ICT MATERIAL REFERENCE ICT MATERIAL REFERENCE
V Version ersion 1.091.09 January 06, 2013 January 06, 2013 1 1
T
TABLE ABLE OF CONTENTSOF CONTENTS PSYCHOLOGY
PSYCHOLOGY
ICT TRADING PLAN ICT TRADING PLAN
TOP DOWN ANALYSIS (BIAS AND DIRECTION) TOP DOWN ANALYSIS (BIAS AND DIRECTION) DET
DETAILED TOP DOAILED TOP DOWN ANALWN ANALYSIS RYSIS RULESULES UNDERST
UNDERSTANDING COMMITMENT ANDING COMMITMENT OF TRADERS OF TRADERS (COT)(COT) MARKET PROFILES
MARKET PROFILES
SUPPORT / RESISTANCE AREAS SUPPORT / RESISTANCE AREAS AREAS OF CONFLUENCE AREAS OF CONFLUENCE FIBONACCI FIBONACCI OTE PATTERNS OTE PATTERNS SESSION TRADING SESSION TRADING PRICE ACTION PRICE ACTION
HIGH PROBABILITY PRICE PATTERNS HIGH PROBABILITY PRICE PATTERNS TRADING SWINGS
TRADING SWINGS
ICT TRADING CONCEPTS ICT TRADING CONCEPTS ICT TRADING METHODS ICT TRADING METHODS
INSIDERS TRADING METHODS INSIDERS TRADING METHODS
PROFESSIONALS USE OF INDICATORS PROFESSIONALS USE OF INDICATORS MISC VIDEO NOTES
MISC VIDEO NOTES TRADE RULES
TRADE RULES
RISK MANAGEMENT RISK MANAGEMENT
TRADING INSIDE THE RANGE TRADING INSIDE THE RANGE PETER’S ICT VIDEO NOTES PETER’S ICT VIDEO NOTES
ICT TERMS AND ABBREVIATIONS ICT TERMS AND ABBREVIATIONS TIONS
TIONS
2 2
T
TABLE ABLE OF CONTENTSOF CONTENTS PSYCHOLOGY
PSYCHOLOGY
ICT TRADING PLAN ICT TRADING PLAN
TOP DOWN ANALYSIS (BIAS AND DIRECTION) TOP DOWN ANALYSIS (BIAS AND DIRECTION) DET
DETAILED TOP DOAILED TOP DOWN ANALWN ANALYSIS RYSIS RULESULES UNDERST
UNDERSTANDING COMMITMENT ANDING COMMITMENT OF TRADERS OF TRADERS (COT)(COT) MARKET PROFILES
MARKET PROFILES
SUPPORT / RESISTANCE AREAS SUPPORT / RESISTANCE AREAS AREAS OF CONFLUENCE AREAS OF CONFLUENCE FIBONACCI FIBONACCI OTE PATTERNS OTE PATTERNS SESSION TRADING SESSION TRADING PRICE ACTION PRICE ACTION
HIGH PROBABILITY PRICE PATTERNS HIGH PROBABILITY PRICE PATTERNS TRADING SWINGS
TRADING SWINGS
ICT TRADING CONCEPTS ICT TRADING CONCEPTS ICT TRADING METHODS ICT TRADING METHODS
INSIDERS TRADING METHODS INSIDERS TRADING METHODS
PROFESSIONALS USE OF INDICATORS PROFESSIONALS USE OF INDICATORS MISC VIDEO NOTES
MISC VIDEO NOTES TRADE RULES
TRADE RULES
RISK MANAGEMENT RISK MANAGEMENT
TRADING INSIDE THE RANGE TRADING INSIDE THE RANGE PETER’S ICT VIDEO NOTES PETER’S ICT VIDEO NOTES
ICT TERMS AND ABBREVIATIONS ICT TERMS AND ABBREVIATIONS TIONS
TIONS
2 2
PSYCHOLOGY PSYCHOLOGY
Below is basi !sy"olo#y a $ra%er nee%s $o
Below is basi !sy"olo#y a $ra%er nee%s $o un%ers$an% be&ore be#innin# $oun%ers$an% be&ore be#innin# $o $ra%e' Ensure $"e &ollowin# one!$s are un%ers$oo% an% !lanne% ou$ be&ore $ra%e' Ensure $"e &ollowin# one!$s are un%ers$oo% an% !lanne% ou$ be&ore $ra%in#(
$ra%in#( 1'
1' )n%ers$an% $"e )n%ers$an% $"e asse$ lass you asse$ lass you are $ra%iare $ra%in# *i'e' %on+n# *i'e' %on+$ &ollow 20 !a$ &ollow 20 !airs a$irs a$ one
one 2'
2' T"in- in%e!en%eT"in- in%e!en%en$ly an% use n$ly an% use your own ayour own analysis *$urn nalysis *$urn o&& o&& $"e T$"e T. an%. an% ru/or si$es
ru/or si$es 3'
3' eelo! an% eelo! an% a%"ere $a%"ere $o your !erso your !ersonal $ra%e onal $ra%e !ro&ile an% !ro&ile an% o/!ressieo/!ressie $ra%e !lan
$ra%e !lan '
' )$ilie a)$ilie an% e4erisn% e4erise i/!eae i/!eable e5ui$y /ble e5ui$y /ana#e/en$ *ana#e/en$ *11'78 ris- 11'78 ris- !er!er $ra%e &or new, 28 &or e4!'
$ra%e &or new, 28 &or e4!' 7'
7' on+$ aon+$ assu/e $o ssu/e $o -now w"ere -now w"ere !rie will !rie will #o *i'e' #o *i'e' no !re%i$ionsno !re%i$ions, se$u!, se$u! your $ra%es !er your analysis in
your $ra%es !er your analysis in an$ii!a$ion IF $"e /ar-e$ /oes inan$ii!a$ion IF $"e /ar-e$ /oes in your %ire$ion
your %ire$ion 6'
6' T"in- in $eT"in- in $er/s o& !rr/s o& !robabili$y an% obabili$y an% no$ absolu$es, no$ absolu$es, $"ere a$"ere are no absolre no absolu$esu$es in $ra%in#
in $ra%in#
Trade like a Sniper Trade like a Sniper
Tra%ers w"o learn $o !i- an% "oose $"eir $ra%es li-e a Fore4 9sni!er: are Tra%ers w"o learn $o !i- an% "oose $"eir $ra%es li-e a Fore4 9sni!er: are $y!ially $"e ones w"o su
$y!ially $"e ones w"o suee%' ee%' TTra%ers w"o &ail ara%ers w"o &ail a$ li-e /a"ine#uns by$ li-e /a"ine#uns by s"oo$in# a$ eery$"in# $"ey see *oer$ra%in# an%;or $en% $o run
s"oo$in# a$ eery$"in# $"ey see *oer$ra%in# an%;or $en% $o run ou$ o&ou$ o& a//o */oney ery 5ui-ly'
a//o */oney ery 5ui-ly' 1'
1' LeLess ss is is MoMorere ○
○ <ai$ !a$ien$ly &or an$ii!a$e% $ar#e$ $o o/e in$o iew as a resul$<ai$ !a$ien$ly &or an$ii!a$e% $ar#e$ $o o/e in$o iew as a resul$ o& your own analysis'
o& your own analysis' ○
○ A$ only w"en your se$ o& ri$eria are /e$'A$ only w"en your se$ o& ri$eria are /e$' 3'
3' =i#=i#"er "er TTi/e Fi/e Frara/es/es ○
○ T"e "i#"er $"e $i/e&ra/e $"e T"e "i#"er $"e $i/e&ra/e $"e /ore reliable $"e $ar#e$,/ore reliable $"e $ar#e$,
in&or/a$ion is !resen$e%' Loo-in# a$ Mon$"ly or <ee-ly $i/e in&or/a$ion is !resen$e%' Loo-in# a$ Mon$"ly or <ee-ly $i/e &ra/es only %oes no$ #ie you
&ra/es only %oes no$ #ie you enou#" $ar#e$s $o $ra%e'enou#" $ar#e$s $o $ra%e' ○
○ Base /os$ o& your analysis o&& o& aily an% Base /os$ o& your analysis o&& o& aily an% =our "ar$s $o=our "ar$s $o i%en$i&y "i#" alue,
i%en$i&y "i#" alue, !robabili$y $ar#e$s'!robabili$y $ar#e$s' ○
○ <or- wi$" $"e lower $i/e&ra/es *1=our an% 17Min $o /ana#e<or- wi$" $"e lower $i/e&ra/es *1=our an% 17Min $o /ana#e $"e iru/s$anes aroun% $"e $ra%e'
$"e iru/s$anes aroun% $"e $ra%e' '
' >a>a$i$ienenee ○
○ Mos$ be#innin# $ra%ers lose /oney in $"e Mos$ be#innin# $ra%ers lose /oney in $"e /ar-e$s, an% /os$/ar-e$s, an% /os$ be#innin# $ra%e
be#innin# $ra%ers are alsrs are also any$"in# B)T o any$"in# B)T !a$ien$'!a$ien$'
3 3
○ For be#inner $ra%ers, &i#"$ $"e $en%eny $o /a-e yoursel& $ra%e beause you "ae $"e i%ea $"a$ $ra%in# will earn you /oney'
?nly s/ar$ $ra%in# wi$" a !lan an /a-e you /oney'
○ <ai$ &or on&ir/a$ion by /ul$i!le &a$ors be&ore @u/!in# in$o a $ra%e $o aoi% &alse /oes'
7' Fear an% ree%
○ Co/ba$ na$ural $en%enies o& &ear an% #ree% by %ou/en$in# an% %ili#en$ly &ollowin# a $ra%in# !lan'
○ Ma-e $ra%in# abou$ &ollowin# rules, !lans, an% ris- /ana#e/en$' N?T abou$ e/o$ions'
ICT TRADING PLAN
Eery ni#"$ a$ Mi%ni#"$ *New or- I alula$e new %ay >io$ >oin$s &or $"e Cable *B>;) an% !os$ $"e/ on /y "ar$s' I $"en no$e -ey su!!or$ an% resis$ane leels &ro/ Mon$"ly "ar$s %own $o &ie /inu$e "ar$s'
I %e$er/ine /y $ra%e bias &or $"e new session an% w"ile I %o loo- &or $ra%es in $"is %ire$ion, ID/ no$ /arrie% $o $"e no$ion $"e /ar-e$ /us$ ben% $o /y e4!e$e% %ire$ion''' I a/ &le4ible' T"e /ar-e$ is always ri#"$ an% I an ae!$ bein# wron# eery %ay as lon# as I an be willin# $o "an#e /y bias base% on urren$ !rie a$ion'
I& we are $ra%in# in $"e >io$ leels aboe $"e Cen$ral >io$ leel''' I %e/an% a lo$ &or buys' I%eally I &ous on $ra%es $"a$ s"ow a s"or$ $er/
oerbou#"$ on%i$ion an% !rie in $"e area a$ or aboe R1 or R2 &or s"or$s' T"is is een /ore !ower&ul i& $"e !reious %ay+s "i#" is sli#"$ly below $"e R1 or R2 leel'
In o$"er wor%s, I loo- &or &alse brea-ou$s aboe !reious %ay+s "i#"s a$ R1 an% or R2 leels' I use s$o!s an% li/i$s $o #e$ /e in a$ $"e leels an% use a 30 !i! s$o! or less ini$ially' As $"e $ra%e /a-es $"e s!rea% u! an% /oes in /y &aor, I loo- $o re%ue $"e ris- an% $i#"$en $"e s$o!' My e4i$s are
!re%e$er/ine% an% an be a$ /ar-e$ i& $"in#s #e$ "airy'
I use an%le &or/a$ions an% basi "ar$ !a$$erns $o %e$er/ine low ris- $ra%es an% $ar#e$s are $y!ially 2730 !i!s be&ore salin# ou$ so/e o& $"e !osi$ion' I #enerally $ry $o "ol% &or $"e aera#e %aily ran#e in !i!s be&ore e4i$in# &or $"e re/ainin# !or$ion'
