12 months before you can see a
change in trend on the relationship between the bonds and commodities. That means that the
commodities may turn up and bonds may, eventually, turn lower as a result later on OR bonds
may be turning up and commodities may turn lower later on as a result of that. It does not
happen lockstep, it does not give you that immediate feedback because it is long term macro
fundamentals that are behind these big moves especially when you are dealing with two asset
classes in the relationship basis. It takes a long time for the effect of interest changes OR supply
and demand factors that are really weighed in the consumption or production of commodities
as a whole.
• Treasury bonds vs. CRB Index [heavy agricultural and grain weighting] – this is what you will
be using to measure the relationship between the 2. The CRB Index is very heavily weighted
with the agricultural and grain markets. The CRB Index is very heavy on soybean prices, wheat
prices, corn prices, cattle prices, hog prices. Keep this in mind when you are looking at the CRB
Index.
• Use Goldman Sachs Commodity Index [energy weighted] – use this when you are looking for
the energy focused side of the marketplace. It is heavily weighted on energy and you want to
weigh that against the bond market.
• Use Goldman Sachs Industrial Metal Index – this is for focus on global trends and it is not
meant for metals like silver, palladium, platinum and gold. These metals are like zinc, tin,
copper, aluminum – industrial metals. If there is a big demand for industrial metals, then you
will see it in this index.
• Bonds yields UP – commodities UP – when bond yields are going higher that would be seen
with the bond market going lower which means that the bond yields are increasing and that is
going to push commodities up.
• Bonds yields DOWN – commodities DOWN – when bond yields are going down that means
that the treasury bond market prices are going higher and that is going to push commodities
down.

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Bonds vs. stock market
Positive correlation – move in same direction
• Bonds UP – stocks UP
• Bonds DOWN – commodities DOWN

• Bonds act as a leading indicator for stock direction.

• Lead and lag time in changes long term 6 – 12 months – that means that what you see going
on in the long term trends of the bond market may take up to a year before you see these long
term trends start to manifest themselves in the stock market.
Deflationary periods – there is one caveat with this. It is a rarity that ever happens.
• When there are deflationary periods, meaning when the prices are decreasing:
a. the bonds perform very well because the interest rates are collapsing.
b. Bonds UP = stocks DOWN and commodities DOWN.

Key intermarket relationships

• USDX UP – GOLD DOWN
• GOLD UP – AUS and NZD UP [gold exports]
• OIL UP – USDCAD DOWN [Canada export leader]
• DOW UP – Nikkei Index UP
• Nikkei Index DOWN – USDJPY DOWN
• Yields DOWN – Currency DOWN [money seeks yield]
• GOLD DOWN – USDCAD UP

By understanding all these relationships as a whole, conceptually, they give you confirmation of
long term analysis. The relationships between all of them, if you are seeing a number of these things
in alignment with your long term analysis, you are probably on to the right path. Rarely will you see a
wide disparity with all these things not aligning.
If you have a good sample size of some of these things in alignment generally your long term
analysis is probably going to be true to form and pan out in the long term direction like you think it
will.
The problem is timing. Long term trading or long term analysis and timing are some of the hardest
things to time because it is hard to get traders to focus allowing a little bit more movement against
their underlying entry point; because you are trading on a higher timeframe charts it is probably
because of your home life, your time constraints that keep you from being able to trade with a lower
timeframe entry. So you are forced many times to trade off of a daily chart and if you are going to
execute off of daily chart you have to permit yourself a great deal of movement against you in terms
of a stop loss; the ranges are a lot larger and you have to require a lot more time. Even with that said
and if you are going to be using these points of information and relationships with intermarket analysis,
it is going to help you in all facets of trading regardless if you are day trading, scalping, short term
trading, swing trading or position trading. It is going to be beneficial to know these things and it helps
build probabilities in your favor.
Nothing in here equates to 100%. There is no guarantee that nothing out there cannot change
“on drop of a hat”. What you think you see in the charts could always be wrong because there is always
the human element that is involved here. The analyst is you.

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 You will see that there is a great deal of value in knowing these relationships and because they
are leading you to a long term trend following directional bias using higher timeframe daily charts, it
will give you confidence as a trader to know that you are trading with the underlying fundamentals
and you do not really require all that time and energy and diligence needed to go through fundamental
data. The relationships between these markets will take you to the same outcome that fundamental
data will give you.
Just because the fundamental data suggests something should be bullish, it does not mean that
tomorrow it is going to go straight up. There is going to be time that has to be built in for that market
to start building in a bullish tendency. Long term macro trends can be seen when they are starting and
shifting and moving into place by using the information shared in this lesson.

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EPISODE 10 – How To Use Bullish Seasonal Tendencies In HTF Analysis 4.1 –
LINK
Bullish seasonals in HTF analysis
• Seasonal tendencies are merely a proverbial “roadmap” of past performance.
• They are not to be viewed as a panacea or be all end all concept.

This is just one more tool to add a confluence of things that would already lead you to an
expectation that the market should go higher or lower.

This is the Canadian dollar 40 year seasonal tendency

At the top of the chart in yellow you have the abbreviations for March, June, September,
December contracts and then back to March again. The time of year is at the bottom of the chart.

This is delineating the contract delivery months for the Canadian dollar. Currencies deliver on
March, June, September and December every single year. These months expire. Those charts shared
here are a compilation of data over all the delivery months price action for the last 40+ years beginning
in 1976. This data is only compiled up to 2015 but the output is hardly changed at all if you are
concerned about it being 2017 is it any deviation. There is no deviation.

How do you look at these things and what benefit does it give you?
If you were to ask the average trader that is just now is getting into trading, maybe is not forex
and maybe it is stocks or commodities “If I were to ask you today: is the market manipulated to a
degree where well before price ever starts to trade a specific time of year, would you be inclined to go
higher or lower based on some underlying influence that repeats itself?”. As a new trader ICT says that
he could never have answer that question as it felt like a random thing to him. One of the things that
he likes about seasonal tendencies is it gave a characteristic to price that proved to him that there is a
rhyming reason behind everything that goes on.

The blue line is 40 years of data and the red line is 15 years of data. Looking at the 40 years
worth of data and 15 years worth of data there is very little discrepancy of what the overall strong
seasonal tendencies are for this particular currency.

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 If you would be asked what would be your first choice in deciding when would be a good time
to buy, what your answer would be looking at this chart?

If you paid attention, you can see that from around mid-March and all the way up into the
May-June time period there was a strong tendency for the Canadian dollar to rally.

If this is the contract month for the Canadian dollar, what would that mean for you if you are
not a futures trader? The main thing is that this is the seasonal tendency that you would expect for the
Canadian dollar futures to rally. It does not mean that it is going to rally every single year March to
June. It just means that there is a strong probability that, historically, looking back 40 years of data and
comparing it against 15 years of data, there is a strong underlying element of truth to the fact that
there is a tendency for this to rally. But if you are not a futures trader this does not make anything for
you. Or does it?

If you are trading forex you have to remember that the Canadian dollar is paired with the dollar
index. The dollar index is the first in the pair’s name, so that means that if you are bearish on the
Canadian dollar, the USDCAD is going to go up. If you are bullish on the Canadian dollar that means
that the USDCAD pair is going to go down. That means that the Canadian dollar is bullish while that

95
would suppress the US dollar index. Since the pair’s name begins with USD, the opposite would be
seen in what you expect to see in the futures contract.

