we're going to be looking at a amplification of order block Theory we're specifically dealing with the mitigation block okay when we look at mitigation blocks what we're looking for is a condition in the marketplace where the market has given clear indications that it wants to break down or move higher in a step ladder formation in other words like selling rallies or buying declines Vine declines in bullish markets and selling rallies in a bear Market okay when we look at the marketplace and we frame price action in the form of resistance levels and support levels or
anticipated bearish institutional reference points and anticipated bullish institutional reference points we have to have a context in the marketplace behind our viewpoints are we looking at the market that has a bullish scenario are we looking for a market that has embarrass scenario in this example we're going to look at a market that has a bearish example when we're looking at a market that is moving up into a potential bearish resistance level Market typically will move up and they move into a old high it could be an old low it could be a bare shorter block
it could be a breaker that we'll learn more about it could be a multitude of things that would lead your opinion into the realm of resistance okay but without going into great detail what that may be there's multiple opportunities to frame that idea of being resistance if a resistance level is expected or you anticipate some selling pressure at a particular level as is indicated here what we do is we wait for price to indicate a confirmation that there are willing sellers up there if the market does show repricing then it realize one more time up
to it what we're going to be doing is monitoring does the market have a willingness to want to break down and eventually the market will show signs that it does in fact want to break lower now if you look at this specific pattern here this is what is referred to as an M pattern y because it looks like a giant M okay well when you have this pattern here it's a failure swing with a confirmation break in Market structure that low right here is what you're going to be utilizing to frame the context of the
market structure shift so a net shift in Market structure is seen here with a break below that old low that gives us confirmation that the market does in fact have participants on a large scale willing to drive prices lower and that's what we need as small Traders we have to have the willingness to have the smart money indicate their cards if you will show in other words show their hand do they want to send prices lower or do you want to send prices higher in this case this is indicating that the market does in fact
have confirmation that it wants to go lower so what we do is we look at this range from that short-term low up to that short-term High inside that range there has been buyers but the problem is is now those buyers are underwater this short-term rally in Price highlights a specific institutional reference point known as the mitigation block once price posts a market structure shift lower your attention as the trader moves to this specific low in price right there inside that low what we're going to be focusing on is the last downed candle because the last
down Kindles where the buying took place right before that little short-term rally up since price broke below that low at a subsequent later time which is really no um there's no rule as to how long it takes before that low is violated we just note it and when it's broken it's seen as a short-term support level that's given way with a bearish context behind it so when we see that we're seeing the evidence is that there are smart money entities behind the marketplace driving price lower now at first glance it looks like well this is
a missed opportunity but no what we do is we focus on this low because that last downed candle will give us a bearish level to sell into when price drives back up into that old short term low we just referenced there's going to be three reference points that you need to be aware of the market structure shift is seen here we're retracing back into it right there what three points are used at this moment you have point a point B and point C when price action returns to the point of a reference the long positions
taken from A to B price swing will have an opportunity to liquidate or mitigate their losses that were occurred during the price move from B to C now this can result in new lower price swings to C for retesting or a significantly lower price move into a support level that's under the market price in short this is an opportunity to sell whatever particular Market or asset class this is as the market breaks lower let's say you look at the chart this is what you see here it does not mean that you've missed an opportunity it
just means that now you have a new opportunity that's unfolding do the Longs in here in that short term low that has short-term high do they need to be mitigated we don't know for certain but if you do have a belief that price is going to be moving lower longer term that there's an unrealized lower support level for sell side liquidity that has not been tapped into yet we could be viewing this short-term rally in here as an opportunity for a new selling opportunity we have another Market structure shift so where's our Focus given what
was explained in the previous example where's our Focus right now as a Trader why are we looking at a specific level and what are we anticipating that low right there inside that low the last down candle that's what we're going to be looking for price to reach back up into if it does that we can be a seller at that moment as price dries back above it into that low we're watching price trade into that last down candle right before I had that short-term rally before rated that moment here we're looking to go short as
price hits that last down candle in the previous short term low where's your focus at this moment we're anticipating price to move down from this point here which is giving us a short opportunity to run the liquidity Out Below this short term low here and potentially as low as our higher time frame support level as price hits our longer term support level or anticipated bullish institutional reference point which could be an old high it could be an old low it could be a bullish order block many many opportunities to frame that idea but whatever that
is that forms your idea for support this is the objective that you could be reaching for as price hits that level we would be collapsing our trade and moving to the sidelines waiting for new developments when we had this in the marketplace what we're seeing is the classic support broken turns resistance every time price moves back to an old low it's actually happening is it's referred to as buyer's remorse the buyers at the previous short-term low that saw a short-term pop in their favor then eventually saw the American break below that low they bought that
when price gets back to that level they're remorseful for buying it so they bail but on an Institutional level the smart money understands these short-term fluctuations and they can drive price on a short-term basis higher or lower through manipulation so if they're going to manipulate price on the short term by having large orders come in and push and Bully market pricing around they're going to want to liquidate their Physicians because just like anyone else they don't want to incur losses so this gives them the opportunity to mitigate those losses premium price Highs are bought by
less informed Traders and sold by smart money which are you going to be grouped in we're going to look at a quick example and I draw your attention to a liquidity avoid in here and there's equilibrium of that liquidity void body's a body end or where's the open and close and we're going to highlight that reference point here except halfway point of this equilibrium the idea is we broke this high back here we're expecting continuation on the upside Market trades higher but it shows a breakdown in here okay in here this failure swing right there
we're gonna be looking at this low and I'm just going to drop horizontal lines in on the respective lows [Music] and this will be a new mitigation block when we drop down into the lower time frames in order to sell off there it sells off breaks this low here to the last down candle on this move here is there so once price trades back up that's a sell right in here and choose it just overshoots it by a little bit but nonetheless it breaks lower right here so now our attention is on this low every
rally that sees lower prices needs to be mitigated right here so if we trade back up to that low that's a cell right there's a cell we're gonna be aiming for a move back below this low ultimately down into our equilibrium of our liquidity void right here well it comes in at 1 11 48 11 48. here's a short-term low hits it trades lower trades back up into the last down candle hits it overshoots a little bit but it's inside the body of the candle which is with a mitigation block represents price trades down below
the last down candle here and we have another lower low here so we can adjust that one to that low there right there price hits that objective is going to be break below this low sells off goes through it and ultimately goes down into our mean threshold of the liquidity void so a couple different things shown in here as an overlap study on mitigation let's take a look at a 30 minute chart on the same price action here's the mean threshold liquidity void last down candle great for the up move price hits it sell it
right there this is a mitigation block everything that was used to drive price higher once it's traded below here it's underwater they're going to want to mitigate those losses at that candle sell short this last down candle here is violated here it probably trades back up to it here we can be a seller the bodies the whole entire candle is used not just the bottom but we can be a seller down here so it could be a short seller at 112.62 and our stop has to be somewhere above the down candle in here okay so
that high on this candle comes in at 112.89 so it needs to be above that in the form of a stop so we could be seeing just a little bit of draw down in here about 20 Pips or so but never getting much above this down candle probably trades lower violates a very convincing break down here last down candle the low trades up now again notice the body of the candle is not violated this is Hallmark characteristics of a of a mitigation block price trades up into it we're expecting prices below this low now and
ultimately reaches down into our mean threshold of the liquidity void then ultimately I'll give you a view of what took place price eventually started moving back up so hopefully this helped you with mitigation blocks we will still talk more about it again in the PDF file for your December 2016 ICT mentorship study notes until next time I wish you good luck and good Trading
