welcome back folks this is the third teaching of eight from the december content of the ict mentorship we'll be talking about reinforcing order block theory selecting and avoiding and we're going to first talk about the bullish order block everything i say here you'll just reverse for a bearish order block to save time definition of a bullish order block is the lowest candle or price bar with a down close that has the most range between open to close and is near a support level validation of a bullish order block is when the high of the lowest down candle or price bar is traded through by a later formed candle or price bar entry techniques using a bullet shorter block when price trades higher away from the bullish order block and then returns to the bullish order block candle or price bar high this is bullish and can be used for a bullish entry defining risk with bullish order block the low of the bullish order block is the location of a relatively safe stop loss placement just below the 50 percent of the order block total range is also considered to be a good location to raise the stop loss after price runs away from the bullish order block to reduce risk when applicable okay let's take a look at a supposed support line now that can be in the form of a old low on a long term or higher time frame chart it could be an old high where price has moved above recently and now we're trying back down into it so simple support resistance ideas are just enough here but the main thing is you want to be using it on a higher time frame charts like a monthly weekly or daily and eventually you'll see price trade down into this level that you identified as a support level once price trades down into the support level and it could trade to it or just through it doesn't make a difference but what we're doing is we're waiting for price to show us indications that smart money or a large body of big flows or those individuals that are on an institutional level they have a whole lot more collectively than we do in terms of money when they participate in a move it'll be seen in price action so when we have this down candle we have already assuming that this may be a bullish order block we don't know that yet until at a later time when another candle trades through it what are we specifically aiming for we're identifying our focus the down candle is high when that is violated with a new candle and it trades through that high now we have a validated bullish order block this candle validates the down candle as a bullish order block now this moment if we trade back down once that down candle or suspected bullish order blocks highs violated we can now highlight that candle's high and even in the very candle that broke that down candle's high if it trades back down to that down candle's high or the voltage order blocks high that could be a retraded price that which we could day trade off of or enter our longs early in other words we don't have to wait for a later time for it to trade back down to this level eventually price will run away at this point if you didn't enter on a re-trade at the bullish order blocks high you're simply going to be waiting for price to want to pull back now we have indications that there has been displacement in the marketplace that means someone with a whole lot of money and a whole lot of interest wanting to see higher prices is now in play they are participating in the marketplace this is the evidence in price action that you have institutional sponsorship behind the move large flows or institutional traders have the capacity to move price whereas we as lower grade traders in terms of retail or smaller traders in terms of respect of a bank or a large entity in an institutional capacity we can't move the marketplace but they as a whole collectively can so what we do is we wait we're patiently watching price we anticipate prices start to retrade back down into that down candle or bullish order blocks high at this moment we can set alerts we identify the high on that candle now i'm using the bodies of the candles you may end up using the wick but i want your focus primarily on the bodies of the candles and when we talk about wicks i'm going to overlap order blocks with fair value gas because that's going to be the answer to many of your questions as it relates to when do we use the wicks and when do we use the buys of the candles but primarily i want you focusing on the bodies of the candle when we're talking about order blocks as a whole so at some point when we see that level okay that high of that order block when we're close to it we can now set an alert we can set our platform to remind us with a text to our phone or email us or however it is that you would be uh alerted by your platform some platforms have pretty sophisticated means of contacting you others are just simply a you know an audible alarm that goes off on your computer to draw your attention to a specific market but until then you're going to submit to time you're waiting now this is sometimes the hardest thing to do as a trader we identify what we're looking for in terms of a entry but you have to wait for price to get down there while price is trading lower you should already formulate an idea of what it is that you're going to do in terms of risk how much you're going to put on the trade when you buy long and where you're aiming to get out of a market with a profit all those things should be factored in during this time eventually price will drive down into that down candle or bullish order blocks high at that moment if you're in front of your charts that's when you enter the market with a long position if you have a limit order you're going to add a few pips and preferably it's about five pips we like to add to a bullish candle and that way the spread will be able to kick us in on a long entry but you don't have to always rely on a limit order you can go and rate the market as it hits that down candle now sometimes it'll drive a little bit deeper into that bullish order block and that's okay but for now i want you to try to key off your demo entries on the down candles body of the candle the high and the cut or the open in this instance any down candle the body is going to begin with the opening and it ends with