What you have to do is to focus in the seasonal tendency in the futures contract that shows
you a bearish tone in the marketplace. You can see here that between September and around
Christmas time in December that there is, typically, a strong tendency for the Canadian dollar to decline
in the underlying futures contract. You have to take this into account because the USDCAD pair is an
inversion of what the futures contract shows for the Canadian dollar futures price.

So if there is a strong tendency for September, October, November and December to have a
decline in the Canadian dollar, that should be a bullish scenario for the USDCAD.

USDCAD – weekly chart

Let’s take this over to the chart and this has any validity to it.

Keep the focus on the bullish seasonal tendency. Above there is the weekly USDCAD from
February 2008 up to January 2017.

On the 1st shaded area is where you would expect to see the Canadian dollar be bearish on the
futures underlying contract price, but as this is the foreign exchange chart, you have to look at it to be

96
reversed, so that means it would be bullish for the USDCAD. That is the buying opportunity that would
be presented.

On the 2nd shaded area is the next time period, the very next year in 2009, a time when the
seasonal tendency should take place and that means that the Canadian dollar should be bearish on the
underlying futures contract, but that would be an inversion on the USDCAD pair; that means that you
would expect bullishness there. While it did not press up to make a new higher high, there was a nice
little pop but overall the direction was down. Here the seasonal tendency was not helping in terms of
seeing higher prices.

The 3rd shaded area is the next year, 2010, is more like the same thing; it is weak and goes
lower. Look at the last two years from there. What was the underlying price direction on the weekly
chart? Was it bullish or bearish? It was bearish. So… would you be focusing on buying in that time of
year versus looking for the opportunity to be a seller?

In the 4th shaded area, 2011, you can see that the seasonal tendency had a really nice effect
there after it made a low and market structures shifted to the bullish side. Institutional order flow is
now bullish and during a time of year when the underlying futures contract for the Canadian prices
should be going lower, that is bullish for the USDCAD. For a forex trader you are looking for buys, you
have to look for weakness in the futures contract of the Canadian dollar. That would repel the price
higher at a time of the year when you would expect prices to come in.

In the 5th shaded area, 2012, you can see the price again rallying up during that time of the
year.

In the 6th shaded area, 2013, look at the effects of the seasonal tendency again. There is a low
and it starts rallying up again.

In the 7th shaded area, 2014, from September to December it rallies again.

In the 8th shaded area, 2015, in the same period it rallies again.

Finally, in the 9th shaded area, 2016, it has a nice rally.

REMINDER
What you are looking at is underlying weakness in the futures contract. If there is underlying
weakness in the futures contract for the Canadian dollar, the inversion puts it to a bullish stance for
USDCAD.
The currency pair starts with USD and then is CAD [put together as USDCAD], so what you see
in the futures contract has to be reversed.

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 I tried to reproduce ICT’s USDCAD chart on the weekly. I am not able to place the lines on the
weekly as the first day of every September, hence the dates I obtain are different vs his charts.

Even if I set the first day of the period as being the 1st of September on the daily chart, when
switching to weekly it still does not keep the same day. Look at the dates of the previous and next chart.
You will see some differences.

Measuring the shaded areas periods I found to have 112 days of trading for this seasonal bullish
tendency ICT highlighted initially. That means 16 bars on the weekly timeframe and 80 bars on the daily
timeframe.

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 Now, by itself it means nothing, but couple it with other things like the quarterly shifts.
Remember that every 3 months there is going to be a move on a higher timeframe. It is one thing to
expect a move every 3 or 4 months, but where is that move going? What is the direction? Seasonal
tendency gives you a roadmap to help build the idea that there are certain quarters of the year that
you want to be a buyer and certain quarters of the year that you want to be a seller. You anticipate
this year in and year out. The only difference in this lesson is that it will be concentrated on markets
that are predisposed to go higher and then couple that with the bullishness of the seasonal tendencies.

As you were looking at the Canadian dollar, you would have to reverse it and look for weakness
in the seasonal tendencies on the underlying futures contract and then apply it on the USDCAD as a
bullishness because it is an inversion of the futures contract prices for the Canadian dollar.

If you see times when the Canadian dollar is bullish underlying USDCAD pair and the seasonal
tendency September to almost Christmas every single year, there is a strong tendency for it to be
bullish between that time period. That means that there are many weeks where you can be a bullish
USDCAD trader if the underlying pair of USDCAD is bullish.

This is just an example as a supporting idea on the Crude Oil market. You are expecting
bullishness in the Crude Oile market and since the Canadian dollar generally moves almost in tandem
with Oil, the strong tendency for the Canadian dollar to rally and the Crude Oil to rally this time of the
year, that means that you have a March to June bullish effect for the Canadian dollar and Crude Oil
coupled together. That is a strong tendency.

But because you are looking at the Canadian dollar in the forex market this would have to be
reversed.

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 Next you will see the futures contract price for Crude Oil between around March to June time
period.

This is a weekly chart from January 2014 up to January 2017. You can see it has been in a
bearish trend starting from around the 105 level. But let’s take a look at the bullishness of the seasonal
tendency looking for that March to June time period.

• This is the March to June 2014 where you can see it had a bit of an uptrend.
• Next year, in 2015, even if the market was in a bearish trend it is clear that between March
and June it had a rally. You do not force the trades, but you can see that the seasonal tendency
exists in the marketplace during that time period.
• In 2016 look again at the March to June time period where the Crude Oil had a rally again. The
question is the following: if you can see these opportunities repeating themselves based on
dates shared here, is it hard not to feel like there are treasure maps?

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EPISODE 11 – How To Use Bearish Seasonal Tendencies In HTF Analysis 4.2 –
LINK
Bearish seasonals in HTF analysis
The market of study for this teaching is going to be the New Zealand dollar – KIWI
• Futures or commodity markets are not the same as forex. The underlying currency market may
move in tandem in a forex pair or it may be inverted based on the pairing with another
currency.
• New Zealand dollar, for instance, can be tracked in forex with the NZDUSD pair. It is the first
currency in the pair’s name, thus is expected to move in tandem with the New Zealand dollar
futures movement.
• Seasonals can provide trade conditions that may align your trading in the direction of the next
quarterly shift or it may not. The following examples in the Kiwi [New Zealand dollar] will
highlight the influences seasonal tendencies can create in bearish setups that lead to unique
trade framework OR into quarterly bullish shifts after a tradable drop in price.

The quarterly shifts in the marketplace are the goal of position trading or long term trading as ICT
understands it and teach it. Powerful moves that occur on these HT charts, monthly, weekly and daily,
they are in the hundreds of pips for foreign exchange. If you use seasonal tendencies like a road map
it is like knowing the most probable direction certain times of the year for certain currencies or
markets; it is not limited to just foreign exchange or currencies as everything has seasonal tendency.
But you have to study it and go through a long process of compiling all that data to get to the outcome
that would highlight a seasonal tendency where it rests most predominantly.

Looking at the following charts you can see that there are certain points in where price is
comparing a long period of time [blue line – 19 years] and a shorter period of time [red line – 15 years].

When both of them move in tandem, same direction, that highlights a high probability seasonal
tendency. When it gets choppy then it makes it less likely there is a seasonal tendency there.
Quickly going over the chart it should be obvious to you what time of there year there is a
significant decline in price expected and when there should be a significant increase in price for the
Kiwi dollar.