T"e reerse an be sai% &or buys' I li-e s"or$ $er/ oersol% on%i$ions an% !rie in $"e 1 an% or 2 leels un%er $"e Cen$ral >io$' I li-e buyin#
!reious %ay+s low or a &alse brea- un%er $"is leel #ien $"e on%i$ions warran$ a boune'
I li-e $ra%in# a$ $"e &i#ure, $"e /ar-e$s li-e roun% nu/bers an% o!$ions #e$
$ri!!e% a$ $"ese !oin$s so $"ey are an easy $ra%e /ul$i!le $i/es !er /on$"' ou an $ra%e &or a liin# @us$ %oin# $"a$ as a /e$"o%, new $ra%ers
o "ere is w"a$ I will be %oin# $"is wee-(
I will s"or$ !reious %ay+s "i#"s an% buy !reious %ayDs lows' I& I #e$ s$o!!e% ou$ an% $"e /ar-e$ &in%s su!!or$ aboe $"e !reious %ay+s low, I will buy' I& $"e /ar-e$ &in%s resis$ane a$ $"e !reious %ay+s "i#" a&$er bein# !ene$ra$e% I will s"or$ i$'
I $a-e $wo $ra%es !er %ay /a4, i& I win on $"e &irs$ I lose s"o! an% ban- $"e wins' I& I lose on $"e &irs$ I $ry $o a!$ure $"e $ra%e as %esribe% aboe''' i& i$ loses $oo, I lose s"o!' No e/o$ions, no /uss no &uss'
I& a >io$ leel &in%s i$sel& a$ $"e Fi#ure, say Cable 1'71, I will loo- $o buy i$ a$ $"a$ !oin$ i& !rie "as $ra%e% %own $o i$ an% onersely &or !rie $ra%in# u! $o i$' I @us$ &oun% $"e Mee$>i!s'o/ si$e an% rea$e% an aoun$' I will %o /y bes$ $o "i#"li#"$ $ra%es wi$" $"is as i$ a!!aren$ly #ies real $i/e or lose $o i$ $ra-in#G
TOP DOWN ANALYSIS (BIAS AND DIRECTION)
1' T"e Basi To! own Analysis(
a' $u%y ) ollar In%e4 &or #eneral /ar-e$ %ire$ion
b' Re&er $o $"e C?T re!or$ an% no$e $"e Co//erial Tra%erDs ne$
!osi$ion
' Consi%er $"e Co//erial Tra%ers as $"e H/ar$ MoneyH $"us
$ry $o !osi$ion li-e $ra%es
%' Re&er $o an% /oni$or %aily $"e 2, 7, 10, an% 30 year no$e line
"ar$ oerlay
e' ?n $"e Treasury No$e oerlay, loo- &or &ailure swin#s $o !roi%e
lues $o $"e &u$ure %ire$ion o& $"e ) ollar
&' I& $"e yiel%s are %ro!!in# an% one o& $"e $"ree yiel%s &ail $o /a-e
a lower low, loo- &or ) ollar $o boune
#' I& yiel%s are risin# an% one o& $"e $"ree yiel%s &ails $o /a-e a
"i#"er "i#", loo- &or ) ollar $o sli%e lower
"' A bullis" ) ollar $ransla$es $o lower &orei#n urrenies i' A bearis" ) ollar $ransla$es $o "i#"er &orei#n urrenies @' Loo- a$ $"e /on$"ly, wee-ly, an% %aily "ar$s o& $"e urreny
!airs $ra%e%, no$in# -ey su!!or$ an% resis$ane leels
-' e$er/ine $"e /ar-e$ &low on $"e %aily, "our, an% 1"our
"ar$s ia swin# "i#"s an% lows
l' Try $o $ra%e in line wi$" $"e lon# $er/ *$o! %own %ire$ional bias
an% w"en $"e "our /ar-e$ &low is in syn' T"is will &il$er /any &alse si#nals an% assis$ us in "i#" !robabili$y $ra%e se$u!s
/' <"en $"ere is no lear %e&inable %ire$ion, re/ain &la$ an%
si%eline% un$il $"ere is a lear bias
3' Mar-e$ Bias
a' Bias is %e$er/ine% by swin#s, use &ra$als $o "el! 5ui-ly an%
isually i%en$i&y swin# areas on $"e %aily, "r, 1"r
b' <an$ $o "ae on&luene o& %aily;"r or "r;60/, or all 3 in
$er/s o& swin#s
' <"en swin# low &ra$al is &or/e%, $"e >A /us$ $ra%e below $"a$
low &ra$al $o $"e %ownsi%e &or /ar-e$ &low $o be onsi%ere% s"or$
%' I& !rie %oes no$ $ra%e below $"e low &ra$al &or/e%, $"en !rie
a$ion is lon#
e' ?nly onsi%er &ra$als $o $"e i//e%ia$e le&$ o& $"e !rie a$ion,
!rior &ra$als are no lon#er ali%
' =i#"er Ti/e Fra/e Analysis
a' =i#"er Ti/e Fra/e $o Lower
i' Mon$"ly C"ar$ I%en$i&y -ey R leels an% %ire$ion ii' <ee-ly C"ar$ I%en$i&y -ey R leels an% %ire$ion iii' aily C"ar$ I%en$i&y -ey R leels an% %ire$ion i' 1=our C"ar$ !en% /os$ o& your $i/e "ere learnin#
$en%enies o& "ourly
' 17Min C"ar$ Ti/e&ra/e w"ere /os$ $ren%s, !ro@e$ions,
ob@e$ies are /a%e' Tra%e /ana#e/en$ $i/e&ra/e
i' 7Min En$er $ra%es a$ 7/in
b' $o!s I& $"ere are $ra%es $"a$ re5uire /ore $"an a 30 !i! s$o!
loss, !robably le$ $"a$ $ra%e #o an% loo- &or ano$"er o!!or$uni$y $o en$er
' Res!e$able win# <"en loo-in# &or swin#s $o %raw Fib, e$',
loo- &or !rie /oes o& 0 !i!s or #rea$er
%' easonal Ten%enies
i' )
1' Ty!ially $o!s ou$ in $"e /i%%le o& February an%
%elines in$o /i%Mar"'
2' Las$ "al& o& Mar" is usually s$ron# an% $"en sells o&&
in A!ril *an% las$ bi$ o& Mar"'
3' Be#innin# $o /i%%le o& May is a s$ron# $i/e &or $"e
)'
' Mi%%le o& June usually /ar-s a s"or$$er/ "i#" an%
$"e ) %elines in$o $"e en% o& Au#us$'
7' Rally &ro/ be#innin# o& Au#us$ $o early $o /i%
e!$e/ber'
6' A&$er $"is $"e lines beo/e %ier#en$ /eanin# si#nals
are less lear an% no s$ron# seasonal !a$$erns are bla$an$ly !resen$'
ii' E)R
1' T"e Euro $y!ially &or/s a bo$$o/ in /i%February
an% $"en /oes "i#"er in$o /i%/ar"' A !ull ba-$"en ours ba-$"en we see ano$"er li/b in$o $"e en% o& A!ril'
2' Ano$"er low in June w"i" li/bs in$o la$e July;early
Au#us$'
3' )sually a %eline &ro/ early Au#us$ $o early
e!$e/ber'
' Early $o la$e e!$e/ber be#ins a bullis" $ren% &or
Euro $"rou#" year en% wi$" a !ullba- in ?$ober'
iii' B>
1' T"e >oun% $y!ially &or/s a bo$$o/ in early Mar"
an% $"en /oes "i#"er in$o $"e en% o& A!ril'
2' Early May $o /i%May is usually a bearis" $i/e' 3' A bo$$o/ $y!ially &or/s a#ain in /i%May we see a
/oe "i#"er in$o early Au#us$'
' >rie usually !ea- early in Au#us$ an% %eline in$o
/i%e!$e/ber'
7' >rie !ea-s in early Noe/ber an% $"e !rie sli%es
in$o /i%$ola$e Noe/ber'
6' >ries bo$$o/ in la$e Noe/ber an% rally in$o $"e en%
o& $"e year'
DETAILED TOP DOWN ANALYSIS RULES
1. Long Term Analysis Use US! " #eneral marke$ dire%$ion a. )K is a /easure o& $"e alue o& $"e )'' %ollar rela$ie $o
/a@ori$y o& i$s /os$ si#ni&ian$ $ra%in# !ar$ners' Bas-e$ in%e4 o& 6 urrenies *$"e euro, Ja!anese yen, Cana%ian %ollar, Bri$is" !oun%, we%is" -rona an% wiss &ran'
&. Ris- ?&& Eniron/en$ I& ) In%e4 is !oise% $o #o "i#"er
*la- o& ris- $olerane, &orei#n urrenies /ay see sellin# !ressure' E4a/!le( B>;) woul% /oe lower
%. Ris- ?n Eniron/en$ I& ) In%e4 is !oise% $o #o lower
*ris-$olerane, &orei#n urrenies /ay see buyin# !ressure' E4a/!le( B>;) woul% /oe "i#"er
'. COT (Commi$men$ o) Traders*
a. Consi%er $"e Co//erial Tra%ers as $"e 9/ar$ Money:'
E4a/ine a$ual !osi$ions o& $ra%ers an% $"e ne$ "an#e &ro/ !rior re!or$ *o//erials
&. Loo- &or e4$re/e ne$ !osi$ions in $"e %a$a, warn o& /a@or $ren%
"an#e
%. Co//erial sen$i/en$ is on$rary $o o//erial a$ii$y *i'e'
"e%#in#
i. <"en sen$i/en$ is bearis" w"ile o//erial "e%#es "ol%
lar#e ne$ lon#s, e4!e$ a rally $o un&ol% or $ren% "an#e lon#
ii. <"en sen$i/en$ is bullis" w"ile o//erial "e%#es "ol%
lar#e ne$ s"or$, e4!e$ siable %eline $o un&ol% in $"e /ar-e$
iii. <"en aboe is no$ in e&&e$, $ra%e $"e $ren% wi$" Lar#e
$ra%ers o//erials are "e%#ers on o$"er si%e o& !osi$ions, lar#e $ra%ers will "ae lar#es$ ne$ on a$ e4$re/e leels, loo- &or e4$re/es be$ween lar#e an% o//erial !osi$ions &or lue o& /ar-e$ "an#e
+. Bond ,ield Analysis " T-No$e Analysis a. eb$ In$eres$ Ra$es
i. Inreasin# in$eres$ ra$es, inrease% &orei#n urreny alue,
%erease% loal urreny'
ii. ereasin# in$eres$ ra$es, %erease% &orei#n urreny alue,
inrease% loal urreny'
&. Bon% iel% ier#ene Moni$or yiel%s o& 2, 7, 10, an% 30 year
no$es' I%en$i&y %ier#ene o& one or /ore o& $"e yiel%s as a "ar$ oerlay'
%. As yiel%s /oe "i#"er *or lower a$ so/e !oin$, 1 will &or/ a
&ailure si#n as one yiel% &ails $o !os$ "i#"er "i#"s or lower lows on $"e line "ar$, $"is is si#nal on&ir/a$ion $"a$ )K !oise% $o "an#e %ire$ion
. /arke$ Flo - Fra%$als
a. win# =i#"s - I%eal se$u! is "ain# $wo lower "i#" an%les on
ea" si%e o& $"e Fra$al =i#" an%le' Mos$ reen$ win# =i#" is $"e >io$ >oin$ an% /us$ be brea"e% $o $"e u!si%e be&ore
Mar-e$ Flow $urns u!'
