ICT Mentorship Core Content - Month 03 - The Next Setup - Anticipatory Skill Development

Summary

This teaching focuses on using institutional order flow in conjunction with monthly charts to identify potential trading setups. The strategy involves analyzing key price levels (open, high, low, close) on the monthly chart, defining a trading range based on recent up and down candles. Once the range is identified, traders refine the setup on lower timeframes to find optimal entry points. By monitoring how price interacts with these levels, traders can pinpoint profitable opportunities, ensuring they are trading within the context of larger market movements driven by institutional players.

Takeaways

• 😀 The monthly chart is key for identifying institutional order flow, as large price movements are driven by institutional buying and selling, not retail traders.
• 😀 Focus on the open, high, low, and close of monthly candles over the last three months to define key reference points and ranges for analysis.
• 😀 Overlapping levels are normal, but finding the most recent down candle and the up candle before it helps define the range for potential trades.
• 😀 When the price trades above the high of the most recent down candle, it activates a bullish order block. When it trades below the low of the most recent up candle, it activates a bearish order block.
• 😀 Moving from the monthly chart to lower timeframes like weekly and daily charts allows for more refined analysis and clearer trade setups.
• 😀 Institutional order blocks are critical for identifying potential areas for price reversals and continuation on lower timeframes.
• 😀 A top-down approach, starting with the monthly chart to define the range and order blocks, helps provide context and a structured way to find trade opportunities.
• 😀 For bullish setups, wait for price to return to a bullish order block before executing a trade. For bearish setups, wait for price to return to a bearish order block.
• 😀 Examples of currency pairs like Dollar CAD and USDJPY demonstrate the application of these principles, highlighting how price reacts to identified levels and order blocks.
• 😀 The strategy is designed to help traders avoid random, impulse-driven decisions by providing a systematic approach to reading market structure and identifying trading opportunities.

Q & A

What is the main concept discussed in the video?

The main concept is using institutional order flow and monthly charts to identify key trading levels. By analyzing price swings driven by smart money, traders can define ranges and trading opportunities.

How do you define the trading range on the monthly chart?

The trading range is defined by identifying the most recent down candle and the up candle prior to it. The high of the down candle and the low of the up candle create a range that can guide trading decisions.

What role do retail traders play in the price movements on monthly charts?

Retail traders generally do not have the capital to influence price movements on the monthly chart. The significant price movements are driven by institutional orders, also referred to as smart money.

How do you use the open, high, low, and close of candles in your analysis?

The open, high, low, and close of the last three monthly candles serve as reference points. These levels help traders identify potential buy or sell zones and map out important price levels for trading setups.

What is an order block, and how is it identified?

An order block is a price area where a significant order flow occurred, typically initiated by institutional traders. It can be identified by finding a down candle followed by an up candle or vice versa, with price trading above or below these levels activating the order block.

How can you refine your analysis using lower time frames?

After identifying key levels on the monthly chart, you can refine your analysis on weekly, daily, or even hourly charts. This allows for more precise entries, better risk management, and alignment with market movements.

What is the purpose of moving from the monthly chart to smaller time frames?

The purpose is to provide more detail and precision for trade entries. While the monthly chart helps define the broader range, lower time frames help refine entry points and manage risk with more accuracy.

What happens when price breaks above the high of a down candle?

When price breaks above the high of a down candle, it activates a bullish order block, signaling a potential buying opportunity as the market may continue to move upward.

Can this strategy be applied to all currency pairs or only specific ones?

This strategy can be applied to any currency pair or asset, but traders are encouraged to study multiple pairs to identify the best setups and take advantage of various market conditions.

What is the primary takeaway from this lesson on using the monthly chart?

The primary takeaway is to use the monthly chart to define key trading ranges and order blocks, then use lower time frames for refined entries. This approach ensures that traders are aligned with the institutional order flow and not relying on random, emotional decisions.