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 The seasonal tendencies, while you are trying to aim at where the conditions lie that would set
up a quarterly shift, meaning a move that would take 3 to 4 months to unfold, you are using these HTF
charts with the attempt to hone in an area where you can capture several hundred pips in a long term
position trade or to look for the ideas that would get you in sync with the institutional mindset where
the direction of the market should go on these HTF charts.
Since it is the smart money entities that moves price on these HTF charts you know that there
is a high probability that if it is a certain time of the year or a tendency for the market to rally or decline.

The blue line – 19 years and the red line – 15 years are contrasting for 15 vs 19 years of data.
You can see that the seasonal tendency is locked in tandem; it is pretty much the same scenario all the
time.
Because it is traded in March, June, September and December contracts, they are the futures
contracts delivery months.

As you can see the June contract has the strongest tendency to rally and decline all in the same
contract month beginning first trading day and last trading day before the contract would expire.

The December’s contract has a very strong tendency to a rally late in the year. Understanding
that it is obvious that if you are going to trade the Kiwi you want to be focusing on the June contract
and December contract.

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 It does not mean that the March contract will not see specific price action that sets up moves
that you see in the June and December contract or that you will not see things in the September
contract that would lead into December’s contract month unfolding like you see here in the seasonal
tendency.

AGAIN, this is not the “end all.” Those are only road maps as to what price has done in the past
historically year after year. By compiling the data you can see that these contract delivery months do
this type of thing over a large sample size of data. It will not happen every single year!

MORE INFORMATION
Mid-February to mid-March time period is historically a declining period for the NZDUSD.

Mid-March to April has a tendency to rally up into around May where it makes a high and sells
off again giving you another bearish seasonal tendency.
Then there is an area of consolidation between June going into July. It makes a seasonal low
around June-July and it bounces bullishly and sells off again around mid of August down into October.

When you use the seasonal tendency, the way you want to use it are limited only to what the
current market conditions are. You do not go into charts forcing the seasonal tendency. Do not force
the idea that Kiwi has to make a high in May.
If the seasonal tendency is in fact true, is there something technically in price that would
support that seasonal tendency? Is it in a bearish market? Did it rally up into a bearish OB? Did it run
an old high? Do you see a market structure break? Has it been, in fact, moving up in the last 3 to 6
months and is it likely to be selling off because of an overbought premium market and then maybe you
anticipate seeing some breakdowns in the marketplace and then you can take a short position for a
bearish move lower?
It is a matter of lining up what the current market conditions are. It is not just “take this thing
and apply it to the marketplace and you are going to get rich.”

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The arrows show other opportunities that can be used:
• The 1st week of January going into February.
• Mid-June down into the 2nd week of July.
• Mid-August down into September-October time period.
• Mid-September down into October – this is the one that generally sets a strong buying
opportunity.

Going further focus on the sell offs from mid-February to mid-March area and the sell offs from
May going into June and July. Look at how those moves can setup bullish conditions for quarterly shifts.
The first one to watch is between March and April for a quarterly low. Then there is the June
to July low that you could expect a seasonal low to form for that quarter to be a buyer. The next one
is the September to October low giving you a strong tendency to be a buyer.

Think about this for a minute. You just had outlined the general road map on what the Kiwi
does on a 12 months cycle. This was the macro view on what the Kiwi does over the course of 12
months. There are seasonal tendencies that shift in and out of the marketplace and depending on what
the market conditions are for that particular time or year, one seasonal tendency is going to be favored
over the other.
If you are in a bullish market the March-April-June-July and September-October time periods
are going to be phenomenal buying opportunities.
If you are in a bearish market, that means mid-February to mid-March is going to be amazing
sell off and May is going to be an amazing sell off. August can also create a nice sell off.

March-April, June-July, September-October are really strong buying opportunities.

February-March, May-June, August-September are selling opportunities.
19:04

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EXAMPLES OF SEASONAL TENDENCIES – NZDUSD weekly charts
2007
Mid-February into March and May to June declines can be seen here. Notice the sell offs. The
sell off were expected to set what opportunities? Remember that March-April time period expected
for bullish scenarios, June-July the same and also September-October.
September-October has a rally.
While focusing on the bearish seasonal tendencies, the other seasonal tendencies will also
have some measure of influence. Keeping in mind what the market conditions are in that particular
year it is going to be helpful for you in that regard because you are not trying to form fit just a seasonal
tendency in price, but you are looking for clues to justify WHY that scenario would be more inclined to
unfold than the other.

2008 – The economic crisis year

Mid-February to mid-March are creating the high here.
The May also created a high and then sold off.

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106
2009
Sell off between mid-February and going into March.
During the May period it did not get any decline at all on the bearish side. Keep in mind that
using these seasonal bearish tendencies, the one that dropped down in February into March leaves
you into the March-April bullish scenario.
June to July had a consolidation and July sent the price higher going into the late fall October
highs.

2010
Mid-February to March – flat market, nothing bullish or bearish.
May had a decline and THAT decline set up the bullish seasonal tendency of June-July that sent
the price higher.
August to October had a bearish scenario.

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2011
Mid-February to mid-March decline that leaves you for the bullish March to April seasonal
tendency.
Small decline from May that was sent into the January highs.

2012 – Nothing to add here. The chart is obvious enough.

2013

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2014
Nothing bearish between February and March. March was in consolidation and it rallied out of
the consolidation.
May had a retracement that lead to June rally creating the high.

2015
A bit of a move down from mid-February to mod-March.
Decline in May.
June to July kept being weak which lead the price in the next bullish scenario which is the
quarterly shift that would be bullish that occurs in September-October.

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2016
Unchanged consolidation. Nothing happening in mid-February to mid-March.
It declines from May into June and rallies.

In closing think about how these ideas lead to a road map idea of where price should go
generally speaking and when to focus in on very significant price moves. When do they usually occur?
It is one thing to say “OK, I can see when an indicator bearishly diverges and it should give a sell signal
or it should suggest some consolidation in a strong uptrend.” You can understand that but it does not
tell you WHEN the divergence should occur. Seasonal tendency tells you a specific time element that
escapes most people that do not use them. Most traders do not even have any understanding that
these things exist.
There is a strong tendency for the market to react when a few things come into confluence. If
you have a seasonal tendency to suggest bullish prices when the market has already predisposed to
go higher because it is in a bullish market AND it is in a time of the day when the market should be
bullish AND it is also a time when the market is indicating that the interest rates are supporting that
bullish idea, it is also supported in the dollar index… when all those things come together they dovetail
into a beautiful tapestry where you are going to see a profitable outcome in your analysis.
As long as you stick to those types of trades you are going to very well. You do not need a
whole lots of trades throughout the year. Notice that there are not a whole lot of overlapping going
on between what was shown so far. Certain currency pairs have certain seasonal tendencies and all
are going to “bend the knee” to the dollar index, lesson that will be later discussed.

Everyone is looking only at price action alone. But if you look at what price has done
historically in hindsight, it is a gold mine of information because it leads to understanding what
should take place.

Site to look for the seasonal tendencies

https://www.mrci.com/web/index.php

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EPISODE 12 – Ideal Seasonal Tendencies 4.3 – LINK
This lesson is going to be specifically dealing with foreign exchange or FX pairs.

Reminder
The seasonal tendencies are just a tendency. They are not a panacea, absolution or end all
solution. Seasonal tendencies are a roadmap to what happened in the past price action.

In the charts below the green areas are the futures market for that specific currency and red is the
dollar index.