&. win# Lows I%eal se$u! is "ain# $wo "i#"er low an%les on
ea" si%e o& $"e Fra$al Low an%le' Mos$ reen$ win# Low is $"e >io$ >oin$ an% /us$ be brea"e% $o $"e %ownsi%e be&ore
Mar-e$ Flow $urns %own'
%. ?nly $"e /os$ reen$ win# =i#" ; Low are u$ilie% &or
%e$er/inin# Mar-e$ Flow wi$" ol% win#s %isre#ar%e%
d. T"ere is s$ron# a#ree/en$ o& Mar-e$ Flow i& aily, =our, an%
1 =our $i/e&ra/es are in line' Fous on =our Mar-e$ Flow &or onsis$eny'
e. Fra$als by %e&ini$ion an be i%en$i&ie% &ro/ $"e "i#"er $i/e
&ra/e on %own $o ea" lower $i/e &ra/e' ou s"oul% be able $o &in% an ?TE a$ ea" $i/e &ra/e %own $o $"e lower ones' *July 12 >ro Tra%ers Club 32(00
. F2$2res Con$ra%$s
a. Loo- a$ &u$ure on$ra$ losin# an% w"e$"er $"e lea% /on$"
lose% "i#"er $"an 2n% /on$" *i'e' $"is /on$"+s on$ra$ lose% "i#"er $"an ne4$ /on$"+s on$ra$
&. Ba-war%a$ion w"en 2n% /on$" loses lower $"an lea% /on$",
in%ia$es $"a$ !re/iu/ is no lea% /on$" an% $"ere&ore $"ere is s$ron# %e/an% &or $"e on$ra$
%. I& a "u#e %i&&erene in lose !ries, an in%ia$e a "an#e in
!rie /oe/en$$"e &ur$"er $"e !rie %i&&erene in $"e &u$ures on$ra$ $"e /ore !rie will li-ely "an#e $owar%s $"e &u$ure !rie
3. Open 4n$eres$ (O4*
a. T"is is $"e $o$al nu/ber o& lon#s an% s"or$s /oin# in$o $"e
&u$ure+s ins$ru/en$
&. I& inrease in ?I, in%ia$e o//erials inreasin# ne$ s"or$s,
w"en ?I %ereases, o//erials re%uin# ne$ s"or$s *i'e' !rie will #o u!
%. ?I use&ul in $"e &ollowin# ase( wan$ $o see /ar-e$ $ra%e in
%ire$ion, #o in$o onsoli%a$ion, $"en see ?I %ro! or rise aroun% 178 su%%enly %urin# onsoli%a$ion
i. I& /ar-e$ $ra%es u!, onsoli%a$es, an% ?I %ro!, !robabili$y
/ar-e$ will /oe u!
ii. I& /ar-e$ $ra%es %own, onsoli%a$es, an% ?I inreases,
!robabili$y /ar-e$ will /oe %own *as o//erials are a%%in# $o "e%#e
d. Canno$ use ?I /oe by i$sel&
5E, 6O4NTS7
Tra%e in line wi$" $"e lon# $er/ *To! own %ire$ional bias an% w"en
$"e "our Mar-e$ Flow is in syn'
<"en $"ere is no lear %e&inable %ire$ion, we re/ain &la$ an%
si%eline% un$il $"ere is a lear bias'
UNDERSTANDING COMMITMENT OF TRADERS (COT)
1. 8y $e COT :epor$;
I$ is %i&&iul$ $o 5uan$i&y olu/e $ra%e% a$ ea" !rie leel sine $"e urreny /ar-e$ is %een$ralie% an% $"ere is no sin#le e4"an#e $"a$ $ra-s all $ra%in# a$ii$ies' In !lae o& olu/ebase% $ra%in#, /any $ra%ers loo- $o $"e Co//o%i$y Fu$ures Tra%in# Co//issionDs *CFTC Co//i$/en$s o& Tra%ers *C?T re!or$ &or /ore in&or/a$ion on
!osi$ionin# an% olu/e' I& use% wisely, $"e C?T %a$a an be a !re$$y s$ron# #au#e o& !rie a$ion' T"e aea$ "ere is $"a$ e4a/inin# $"e %a$a an be $ri-y, an% $"e %a$a release is %elaye% as $"e nu/bers are !ublis"e% eery Fri%ay &or $"e !reious Tues%ayDs on$ra$s, so $"e
in&or/a$ion o/es ou$ $"ree business %ays a&$er $"e a$ual $ransa$ions $a-e !lae'
'. :eading $e COT :epor$
=ere is a 5ui- lis$ o& so/e o& $"e i$e/s a!!earin# in $"e re!or$ an% w"a$ $"ey /ean(
● Commercial esribes an en$i$y inole% in $"e !ro%u$ion,
!roessin#, or /er"an%isin# o& a o//o%i$y, usin# &u$ures on$ra$s !ri/arily &or "e%#in#
● Long Report Inlu%es all o& $"e in&or/a$ion on $"e Hs"or$
re!or$H, alon# wi$" $"e onen$ra$ion o& !osi$ions "el% by $"e lar#es$ $ra%ers
● Open Interest T"e $o$al nu/ber o& &u$ures or o!$ions on$ra$s
no$ ye$ o&&se$ by a $ransa$ion, by %eliery or e4erise
● Noncommercial (Speculators) Tra%ers, su" as in%ii%ual
$ra%ers, "e%#e &un%s an% lar#e ins$i$u$ions, w"o use &u$ures /ar-e$ &or s!eula$ie !ur!oses an% /ee$ $"e re!or$able re5uire/en$s se$ &or$" by $"e CFTC
● Nonreportable Positions Lon# an% s"or$ o!enin$eres$
!osi$ions $"a$ %onD$ /ee$ re!or$able re5uire/en$s se$ &or$" by $"e CFTC
● Number of Traders T"e $o$al nu/ber o& $ra%ers w"o are
re5uire% $o re!or$ !osi$ions $o $"e CFTC
● Reportable Positions T"e &u$ures an% o!$ion !osi$ions $"a$ are
"el% aboe s!ei&i re!or$in# leels se$ by CFTC re#ula$ions
● Short Report "ows o!en in$eres$ se!ara$ely by re!or$able an%
nonre!or$able !osi$ions
● Spreading Measures $"e e4$en$ $o w"i" a nono//erial
$ra%er "ol%s e5ual lon# an% s"or$ &u$ures !osi$ions
Ta-in# a loo- a$ $"e sa/!le re!or$, we see $"a$ o!en in$eres$ on Tues%ay June O, 2007, was 1P3,O0O on$ra$s, an inrease o& 3,213 on$ra$s &ro/ $"e !reious wee-' Nono//erial $ra%ers or s!eula$ors were lon# 22,P3P on$ra$s an% s"or$ 0,O10 on$ra$s /a-in# $"e/ ne$ s"or$' Co//erial $ra%ers, on $"e o$"er "an%, were ne$ lon#, wi$" 1P,P36 /ore lon# on$ra$s $"an s"or$ on$ra$s *127,2 107,30Q' T"e "an#e in o!en in$eres$ was !ri/arily ause% by an inrease in o//erial !osi$ions as nono//erials or
s!eula$ors re%ue% $"eir ne$s"or$ !osi$ions'
<. Tree 6rimary 6remises
a. Fli!s in /ar-e$ !osi$ionin# /ay be aura$e $ren%in# in%ia$ors' &. E4$re/e !osi$ionin# in $"e urreny &u$ures /ar-e$ "as
"is$orially been aura$e in i%en$i&yin# i/!or$an$ /ar-e$ reersals'
%. C"an#es in o!en in$eres$ an be use% $o %e$er/ine s$ren#$" o&
$ren%'
+. COT " Commi$men$ o) Traders
a' Co//erials Mos$ in&or/e% #rou! an% !roi%e oun$er$ra%e
!osi$ion &or $"e /a@ori$y o& o!en in$eres$ in $"e /ar-e$' T"ese are $"e 9/ar$ Money:'
i' $an%ar% Co//erial Au/ula$ion >"ase(
ii' Co//erials are $"e lar#es$ s"or$ sellers in $"e /ar-e$!lae
beause $"ey are "e%#in# $"eir business nee%s'
iii' Co//erials on$rol $"e lon# $er/ $ren% base% on 12
/on$" or year e4$re/es'
1' Co/in# &ro/ 12 /on or yr e4$re/e ne$ s"or$,
weDre in sell !ro#ra/'
2' Co/in# &ro/ 12/on or yr e4$re/e ne$ lon#, weDre
in buy !ro#ra/'
b' Lar#e !eula$ors Lar#e &ir/ $ra%ers, &un%s, an% "i#" leel
!ria$e s!eula$ors w"o &or $"e /os$ !ar$ $ren% $ra%e' enerally on $"e ri#"$ si%e o& $"e /ar-e$
' /all !eula$ors Ma@ori$y o& $ra%ers' T"ey are $"e 9u/b
Money:' Consis$en$ly wron# on $"e si%e o& $"e /ar-e$'
6' Open 4n$eres$ in COT a$a
a. ?!en in$eres$ $en%s $o inrease w"en new /oney is !oure% in$o
$"e /ar-e$, /eanin# $"a$ s!eula$ors are be$$in# /ore
