Romeo Video 3

Summary

This script delves into the 'Monthly Power of Three' trading strategy, focusing on Bitcoin's price action through a four-hour lens. It emphasizes the importance of blending time and price for effective trading, highlighting key levels and Fibonacci retracement as critical for framing trade ideas. The speaker illustrates how to identify entry points, set stop losses, and recognize patterns like accumulation, manipulation, and distribution within monthly candles, advocating for a disciplined approach to maintain a bullish bias until invalidated.

Takeaways

• 📊 The concept of 'Monthly Power of Three' involves analyzing the open, high, low, and close of Bitcoin through a four-hour time frame lens.
• 🔍 Importance is placed on the blend of time and price analysis, emphasizing that price levels are significant when considered with time, and vice versa.
• 📈 A bullish bias on Bitcoin is maintained, with the expectation of being drawn to higher time frame levels, specifically targeting the 32,000 price point.
• 🧲 The 'magnet' for Bitcoin is identified at the higher time frame liquidity level of 32,000, where the expectation is to buy retracements until this level is reached.
• 🗓 The previous month's candle on Bitcoin's chart was bearish but did not close below the low, suggesting a continuation of the bullish trend rather than a bearish reversal.
• 📉 The refusal to close below certain lows and the presence of key levels, such as the 0.618 Fibonacci level, are critical in framing trade ideas and maintaining a bullish bias.
• 📝 The speaker emphasizes the importance of sticking to a trading bias until it is invalidated, highlighting the need for discipline in trading strategies.
• 📌 Key levels, such as lows that break highs or highs that break lows, are crucial for identifying potential entry and exit points in trading.
• 📉 The strategy of 'entering with a wick' is discussed, which involves buying below the opening price in a bullish market or selling above the opening price in a bearish market.
• 📊 The division of each candle into three parts (or four for monthly candles) is highlighted as a method for understanding the phases of accumulation, manipulation, and distribution in the market.
• 🔑 The importance of confirming the high being broken before entering a trade is stressed to avoid being tricked into a false bottom or top.

Q & A

What is the 'Monthly Power of Three' concept mentioned in the script?

The 'Monthly Power of Three' refers to analyzing the monthly candlestick chart in terms of its open, high, low, and close, and dividing it into three parts or phases: accumulation, manipulation, and distribution. This method helps in understanding the market sentiment and predicting future price movements.

What does the speaker mean by 'blend of time and price'?

The 'blend of time and price' refers to the integration of both time and price factors in technical analysis. It suggests that price levels alone are not sufficient for making trading decisions; they need to be considered in conjunction with the time element for a more accurate analysis.

Why is the speaker focusing on Bitcoin in the script?

The speaker is focusing on Bitcoin because it has been offering a clear bias or trend, making it easier to analyze and predict its price movements. Additionally, Bitcoin has a higher time frame liquidity level at 32,000, which is a key level the speaker is watching for potential buying opportunities.

What is the significance of the 'monthly fvg' mentioned in the script?

The 'monthly fvg' or Fibonacci volume glow refers to a technical analysis tool that combines Fibonacci levels with volume analysis. It helps in identifying key support and resistance levels where the price is likely to react, providing potential entry and exit points for trades.

What does the speaker mean by 'sticking to your bias until it is invalidated'?

This means that a trader should maintain their market outlook or 'bias' as long as the market conditions continue to support it. If new information or market movements contradict the trader's bias, it should be re-evaluated or 'invalidated', prompting a change in strategy.

What is the importance of 'closing below lows and above highs' in the context of the script?

Closing below lows and above highs is significant because it can indicate a potential trend reversal or continuation. If a candle closes below its low, it might suggest a bearish sentiment, whereas closing above its high could indicate a bullish sentiment.

How does the speaker define a 'wick entry' in trading?

A 'wick entry' is a trading strategy where a trader enters a position at the end of a candle's wick, which is the small line extending from the body of the candle. It is considered a good entry point because it signifies a potential reversal of the current trend, especially when the wick occurs below the opening price in a bullish market or above the opening price in a bearish market.

What does the speaker suggest as the first step in framing a trade idea?

The first step in framing a trade idea, according to the speaker, is to determine where the price is likely to be drawn to, either up or down. This is known as identifying the 'magnet' or the key level that the price is expected to reach.

What is the role of the 'opposing end' or 'invalidation level' in the trade idea?