AUDUSD seasonal tendency

Bellow on the left is the Australian dollar – AUDUSD futures price and on the right is the US
dollar index seasonal tendency for the futures price.

Ideal seasonal tendency is when the underlying market is predisposed to go in a direction that
the seasonal tendency is being outlined here. It does not mean that every single year the seasonal
tendency may not come to fruition.

On the AUDUSD the green shaded area shows the strongest tendency for the Australian dollar,
futures prices, to rally in March and make a top sometime in May. If this is true you should see a selloff
in the dollar index and you can see that in the red shaded area on the right.

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NZDUSD seasonal tendency

EURUSD seasonal tendency

GBPUSD seasonal tendency

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USDCHF seasonal tendency

USDJPY seasonal tendency

USDCAD seasonal tendency

Just because you are looking at once seasonal tendency, for instance when you are looking at
the seasonal tendency for the dollar index, when that occurs like between March and April time period
you expect the dollar index to create some measure of a high long term, seasonally. It does not mean
it is going to happen, but you are expecting it to occur. By itself it means that if you are primarily
bearish on the dollar index, this is an ideal scenario to be selling dollars. That may not be apparent in
the dollar index but if you see pair or a currency that is coupled with the dollar that has a strong
seasonal tendency to rally in specific times of the year like that March and April time period as for the

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USDCAD, that means you do not have to be in the uptrend for dollar index, You can be in a long term
consolidation. Say that the Canadian dollar is in a bullish uptrend, you are focusing in on that time of
year where March and April creates a dollar and it rallies up into May so with that seasonal tendency
underlying strength for the Canadian dollar that also would sell off the USDCAD pair.
It is a blending of the ideas, it is not simply “it has to be a downtrend for the dollar and it has
to be an uptrend for the Canadian dollar”. You only really need one and by blending these two
elements together and applying the seasonal tendency you are really focusing in on when seasonally
the highest probability for a big move is to occur, you narrow down to a specific time of the year,
certain calendar months and highest probability seasonal tendencies. Hence you can go through your
calendar ahead of time and write down certain months where you want to be focusing on specific plays
that may unfold in price.
It is really easy to forget about the seasonal tendencies when you get caught in day trading
and reading other stuff about ICT material. You want to have this stuff in your calendar and on your
trading desk here should always be things to watch this month, things to watch the coming month.
When you have your trading desk open and you are looking for trades, always have your
trading day every single day with reviewing a macro perspective like this.

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EPISODE 13 – Money Management and HTF Analysis 5 – LINK
Money management and HTF analysis
Assume that you are contemplating on the medium of long term trading or position trading.
• Account balance is not important – it is not important in having a big account because you are
focusing on the control on drawdown – about 15% annually is a realistic objective.
• You do not need to use the majority of the available equity – limit the allocation to 30% of the
total equity. Assume you have a 100k account; you will use 30k as being the total equity. If you
are going to be doing a percentage basis of your equity, like 2%, that means you are going to use
2% out of the 30k, not out of the 100k. The reason why that is done is because you will never have
to worry about margin calls, over leveraging or big equity dips.
• Limit allocation to only 30% of equity.
• Determine maximum risk exposure on the 30% of equity.
• Ideally set 1% as the most RISK per trade – that means 1% of the 30% of your total equity base.
1% of the 30k equity is 300 dollars as a maximum risk per trade.
• Target 3:1 RR or higher setups.
• Low risk high reward permits low accuracy – you do not have to be accurate but you have to be
patient on this timeframe.
• Low risk allows equity for more setups – That means that you are going to see more possible
trade setups by not having all of your money in one trade.

Money management and expectations

• Focus on a handsome annual % return – 18% to 25% per year. If you are able to do this you
will never have a shortage of people wanting to handle their money. That % gain is like an
industry standard for managed funds.
• Remember that a few long term setups form annually.
• Learn to allow short term draw down in profits – that means that while you are in these long
term trades many times you will have retracements that you will have to deal with maybe for
a few days or weeks. The reason why you should use 30% of your equity is that it give you
equity and margin to have short term trades. In the US you are not allowed to hedge your
trades, but you can trade markets that are closely corelated or inversely correlated with the
long term position that you are having. For instance if you are in a short position [selling] in a
long term position on USDJPY and the price starts to have a retracement against your short
position you are going to give back some of that open profit. The way to counter act that is
you can go in and trade the EURUSD or GBPUSD and long [buy] and capitalize some more
money in the marketplace while your term position is in drawdown. You can actually hedge
that by trading other pairs that are inversely related.
• Stop loss orders are not a measure of ability – tighter stop losses are not better. Your stops
must be proportionate to the timeframe that you are trading in.
• 200 pips risked for 600 pips is still a 3:1 ratio.
• Do not look to move the stop loss soon to break even or even reducing the risk – position
trading require a great deal of patience and, unfortunately, there is no way of forming that for
most of you. You either have it or you grind it out and develop it over time.
• Learn to exit at logical targets and to reenter at a later time.
• Long term is not get rich quick, but steady.

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EPISODE 14 – Defining High Timeframe PD Arrays 6.1 – LINK
When you look at a chart regardless of what timeframe you are looking at it, there are a few
elements that come to mind as a trader:
1. Support and resistance.
2. Overbought and oversold.
3. Price patterns.

…but generally you think of a price being valued too low or too cheap or expensive or too high. The
algorithm has similar “thought processes” built into it and you will look at it in the form of a premium
and discount market.
For the sake of this discussions think of this red line at the top as a resistance and the blue line
as a support. As the price starts to move away from a level that would be viewed as too cheap or
support. Naturally your expectation as a trader would be to see price move higher. When it does this
you are confirmed to see a response moving up to a resistance point of some kind.
Now the problem is with retail trading and with technical analysis as a whole by itself it does
not help you because everyone of us could come to the conclusion that a specific level above the
current price action would be a resistance level.
To remove all the ambiguity you have to have a mindset going into it. This teaching is about
hierarchy on the tools used by ICT to frame the trades.
There is a hierarchy on those PD arrays and how you look for them in price and those PD arrays
have been discussed throughout this mentorship.

As price makes a retracement lower from a support level how far does it usually retrace back?
When you look at charts you want to be viewing price in the terms of “is it in a premium or in a discount
market”?
As price starts to retrace and then moves higher, it hits a level of resistance. For the sake of
discussion assume that everyone understands what would deem a resistance level just to remove any
secondary discussion. The resistance level in this case is the upper red line. Here the reasonable
expectation would be to see the price move away and when the price does that some of you would
expect one more try to get to that level, maybe to go through it or fail.
This is the type of setup ICT mentions he likes to see here, meaning another pass towards that
high. It will either give a run through or a false break OR a failure swing. Classifying institutional price
swings were already discussed prior to this teaching.
Here you want to be thinking in terms of premium and discount on higher timeframe charts
because the hierarchy on how you view this is going to help you whether you are a day trader, scalper,
position trader, short term trader.

With the expectation of lower prices how far would you expect to see the price go down? Well,
the 1 impulse leg, then retracement and then there is a 2nd leg higher hitting the resistance level, that
st

secondary impulse leg is probably going to be a good reasonable expectation for support level. That
can be a bullish orderblock, an old short term high in there on a lower timeframe [if this would be a
monthly chart], at that low the may be a daily short term high that would create a support level that
cannot be seen on the monthly chart. So when you are looking at these higher timeframes you need
to understand that there are going to be levels that exist inside the larger price swings that you may
not see unless you are going down to the lower timeframe. When ICT says lower timeframe he refers

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only to the daily timeframe because the higher timeframe analysis is the only focus here and nothing
below a daily chart.