a##ressiely on $"e urren$ /ar-e$ %ire$ion' T"us, an inrease in $o$al o!en in$eres$ is #enerally su!!or$ie o& $"e urren$ $ren%, an% $en%s $o !oin$ $o a on$inua$ion o& $"e $ren%, unless sen$i/en$ "an#es base% on an in&lu4 o& new in&or/a$ion'
&. Conersely, oerall o!en in$eres$ $en%s $o %erease w"en
s!eula$ors are !ullin# /oney ou$ o& $"e /ar-e$, s"owin# a "an#e in sen$i/en$, es!eially i& o!en in$eres$ "as been risin# be&ore'
%. In a s$ea%y u!$ren% or %own$ren%, o!en in$eres$ s"oul% *i%eally
inrease' T"is i/!lies $"a$ lon#s are in on$rol %urin# an u!$ren%, or s"or$s are %o/ina$in# in a %own$ren%' ereasin# o!en
in$eres$ seres as a !o$en$ial warnin# si#n $"a$ $"e urren$ !rie $ren% /ay be la-in# real !ower, as no si#ni&ian$ a/oun$ o& /oney "as en$ere% $"e /ar-e$'
d. T"ere&ore, as a #eneral rule o& $"u/b, risin# o!en in$eres$ s"oul%
!oin$ $o a on$inua$ion o& $"e urren$ !rie /oe, w"e$"er in an u!$ren% or %own$ren%' elinin# or &la$ o!en in$eres$ si#nals $"a$ $"e $ren% is wanin# an% is !robably near i$s en%'
e. <"en o!en in$eres$ rises or %ro!s 5ui-ly, li-ely !rie /oes in
$"e o!!osi$e %ire$ion'
). Conen$ional >rie Rela$ions"i!(
i. ?!en In$eres$ )!, !rie u! is bullis" ii. ?!en In$eres$ )!, !rie %own is bearis" iii. ?!en In$eres$ own, !rie u! is bearis"
?!en In$eres$ own, !rie %own is bearis"
iv.
MARKET PROFILES
1' Consolida$ion :ange 6ro)ile
a' Consoli%a$ion Ran#e >ro&ile )n%ers$an% w"ere you are in $"e
/oe $"a$ /ay alrea%y e4is$' I& in bearis" /ar-e$ eniron/en$, %urin# a onsoli%a$ion ran#e you an i%en$i&y &alse brea-ou$s $o $ra%e a#ains$ or o!!or$uni$ies $o en$er s"or$ wi$" an ?TE'
b' Es$ablis" >osi$ion urin# Consoli%a$ion >erio%s o&
onsoli%a$ion are $y!ially $"e o!!or$uni$y $o es$ablis" your !osi$ion in an$ii!a$ion o& w"ere $"e $ren% will #o' Loo- &or
$i/es an%les;bars are s/all $o en$er $ra%es'
' Tra%e En$ry on ?!!osin# Can%le ou wan$ $o en$er $ra%es
w"en $"e bar;an%le #oes a#ains$ $"e /ar-e$ !ro&ile %ire$ion' I& !ro&ile is lon#, en$er $ra%es on a %own an%le'
%' ICT >re&erene ICT !re&ers no$ $o &ollow $ra%es in$o new
$erri$ory as i$ usually $ries $o o/e ba- %own $o $"e ran#e' Base $ra%in# on -nown leels'
2' Breako2$ - Valid = False 6ro)ile 3' Trending 6ro)ile
' :e>ersal 6ro)ile T"e !ro&ile will &or/ a sell %ay %urin# a bullis"
Asian, Lon%on an% !ossibly N session bu$ &ail $o "ol% i$s rally an% reerse lower' I$ will &or/ a buy %ay %urin# a bearis" Asian, Lon%on an% !ossibly N session bu$ will &ail $o "ol% i$s lower !rie sli%e an% reerse "i#"er' Ty!ially N?, LC an% la$e N session will !os$ $"e reersal'
a' Sing on
i' win# %own $o a -ey wee-ly an%;or %aily su!!or$ an%
brea-$"rou#" be&ore $urnin# u! an% reersin#'
ii' Reersal /ay brea- in$o new session "i#"s be&ore i$ se$$les
in$o a $ra%in# ran#e &or a new $ra%in# %ay'
b' Sing Up
i' win# u! $o a -ey wee-ly an%;or %aily resis$ane an%
brea-$"rou#" be&ore re$rain# %own'
ii' Reersal /ay brea- in$o new session lows be&ore i$ se$$les
in$o a $ra%in# ran#e &or a new $ra%in# %ay'
!' Sear% = es$roy Tren%in# i%eways Mar-e$( Ban-s will loo- $o
lear ou$ s$o!s $o #ain a%%i$ional li5ui%i$y'
a' A ran#e &or/s a&$er swin# low an% swin# "i#"' u!!or$ an%
Resis$ane areas are &or/e% in $"e ran#e' Mar-e$ will loo- $o $a-e ou$ $"e lon#s by %i!!in# below $"e es$ablis"e% su!!or$ leel o& $"e ran#e'
b' Ne4$ $"e /ar-e$ will loo- $o $a-e ou$ $"e s"or$s by s"oo$in# ba-
u! aboe $"e resis$ane leels'
' ealers will $"en $ar#e$ $"e s$o!s aroun% $"e swin# !oin$s an%
s"oo$ aboe !reious "i#"s $o $ri##er $"e s$o!s o& $"e s"or$s'
%' Tra%ers $"in-in# $"a$ $"e !reious /oe &inally si#nals a buy
brea-ou$ will $"en be &oole% as $"e %ealers will loo- $o $a-e ou$ $"e s$o!s aroun% $"e !reious swin# low !oin$'
SUPPORT / RESISTANCE AREAS
1. S2ppor$ (emand*( T"is is an area w"ere buyers are li-ely #oin# $o
oerw"el/ sellers ausin# $"e /ar-e$ $o #o u!' <"en a /ar-e$ &alls %own $o a !rior low, i$ is /ore si#ni&ian$ $"an w"en a /ar-e$ &alls %own $o a !rior "i#"'
2. :esis$an%e (S2pply*7 T"is is an area w"ere sellers are li-ely #oin# $o
oerw"el/ buyers, ausin# $"e /ar-e$ $o #o %own' <"en a /ar-e$ $ra%es u! $o a !rior "i#", i$ is /ore si#ni&ian$ $"an w"en a /ar-e$ $ra%es u! a !rior low'
<. u!!or$ an beo/e resis$ane an% resis$ane an beo/e su!!or$ i&
!ries brea- $"rou#" $"ese areas'
+. Con&luene o& R areas is a -ey one!$ $o $"e $ra%e en$ry' T"e
lis$in#s below are onsi%ere% -ey R areas $o onsi%er &or
on&luene' T"ere is no ri#"$ or wron# on&luene se$u!, $"e /ore
on&luene you "ae $"e "i#"er $"e !robabili$y $"e $ra%e ou$o/e' T"e easies$ way $o &in% ey leels $o an$ii!a$e rea$ions in $"e &u$ure is $o be#in wi$" $"e lon# $er/ "ar$s an% wor- your way %own $o $"e lowes$
$i/e&ra/e you in$en% $o $ra%e &ro/'
. Na$2ral S=: Le>els
a. =i#" ; Lows base% o&&( 12 /on$"s rollin# Suar$erly Mon$"ly
<ee-ly aily "r
i. /on$ly Car$s No$e $"e "i#"s $"e /ar-e$ $urne% a$ an%
$"e lows $"e /ar-e$ $urne% a$' T"ese leels are $"e obious leels $"a$ any 5ui- #lane woul% reeal' o no$ s$rain your eyes an% was$e $i/e won%erin# i& a s!ei&i leel is a ey leel''' i$ is beause i$ is obious' T"ese /ar-e$
$urnin# !oin$s are obious''' %o no$ oer $"in- $"e/'
ii. 8eekly Car$s T"e lon# $er/ Mon$"ly ey R leels
will a!!ear on $"ese "ar$s as well as new ey Leels $"e Mon$"ly $i/e&ra/e was no$ so a!!aren$ $o see'
iii. aily Car$s T"is is w"ere $"e ban-s wor- &ro/' All $"e
lon#er $er/ Mon$"ly an% <ee-ly R leels are $o be !lo$$e% on $"is aily $i/e &ra/e' T"e aily "ar$ will !resen$ i$s own ey R leels an% $"ese nee% no$in# as
well'
iv. 4n$raday Time 6eriods *"our, 1"our, an% 17/in
T"ese will s"ow e4ellen$ rea$ion leels $o an$ii!a$e $ra%es $o se$ u! on &ar in $"e &u$ure an% $"is is $"e -ey $o !ro!er $ra%e sele$ion an% %eelo!in# !a$iene' No$e $"e
ey R leels on your in%ii%ual in$ra%ay "ar$s you li-e $o use'