The 'opposing end' or 'invalidation level' is a price point that the trader considers unlikely to be reached before the target or 'draw liquidity' is achieved. If this level is breached, it could indicate that the trade idea is no longer valid, and the trader may need to exit or adjust their position.

How does the speaker describe the process of 'accumulation manipulation distribution' in the context of trading?

The speaker describes 'accumulation manipulation distribution' as a three-phase process within a higher time frame candle. Accumulation is when buyers enter the market, manipulation is when the market is influenced to create a false impression, and distribution is when sellers exit their positions. This process helps traders understand the market's behavior and anticipate potential price movements.

Outlines

00:00

📈 Monthly Power of Three Analysis

The speaker discusses the concept of 'Monthly Power of Three' in the context of Bitcoin trading. They explain that the open and close of the monthly candle are fixed values, while the high and low are moving values. The focus is on catching the monthly range by identifying either the low or the high. The speaker emphasizes the importance of time and price in trading, highlighting the need to blend these two factors for better results. They also discuss the significance of the 50% Fibonacci level in their analysis and the importance of sticking to a trading bias until it is invalidated. The speaker marks the draw on liquidity on the higher time frame, indicating a bullish outlook for Bitcoin, aiming for a target of 32,000.

05:01

📉 Engulfing Candles and Bias

The speaker continues the discussion on Bitcoin, focusing on the monthly candle's behavior. They note that despite the bearish appearance of the candle, the bias remains bullish as the candle did not close below the previous low. The speaker discusses the importance of key levels in trading, such as the refusal to close below certain lows and the significance of highs that break lows or lows that break highs. They also delve into framing a trade idea by considering the premium discount and reading price action. The speaker emphasizes the importance of understanding the context of the move and the narrative behind the trading decisions.

10:01

🚀 Framing Trade Ideas and Fibonacci Levels

The speaker outlines the process of framing a trade idea, starting with identifying where the price is likely to be drawn (the magnet). They discuss potential entry points and the opposing end of the draw liquidity, which is considered unlikely to be reached before the target. The speaker uses the 0.618 Fibonacci level as an example of a reasonable stop loss in an uptrending market. They also explain the concept of 'power of three' in trading, dividing each candle into three parts to identify accumulation, manipulation, and distribution phases. The speaker emphasizes the importance of understanding the order flow and the context of the move to make informed trading decisions.

15:03

🔍 Wick Entries and Candle Analysis

The speaker delves deeper into the concept of 'power of three' in candle analysis, explaining how to trade using the open, high, low, and close of the monthly candle. They discuss the strategy of buying below the opening price in a bullish market and selling above the opening price in a bearish market. The speaker introduces the concept of 'wick entry,' which involves entering a trade below the opening price in a bullish context or above the opening price in a bearish context. They also discuss the importance of waiting for confirmation of the high being broken before entering a trade to avoid being tricked into a false bottom.

20:05

🔄 Accumulation, Manipulation, and Distribution

The speaker concludes the discussion by emphasizing the importance of understanding the accumulation, manipulation, and distribution phases within each candle. They explain that these phases can be used to identify key trading opportunities and to frame a trade idea effectively. The speaker also discusses the importance of switching between higher and lower time frames to gain a comprehensive understanding of the market dynamics. They suggest waiting for the sections of the candle to play out as they are supposed to, focusing on the accumulation phase in the first week, manipulation in the second week, and distribution in the third week to make informed trading decisions.

Keywords

💡Monthly Power of Three

The 'Monthly Power of Three' refers to a trading strategy that focuses on the monthly timeframe and involves analyzing the open, high, low, and close of the monthly candlestick. This concept is central to the video's theme as it helps traders identify potential market movements and trade setups. In the script, it is used to discuss how to read price action and frame trade ideas based on the monthly candlestick's behavior.

💡Fixed Values

In the context of the video, 'fixed values' refer to the open and close prices of a financial instrument, which are set at the beginning and end of a trading period. These values are contrasted with 'moving values' like high and low, which can change throughout the trading period. The script emphasizes the importance of understanding both fixed and moving values in analyzing market trends.

💡Fibonacci

Fibonacci is a mathematical sequence often used in trading to identify potential support and resistance levels. In the video, the speaker uses Fibonacci retracement levels to analyze price movements and predict future trends. The script mentions looking at the '50 percent Fibonacci level' as a blend of time and price to determine key levels for trading decisions.