Assuming that that this is a monthly chart and looking at price, the expectation is that at that
old low you would expect to see some lower timeframe support level – monthly +OB, a weekly +OB or
a daily short term high.
Nonetheless, when you look at price back and forth on a chart whether it may be monthly,
weekly or daily and even lower timeframes, you have to understand that there are swings that exist
and support levels and resistance levels that exist in the lower timeframes that may no be so apparent
using the higher timeframe charts.
THAT IS NOT WHAT YOU BASE THE MAJORITY OF YOUR TRADES ON.
What you are going to be doing is using the monthly and weekly chart to frame the context of
what that market should be doing using those PD arrays.

So, if you watch price and it continues to trade higher here, where would you reasonably
expect price to trade to?

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That short term little swing low at the failure swing. That is going to be a potential mitigation block –
that means that any orders that were used to go long but failed to make another pass at that old high
will be mitigated and cover the long positions and go short, potentially, or just get out of the trade.
But smart money just do not cut losses, they know what they are doing, they scale in and out and they
hedge, so this would be another selling opportunity.

The market seeks liquidity below the low and below the 2nd impulse swing prior to the run into
resistance. It seeks liquidity below the marketplace.

Once it takes that liquidity out it can drive all the way down to that old support level, but
generally it does not. It will retrace again and pick up more orders back at an old low where you would
see another opportunity to sell off and take out the liquidity below a short term low that was just
created and back down to a logical area of support.

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 The expectation would be what? To see the price bounce. Price does this and when it starts to
retrace again some of us, if we would be in the same room, would expect to see that price low to be
violated and a new low created. Sometimes that will happen, sometimes it will not.

This failure swing in here could be used to set up another long opportunity where price rallies.
Here is the million dollar question: Where would you expect to see price go next?
The understanding is how price moves from one level to the next, but predominantly it is
moving from a level of discount to a level of premium and from premium to discount. Between the red
line and the blue line, levels that are extremes, there is the middle point of it that is classified as
equilibrium or balance. Buying in balance is seen when price gets above equilibrium or up into that red
level that would be resistance. Selling in balance would be when price gets below equilibrium and
down into the blue line or what would be derived as discount.

So… where would you expect to see price go next? That is what you are faced with when you
sit down in front of the charts. For this discussion the common ICT tools will be used in the form of
the way they form on charts, in other words – the order in which they form and how to use them
wherever you are at in the marketplace.

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 This teaching will be used as a foundation that is going to lead you into a better understand of
this example shown in the money management lesson.

Before getting into that teaching you will need to have the foundation to understand what you
look for and why you expect it to unfold like you would.

Using the thought process of premium, which would be the red line, and discount, which would
be the blue line, when you look at charts you want to see where price has moved away from an old
high and it is dropping down from an area of premium; In other words it is too high so the valuation is
going to be reduced and drop lower. Repricing takes places and the market goes down until it gets to
a point where it is too much of a discount, then it has to be a premium built into it. The algorithm will
do this moving price back and forth until something of significant impact comes into the marketplace
and drives the market one-sided and creates a strong imbalance. Otherwise the market is going to
gyrate back and forth looking for liquidity based on premium and discount conditions.

Assume for a moment that the market price is here. You can clearly see that the market, in
recent times, had a clear discernible level of resistance and support. That can come in the form of a
bullish or bearish orderblocks or it could be just old highs and old lows.

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 Your expectation is right now that price is at a level where it should move lower because it is
at a classic viewed resistance level. You do not know how much time it will be required before the
market submits to your expectation and see a lower price. You will have to submit to time. When time
and price agree with one another and you have waited for that agreement to come to fruition, that is
where profitability and opportunities are.
You do not know how much time is going to be required to wait before the displacement takes
place. Eventually your expectation is that you will see lower prices down to a level of discount. That is
where you are expecting your forecasting as a future price.
In between those two reference points, again, time and price is what is essential. You have to
submit to the level of time which nobody knows how much time is going to be required before your
setup pans out.
PRICE is what you are studying. You are submitting to time throughout the process but while
you are in the trade or expecting this to unfold studying it, you are submitting the price and not trying
to force your will in price. You are analyzing the price to see what it is telling you in terms of institutional
order flow. Is it justifying your expectation that it wants to go to that discount level or some bullish
order block to buy back off and cover a short position? Or could be an old low that it want to run
bellow. That future price could be a number of things but for now you are considering just an old low.

Between the market price today and the future price that you anticipate or forecast lower in
the future there is going to be zero opportunities for it to be a straight line. Understanding where
certain arrays occur in that process will help you to stay with the trade idea and have the confidence
to hold until the objective is met or your stop gets taken and then move to the next opportunity.

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 The opposite is seen when you are looking for a bullish scenario where everything is just
reversed and expect the market price to be in the future at a premium, meaning higher than it is today.

The understanding here is that price will move from a discount to a premium because
DISCOUNT cannot stay discount very long. Price is going to be established by whoever is selling.

The hierarchy of the PD arrays

On a monthly chart look at the current trading range that it is in. Let’s assume that you outlined
the marketplace in terms of old highs and lows on the monthly. The most recent trading range that
the market has moved from an old high to an old low, that would be your premium and discount
definition. In between those two reference points the halfway point will be referred to as equilibrium.
Equilibrium between where you think price will go, because it has been there before, and where it is
at right now relative to an old high and an old low, that is the current trading range.

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PREMIUM PD arrays in the level of their importance – to sell from
1. Old high/low – the first thing above equilibrium in the form of an array is an old high and an
old low. You are looking for that above equilibrium.
2. Rejection block – the next thing you are looking for is a rejection block. That will be just above
the candle’s body, not the wick’s. The actual high and low is the wick and the next area of
importance is the rejection block that would be just above the candle’s body.
3. Bearish orderblock.
4. Fair Value Gap.
5. Liquidity void.
6. Bearish breaker.
7. Mitigation block.

If you are at equilibrium and moving AWAY from a premium level, meaning that the price
already dropped down and you anticipate the price going lower into a level of support or monthly
discount, look above the current market price in the past on the left side of your chart and look for the
following PREMIUM PD arrays. If you do not find the first one, move to the next PD array in the order
presented below until you find one.
- Where is the nearest mitigation block? There may not be one; then move on.
- Where is the nearest bearish breaker? There may not be one; then move on. But if there is one
then you would reasonably expect price to trade up to that price point and then expect selling to
go lower and once it moves below equilibrium then you would be all set to go the monthly
discount or support level.
- Where is the nearest liquidity void? Is there a range that needs to be closed in? If not clear, move
to the next PD array.
- Where is the nearest FVG?
- Where is the nearest bearish orderblock? It is probably going to be there. Chances are very strong
that it is going to be there.