&. ession =i#"s an% Lows *Asia /os$ i/!or$an$
i. Asian Session se$s $"e !ara/e$ers &or $"e &ollowin#
Lon%on session
1. Be#ins( O!/ ET or 12a/ MT '. En%s( a/ ET or Pa/ MT
<. Allow u! $o 1 "our be&ore an% a&$er $"ese $i/es
ii. London Session se$s $"e !ara/e$ers &or $"e &ollowin# New
or- session
1. Be#ins( 3a/ ET or Qa/ MT '. En%s( 12!/ ET or 7!/ MT
<. Allow u! $o 1 "our be&ore an% a&$er $"ese $i/es iii. Ne ,ork Session se$s $"e !ara/e$ers &or $"e &ollowin#
new $ra%in# session+s $ra%in#
1. Be#ins( Qa/ ET or 1!/ MT '. En%s( 7!/ ET or 10!/ MT
<. Allow u! $o 1 "our be&ore an% a&$er $"ese $i/es c. 4n$raday Fra%$al */oney &low an% ITL or IT= )se $"e 17
/inu$e as a #o $o "ar$ &or /oni$orin# s"or$ $er/ swin#s &or
lower ris- en$ries an% &ine $unin# s$o! !lae/en$ on o!en !osi$ions'
d. Trend Line Analysis *"annels, obious $ren%s . 4mplied S=: Le>els
a. Fi& Le>els
i. Re$rae/en$ ii. E4$ensions &. 6i>o$ 6oin$s
i. Mon$"ly >io$s ii. <ee-ly >io$s iii. aily >io$s 3. O$er S=: Le>els
a. >reious ay Close;?!en
&. Ins$i$u$ional >rie Leels *I>L Ins$i$u$ional Tra%ers /ay
%e$er/ine $i/in# o& $ra%es aroun% 100 !i! !rie leels *0'20, 0'70, 0'Q0, e$'
%. Tra%in# $o a !rior low or "i#" d. aily AR "i#";low
5E, 6O4NTS7
T"e /ore $i/es a su!!or$ an% resis$ane area is 9"i$:, $"e /ore
si#ni&ian$ i$ is'
?nly $"e /os$ reen$ win# =i#" ; Low are u$ilie% &or %e$er/inin#
Mar-e$ Flow wi$" ol% win#s %isre#ar%e%'
AREAS OF CONFLUENCE
1. /arke$ S$r2%$2re As /ar-e$s %eline an% /a-e lower lows, ea"
new swin# lower in !rie is an"ore% or %ire$ly rea$in# $o ano$"er swin# "i#"er or lower' Eery swin# in !rie "as an e5ual oun$er swin# i$ is un&ol%in# &ro/ an% a$$e/!$in# $o &ul&ill'
a' Any "or$ Ter/ Lon# *TL $"a$ "as a "i#"er TL on bo$" si%es
o& i$ is onsi%ere% an In$er/e%ia$e Ter/ Low *ITL' Any ITL $"a$ "as a "i#"er ITL on bo$" si%es o& i$ is onsi%ere% a Lon# Ter/ Low *LTL'
b' Any "or$ Ter/ =i#" *T= $"a$ "as a lower T= on bo$" si%es
o& i$ is onsi%ere% an In$er/e%ia$e Ter/ =i#" *IT=' Any IT= $"a$ "as a lower IT= on bo$" si%es o& i$ is onsi%ere% a Lon# Ter/ =i#" *LT='
' Tra%e !ri/arily on $"e si%e o& $"e $ren%' Lon# on bullis" an%
s"or$ on bearis"'
2. Sing 6oin$s Mar-e$ %elines an% /a-es lower lows on ea" new
swin# lower in !rie, $"e !rie is 9an"ore%: or %ire$ly rea$in# $o ano$"er swin# lower
a' Ea" swin# in !rie "as e5ual oun$er swin#
b' >A nee%s $o /oe a$ leas$ 0 !i!s $o be onsi%ere% a swin# *on
) a$ leas$
' Mar-e$ $ra%es &ro/ s"or$ $er/ lows *TL $o s"or$ $er/ "i#"s
*T= ba- $o new TL' A$ TL an% T=, >A will %eelo! /ar-e$ s$ru$ures
i' In$er/e%ia$e $er/ low *ITL( TL $"a$ "as "i#"er TL on
ei$"er si%e
ii' In$er/e%ia$e $er/ "i#" *IT=( T= $"a$ "as lower T= on
bo$" si%es
iii' Lon# $er/ low *ITL( ITL $"a$ "as "i#"er ITL on ei$"er
si%e
i' Lon# $er/ "i#" *IT=( IT= $"a$ "as lower IT= on bo$"
si%es
%' win#s( loo- a$ swin#s an% un%ers$an% eery /oe is an"ore%
$o !reious low or "i#" an% >A beo/es lear i$ is !io$in# on a 708 basis o& $"e !reious lows an% "i#"s
i' I& swin# /oes 70 !i!s, a&$er onsoli%a$ion i& i$ on$inues
"i#"er an% brea"es $"e swin# "i#", an$ii!a$e ano$"er 70 !i!s /oe a%%e% $o $"e low %urin# onsoli%a$ion
ii' I& >A &ails $o $ra%e aboe $"e !reious swin# "i#",
an$ii!a$e a %eline o& 70 !i!s &ro/ $"e "i#" /a%e on /os$ reen$ rally;onsoli%a$ion
3' Session ?ig@Lo $"e "i#";low o& $"e 3 %i&&eren$ sessions' Asia is
/os$ i/!or$an$ an% $"e "i#";low usually se$s $"e %ay+s R &or Lon%on an% )'
a. ession Ti/e Asia O!/ ET P!/ ET *12 MT Lon%on 3
a/ 12 !/ ET *P1O MT N Qa/ 7!/ ET *1220 MT
&. <"en %rawin# $"e "i#";low o& Asia, use $"e "ar% bo%ies an% no$
$"e wi-s' ?nly use wi-s i& a an%le is a s$ron# "a//er'
5. :ange Epansion @ Con$ra%$ion aily ran#es $y!ially swin# &ro/
lar#e ran#e %ays $o s/all ran#e %ays an% ie ersa'
5. 4ns$i$2$ional 6ri%e Le>el (46L* >rie leels w"ere o//erials
usually en$er $"e /ar-e$' T"ey are 00, '20, '70, 'Q0 loa$e% be$ween eery 100 !i! /ar-in# *e'#' 1'0100, 1'0120, 1'0170, 1'01Q0
a. T"e Fi#ure Ter/ use% by $ra%ers $o re&er $o a 100 !oin$;!i!
leel or een a /i% !oin$ $o $"e Fi#ure' E4a/!le, 1'7770, 1'770, an% 1'7370'
&. Basi Bi# Fi#ure Mo%el
i. >rie an $ra%e $o an% boune;re$rae &ro/ a bi# &i#ure
leel'
ii. Loo- &or on&luene o& su!!or$in# leels, ?TE, e$'
Always $a-e $"e Fi#ure in li#"$ o& w"ere we s$an% in $"e oerall /ar-e$ &low, s$ru$ure, an% $ren%'
%. An$ii!a$e wee!s An$ii!a$e !rie swee!in# "i#"er an% lower
$"an $"e Fi#ure $o $a-e ou$ s$o!s aboe an% below $"e leel'
. Trading $o 6rior Lo or ?ig7
d. ?n Lon#, w"en /ar-e$ &alls %own $o !rior low, $"is /oe is
/ore si#ni&ian$ $"an w"en /ar-e$ &alls %own $o !rior "i#"
e. ?n "or$, w"en /ar-e$ $ra%es u! $o !rior "i#", $"is /oe is /ore
si#ni&ian$ $"an w"en /ar-e$ $ra%es u! $o !rior low
). Fibs raw &ibs usin# $"e swin#s, swee$ s!o$ is $"e 62OP8 leel
wi$" O28 bein# /os$ o!$i/al
g. Ran#e Cyle Calula$ions
i. Mar-e$ yles in lar#e an% s/all ran#es, as %aily s$ar$s $o
lose near !rior lose i$ is a s/all ran#e
ii. For swin# "i#" ran#es, oun$ %ay;bars be$ween !reious
swin# "i#"s an% /ul$i!ly by 1'2Q, $"en oun$ &orwar% $"a$ ' "oul% in%ia$e w"ere a new "i#" will un&ol%
iii. For swin# lows, oun$ %ays be$ween !rior lows an%
/ul$i!ly by 1'2Q
#' 6i>o$ 6oin$s Ty!ially, w"en !rie is $ra%in# aboe en$ral !io$, i$Ds
$i/e $o sell' <"en $ra%in# below, i$Ds $i/e $o buy' I& !rie "as no$ #one below en$ral !io$ &or $"e %ay, i$ /ay a$ as su!!or$' I$ /ay a$ as
resis$ane i& !rie "as no$ #one aboe en$ral !io$ &or $"e %ay' aily 6i>o$s
)se !io$s as a $ool $o &in% an$ii!a$e% leels $o $ra%e on in $"e &u$ure' rawn by "an% or in%ia$or &ro/ 12a/ ET' Cen$ral !io$ a$s as an an"or &or >A' >A a$s li-e a rubber ban% i$ /oes away &ro/ en$ral !io$ an% $"en !ulls ba- $owar%s i$' =oweer, li-e a rubber ban%,
one $ren% $a-es o&& i$ will sna! an% &ly' sed best in range trading periods!
