ICT Advanced Market Structure Made EASY

Summary

This video dives into the fundamentals of Advanced Market Structure, explaining key concepts like swing points, long-term, intermediate-term, and short-term points across different timeframes. It covers how market structure is influenced by swing highs and lows, the role of price retracements into key price delivery areas, and how different types of liquidity targets are identified. The video emphasizes the fractal nature of market structure and how traders can apply these principles across various timeframes to determine entry points and market direction, with a focus on practical applications in bullish market scenarios.

Takeaways

• 😀 Understanding advanced market structure is rooted in identifying swing points, which are determined by the relative positions of the wicks of three candles.
• 😀 Swing points are classified into three types: short-term, intermediate-term, and long-term, based on their placement and the surrounding candles.
• 😀 Long-term points occur on higher time frames and are critical for identifying potential market reversals when broken. These are considered the major swing points in the market.
• 😀 Intermediate-term points can form in two ways: when surrounded by short-term points or within imbalances such as fair value gaps (FVGs). These are less significant than long-term points but still important for price action.
• 😀 Short-term points are the most basic swing highs and lows, typically forming the smaller, more immediate structures in the market.
• 😀 A long-term low is established when price retraces into a discount array on a higher time frame, while long-term highs are drawn from previous highs.
• 😀 Intermediate-term highs and lows are often considered when price action moves between internal and external range liquidity, with price typically respecting key imbalances.
• 😀 When a market structure break occurs, a violation of either a long-term or intermediate-term point is expected to shift the market direction and could lead to significant moves.
• 😀 The concept of range liquidity is key: external range liquidity refers to highs and lows on the higher time frame, while internal range liquidity refers to more localized liquidity within that range.
• 😀 Advanced market structure analysis is fractal, meaning it can be applied across different time frames, from the daily down to the 5-minute chart, with the same principles guiding market structure shifts and breaks.

Q & A

What is the foundation of advanced market structure analysis?

Advanced market structure is based on swing points, which are identified by observing the relationship between the first, middle, and third candles in a price movement. These points determine the direction and type of market structure (bullish or bearish).

How are swing highs and swing lows defined in the context of market structure?

A swing low is formed when the bottom wicks of the first and third candles are higher than the middle candle's bottom wick. A swing high is formed when the middle candle has the highest upper wick compared to the first and third candles.

What role do higher time frames play in advanced market structure?

Higher time frames (like the daily chart) are used to identify long-term points, such as long-term lows and highs. These points are crucial because they set the overall trend direction. Violations of these points can signal a market structure break and a potential reversal.

What is the significance of a long-term low in market structure?

A long-term low occurs when price retraces into a discount array and forms a swing low. If this low is broken, it signals a market structure break on the higher time frame, indicating a potential bearish shift.

How are intermediate-term points different from long-term points?

Intermediate-term points form when there are short-term highs or lows on both sides of a swing point, or when a swing point forms within an imbalance. A violation of these points signals a market structure shift.

What is the importance of short-term points in advanced market structure?

Short-term points are the basic swing highs and lows, forming the targets for liquidity sweeps. These points are more volatile and are typically used as markers for market entries or exits in a trend.

How does price behavior confirm market structure shifts?

A market structure shift occurs when intermediate or long-term points are violated, typically accompanied by strong price displacement. This indicates a shift in market sentiment and trend direction.

What is the significance of imbalances in market structure analysis?

Imbalances, such as discount or premium arrays, are critical in identifying key price zones where price is likely to retrace. These areas help pinpoint long-term lows or highs and serve as areas to watch for potential reversals or continuations.

What does a market structure break mean?

A market structure break occurs when a significant swing point (usually a long-term low or high) is violated. This could indicate a reversal in trend or a continuation, depending on the context and the time frame being analyzed.

How does fractality apply to advanced market structure?

Fractality means that the same market structure concepts apply across different time frames. Whether on a daily chart or a 5-minute chart, the same principles of identifying swing points, imbalances, and market structure shifts are used to analyze price action.