This is the hierarchy in which you look for

The mitigation block is going to be the first considered before you get to the bearish orderblock
because the bearish orderblock is going to be really up high in the premium zone.
The mitigation block is going to be the lowest. Mitigation and breakers are basically mitigation
blocks but, generally, mitigation blocks can occur lower than breakers. Small little bounces in bear
markets would be a mitigation block.
A bearish breaker would keep you from getting to a bearish orderblock which will be resting
higher up in the premium when an old high is taken out – that down candle just before the 2nd
high is made taking out an old high – turtle soup. That down candle, if it is re-traded to, that is
going to be a bearish breaker that is going to keep you from seeing, most likely, high probability
that it will not allow you to get to a bearish orderblock. Whenever you see bearish breakers just
do not expect the bearish orderblock to be hit because it is most likely going to keep the price
lower as that is the most dominant array of all listed here.
The liquidity void would be viewed if there is no breaker. You can close in that range and that
may take you up into a fair value gap or a bearish orderblock. Breakers by themselves, even though
they are low end on this list, are the first thing that you are going to encounter because if you are

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at equilibrium and price has already been moving away from the resistance level, you are looking
up now for any potential areas to re-sell at.
First when you look at mitigation blocks, then bearish breakers and there is neither of those,
you look for liquidity void to trade up into the close in that range or a fair value gap to close in.
And it may not be any of that. If so, you would expect to see the bearish orderblock to be traded
to and that would be your selling opportunity because you are in a premium and you go to the
logical area where institutional order flow would kick in, new orders would capitalize and then
selling would ensue.
If there is not an obvious bearish orderblock, then you would look for a rejection block which
would be just above the body of the candles. You would expect that to be ran out and then you
would be really high on the premium there and then, ultimately, a whole entire run on the old
high.

Now… You have your old high and your old low. Why would the low be there? If you are on a
very low end of a down trend on a higher timeframe monthly chart you may be rallying up to an
old low and if it gets to that old low, even though it is an old low in terms of price, it is really high
up in the premium if it has been rallying a considerable amount of time and price to get to that
level. Re-trading to an old low, that is classic resistance understanding but it may need to run out
old highs as well. Basically all you are doing is that you are scaling the grade of how much
importance you are going to have on each one of these.

Those PD arrays are not just listed from the previous teaching. The PD arrays are put in an
order of significance.
When you are at equilibrium OR if you are moving up from discount your expectations are to
look for the very first thing in the list as price is going up, and that is the mitigation block. Then is
the bearish breaker that can set the leg for another move lower.
If you are bullish from a discount or you are expecting a new selling opportunity and you are
at the EQ price and anything below the premium, the expectation is that when you are looking up
in price for areas where the price may go up to, it is only in this specific order from the lowest to
the highest of their importance. The order of importance, meaning the highest of the premium
arrays are the old high and the old low.
The farther you go up in this list, the more deeper you go into a premium market. Certain
arrays in here will keep you from seeing the next higher array.
For example if you get to a breaker block, chances are that you are probably not going higher
than that. You will not, generally, get up and close that liquidity void. If there is a breaker below a
liquidity void, the liquidity void may stay open.

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DISCOUNT PD arrays in the level of their importance – to buy from
If you are anticipating move lower in the price into a discount or support level, you would
expect the following DISCOUNT PD arrays be in this order:
1. Mitigation block – this may not appear in price. If you do not see a mitigation block, expect to
see the next PD array.
2. Bullish breaker – if this is not on the chart move to the next one. The bullish breaker is an up
candle between two swing lows. The most recent swing low would be lower. What you are
seeing is a stop run in the past. The high that forms between the two lows, that up candle, is
going to be your bullish breaker. If you see a breaker anticipate that the next PD array, which
is the liquidity void, to be left intact.
3. Liquidity void.
4. Fair Value Gap – if there is no breaker and no liquidity void but there is a gap, you will
anticipate the price going down into the FVG.
5. Bullish orderblock.
6. Rejection block – usually just below the most lowest candle and its body. If it has long wicks
below it, look for a move just below the body of that candle.
7. Old low/high – this is the deepest form of discount.

When you look at the markets like this it gives you a framework.
The monthly premium arrays are going to be focused primarily for bearish premium array
trading. You are going to use these area at which to frame a trade or look for bullish targets at these
levels.
For monthly discount you look for the bullish discount arrays. You will be looking for these for
bearish targets or looking to get long at one of these based on the current conditions of the market.

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The same things are seen for the weekly and daily charts

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EPISODE 15 – Trade Conditions and Setup Progressions 6.2 – LINK
This teaching is going to be specifically dealing with discount buying opportunities and aiming
for premium objectives.

For selling opportunities the framework looks like this:

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 When markets are at premium or discount they are always going to look to rebalance, initially;
that means the equilibrium price point of the last recent range. Even if it does not go all the way up to
a deep premium or deep discount you can always expect it to go back to equilibrium.

When markets are in a premium and you are at equilibrium you will focus on the market to
potentially move up into one of these monthly PD arrays that can be shorting opportunities.

When the market is at equilibrium you can anticipate a market move down into a monthly
discount aiming for one of the PD arrays as an objective.

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Example on the USDJPY
ICT starts here by presenting the daily chart for the Japanese Yen Cash on www.barchart.com.
Historically he states that it also had a high in August in the previous here. This below if from 2016.
***previously, if you look at the chart, there were other MSS, but it seems that the one drew here below
happened in month where the seasonal tendency also has influence on the Japanese Yen Cash.

The wick in November happened during Donald Trump’s election. It rallied up into a bearish
orderblock and then it started to sell off.

-OB
MSS
MSS

Moving on to the forex chart – USDJPY. As “USD” is in front of this parity, meaning USDJPY and
not JPYUSD, it means that the chart will be inverted and it will go up because the Japanese Yen Cash is
dropping and the dollar prices are rallying. If the dollar is first in the name of the pair, USDJPY, it means
that you are watching the advancement of the dollar vs the decline of the Japanese Yen.

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 What you see on the previous page is the monthly timeframe for USDJPY as ICT had it, but I
will share my chart because he also presents some PD arrays.

MONTHLY USDJPY

***when the price hits the low of the bearish breaker block it becomes a valid breaker.

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WEEKLY USDJPY

On my chart the weekly bearish orderblock was not hit as on ICT’s chart.

The open of that candle was chosen as being the beginning of the orderblock because it has a
wick down and when the next candle passes below it, that is considered passed 2 times and did not
create a gap. In fact it did create a gap but as that candle, the -OB has a wick down, the gap is covered.
I know, it does not make too much sense… but wait.

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The PD arrays seen as objectives when buying from the DISCOUNT area.
You would look at these PD arrays if you bought from the discount area.

An interesting information ICT share here when he highlighted the rejection blocks – he was
looking at equal bodied candles, like two consecutive candles having the same close and open price as
you can see on the chart above.

Now pay attention to that last down closing candle on the weekly timeframe because that
candle will be discussed next on the daily timeframe.

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The price hit both of the weekly +OBs

There are a few down closed candles highlighted on the next chart and the price rallies away
from them. Every time you look in an uptrend you want to focus on the down closed candles because
that is where institutions are going to buy. They either buy at the time at the down candle’s creation
OR if the price ever comes back down to that down candle at a later time, they buy will more at that
time.

A bit higher there are 3 down closed candles [2 on my chart where the OB line is]. The OB
begins at the highest candle’s price opening.

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ICT’s chart for USDJPY – Daily timeframe

***If any bullish order block or any supportive role from a PD array on a daily chart fails to hold and
does not give you a buy signal, the next level you drop back to is the weekly PD array.
If the weekly chart PD array has no support and breaks, then you get back to the monthly chart.
The daily is not going to support a monthly retracement.

