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Video Transcript:
So,
we came into this morning after the accumulation–manipulation–distribution
start in yesterday’s Fed meeting. We ended the day right at the beginning of
distribution, and distribution began in Asia, expanded in London, and we only
really had one decent move in New York. We had this manipulation down, getting
SMT with ES, which allowed us to go from this internal one-hour plenty—one-hour
gaps—into external and extend the distribution move. It looks like it’s coming
to an end now since we’ve got SMT here at the highs. How did that look in real
time? This was the move lower here, and this was the SMT. This is the
one-minute chart. We did inverse this one minute, but we were coming into this
one minute, so the best inverse fair value gap was the three-minute. It was
pretty clear. We inversed it strongly. We had a nice pullback. It didn’t get
stopped out, but it definitely would have been close, even if you got long at
the close. Technically, your stop has to be below this level because this is
the body of the third candle, which makes this a little over 1.25:1
risk-to-reward. As we discussed in the meeting, one way to get a slightly
better risk-to-reward is to take a bit on the close of the three, but also
analyze what you see on the one minute, because sometimes the one minute will
show if a pullback is warranted. Initially, we had a BPR here, which called for
a pullback, but one thing I did see was this breaker block, which coincided
with a fair value gap. ICT calls this the unicorn model. When price comes back
into this breaker block, which is a failed order block, it acts as support,
which it did here. So, you could have entered at the top on the close, or when
price came back to retest the fair value gap or the breaker block. Either way,
it was anywhere from 1.25:1 up to around 3.5:1 risk-to-reward if you got in at
the top of the breaker block. The five-minute chart created an order block down
here that never got retested, and the 15-minute made an order block that we’re
just retesting now. Price moved quickly, so this could actually be an area to
take action from and a launching spot for price to move higher and take out
these highs. You’ve got a fair value gap, an order block, and a change of state
of delivery area. The reason I marked that is because on the seven-minute
chart, there’s that clear one-candle move, which we can use as an order block.
It’s more of a zone. Like I explained in the meeting, it’s not a perfect
science with order blocks—that’s why we use them only as confluence. This would
have been an area to look for action this afternoon or early morning if price
hit it, but it didn’t. As you can see, though, we are getting a decent late-day
reaction, so we’ll see if we can build on that.
Another
trade I wanted to point out was these two right here. This is a cool trade
because, as a pattern trade, it’s exactly what we look for—the inverse fair
value gap “B” formation. Where did this come from? Not from anything to the
left or all-time highs, but from the break above the initial balance. When we
formed the initial balance, we broke above. Sometimes, when we break above the
initial balance and then get an inverse, that signals a retracement. So this
trade was the break of the initial balance and an inverse, which indicated a
pullback. From 786, it was over a 50-point move down. Decent pullback, and then
here we had a move into this area, which was an SMT with ES. There was an
inverse fair value gap here, and this was another unicorn model: a breaker
block failed with a fair value gap overlapping it. Price came back to mitigate
that before moving higher. You could have entered either on the close of the
inverse fair value gap or on the order block unicorn model, but either way
price hit those highs.
Hey everyone, it’s Dale here. I hope you enjoyed the video. If you’d like to trade alongside me and our team of prop firm funded traders every day, click the link below the video and hop aboard. We look forward to trading with you.