💡Liquidity

Liquidity in trading refers to the ease with which assets can be bought or sold without affecting their price. The script discusses 'draw liquidity' as a concept where the price is expected to be drawn towards a certain level, indicating potential areas of support or resistance. The speaker uses this concept to frame trade ideas and identify potential entry and exit points.

💡Bias

In trading, 'bias' refers to a trader's expectation or inclination towards a particular market direction. The script mentions a 'bullish bias' for Bitcoin, indicating that the speaker expects the price to rise. This bias is used to guide the analysis and decision-making process throughout the video.

💡Engulfing Candle

An 'engulfing candle' is a candlestick pattern where one candle completely covers the body of the previous candle, suggesting a potential reversal in the market trend. The script discusses how an engulfing candle in a bullish market can be a signal for further price increases, emphasizing the importance of understanding candlestick patterns in trading.

💡Key Levels

Key levels in trading are price points that are considered significant due to historical price action or technical analysis. The script repeatedly mentions 'key levels' as crucial for understanding market behavior, such as the importance of not closing below a certain low or breaking above a high, which can indicate a change in market sentiment.

💡Trade Idea

A 'trade idea' is a potential strategy or plan for entering and exiting a trade based on market analysis. The script delves into how to frame a trade idea by considering factors like draw liquidity, potential entry points, and invalidation levels. This concept is integral to the video's message on how to approach trading with a structured and analytical mindset.

💡Order Flow

Order flow in trading refers to the sequence of buy and sell orders that drive price movements. The script mentions 'order flow' in the context of understanding market dynamics and identifying potential entry points. It suggests that analyzing order flow can help traders anticipate price movements and make informed trading decisions.

💡Wick Entry

A 'wick entry' is a trading strategy that involves entering a trade at the end of a candlestick's wick, which is the small line extending from the body of the candle. The script discusses 'entering with a wick' as a way to capitalize on price movements, particularly in the context of buying below the opening price in a bullish market or selling above the opening price in a bearish market.

💡Accumulation, Manipulation, Distribution

These terms describe phases in the market cycle where traders accumulate positions, manipulate prices, and distribute assets. The script uses these terms to explain how the monthly candlestick can be divided into sections, each representing a different phase of market activity. Understanding these phases is crucial for identifying potential trade opportunities and managing risk.

Highlights

Introduction to the concept of 'monthly power of three' in trading, focusing on the importance of time and price in determining significant market movements.

Explanation of how the open and close of a trading period are fixed values, while the high and low are moving values, emphasizing the need to look through a 'four-hour time frame lens'.

Discussion on the blend of time and price, highlighting the famous saying that 'price levels are useless until time is considered, and time is of no use unless price is at a key level'.

Focus on Bitcoin's recent move, demonstrating the use of Fibonacci levels to predict market trends and the importance of sticking to a trading bias until invalidated.

Analysis of Bitcoin's higher time frame liquidity at 32,000, and the strategy of buying retracements until reaching this level.

Emphasis on the significance of the monthly candle's close, explaining that a bearish candle in a bullish market is likely to be engulfed in the next candle.

Introduction of the concept of 'draw liquidity' and its role in framing a trading bias, using the example of Bitcoin's market behavior.

Explanation of how to frame a trade idea by identifying draw liquidity, potential entry points, and the opposing end of the liquidity.

Discussion on the importance of key levels in trading, particularly the lows that break the high and the highs that break the lows.

Introduction of the 'SR flip' price action and its role in identifying potential trading opportunities.

Explanation of how to use the 'power of three' in trading, dividing the monthly candle into three sections for analysis.

Discussion on the importance of waiting for confirmation of the high being broken before entering a trade.

Introduction of the 'accumulation manipulation distribution' model and its application in understanding market movements.

Explanation of how to use the 'power of three' in trading, focusing on the first, second, and third candles for entry and exit strategies.

Discussion on the nuances of entering trades with a 'wick entry', explaining the strategy of entering below the opening price when bullish and above when bearish.

Emphasis on the importance of understanding the context and narrative of the market move, blending it with the opening price to predict future movements.

Introduction of a deeper understanding of 'accumulation manipulation distribution', detailing how higher time frame candles can be divided into sections for analysis.