a. Buy Uone Area below en$ral !io$ &. ell Uone Area aboe en$ral !io$
%. ou an buy in a sell one i& you are $ra%in# be$ween !io$s
o!!ose% $o $ren% $ra%in#
$' OTE " Op$imal Trade En$ry - ee! Fib Re$rae/en$ T"e V62 an%
VOP re$rae/en$ leels beause $"ey are al/os$ a$ $"e &ull 1008
re$rae/en$' ?TE woul% be rou#"ly $"e 708 leel be$ween $"e 62 an% OP leels'
FIBONACCI
Tra%ers use $"e "ibonacci Retracement leels as !o$en$ial s2ppor$ and resis$an%e areas' ine so /any $ra%ers wa$" $"ese sa/e leels an% !lae buy an% sell or%ers on $"e/ $o en$er $ra%es or !lae s$o!s, $"e su!!or$ an%
resis$ane leels $en% $o beo/e a sel&&ul&illin# !ro!"ey'
Tra%ers use $"e "ibonacci #$tension leels as pro)i$ $aking le>els' A#ain, sine so /any $ra%ers are wa$"in# $"ese leels $o !lae buy an% sell or%ers $o $a-e !ro&i$s, $"is $ool $en%s $o wor- /ore o&$en $"an no$ %ue $o sel&
&ul&illin# e4!e$a$ions'
T"e Fibonai $ool wor-s bes$ w"en $"e /ar-e$ is $ren%in#' T"e i%ea is $o #o lon# *or buy on a re$rae/en$ a$ a Fibonai su!!or$ leel w"en $"e /ar-e$ is $ren%in# u!, an% $o #o s"or$ *or sell on a re$rae/en$ a$ a
Fibonai resis$ane leel w"en $"e /ar-e$ is $ren%in# %own' In or%er $o &in% $"ese re$rae/en$ leels, you "ae $o &in% $"e reen$ si#ni&ian$ win# =i#"s an% win#s Lows' T"en, &or %own$ren%s, li- on $"e win# =i#" an% %ra# $"e ursor $o $"e /os$ reen$ win# Low' For u!$ren%s, %o $"e o!!osi$e' Cli- on $"e win# Low an% %ra# $"e ursor $o $"e /os$ reen$ win# =i#"'
1' >reious T"ree ays Re&erene $"e !reious $"ree %ays w"en $ryin#
$o %e$er/ine !oin$s $o %raw Fibs a$ $"e =i#"s;Lows'
2' ession =i#"s Lows ou an use a ession =i#";Low w"en %rawin#
Fibs' No$ @us$ only %aily "i#"s;lows' U6T:EN
O8NT:EN
1' Tar#e$in# )sin# Fib Re$rae/en$
a' )!si%e ?b@e$ie( >ull Fib &ro/ reen$ swin# "i#" $o $"e swin#
low' Firs$ $a-e !ro&i$ woul% be aroun% $"e 100 leel an% $"en $"e 200 leel'
b' ownsi%e ?b@e$ie( >ull Fib &ro/ reen$ swin# low $o $"e
swin# "i#"' Firs$ $a-e !ro&i$ woul% be aroun% $"e 100 leel an% $"en $"e 200 leel'
' Always loo- $o $"e le&$ o& !rie $o i%en$i&y o$"er -ey !rie leels
w"i" /ay oini%e wi$" $"e $ar#e$e% !rie ob@e$ie'
2' Tar#e$in# )sin# Fib E4!ansion
a' )!si%e ?b@e$ie( >ull &ro/ $"e buy !oin$ on $"e swin# low
$owar%s $"e !reious swin# "i#"' T"is will s"ow $"e e4!ansion leels'
b' ownsi%e ?b@e$ie( >ull &ro/ $"e sell !oin$ on $"e swin# "i#"
$owar%s $"e !reious swin# low' T"is will s"ow $"e e4!ansion leels'
3' >rolon#e% Tar#e$in# )se Fib Re$rae/en$ an% ins$ea% o& !ullin#
&ro/ "i#" $o low an% $"e "i#" si$s on $"e 100 leel, raise $"e Fib $ool so $"a$ $"e "i#" si$s on $"e 70 leel' ouDll see $"e e4$ension leels /oe "i#"er &or a lon#er ran#e !rie ob@e$ie in a $ren%in# "i#"er /ar-e$'
OTE PATTERNS
1. S$andard OTE
' OTE 6a$$ern " Long( on+$ rea$ $o !rie /oe/en$s,
an$ii!a$e' An$ii!a$e an% $ra%e in$o -ey su!!or$ leels' Buy as !rie #oes %own an% a!!roa"es $"e swin# low' I& bar Hwi-sH,
you an /oe s$o!s or $a-e $ra%es o&& $o brea- een'
' An$ii!a$e !rie $o #o %own $o su!!or$ leel an% boune
u!' T"e $ou" o& $"e su!!or$ is 1'
i' Boune u! $o a s"or$ $er/ "i#" a$ !oin$ 2' An$ii!a$e $ra%e
$o #o ba- %own an% re$es$ su!!or$'
ii' Loo- $o en$er lon# in $"e HHwee$ !o$HH *Be$ween 62 an%
OP leels VO0'7
iii'Firs$ $a-e !ro&i$ !oin$ woul% be w"en $ra%e rea"es !oin$
2 !rie or 20 !i!s'
i4' >ro$e$ie s$o! loss is 10 !i!s /ini/u/ below !oin$ 1' ' OTE 6a$$ern " Sor$( on+$ "ase !rie a$ion' I& !rie #oes
u!, %on+$ assu/e i$ will always /oe u!' An$ii!a$e an% $ra%e s"or$ in$o -ey resis$ane leels' ell as !rie #oes u! an%
a!!roa"es $"e swin# "i#"' I& bar Hwi-sH, you an /oe s$o!s or $a-e $ra%es o&& $o brea- een'
4' I%en$i&y, an$ii!a$e !rie $o #o %own $o resis$ane leel an% 33
re$raes %own' T"e $ou" o& $"e resis$ane is 1'
4i' Re$rae %own $o a s"or$ $er/ low a$ !oin$ 2' An$ii!a$e
$ra%e $o #o ba- u! an% re$es$ resis$ane'
4ii' Loo- $o en$er s"or$ in $"e Hwee$ !o$H *Be$ween 62 an%
OP leels VO0'7
4iii'Firs$ $a-e !ro&i$ !oin$ woul% be w"en $ra%e rea"es !oin$
2 !rie or 20 !i!s'
4i'>ro$e$ie s$o! loss is 10 !i!s /ini/u/ aboe !oin$ 1'
'. 4CT :e)le%$ion 6a$$ern - Te An$i-OTE
a. B2y Eample( ouDll "ae a si#ni&ian$ low an% you an$ii!a$e
$"e /oe is $o "ase s$o!s below $"e leel' In or%er $o
a!!ro4i/a$e $"e !rie leel $o en$er, %raw a Fib &ro/ low $o "i#" an% loo- $o #o lon# a$ $"e 100 leel' <"en loo-in# $o $"e le&$, i$ will a!!ear $o be an ?TE Re&le$ion'
ou an !ull $"e Fib &ro/ $"e "i#" $o line u! $"e !reious low a$ $"e ?TE leel an% youDll see "ow $"e reen$ low a$ $"e 100 leel was s!o$ on'
b. Sell Eample( ouDll "ae a si#ni&ian$ "i#" an% you an$ii!a$e
$"e /oe is $o "ase s$o!s aboe $"e leel' In or%er $o
a!!ro4i/a$e $"e !rie leel $o en$er, %raw a Fib &ro/ reen$ "i#" $o low an% loo- $o #o s"or$ a$ $"e 100 leel'
ou an !ull $"e Fib &ro/ $"e low $o line u! $"e !reious "i#" a$ $"e ?TE leel an% youDll see "ow $"e reen$ "i#" a$ $"e 100 leel was s!o$ on' <"en loo-in# $o $"e le&$, i$ will a!!ear $o be an ?TE Re&le$ion'
<. ?idden OTE
ou an %raw Fibs &ro/ o$"er i/!or$an$ areas o& on&luene li-e reen$ "i#"s;lows or session "i#"s lows $o &in% an ?TE'
EI?N TRADING
1. Asian Session - T"e Asian Ran#e %e$er/ines $"e %ire$ional bias or
li-ely %ire$ion &or $"e /a@ori$y o& $"e Lon%on N sessions' <"ere $"e /oney is !osi$ione% in Asian %i$a$es $"e !ro&i$ release on $"e
$ra%in# %ay' Ty!ially $ra%es oun$er $"e N session %ire$ion in a orre$ie boune'
a. Asian ill Uone
i. 6(00!/ 10(00!/ ET is $y!ial Asian ill Uone &or
$ra%es' ill Uone is $"e $i/e o& %ay w"ere youD% i%eally loo- &or a $ra%e'
ii. Asian ession is be$$er &or !osi$ion $ra%in# in lon# $er/
!osi$ions'
&. <"i!las" "or$ Ca$a!ul$ Buy
i. un%ay ?!en a! =i#"er &ro/ Fri%ayDs Close
ii. <ai$ &or ini$ial a$$e/!$s $o on$inue "i#"er an% wa$" MT
&or Ne#a$ie or Bearis" ier#ene'
iii. "or$ near un%ay ?!enin# an% loo- &or e4i$ a$ $"e Fri%ay
Closin# Ran#e'
i>. For bullis" eniron/en$s you an buy $"e MT >osi$ie or
Bullis" ier#ene insi%e an% or a$ $"e Fri%ay losin# ran#e u!on #a! &illin#'
>. Ta-e !ro&i$s a$ 20 !i!s an% se$ re/ainin# !or$ion $o
brea-een an% loo- &or Lon%on on$inua$ion in$o N session'
%. <"i!las" Buy Ca$a!ul$ "or$
i. un%ay ?!en a! Lower &ro/ Fri%ayDs Close
ii. <ai$ &or ini$ial a$$e/!$s $o on$inue lower an% wa$" MT
&or >osi$ie or Bullis" ier#ene'
iii. Buy near un%ay ?!enin# an% loo- &or e4i$ a$ $"e Fri%ay
Closin# Ran#e'
i>. For bearis" eniron/en$s you an s"or$ $"e MT Ne#a$ie
or Bearis" ier#ene insi%e an% or a$ $"e Fri%ay losin# ran#e u!on #a! &illin#'
>. Ta-e !ro&i$s a$ 20 !i!s an% se$ re/ainin# !or$ion $o
brea-een an% loo- &or Lon%on on$inua$ion in$o N session'
d. Lay Asian ession ession %oesn+$ $y!ially a$$e/!$ $o
brea-in$o new "i#"s ; lows'
e. Asian ession Buy Ty!ially $ra%es oun$er $"e N session
%ire$ion in a orre$ie boune'
i. Asian ession rarely sees &ollow $"rou#" on new lows' ii. ?n "i#"er $i/e&ra/es li-e <ee-ly, aily, =our, an% or