You will have the monthly PD arrays on your chart and looking for them, also, on the weekly
chart and having those levels on both, monthly and weekly, on your daily chart. This is crucial for
position trading because it is going to frame what trades you are taking and will provide structure in
the form of support and resistance or natural support for price to find new buying or new resistance
to find new selling at.
The takeaway – if you are following the market on the daily chart, just because there is a
bullish orderblock or a void that gets closed in or fills in a gap and that, supposedly, is bullish, it does
not mean that it is going to keep the price up from that point. It can come back on the daily chart and
retrace rather deeply.
When you look at price, every single PD arrays presented in the charts above are all tradeable.
Every PD array here can be considered a premium. As you go through deeper into the premium, the
weekly bearish orderblock is where the last opportunity is to unload a long position down into the
discount area.
Moving from HTF, monthly and weekly charts, to the daily, you are using the PD arrays in terms
of understanding institutional order flow.

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 If you lose a level that is seen on daily chart, you could drop back down into levels that have
been seen on the weekly chart. Here is an example.

They bought at every of those 3 levels. Long term hedging is what you are seeing here. Every
time there is a down candle and then there is a subsequent up move, you know that they bought.
That is the footprint; they moved the market by doing that. Every time they do that it allows
new scaling in for them and their positions are large and they do not get them all in one time.
Going on the daily timeframe you can see where a daily orderblock may occur. You will not
have them “to the pip”, but you can see how these levels draw your attention to where a future
orderblock on the daily timeframe may occur. It gives an opportunity to anticipate when the next down
candle should occur in terms of price, not time. Around the time of the price hitting those weekly PD
arrays, you will focus on when there is a down close candle on the daily chart because that is going to
be new buying opportunity especially when you have a higher timeframe premium level that is not
met yet.

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 If you loose a level like an orderblock, for instance, like the one presented below, ask yourself
WHY didn’t the price go down and not up. It went THROUGH the daily orderblock and dropped into
the weekly orderblock. The banks went back down to recapitalize a level on the weekly chart.

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 Usually when you see these big price surges higher or lower in price and you are watching it
on a daily chart, quickly go to the weekly chart and you will see what they have done or what they are
reaching for.
Let’s say that maybe you bought before that drop inside the weekly PD array. Great! All of a
sudden you get knocked out of the position as sell stops were ran out, but the price just returned to a
weekly OB and you can be a buyer again. The banks just recapitalized a longer term PD array.

Do not be concerned about losing a daily PD array. Go on the weekly and see what they are
reaching for. If you cannot find it on the weekly chart, go to the monthly chart and you will, probably,
see much clear where they are trying to push the price.
The algorithm is going to work predominantly on the daily timeframe, but if the levels are
already worked enough and already absorbed all of the potential liquidity because it has already been
trading to them, it will go out to that larger open float and that will, usually, dip you into the weekly
ranges.

At some point during

this lesson ICT said that
the weekly orderblock
cand be used as a buy if
the price ever comes
back. The result?

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EPISODE 16 – Stop Entry Techniques For Long Term Traders 7.1 – LINK

Buying with stop orders

• The monthly and / or the weekly should suggest Institutional Order Flow will be seeking a PD
array ABOVE daily market price.
• The daily should post a BEARISH candle. The daily chart must close the candle with a DOWN
close – it is not valid while the daily chart candle is trading or forming.
• Buy stop is placed at the bearish candles open on daily.

You have the HOLC prices of the candle. You are going to place a buy stop for an entry on long
positions at that open price of the candle. The concept is that you are using strength to get you long in
the marketplace. You are not just buying old down candle, you are looking at the PD arrays that would
be in a discount market.
OR while you are in a long term uptrend, every down candle promotes new buying
opportunities for smart money. You will use this entry technique to get in sync with the long term
trends.
You have to have a monthly and / or weekly institutional order flow reference point in the form
of a PD array – this means that it has to be a weekly bearish orderblock that is above the daily price, it
has to be a fair value gap above the daily price in the form of a weekly or monthly chart. Something on
the weekly or monthly, preferably both, is leading you to believe that the price will be drawn up there
on that timeframe.
The daily – you are going to wait for the move against that intended direction. That is why you
are buying off of a down candle. You are using the opening price on the down candle.

Think about this for a second – the orderblock theory. That candle would be a bullish orderblock in
the form of a down candle. If price trades away from a down candle and it trades back down into that
opening of the down candle that is also a future entry long position. If the price should trade back up
to that opening price and through it, it should be turning the corner and trading higher. BUT if it does
not trade back above the opening price you do not get a fill. You just need to wait for new down candle
and you keep moving forward every time you get a new successive down candle and keep adding that
new entry at the opening price. You would consistently moving forward one new trading day every

139
time a new candle paints. If you do not get a fill on the daily, you just go to the next daily candle. As
long as there is another down candle, you keep doing it.
If you are buying at the opening price of a down candle long term expecting monthly and/or
weekly PD arrays to be the draw on price, the daily charts are going to submit to those higher
timeframe monthly and weekly idea. They are going to trade up into those levels, but they will not just
go straight up, they will go up, then come back down to that same opening price many times giving
another opportunity to buy.
What you can do is when price moves away from the opening price and comes back down you
are looking for confirmation and you are going to see new buying and that may be another opportunity
for you to add new positions. This will happen only when you have taken profits off. If that entry is
executed and you are long and you get several hundred pips in your favor you can take some of that
position off with the expectation that you may end up seeing a retracement back to that same opening
price. If it does you can put that same position you took off from partial profits right back on at that
same opening price. Keep the trade until it hits that monthly and / or weekly PD array in the form of a
premium market.
Every down candle promotes new buying opportunities for smart money. The higher you get
on the monthly and weekly range and get closed to those premium ranges, the less likely these candles
will promote strong buying.
Remembert that you will buy at equilibrium or less than the range that you identify on the
monthly and weekly charts.

Selling with stop orders

• The monthly and / or the weekly should suggest Institutional Order Flow will be seeking a PD
array BELOW daily market price.
• The daily should post a BULLISH candle. The daily chart must close the candle with an UP close
– it is not valid while the daily chart candle is trading or forming.
• Sell stop is placed at the bullish candle’s open on daily.

The same principles apply here, also. But this time you are selling.

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BUYING EXAMPLE
Assume you have a buy stop at the opening price of that candle.

You are not getting filled for that entry.

You wait for the next down closed candle on the daily and repeat the process.

Now you get a fill and then there is another down closed candle that is printed higher than the
previous.

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You repeat the process of having a long entry with a buy stop

… and you get filled again.

What can be seen in the last chart is that now you have 3 consecutive down closed candles.
Each time you have an opportunity to be net long. The candle in the middle of the 3 down candles
might have got you a fill for a long entry but your stop loss would be below the swing low that was
most recently created on the daily chart and below a specific reference point which will be outlined
later on in lesson 8.

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You place another buy stop at the open of the last down closed candle.

And you would get a fill for a long entry.

As there is another down closed candle you place another buy stop.

143
That buy stop also gets filled and then price makes another down candle and then that lower candle’s
opening price does gets filled and sees another move higher.

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SELLING EXAMPLE
The example is presented for the monthly USDJPY pair.
Look at the old high from 2007 – upper left, you can see how the price made a piercing of that
1.2350 level and rejected it having a break in market structure and a sell off.

On the weekly timeframe you can see there is a bearish market structure shift and then
another one – red circle – that is where the focus will be for this example.

This market on the daily timeframe [next page] was getting in sync with the lower objectives
for the monthly and weekly USDJPY. The PD arrays they would be looking for lower prices would draw
price on the daily chart lower. The mapped candles are the candles that went back up to the premium
of the ranges that the price was trading in for the daily chart. Every opening price, once triggered, you
would be net short – there are 5 examples where each one of the up candles trips you short.

