2022 ICT Mentorship Episode 35

Summary

In this detailed market analysis, the speaker provides a bullish outlook for the E-mini S&P, focusing on key technical concepts like order blocks, fair value gaps, and Smart Money Techniques (SMT) for spotting trade setups. The speaker highlights a significant bullish move towards the 4000 level and advises against countertrend trading, emphasizing the importance of following the dominant market bias. Personal commentary includes a break for Memorial Day and guidance on timing trades around market structure shifts. The overall message stresses careful trade planning, particularly in light of holiday-weekend volatility.

Takeaways

• 😀 The market is showing a bullish bias, with a focus on upside continuation after testing key price levels.
• 😀 The concept of the 'mean threshold' was discussed, where price often retraces to the middle of a significant candle's range before moving further.
• 😀 The speaker emphasizes the importance of using Fibonacci levels to identify equilibrium (50%) and discount zones for potential trade entries.
• 😀 A key entry was identified above the 4000 price level, with the speaker confirming this level as their target based on prior commentary.
• 😀 The speaker warned against trying to trade against the dominant trend (bullish bias), advising caution when attempting to short during strong upward movements.
• 😀 An analysis of order blocks and fair value gaps was conducted, demonstrating how price reacts to these levels in creating rallies and retracements.
• 😀 SMT (Smart Money Technique) divergence was highlighted as a useful tool for identifying divergence between correlated markets (e.g., NASDAQ and S&P).
• 😀 The market demonstrated a bullish continuation pattern, picking up more accumulated longs to push deeper into price levels and target buy-side liquidity.
• 😀 The importance of understanding market structure and narrative is emphasized, particularly how recognizing the flow and intent can guide trade decisions.
• 😀 The speaker shared insights on using early runs in the morning (before 7 am) as signals for potential setups later in the day, particularly around the 9:30 opening.
• 😀 The speaker concluded with advice for the holiday weekend, urging traders to enjoy the break and refrain from trading during the lighter volume periods (Friday afternoon and Monday).

Q & A

What is the significance of the 'mean threshold' mentioned in the video?

The mean threshold is the midpoint of a specific candle on the chart, particularly used in the context of an order block. When price reaches the mean threshold, it suggests a higher likelihood of continuing the trend in the direction of the original order block, as it often indicates balance in the market before further movement.

Why did the speaker focus on the 4000 level in the market?

The 4000 level was highlighted as an important target because it was part of the speaker’s predefined objective. It was a critical level mentioned earlier in the commentary and acted as a key point of entry. Once the market reached 4000, the speaker expected it to continue upward.

What is the role of 'SMP divergence' (Smart Money Technique divergence) in the analysis?

SMP divergence occurs when two correlated assets (like the NASDAQ and S&P 500) diverge in price action. In this case, the NASDAQ made lower lows while the S&P 500 did not, signaling a possible accumulation phase for longs in the S&P 500. SMP divergence helps the speaker predict when price may move higher after the accumulation phase.

What does the speaker mean by 'fair value gap'?

A fair value gap is a price range where the market has skipped over, creating an imbalance between buying and selling. It is often considered a point of opportunity for price to return to before continuing the trend. These gaps help define areas where the market may retrace or consolidate before moving further.

Why does the speaker mention not to trade during the holiday weekend?

The speaker advises against trading during the holiday weekend due to the expected low trading volume, particularly on Friday and Monday. Low volume can increase market volatility and reduce the effectiveness of typical trading strategies, making it less ideal for active trading.

What was the market structure like before the 9:30 AM rally, according to the speaker?

Before the 9:30 AM rally, the market had been in a consolidation phase, with a series of lower lows and higher lows. The speaker identified that the market was compressing, akin to a spring, and once the market reached a certain threshold, it exploded upward.

What is the significance of 'dealing range' in the speaker's analysis?

The dealing range refers to the low and high points of a price move, often marked by a significant retracement. The speaker uses the dealing range to help define the entry points for trades and to understand the balance between buying and selling pressure within that range.

How does the speaker use Fibonacci levels in their analysis?

The speaker uses Fibonacci retracement levels, particularly the 50% level, to identify key price areas where the market may either reverse or continue its trend. Fibonacci levels help to map out key support and resistance zones that are expected to play a significant role in price action.

What is the 'bearish order block' mentioned in the script?

A bearish order block is a price area defined by a specific candle or range that signifies a previous point of strong selling activity. When price revisits this area, it often indicates a potential for downward movement, as selling pressure is expected to re-emerge.

Why does the speaker caution against selling when the market is bullish?

The speaker cautions against selling when the market is bullish because doing so contradicts the prevailing market bias. When the market is in an uptrend, looking for long trades is more likely to be profitable, while shorting would go against the dominant trend and increase the likelihood of losses.