60 /inu$e "ar$s, no$e ey u!!or$ Leels'
iii. An$ii!a$e ?TE Buys $o &or/ in Asian ession w"en !rie
$ra%es %own in$o u!!or$'
i>. Ta-e !ro&i$s a$ ?TE leels &or N win# an% leae !or$ion
&or on$inua$ion in$o Lon%on'
). Asian ession ell Ty!ially $ra%es oun$er $"e N session
%ire$ion in a orre$ie boune'
i. Asian ession rarely sees &ollow $"rou#" on new "i#"s' ii. ?n "i#"er $i/e&ra/es li-e <ee-ly, aily, =our, an% or
60 /inu$e "ar$s, no$e ey Resis$ane Leels'
iii. An$ii!a$e ?TE ells $o &or/ in Asian ession w"en !rie
$ra%es u! in$o Resis$ane'
i>. Ta-e !ro&i$s a$ ?TE leels &or N win# an% leae !or$ion
&or on$inua$ion in$o Lon%on'
'. London Open
a. London Open 5ill one See$ Spo$ " 37<0am - 7<0am #/T
&. Long Oppor$2ni$y - :aid S$ops $en Soo$ )or S2ppor$
i. oal is $o %ial in on $"e Low o& $"e %ay $o #o lon# &ro/' 1. Firs$ ob@e$ie a&$er Lon%on ?!en is $o rai% Asian
=i#" s$o!s'
'. A&$er s$o!s are $a-en ou$, !rie /oes lower $es$in#
-ey su!!or$ leels ?TE'
<. Fro/ Lon%on ?!en $o Close or 1Q(00 MT, $"e
aily Ran#e is !u$ in an% you s"oul% no$ use $i#"$ $railin# s$o!s'
ii. In Bullis" on%i$ions you /ay leae a !or$ion o& $"e $ra%e
on beyon% 1Q(00 MT &or s"or$ $er/ oerni#"$ $ra%es $"a$ an !ay well wi$" only 10208 o& ori#inal !osi$ion'
%. Sor$ Oppor$2ni$y - :aid S$ops $en Soo$ )or :esis$an%e i. oal is $o %ial in on $"e =i#" o& $"e %ay $o s"or$ &ro/'
1. Firs$ ob@e$ie a&$er Lon%on ?!en is $o rai% Asian
Low s$o!s'
'. A&$er s$o!s are $a-en ou$, an%les /oe "i#"er $o $es$
-ey resis$ane leels ?TE'
<. Fro/ Lon%on ?!en $o Close or 1Q(00 MT, $"e
aily Ran#e is !u$ in an% you s"oul% no$ use $i#"$ $railin# s$o!s'
ii. In Bearis" on%i$ions you /ay leae a !or$ion o& $"e $ra%e
on beyon% 1Q(00 MT &or s"or$ $er/ oerni#"$ $ra%es $"a$ an !ay well wi$" only 10208 o& ori#inal !osi$ion'
d. London Open
i. urin# a "i#"er TF onsoli%a$ion, we wai$ &or $"e %aily
ran#e $o on$ra$' Moni$or $"e "ourly "ar$s &or
onsoli%a$ion near -ey ;R leels' T"e i%eal se$u! woul% lea% $o ran#e e4!ansion w"i" /eans $"a$ $"e !reious %ay is usually a s"or$ ran#e %ay' )se $"e "i#";low o& !reious %ay $o /easure ?TE'
ii. T"e se$u! usually ours after a %aily &ra$al &or/s a$ a -ey
leel' Loo- &or on&luene o& u!!or$ Resis$ane,
wee-ly !io$s an% !ro@e$ion $ar#e$s' Nu/ber $"e bars o& $"e =ea% "oul%ers !a$$ern &ro/ 1 $o 7, 3 bein# $"e "ea%' In a !er&e$ worl% %ays 3 are s"or$ ran#e %ays an% I woul% use Bar as $"e #reen li#"$ $o an$ii!a$e ran#e e4!ansion on %ays 7 6'
iii. T"e se$u! ours /ore &re5uen$ly %urin# a "i#"er TF ran#e
e4!ansion' In $"is eniron/en$ sen$i/en$ is a /a@or
a$alys$ &or &re5uen$ L? se$u!s' I use a 30 >erio% <illia/s 8R on $"e =r "ar$ $o #au#e s"or$ $er/ sen$i/en$'
iv. >rie is relen$lessly reaching &or a -ey leel' Loo- &or
on&luene o& u!!or$ Resis$ane, wee-ly !io$s an% !ro@e$ion $ar#e$s' I& !rie re$raes %urin# L?, $o re$es$ a
R leel, $"e run is usually s"or$ lie% an% a swi&$ /oe $owar%s our $ar#e$ an be e4!e$e% a$ N?'
>. urin# a s/aller TF ran#e e4!ansion, I use $"e 70 !erio%
8R on $"e 30Min "ar$ as a sen$i/en$ /e$er' Also use% $o #au#e oun$er$ren% e4"aus$ion an% -ey o&& o& ;R role reersals'
<. London Close
a. London Close 5ill one
i. Lon%on Close a$ 11a/ ET A!!ro4' ii. ill Uone is be$ween 10a/ 1!/ ET'
iii. enerally $"e /ar-e$ will loo- $o enoun$er !ro&i$ $a-in#
aroun% 11a/ ET as Lon%on $ra%ers lose $"eir $ra%in# %ay an% N $ra%ers are $a-in# lun"'
&. To ominan$ Trade Types
i. Coun$er Tren% Tra%e( Sui- 1720 !i! sal! usin# 7/in
"ar$ &or s"or$$er/ /ar-e$ e4!osure'
ii. Lon%on Close Tren% Tra%e( Tren% $ra%e en$ry $o #e$ in syn
wi$" $"e %aily $ren% or lon# $er/ !rie swin#'
%. A>erage aily :ange
i. I%en$i&y 7, 10, an% 20 %ay AR $o #e$ an i%ea o& $"e !i!s
$ra%in# in $"e urren$ eniron/en$'
ii. )se 7 %ay AR aroun% N ?!en w"i" is w"en $"e
/ar-e$ "as HH!rie% inHH $"e "i#" or low o& $"e %ay' A%% $"e 7 %ay AR $o $"e "i#"es$ "i#" an% lowes$ low $o AR "i#"s an% lows'
d. Op$imal Trade En$ry
i. >' $o! is !lae% 10 !i!s beyon% $"e =i#" or Low on Fib' ii. Firs$ ob@e$ie is 1720 !i!s !ro&i$'
iii. Las$ !ro&i$ is $a-en a$ $"e =i#" or Low o& $"e swin#' i>. T"e En$ry >oin$ is $"e 62OP8 leels or be$ween $"e/
*VO0'7
e. London Close Co2n$er-Trend B2y
i. Re&erene $"e ) ollar In%e4 an% %e$er/ine i& i$ "as /e$
i$s 7 %ay Aera#e aily Ran#e
ii. e$er/ine i& $"e !air $ra%e% "as /e$ i$s 7 %ay AR' iii. >rior $o $"e Lon%on Close ill Uone win%ow %e$er/ine
"i#"er $i/e&ra/e <ee-ly, aily, "our, 1"our R leels'
i>. No$e $"e !reious 3 %ays "i#"s an% lows, ession
=i#"s;Lows, an% >io$ >oin$s
>. As !rie %ro!s %own in$o $"e AR leel an% ill Uone,
loo- a$ $"e 7/in lows &or a boune o&& o& one o& $"e leels'
>i.
>i. A&$er $"e boune, !ull a Fib oer A&$er $"e boune, !ull a Fib oer $"e s"or$ $er/ u!swin#$"e s"or$ $er/ u!swin#
an% onsi%er buyin# $"e !air a$
an% onsi%er buyin# $"e !air a$ ?TE on $"e 7/in "ar$'?TE on $"e 7/in "ar$'
>ii.
>ii. Ris- 10 !i!s un%er $"e low use% &or $"e Fib an% $a-e !ro&i$sRis- 10 !i!s un%er $"e low use% &or $"e Fib an% $a-e !ro&i$s
on 1720 !i!s an% "ol% &or $"e "i#" o&
on 1720 !i!s an% "ol% &or $"e "i#" o& $"e Fib base% swin#'$"e Fib base% swin#'
>iii.
>iii.I%eally, be$$er $ra%es &or/ on swin#s /easurin# a$ leas$I%eally, be$$er $ra%es &or/ on swin#s /easurin# a$ leas$
178208 o& $"e %aily ran#e o& $"e $ra%in# %ay' 178208 o& $"e %aily ran#e o& $"e $ra%in# %ay'
).
). London Close Co2n$er-Trend SellLondon Close Co2n$er-Trend Sell i.
i. Re&erene $"e ) ollar In%e4 an% %e$er/ine i& i$ "as /e$Re&erene $"e ) ollar In%e4 an% %e$er/ine i& i$ "as /e$
i$s 7 %ay Aera#e aily Ran#e i$s 7 %ay Aera#e aily Ran#e
ii.
ii. e$er/ine i& $"e !air $ra%e% "as /e$ i$s 7 e$er/ine i& $"e !air $ra%e% "as /e$ i$s 7 %ay A%ay AR'R' iii.
iii. >rior $o $"e Lon%on Close >rior $o $"e Lon%on Close ill Uone win%ow %e$er/ineill Uone win%ow %e$er/ine
"i#"er $i/e&ra/e <ee-ly, aily, "our, 1"our R "i#"er $i/e&ra/e <ee-ly, aily, "our, 1"our R leels'
leels'
i>
i>.. No$e $"e !re No$e $"e !reious 3 %ays "i#"s an% ious 3 %ays "i#"s an% lows, essionlows, ession
=i#"s;Lows, an% >io$ >oin$s =i#"s;Lows, an% >io$ >oin$s
>.
>. As !rie rises u! in$o $"e AR leel an% ill Uone, loo- a$As !rie rises u! in$o $"e AR leel an% ill Uone, loo- a$
$"e 7/in lows &or a
$"e 7/in lows &or a boune o&& o& one o& $"e boune o&& o& one o& $"e leels'leels'
>i.
>i. A&$er $"e boune, !ull a Fib oer A&$er $"e boune, !ull a Fib oer $"e s"or$ $er/ %ownswin#$"e s"or$ $er/ %ownswin#
an% onsi%er sellin# $"e !air a$ ?TE on
an% onsi%er sellin# $"e !air a$ ?TE on $"e 7/in "ar$'$"e 7/in "ar$'
>ii.
>ii. Ris- 10 !i!s aboe $"e "i#" use% &or $"e Fib an% $a-eRis- 10 !i!s aboe $"e "i#" use% &or $"e Fib an% $a-e
2 2
!ro&i$s on 1720 !i
!ro&i$s on 1720 !i!s an% "ol% &or $!s an% "ol% &or $"e low o& $"e "e low o& $"e Fib base%Fib base% swin#'
swin#'
>iii.
