ICT Charter Price Action Model 6 - Amplified Lesson

Summary

This video lesson revisits the Price Action Model #6, focusing on fractals and liquidity runs in trading. It explains how to pair different time frames and identify low-resistance liquidity draws, with an emphasis on the buy side. The model is designed for traders looking to understand market maker behavior and navigate liquidity pools. The lesson covers how to frame setups, anticipate price movements, and use different strategies across time frames, from weekly down to 15-minute charts. The goal is to help traders identify high-probability buy opportunities and effectively manage entries and exits.

Takeaways

• 😀 The concept of fractals plays a crucial role in understanding price action and liquidity runs, with the market’s movement broken down into smaller time frames.
• 😀 The focus is on 'buy-side low resistance liquidity runs' and understanding where the market is headed in terms of liquidity draws, particularly using higher timeframes for trend identification.
• 😀 A buyer-centric approach is emphasized, highlighting how markets are generally predisposed to rally as people accumulate long positions, with short selling introduced later as a strategy.
• 😀 The importance of targeting premium arrays, such as old highs, fair value gaps, and liquidity voids, to anticipate where the market is headed for potential profitable setups.
• 😀 A critical part of the strategy involves knowing the current market price and anticipating where it will likely reach based on larger fractals.
• 😀 Higher timeframes like weekly charts offer multiple opportunities (two stages of reaccumulation), whereas lower timeframes like 4-hour charts tend to provide only one opportunity to hit a premium array.
• 😀 Price action must be analyzed relative to the time frame being used, as this helps with framing the market’s trajectory and deciding whether to go long or short.
• 😀 In the context of fractal models, each price swing is viewed as a potential rally up to reach buy-side liquidity pools before a later sell-off occurs, offering opportunities to trade both on the way up and down.
• 😀 For short-term trades, focusing on the 4-hour to 60-minute timeframes can help pinpoint precise entry points, with the potential for high-probability setups using fair value gaps or liquidity voids.
• 😀 The model works across various assets (stocks, commodities, Forex), with the application of fractal analysis allowing traders to recognize and act on recurring patterns for profitable trades.

Q & A

What is the main purpose of this lesson on price action model number six (6.1)?

The main purpose of this lesson is to expand on the original price action model number six by introducing advanced concepts of fractals, liquidity runs, and how to frame timeframes and liquidity draws for more precise and profitable trading setups.

What is meant by 'liquidity draw' in the context of this trading model?

A liquidity draw refers to the concept of price moving towards a point where liquidity (buy or sell stops) is concentrated, and the market will likely run to those levels to execute trades, such as at a premium array or liquidity pool.

How does the fractal concept relate to trading timeframes?

The fractal concept in trading refers to the idea that price movements can be analyzed across multiple timeframes. Larger timeframes (like weekly or daily charts) set the broader market context, while lower timeframes (like 4-hour or 1-hour) provide entry points and setups.

What are 'buy-side low resistance liquidity runs' and how are they used in the model?

Buy-side low resistance liquidity runs are scenarios where the market is likely to rally due to a concentration of buy stops or liquidity at higher price levels. The model focuses on identifying these movements to capture profitable buying opportunities before price reaches those liquidity pools.

What is the significance of the 'fair value' pattern in this model?

The fair value pattern indicates price movements that fill gaps, address liquidity voids, or run sell stops. These are considered optimal opportunities because they represent areas where price action is rebalancing or correcting, creating potential profit opportunities.

What is the difference between a 'buy-side liquidity draw' and a 'market maker sell model'?

A buy-side liquidity draw focuses on targeting buy stops or liquidity pools above the current market price, while a market maker sell model identifies areas where price may drop, with the potential to run sell stops or address other bearish liquidity points.

Why is it important to understand where the market is 'most likely reaching up to'?

Understanding where the market is likely reaching helps traders set accurate targets for their trades. By identifying the next potential premium array (liquidity pool) or price level, traders can align their entries and exits with the market’s probable direction.

What is the significance of the 'discount array' in this model?

A discount array represents areas where the market may be considered undervalued or in a buying zone. These zones allow traders to enter at favorable price points with the expectation that price will rise to reach higher liquidity levels, known as premium arrays.

How do timeframes like the weekly, daily, and 4-hour charts work together in the fractal model?

Larger timeframes (like weekly or daily) set the stage for where the market is likely to move, while lower timeframes (such as the 4-hour or 1-hour) provide more granular details for setups and entries. This fractal approach helps align trading decisions across different scales.

What does the term 'stage 1 and stage 2 reaccumulation' refer to in the context of liquidity runs?

Stage 1 reaccumulation refers to the initial period where price consolidates after a move, indicating a potential accumulation phase before the next breakout. Stage 2 reaccumulation is the follow-up phase where the market builds further momentum before reaching its final liquidity target or premium array.