Pattern Recognition - Aussie OTE NYO

The Inner Circle Trader

9 Oct 201704:18

Summary

TLDRIn this pattern recognition tutorial, the presenter guides viewers through identifying optimal trade entries using market structure shifts and price levels. Starting at an old high of 77.49, the video demonstrates how to anchor the FibReactive tool to find entry points and profit objectives. It highlights the importance of respecting price levels and market structure, providing a clear strategy for trading with a focus on the 15-minute time frame and emphasizing the significance of overlapping price zones.

Takeaways

📈 The video discusses a pattern recognition strategy in trading, focusing on identifying optimal trade entries and profit objectives.
📊 The presenter uses a specific price level of 77.49 as an example of an old high that could be a significant institutional level to watch for price action.
🔍 A 15-minute time frame is selected to highlight the market structure shift and identify the optimal trade entry points.
📉 The strategy involves using the FibRetracement tool to find support and resistance levels, with a focus on the 50% and 250% levels.
📍 The 'impulse price' is identified when a high is taken out, and the Fib tool is used to anchor from the lowest body to the highest body of a candlestick.
💰 The optimal trade entry is suggested at the 70.5 level, which is a midpoint between the old high and the current price action.
🎯 The old high at 77.49 is considered the first profit objective, and the presenter discusses potential further targets at 77.95, 77.10, and 78.30.
📝 The script emphasizes the importance of respecting price levels and market structure in making trading decisions.
🌐 The video mentions 'kill zones' which seem to refer to specific price areas where trades should be exited or adjusted.
🕒 The presenter notes the significance of time of day and session overlaps, such as between London and New York trading sessions, on price action.
📚 The script concludes with a reminder of the importance of pattern recognition and optimal trade entry in successful trading.

Q & A

What is the main topic discussed in the video script?
-The main topic discussed in the video script is pattern recognition in trading, specifically focusing on identifying optimal trade entry points using market structure and price levels.
What is the significance of the old high mentioned in the script?
-The old high, mentioned as 77.49, is a significant price level in the market structure that traders use as a reference point for potential institutional buying or selling pressure.
What does the script suggest should be the first level of interest for institutional traders when the price comes down to 77.49?
-The script suggests that the first level of interest for institutional traders should be 77.50, which is a calibrated level that might act as a support or resistance.
What time frame is recommended for analyzing the market structure in the script?
-The script recommends dropping down to a 15-minute time frame to analyze the market structure and highlight the market structure shift.
How is the 'impulse price' determined in the script?
-The 'impulse price' is determined by taking the lowest body of the candlestick (which could be the open or close) and dragging it up to the highest body of the candlestick, creating a range for potential trade entries.
What is the optimal trade entry mentioned in the script, and how is it calculated?
-The optimal trade entry mentioned in the script is 70.5. It is calculated by using the lowest body of the candlestick as an anchor and extending it to the highest body, creating a level that traders can use to enter trades.
What are the profit objectives and targets mentioned in the script?
-The profit objectives and targets mentioned in the script are the old high, target one, target two, and a symmetrical price ring. These are levels at which traders can expect to take profits or adjust their trades.
What is a 'kill zone' in the context of the script?
-A 'kill zone' in the script refers to a specific price area where the market is expected to reverse or consolidate, providing traders with potential entry points or stop-loss placements.
How does the script suggest identifying a trade entry in the 'kill zone'?
-The script suggests identifying a trade entry in the 'kill zone' by looking for a candlestick that shows respect for a certain price level, such as 70.5, and then observing the market's reaction to that level for potential entry signals.
What is the significance of the 'London just New York' reference in the script?
-The 'London just New York' reference indicates a time when the London market session overlaps with the New York market session, which can lead to increased volatility and potential trading opportunities.
What is the potential upside mentioned in the script, and what does it imply for traders?
-The potential upside mentioned in the script is 77.95, 77.10, and then 78.30. This implies that traders should be prepared for the possibility of the price moving up to these levels, and they should have strategies in place to manage their trades accordingly.

Outlines

00:00

📈 Stock Market Pattern Recognition and Trade Entry Strategy

The speaker introduces a pattern recognition strategy in the stock market, focusing on identifying key price levels for potential institutional reactions. The example provided involves observing an old high price of 77.49 and using a 50 level drop to 77.50 as a reference for potential trade entries. The discussion includes a shift to a 15-minute time frame to highlight market structure changes, the use of a Fibonacci tool to anchor trade entries, and the identification of optimal trade entry points at 70.5, with the old high as the first profit objective. The speaker also outlines subsequent profit targets and symmetrical price rings for further trade planning.

