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My Forex Notes-Wps Office

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228 views31 pages

My Forex Notes-Wps Office

Uploaded by

Feni Justine
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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MY FOREX NOTES

1) MARKET STRUCTURE

a) What is a Market structure?

This are simply the highs and lows. The key is knowing which highs and

lows to use and finding a practical method of finding them.

b) Why is market structure important?

It is the foundation of your analysis, and is involved in almost every

price action trading concept, yet most people do it completely wrong.

c) Structure ( Manipulation Vs Displacement)


 Manipulation legs fail to "displace" or push rapidly BEYOND
structure
 Displacement legs DISPLACE or push rapidly through structure
 Manipulation = reversal
 Displacement = continuation
 Pair with other concepts for higher probability than when used
alone.

d) Impulse structure

 Impulse structure is structure that forms with displacement and


fair value gaps (FVG)
 HTF impulses = many LTF impulses
 Impulses can be used to confirm HTF zones
 Don't pay attention to structure that isn't an impulse (MVD)
 All trends come to an end, and there is a way to gauge when
impulses are likely to return

e) Premium & Discount

 If trading is a business, candles are your product


 Do you want to sell your product for a premium or a discount?
 Do you want to buy your product for a premium or a discount?
 0.5 of impulse = fair market value
 Above fair market value = premium
 Below fair market value = discount
 Reversals are likely to happen in premium or discount in context
of the previous price leg

2) FAIR VALUE GAP, FVG

 FVG =3 candle formation with expansive middle candle causing a


gap between the wicks of candles 1 and 3
 FVGs show displacement in the market and a desire to move
towards a further target
 FVGs can be used for everything from higher time frame levels,
directional bias, trade entries, and stop losses
 Some FVGs have a higher probability of continuing than others.
a) Displacement

 Displacenment = Continuation
 Manipulation = Reversal
 Displacement is confirmed with FVGs
 How the market reacts to highs and lows tells youeverything
IRL > ERL

 Price is always moving to a high, low, or fvg


 External Range Liquidity (ERL) = High/Low
 Internal Range Liquidity (IRL) = FVG
 Lower time frame (LTF) tells you when the move begins
 Market Maker Models are always present
b) Consistency Theory

One- Sided

 Consistent candles
 All in same direction
 Displacement
 High probability to Continue
Two sided

 Indecisive candles
 Not all in same direction
 Lack of displacement
 Low probability to continue
c) Structural gaps

BSG = Break Structure Gap

 BSG are the most important FVGs as they are the


 life blood of a trend
 BSG must follow consistency rule
Failed BSG

 If a BSG fails, look for the opposing swing point as a target


 Failure = opposing candle closes through, or inverts
 Can be used as an opposing level after inversion
Inflection Points

 Inflection points are found by extending out the level of structure


that was broken
 Inflection point + BSG = key level
 Should see displacement away from IP if price is going to continue
d) iFVG = inverted fair value gap

High probability iFVGs occur:

 At two-sided gaps
 At BSGs,
 After sweeps of liquidity
 When iFVG is confirmed, look for opposing liquidity
 Can be used for entry or bias
3) LIQUIDITY

What is Liquidity?

Liquidity is the ease at which an asset can be bought or sold. We look for liquidity
beyond highs or lows, as there are stop losses placed using these levels. On a
chart we view this using tools such as highs and lows or fair value gaps.

Why is liquidity important?

 In a bullish market, you buy from sellers, under lows, at sell-side liquidity.
 In a bearish market, you sell to buyers, above highs, at buy-side liquidity.
 This is how the large market participants operate, and so should you.

Daily bias (ERL/IRL)

 Price is always moving to a high, low, or fvg


 External Range Liquidity (ERL) = High/Low
 Internal Range Liquidity (IRL) = FVG
 Lower Time Frame tells you when the move begins
 Market Maker Models are always present.

4) ORDER BLOCKS

What are Order Blocks?

Order blocks are candles formed just before expansive moves in price
that can later be used as support or resistance. In a bullish market,
price should find support on down close candles. In a bearish market,
price should find resistance on up close candles

Why is it important?

Order blocks can be used for many purposes, such as entering trades,
trailing stop losses, determining directional bias, and more.

ORDER BLOCKS

 The Order Block represents a critical price range or candle where


institutions engage in buying or selling against retail trends,
capitalizing on liquidity provided by the masses.
 Market makers strategically manipulate the market to their
advantage, ultimately pushing it back to these order blocks to
manage their losses effectively.
 Closing long positions generates selling pressure, while closing
short positions generates buying pressure. Order blocks
materialize only when the prevailing trend persists.

An Orderblock is activated once it is engulfed by the opposing side of


the market's candles
Examples of order blocks
MANIPULATION BLOCKS

 A manipulation block is the candle that purges liquidity. In the


situation that there is a candle after a candle that wicked the
liquidity, the candle that closes above/below the liquidity level
(previous high or low) is the Manipulation Block.
 This is called a manipulation block because it is the big players
manipulating price to stop out the masses, then continuing the
true market move.
 A Manipulation Block is activated when the market reverses and
displaces through the Manipulation Block.
Examples of manipulation blocks
5) BREAKER BLOCKS

What are Breaker Blocks?

Breaker blocks are powerful levels in price that occur before raids on
liquidity, which is the backbone of the trading methodology l I'm
teaching you

Why are they important?

Breaker blocks often occur at key times of the day when we're
expecting liquidity sweeps, and can be used to enter high probability
trades. They're especially powerful when linked with fair value gaps.

BREAKER BLOCKS

The Breaker Block, mistaken for an 'order block,' forms when market
trading deviates from a bearish or bullish range, causing the 'order
block' to fail. Market makers return later, stopping out Dumb Money to
exit positions, and thus, adding pressure in the true market direction.

Typically, the Breaker Bock forms with a market structure shift pattern.
1. In bullish ranges, we seek out bullish breaker blocks after the
market structure pattern of a low, high, lower low, and higher
high is formed.
2. In bearish ranges, we seek out bearish breaker blocks after the
market structure pattern of a high, low, higher high, and lower
low is formed.
Examples of breaker blocks
Unicorn model

STEP 1: LIQUIDITY SWEEP OR SMT?

 The first step to identifying a Unicorn Model is to look for a


Liquidity Sweep. SMT Divergence also makes this setup valid, but
to keep things simple we will be looking for a Liquidity Sweep.
 In this example, we are looking at the Hourly chart on NQ from
October. As the first step is to identify a liquidity purge, here we
can see that we get one. From here, we just wait. Nothing to do
yet. WAIT.

STEP 2: BREAKER BLOCK?

 The second step is to identify the breaker block that is created.


 In this example, we are looking at the Hourly chart on NQ from
October. As the second step is to identify a breaker block, here we
can see that we get one. In this case, since we are looking for a
bearish breaker, the lowest down close candle in the swing prior
to the liquidity sweep will be our bearish breaker block. From
here, once again, we just wait. Nothing to do yet. WAIT.

STEP 3: FVG WITH BREAKER?

The third step is to identify a fair value gap in alignment of the breaker
block that was previously created.
In this example, we are looking at the Hourly chart on NQ from October.
As the third step is to identify a fair value gap in alignment of the
breaker block, here we can see that we get one. From here, once again,
we just wait. Nothing to do yet. WAIT.

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