>iii.I%eally, be$$er $ra%es &or/ on swin#s /easurin# a$ leas$I%eally, be$$er $ra%es &or/ on swin#s /easurin# a$ leas$
178208 o& $"e %aily ran#e o& $"e $ra%in# %ay' 178208 o& $"e %aily ran#e o& $"e $ra%in# %ay'
g.
g. London Close Se$2pLondon Close Se$2p i.
i. urin# a "i#"er TF onsoli%a$ion, we wai$ &or $"e %ailyurin# a "i#"er TF onsoli%a$ion, we wai$ &or $"e %aily
ran#e $o e4!an%' Moni$or $"e "ourly "ar$s &or ran#e ran#e $o e4!an%' Moni$or $"e "ourly "ar$s &or ran#e
e4!ansion $owar%s -ey R leels' T"e i%eal se$u! woul% e4!ansion $owar%s -ey R leels' T"e i%eal se$u! woul% lea% $o ran#e on$ra$ion w"i" /eans $"a$ we are o/in# lea% $o ran#e on$ra$ion w"i" /eans $"a$ we are o/in# o&& a L? !ro&i$ release'
o&& a L? !ro&i$ release'
ii.
ii. T"e se$u! usually ours %urin#T"e se$u! usually ours %urin# trend exhaustiontrend exhaustion a$ a -ey a$ a -ey
leel' Loo- &or on&luene o& R, wee-ly !io$s an% leel' Loo- &or on&luene o& R, wee-ly !io$s an% !ro@e$ion $ar
!ro@e$ion $ar#e$s' LC se#e$s' LC se$u!s are oun$er $u!s are oun$er $ren% $ra%es$ren% $ra%es' )se' )se $"e 30 !erio% <illia
$"e 30 !erio% <illia/s 8R on /s 8R on $"e "r "ar$ an% $ry $o $"e "r "ar$ an% $ry $o s$i- s$i-$"e wee-ly "i#";low on Bar 3'
$"e wee-ly "i#";low on Bar 3'
iii.
iii. urin# a "i#"er TF ran#e e4!ansion $"is se$u! is urin# a "i#"er TF ran#e e4!ansion $"is se$u! is no$no$
reo//en%e%' reo//en%e%'
+.
+. TTrading rading $e Ne ,$e Ne ,ork Sork Sessionession a.
a. N N ?!en ill U?!en ill Uone wee$ !oone wee$ !o$ 11($ 11(00a/ 13(00 M00a/ 13(00 MTT &.
&. Ran#e E4!ansion /all ran#e or series o& s/all ran#eRan#e E4!ansion /all ran#e or series o& s/all ran#e
%ays;bars will su##es$ an u!o/in# lar#e $ra%in# ran#e %ay;bar' %ays;bars will su##es$ an u!o/in# lar#e $ra%in# ran#e %ay;bar'
%.
%. Close >robabili$yClose >robabili$y i.
i. Q08 o%%s o& $"e lose bein# a$ or near $"e "i#" or low &orQ08 o%%s o& $"e lose bein# a$ or near $"e "i#" or low &or
$"e %ay;bar' $"e %ay;bar'
ii.
ii. I& in a bearis" senario, VO78 o%%s I& in a bearis" senario, VO78 o%%s $"a$ $"e o!en is $"a$ $"e o!en is near $"enear $"e
"i#" an% $"e lose is near $"e low' "i#" an% $"e lose is near $"e low'
d.
d. N N ?!en Eas?!en Easies$ session $o $ries$ session $o $ra%e' Lon%on "i#";la%e' Lon%on "i#";low alrea%y iow alrea%y inn
!lae' !lae'
e.
e. I%eal En$ryI%eal En$ry i.
i. For "or$s, ell on a /oe u!'For "or$s, ell on a /oe u!' ii.
ii. For Lon#s, buy on a /oe %own'For Lon#s, buy on a /oe %own' ).
). e$$in# a $o! w"en i%eal leel is e$$in# a $o! w"en i%eal leel is $oo /any !i!s <"en $oo /any !i!s <"en $"e i%eal$"e i%eal
s$o! is $oo /any !i!s away &ro/ $"e 2030 !i! s$o! leel, #o $o s$o! is $oo /any !i!s away &ro/ $"e 2030 !i! s$o! leel, #o $o s/aller $i/e&ra
s/aller $i/e&ra/es an% i%en$i&y a s$o! /es an% i%en$i&y a s$o! leel on w"a$ !rie isleel on w"a$ !rie is $ellin# you on $"e
$ellin# you on $"e s/aller leel's/aller leel'
g.
g. N N ession Tession Tra%es No$es(ra%es No$es( i.
i. e$ in syn wi$" w"a$ $"e e$ in syn wi$" w"a$ $"e "i#"er leel $i/e&ra/es are"i#"er leel $i/e&ra/es are
$ellin# you' Ma@ori$y o& $"e $i/e $"e
$ellin# you' Ma@ori$y o& $"e $i/e $"e $ra%es will &ollow $"a$$ra%es will &ollow $"a$ $ren%'
$ren%'
ii.
ii. I& loo-in# a$ %aily $i/e&ra/e an% /ar-e$ o!ene% near $"eI& loo-in# a$ %aily $i/e&ra/e an% /ar-e$ o!ene% near $"e 3 3
%ay+s "i#"s an% "as $ren%e% lower, weD% loo- &or /ore %ay+s "i#"s an% "as $ren%e% lower, weD% loo- &or /ore s"or$s $o !us" $o
s"or$s $o !us" $o a %ayDs lowa %ayDs low' ' Lon%on ession rea$e% $"eLon%on ession rea$e% $"e %ayDs "i#"'
%ayDs "i#"'
Lon%on Close oini%in# wi$" N ession lun" $i/e allowe% &or a oun$er Lon%on Close oini%in# wi$" N ession lun" $i/e allowe% &or a oun$er $ra%e o!!or$uni$y' Ta-e !ro&i$ a$ $"e 3Q8 re$rae/en$ leel o& $"e &ull %ays $ra%e o!!or$uni$y' Ta-e !ro&i$ a$ $"e 3Q8 re$rae/en$ leel o& $"e &ull %ays ran#e'
ran#e'
iii.
PRICE ACTION
8a$ is 6ri%e A%$ion;
.ery basially, >rie A$ion is eery$"in# $"a$ $ra%ers are %oin# an% "ow $"ey are be"ain# !lae% on$o a "ar$ &or o$"ers $o analye' >rie A$ion is eery$"in# $"a$ !rie is %oin# an% "as %one on a Fore4 !air or $ra%in#
ins$ru/en$ &or a $ra%er $o see on a "ar$' All !rie re!resen$s on a "ar$ is w"a$ $ra%ers "ae %one an% "ow $"ey "ae be"ae% #ien a er$ain
si$ua$ion' For e4a/!le !rie #e$s $o a su!!or$ area an% !rie bounes "i#"er' T"is is $ra%ers buyin# u! a$ a leel in $"e /ar-e$ w"ere $"ey $"in- su!!or$ is'
Ano$"er e4a/!le o& !rie a$ion a$ wor- on a "ar$ is a >in Bar' >rie #e$s $o a er$ain leel in $"e /ar-e$ be&ore re@e$in# $"a$ leel an% sna!!in# ba-$"e oba-$"er way' ?n a "ar$ we see a >in Bar bu$ $"a$ >in Bar was /a%e u! o& $ra%ers all aroun% $"e worl% buyin# or sellin# a$ $"e sa/e area an% re@e$in# "i#"er or lower !ries' T"is is a /e$"o% $"a$ "as been aroun% &or a lon# $i/e an% will be aroun% &or a lon# $i/e $o o/e' )nli-e o$"er rubbis"
in%ia$ors or bla- bo4 sys$e/s >rie A$ion $ra%in# %oes no$ s$o! wor-in# w"en $"e /ar-e$ %yna/is "an#e'
?o %an e 2se 6ri%e A%$ion $o pro)i$;
Tra%ers an% "u/ans are ery "abi$ual an% will %o $"e sa/e #ien $"e sa/e iru/s$anes' As $ra%ers we an be#in $o reo#nie !a$$erns $"a$ &or/ on $"e "ar$' T"ese !a$$erns will $en% $o re!ea$ $"e/seles an% "ae $"e sa/e ou$o/es' No $wo $ra%es will eer be $"e sa/e an% no ou$o/es will eer /a$" a !reious $ra%e+s, bu$ by !er&e$in# $"ese "i#" !robabili$y !rie a$ion !a$$erns we an be#in $o !lae $ra%es $"a$ oer $i/e will #ie us an e%#e in $"e /ar-e$
Tra%ers an learn an% !er&e$ $"ese $ra%in# !a$$erns an% be#in $o i/!le/en$ s$ra$e#ies $"a$ will oer $i/e #ie $"e/ an e%#e on $"e /ar-e$' An e%#e is si/!ly so/e$"in# $"a$ #ies a $ra%er a be$$er "ane $"an 70;70 o& !lain# a winnin# $ra%e'
HIGH PROBABILITY PRICE PATTERNS
1. Te oDi - For/ w"en o!en an% lose are ir$ually e5ual' o@i alone
is neu$ral' Bullis" or bearis" bias is base% on !ree%in# !rie a$ion an% &u$ure on&ir/a$ion' Bes$ use% as on&ir/a$ion o& an$ii!a$e% a$ion, "an#es in %ire$ion'
2. Te ?ammer aka 6in&ar - For/ w"en !rie /oes si#ni&ian$ly
lower a&$er $"e o!en, bu$ rallies $o lose well aboe $"e in$ra%ay low' <or-s in $"e o!!osi$e %ire$ion *bullis" an% bearis"' I%eally li-e seein# $"ese !a$$erns a$ ?TE or a$ -ey u!!or$ Resis$ane Leels'
3. Te Teeer Lo - Loo-s li-e onseu$ie Bullis" >inbars' In%ia$es
$"a$ !rie "el% $wie a$ $"e e4a$ sa/e leel' ellers no$ able $o !us" !rie lower' T"e lon#er $"e wi-s $"e be$$er' >re&erene is $o see $"e !a$$ern a$ =our an% 1=our "ar$s a$ "i#"er $i/e &ra/e R leels'
I& ao/!anies MT ier#ene, loo- $o $ra%e /a4i/u/ ris-e4!osure
4. Te Teeer ?ig - Loo-s li-e onseu$ie Bearis" >inbars'
In%ia$es $"a$ !rie "el% $wie a$ $"e e4a$ sa/e leel' Buyers no$ able $o !us" !rie "i#"er' T"e lon#er $"e wi-s $"e be$$er' >re&erene is $o