Mindmap

Keywords

💡Pattern Recognition

Pattern recognition in the context of the video refers to the method of identifying and analyzing regularities within data, which in this case is the price movement of a financial instrument. It is a crucial concept in trading as it helps traders to predict future price trends based on historical data. The video discusses using pattern recognition to identify optimal trade entries and market structure shifts.

💡High and Low

High and low are terms used in trading to describe the highest and lowest prices of a security or commodity during a specific time frame. In the video, the presenter uses the high and low prices to identify key levels of support and resistance, which are critical for determining entry and exit points in trades.

💡Institutional Level

The institutional level in trading refers to the price points that are significant to large financial institutions and are often used as reference points for their trading strategies. The video mentions the institutional level to emphasize the importance of the price point 7750 as a potential resistance level for the asset being discussed.

💡Time Frame

In trading, a time frame is the period over which data is analyzed, and it can range from a minute to a year. The video script mentions switching from a higher time frame to a 15-minute time frame to provide a more detailed view of the market structure and to identify specific trading opportunities.

💡Market Structure Shift

A market structure shift is a change in the overall trend or pattern of a security's price movement. The video script highlights the importance of identifying these shifts as they can signal a change in the market sentiment and potential trading opportunities. The presenter points out a specific high that has been violated, indicating a shift in the market structure.

💡Impulse Price

Impulse price is a term used to describe a price level that, once broken, can trigger a strong buying or selling pressure in the market. In the video, the presenter identifies the impulse price as the price level that, once taken out, indicates a strong move in the market and is used to anchor the Fibonacci tool for trade entry analysis.

💡Fibonacci Tool

The Fibonacci tool is a technical analysis tool used in trading to identify potential support and resistance levels based on the Fibonacci sequence. In the video, the presenter uses the Fibonacci tool to find optimal trade entry levels and to calculate potential profit objectives after a market structure shift.

💡Trade Entry

Trade entry refers to the price level at which a trader decides to enter a market to initiate a trade. The video script discusses identifying optimal trade entry points using pattern recognition and market structure analysis, such as the 70.5 level mentioned, which is identified as a good entry point.

💡Profit Objective

A profit objective is the price level at which a trader plans to sell a security to realize a profit. The video script mentions profit objectives as targets for potential profits after a trade has been entered, with the old high being the first profit objective in the discussed scenario.

💡Kill Zone

In trading, a kill zone is a term used to describe a price range where a trade is highly likely to be stopped out or closed at a loss. The video script refers to a kill zone as a specific area where the price respects a certain level (70.5 in the example), indicating a potential entry point for a trade.

💡Symmetric Price Ring

A symmetric price ring is a concept that may refer to a level of price that is considered significant due to its symmetry in the price action, often used in conjunction with other technical analysis tools. The video script mentions the symmetrical price ring as one of the subsequent targets after the initial profit objective has been hit.

Highlights

Introduction to pattern recognition in trading using string analysis.

Explanation of the significance of the old high at 77.49 in the trading pattern.

Use of institutional level to determine the first 50 level at 7750.

Shifting to a 15-minute time frame for a more detailed market structure analysis.

Highlighting the market structure shift and its importance in identifying trading opportunities.

Technique of using the lowest body of a candlestick for optimal trade entry calculations.

Identifying the optimal trade entry at the 70.5 level and its significance.

Achievement of the old high as the first profit objective in the trading strategy.

Introduction of target one, target two, and symmetrical price ring as subsequent profit objectives.

Demonstration of overlapping patterns in the market and their impact on trade entry.

Analysis of the impact of the London and New York trading sessions on market behavior.

Identification of the 70.5 level as a key support and entry point in the New York session.

Discussion on the potential upside targets of 77.95, 77.10, and 78.30.

Consideration of market conditions and the potential for ambitious targets in trading strategies.

Explanation of the pattern recognition process using a break in market structure.

Identification of the optimal trade entry and stop loss placement in the trading strategy.

Conclusion and summary of the pattern recognition method for optimal trade entry.

Good luck and good trading wishes for the audience.