Transcripts

all right folks now

talking about the monthly power of three

we mentioned before the open and the

close are fixed values

right

and the high and the low

or the

moving values

right

monthly power of three we look at it

through the four hour time frame lens

now so this is this is Bitcoin a recent

move I'd called

we pull a fib

we look at the 50 percent

and this is going to be

a blend of time and price

right because as We Know

the famous picture which is quite true

uh the picture which says

uh price levels are useless until time

is considered

and time is of no use

unless price is at a key level

right

when you blend The Two Of course then

you got a pretty good result

so now let's focus on

on the the monthly of catching the

monthly range

open is fixed close is fixed right and

we're trying to catch a

uh we're trying to catch

either the low or the high so right now

on bitcoin

we were bullish

we were expecting uh we're expecting it

to be drawn to the higher time frame

and

before I continue

let me just mark

the draw on liquidity on the higher time

frame

which is this monthly fvg

all right

so the magnet for us is up here right

and the reason I've been more focused on

bitcoin is if you've noticed is it was

offering pretty clean it had a pretty

clean bias ever since down here I've

been calling for 32 000. all right so

over here's a 32 over here I said 32

over here I said 32 and here as well I'd

kind of slipped semi-slip a bit

calling it here instead of here

but over here

I had demonstrated an important thing

which is sticking to your bias until it

is invalidated right which I'll speak

about too

um but the point is the reason I'm

focusing on bitcoin so much is because

the higher time frame is pretty obvious

the Drone liquidity is 32 000.

we are looking to buy retracements until

we reach 32 000 right

so

keeping the higher time frame draw

liquidity in mind

we have opened a new candle

on the monthly

right

and the previous month's candle

has engulfed

the month before it candle

right

but it never closed below the low

you've seen me emphasize if you follow

if you've been following me for a while

on the closes below lows and above highs

right so this monthly candle

uh this monthly candle

closed as an engulfing candle

replay

I'm clearly not used to this

device part replay

I usually watch the data live so

this month closed right so pretty

bearish now you would think but no the

bias is up here

we're expecting this to be

the the magnet if you will

it did not close below this low

if it had closed below the low then you

could you could start considering

bearishness but

it refused to close below the candle

and it is bumping into a higher time

frame key level the fvg

and the inverted f v g

as well

right

so there was no reason to be bearish now

of course then you pull your fibs

you look at the premium discount

and

this is where I delve into how to frame

a trade idea

on reading price not Trading

because this is not Financial advice

this is only

price action reading for fun

right

so again there's refusal to close below

this low as well the swing low

uh that broke the high those are

important key levels I've mentioned

before which is

the lows that break the high

or the highs that break the lows those

are super important key levels when when

closed above or below or falsely closed

above or falsely closed below and back

test that rewind what I said just now

rewind it listen to it once twice three

times and back test it

so

we have this important low

we have this key level the ifag we have

the old high as well a classic

Sr flip price action

and this is what I called

right over here I'd call for Bitcoin

to go to thirty two thousand first of

all for us first Target is over here

and second target is up here

now what happened we dug a bit deeper

before eventually

uh rallying

to

the target

the targets which was one and then

eventually two coming soon right

how would you frame a trade idea

you want to First have an eye on the

Target right so my eye was up here

so the first thing you want is a draw on

liquidity this is how you frame the bias

I had given out a tweet in written form

but I think a video form is a lot more

useful

so number one is

where is Price what's the magnet

where do you think price is going to be

drawn to

either up or down

second of all

what potential entry points do you see

right

third of all

what

is the opposing end

or what is the other side of the draw

liquidity which you are

considering in your assessment highly

unlikely to be reached before the Drone

liquidity

let me say that again

what's the point in price

which is highly unlikely to be reached

before the draw liquidity is reached

right

that is your invalidation level

so

right over here

right over here

we had number one which is where is

Price likely to be going to 32 000.