145
 Another example for a short entry is presented. The price trades back up to a mitigation block.
The up candle you would look to sell short from is in the middle of this chart here.

MB

This is the more “higher timeframe” view offering several hundred pips.

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EPISODE 17 – Limit Entry Techniques For Long Term Traders 7.2 – LINK

Buying with limit orders

• The monthly and / or weekly should suggest Institutional Order Flow will be seeking a PD array
ABOVE daily market price.
• The daily should post a BEARISH candle. The daily chart must close the candle with a DOWN
close – it is not valid while the daily chart is trading or forming.
• Buy limit is placed at the bearish candle’s close on daily.

Selling with limit orders

• The monthly and / or weekly should suggest Institutional Order Flow will be seeking a PD array
BELOW daily market price.
• The daily should post a BULLISH candle. The daily chart must close the candle with an UP close
– it is not valid while the daily chart is trading or forming.
• Sell limit is placed at the bullish candle’s close on daily.

These conditions are best suited when aligned with a daily PD array like orderblocks, fair
value gaps, void, above a recent high or below a recent low.

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BUYING EXAMPLES
USDJPY – daily chart

Using the down candle and its close as a limit order to be a buyer, you can see how that
transpires here. Each day it trades down below the previous day’s down closed candle.

USDJPY – weekly chart

What you are looking at is the weekly chart and how the price was moving away from that 100
level – blue area – and there was a bearish orderblock up around the 118 level – red area – and that
was the weekly premium PD array that would draw price up to that level long term.

148
 Going into the daily chart you can see that in November during the post elections rally of
Donald Trump the price stabbed one more time down into the weekly bullish orderblock.
Prior to the November dip you can see a September rally away from a previous orderblock that
was formed in August 2016. September dropped into August’s weekly +OB and the very next day it did
trade down below the close giving an amazing fill.

Remember that those charts are daily charts. There are plenty of opportunities even here.
Do you still think you need intraday trading to make pips?

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EPISODE 18 – Position Trade Management 8 – LINK

Bullish market conditions

1. Anticipate potential bullish seasonal tendency.
2. Look for intermarket analysis confirmations.
3. Refer to interest rate yields direction to confirm.
4. Consult HTF monthly and weekly charts for PDA – Premium Discount Arrays.
5. Expect a quarterly shift and intermediate swing.
6. Use daily PDAs to frame your bullish setup.
7. Determine if you will enter by stop or limit. It does not matter which one you will go with but
understand that if you are going to trade with limit orders there is a probability that you might
be missing moves or fills because you are demanding a specific price level. With buy stops you
will generally end up getting filled more times using that type of order but unfortunately that
creates a little bit more gap between where you are entering and where your stop loss is going
to be.
8. Trail stop loss below the lowest low in the last 40 trading days. This brings you back to the
IPDA data range. Why would you be looking for the lowest level in the last 40 days? Because if
you are looking for a bullish move the market will most likely not want to go back 40 trading
days to find the low. It is going to be looking for the highs in the last 40 trading days. That
means that you are going to have a trailing stop loss order that is very handsomely behind the
current market price and it is going to take a very significant price move to stop you out. It
avoids getting knocked out of the marketplace prematurely and when you are trading ling term
trends or long term quarterly shifts, the wors thing that can happen is to get knocked out
prematurely and then the market moves takes place and you miss out on that move. In this
timeframe you are not looking to trail your stop loss ultra tight. You have to have some
freedom in the market.

Risk management
Once the trend starts underway and it starts moving in your favor, if it moves 50% of the range
that you expect to see unfold on the monthly and / or weekly chart, because that is what you are
actually trading off of – you are executing on a daily chart – once that range moves to 50% of what you
expect to see in terms of profitability, say it is a 500 or 1000 pips range, you need to still consider what
the lowest low was in the last 40 days. Your stop loss is going to be below that.
And when it gets above 50%, then you are going to look for the lowest low in the last 20 days.
Once you get about ¾ of the way of the entire weekly and monthly range, you want to start trailing
your stop loss below the most recent low in the last 20 trading days.
You are permitting price to seek out liquidity on the upside and giving it a lot of room to
consolidate if it needs to before it goes another leg higher. If you keep your stop loss below the lowest
low in the last 40 trading days you are going to have a better chance of staying in the move and not
being stopped out prematurely.

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Bearish market conditions
1. Anticipate potential bearish seasonal tendency.
2. Look for intermarket analysis confirmations.
3. Refer to interest rate yields direction to confirm.
4. Consult HTF monthly and weekly charts for PDA – Premium Discount Arrays.
5. Expect a quarterly shift and intermediate swing.
6. Use daily PDAs to frame your bearish setup.
7. Determine if you will enter by stop or limit.
8. Trail stop loss below the highest high in the last 40 trading days.

Risk management
Use the same approach as for the bullish market but reversed.

STEP BY STEP SIMPLIFIED RISK MANAGEMENT FOR LONG TERM TRADES

Bullish Market:
1. Start trading based on a monthly or weekly chart.
2. Once the trend is in your favor and moves 50% of the expected range, consider the lowest low
in the last 40 days as your initial stop loss.
3. As the price surpasses 50%, shift your stop loss to the lowest low in the last 20 days.
4. When the price is about ¾ of the way through the weekly and monthly range, start trailing
your stop loss below the most recent low in the last 20 trading days.
5. This approach allows the price to seek liquidity on the upside and gives room for consolidation
before potentially moving higher.
Bearish Market:
1. Start trading based on a monthly or weekly chart.
2. Once the trend is in your favor and moves 50% of the expected range, consider the highest
high in the last 40 days as your initial stop loss.
3. As the price surpasses 50%, shift your stop loss to the highest high in the last 20 days.
4. When the price is about ¾ of the way through the weekly and monthly range, start trailing
your stop loss above the most recent high in the last 20 trading days.
5. This approach allows the price to seek liquidity on the downside and gives room for
consolidation before potentially moving lower.

And remember to use this indicator made by toodegrees – ICT IPDA Look Back.

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EXAMPLES
USDJPY – weekly chart

On this chart ICT applies a Fibonacci retracement tool from the high down to the top of the
bullish orderblock.
Range high

Range low

Fibonacci levels
• 50% as equilibrium
• 62%
• 70.5% as OTE
• 79%

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 We are looking now at this move down here after the market structure has been broken.

Market
Structure
Break

After that low was violated, there is a rally. That rally is detailed in the next chart.

USDJPY – daily chart

40 days look back - SL

-OB
Rally

The rally goes up into a PDA on the weekly and on the daily. The range of risk for a sell limit is
for 250 pips. After you enter short from that level you are going to look back 40 trading days every
single day and see where is the last high in the last 40 trading days.

153
 For example at this level if you look back 40 trading days your stop loss will be at the highest
high printed in the last 40 trading days. The gray rectangle has a 40 trading days.

SL
8RR From this moment

40 days look back

The same applies for the buyside. Even if you would have bought just before the elections on
that bullish daily orderblock presented in the previous lessons, your stop loss should have been below
the lowest low printed in the last 40 trading days. Wicks considered.

+OB

40 days look back

Remember to switch gears after the price goes in your favor 50% of the range.
• Use the 40 days before the equilibrium gets hit.
• Use 20 trading days after the equilibrium gets hit.

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