that's the I

what is a potential entry

um over here

was considered over here was considered

these are the two entries given right

what is a place you deem unlikely to be

tapped before

before

the target

this liquidity pool

highly unlikely to be tapped before

the draw liquidity especially given that

it is a 0.618 fib

and we are in an uptrending Market

tapping into the 50 percent

Fibonacci level

right so this was a reasonable stop loss

for the idea to frame the bias that we

are going to be

rising up there

so this is one

where is the draw liquidity

number two

what is the entry fifty percent

below this low add the fifty percent

the old High

the monthly remember the monthly fvg the

monthly ifpg

week two of the month

right

which I'll be getting into right now

and number three is which which which

point in price is unlikely to be reached

before the Drone liquidity

invalidation

right and that is how a birth

that is how a

a trade idea is birthed

right

it's funny using the RR tool but this is

all called in real time

right if you had picked this

the law of the refugee then sure

it would be shittier risk reward but you

would still be correct

right

now this alone is enough however there

is an important aspect which is the

divisions of each candle

each candle is divided into three

or you can save the volume to four as

well

I like to use

three on The Daily candle

and the weekly

and I like to use four

on the uh the monthly candle

in fact

you can use

this dissection of any higher time frame

candle

as a three candle process so you don't

need any more than three candles to

trade right you can trade this candle

you can choose one candle at a key level

one candle at a key level

one

two three

one two

that's your

that's your whole trade right

and things are getting getting uh

getting close to be interesting very

soon

so

keeping that in mind we have the monthly

candles power of three

the monthly open

High

low and close

the monthly candle is closed as a

bearish candle in a bullish Market in a

clearly obviously bullish Market

disrespecting bear Speedy Rays

respecting bullish speed race in a

bullish Market a bearish candle

is going to be engulfed in the next

candle

in a bearish market a bullish candle

is anticipated to be engulfed in the

next few candles

right retracement protraction expansion

expansion protection expansion

right

so this bearish candle we're expecting a

higher time frame remember

so this alone is a trade

keeping in mind the order flow The

Narrative the whole context of the move

you're trading one two three candle

number one

candle number two

and candle number three

right

from the lens of power of three

you go to June

you go to the open

you want to buy again what was the all

the rules the rules were

buying

below the opening price when bullish and

above the opening price from bearish

into a higher time frame key level

blend that with what I suggest now of

how to frame a trade idea

and you get a pretty accurate read on

price

right so below below below we're forming

a range we're forming a range below the

opening price

we're breaking out of the range

this is all a wick entry what does that

mean what is what does wick mean we

always say enter with a wick right

what is the meaning of entering in the

wick

it is simply entering below the opening

price

when uh bullish

entering below the the above the opening

price when bearish

all the order blocks

all the breakers all the

uh otes everything is happening over

here and you're writing it back into the

opening price

and potentially a flip of the opening

price and a continuation lower

right this is how you get the wick entry

same over here

open

decline into key level

this is all happening below the opening

price

right

you're waiting for the the order block

the range the breaker the OT to form

below the opening price

at a certain time required

and you write it up

and you entered from the wick of the

candle right

not to stray too much

but

in summary

opening price fixed closing price

opening time excuse me fixed and closing

time is fixed right

the previous candle was a bearish candle

in an uptrend bearish candles and

operands are to be engulfed we've

reached a key level

right

so we are at a key level The Narrative

the context everything is in Aid of a

push higher

blending that with the opening price

we're bullish right

what do we say

candle opens we dump we create a range

below the opening price

we then break the range below the

opening price

and we rally

that's cool but

here's a question

how do you make sure that you weren't

tricked into this being the bottom right

you could have well and easily done that

you could have you could have bought

here turtle soup right

and then you could have been suckered in

the stop tab before the move

that is possible

that can be avoided by two ways

number one

always wait for the confirmation of the

high being broken

right whether it's the opening price

being flipped

or it's the high that broke the low

being flipped

all right

or

you can simply wait for the uh

the sections

of the candle

to play out as they're supposed to be

as I mentioned before you got one two

three

accumulation wait for the wait for week

one to accumulate week two to manipulate

and then week three you're looking for

buys

all right accumulation manipulation

distribution let's see what that looks

like

week one is done

week two accumulation manipulation

distribution

right

so again you're noticing I'm I'm

switching back and forth to through two

time frames and that is super important

the higher time frame to give me a draw

liquidity a magnet

and the lower time frame to find the

entry patterns quote unquote

right

now the time has come

the time has come

for me to uh

show an even deeper

understanding of this

accumulation manipulation distribution

which I just mentioned uh the higher

time frame candle being divided into

sections

right and you can use any three of them

accumulation manipulation distribution

you can go back to the the video the

previous uh not this one the one before

it

all right another one before this one

the one before the one before this one

right where I talked about the two

ways this can play out but the basic

premise is an accumulation an

accumulation candle

a manipulation candle and then the

candle number three

you want to ride the wave of the candle

back to

the height of the candle allows Turtle

souped

let's take a break and we will

get into

uh

a nuance

a detail

which

I haven't really mentioned before

but let's uh let's mention it now

let me just take a break

a couple of minutes and I'll be back

so I'm gonna stop the recording right

now

and leave you on suspense mode