the close what we're actually looking at is internal range liquidity now when we're trading inside the range and that range is defined here what we're looking for is an expansion up into a known level of what what's up there well that's going to come in the form of external range liquidity the external range liquidity is where we're going to be looking to offset some or all of our long position now we identified the buy level we've entered the market before we do this what we've should have had in mind is i ideally where we're looking to take our profits that's up here above an old high and that's going to be in the form of buy stops so if we're buying or entering long inside of a known range at a bullish order block at internal range liquidity we're buying the liquidity it's offered at that level we're going to be looking to sell our position to willing buyers in the form of those individuals that hold buy stops above that old high that's all well and good for profit taking but what do we do for risk we take our attention back down to that bullish order block because it's going to give you everything you need for your trading plan we identify the entry at the open of the down candle that's our buy point or five pips above it but we want to focus our attention in the midway point of that down candle that's going to be in the form of the mean threshold ideally the best order blocks will not see price trade down below the midway point of the entire body of the candle you're going to measure the open to the close on the down candle to measure where the middle of it is do not use the wicks don't use the very high or the very low measure your fibonacci level 50 level or halfway point is the mean threshold only on a bullish order block it's the same thing said with a bearish order block but you just don't want to see price drive down deeper than the mean threshold by very much it can stab through it just by a little bit but we primarily don't want to see it trade down there at all the better order blocks won't do it at all and your protective cell stop is going to be below the bullish order blocks low or below the close now at this point depending upon where that low is it could be the low of the wick but primarily you're going to be looking at the low formed by the close of the body of that candle now again focusing on what we anticipate in price eventually price should show a responsiveness and trade up and through our old high when that happens you're going to be looking to take partial profits or all your profits depend upon how big that move was and how much profitability you obtained what you're actually trying to do is you're going to be pairing your long exit with willing buy stops and that is essentially bullish order block trading in a nutshell it's been complicated by many people on the youtube that's adopted it and those that want to use it on twitter and on social media they've shared some several ideas but i want to focus on the simplicity of them here and then we're going to graduate into more teaching uh later on in this month that are going to be subordinate sub topics that are going to be taught to you during the week of christmas so i'm going to give you actually more amplified teaching with the order block so this is not the entire treaty on [Music] order box as it relates to buying and selling okay liquidity based bias okay if the monthly chart is bearish the weekly charts bearish and the daily charts bearish that'll give us a wonderful opportunity to get in sync with institutional order flow intraday charts four hours and less will be correcting and retracing higher now again the markets are predisposed to go lower because the monthly weekly daily we have arrived at a bias that we have seen price want to go lower it's been making lower lows and lower highs support levels are giving way resistance levels are being formed and being respected when you see those evidences in price along the lines of the monthly weekly and daily we can zero in on the four hour okay and start looking for liquidity on the buy side in other words there's going to be a premium built into the marketplace or a rally you're going to be looking to sell rallies protected by stop raids or returns to bearish order blocks or fair value gaps and or filling of a liquidity void each offering a potential low resistance liquidity run shorting for a target under a recent low what low would you be targeting well you want to be primarily looking to see what's near term on the daily chart what liquidity is resting on that daily chart your trade on a short could be looking to take advantage of buying back below a daily low where cell stops would be resting if there is an objective that you can see on the weekly chart much in the same way we would have identified something on the daily we would be looking for that objective as well primarily you'll be trading in the direction of the monthly chart because that's where the large funds and institutional order flow is going to begin and then it moves down into the weekly chart then it moves down into the daily chart the daily chart is the most dynamic of these three time frames and you'll see a lot more trades that actually counter long-term higher time frame institutional order flow so that weekly chart will have a lot longer time period required to change direction versus the daily chart that can go up and down in multiple times and still maintain the bearish nature of the weekly and the monthly and obviously the monthly takes a long time to change directions and that's where the power of what i'm going to teach you in this module will give you okay liquidity-based bias for a bullish monthly chart bullish weekly chart and a bullish daily chart interest rate charts four hours or less will be correcting and retracing lower this is where you anticipate the market to enter into a discount and seek sell side liquidity to buy from and what we just showed you an example of was the bullish order block that you would use in this instance and we're actually going to go into the dollar index and actually break it down show you all this conceptually protective cell stop raids or returns to bullish order blocks or fair value gaps and or filling up a liquidity void each offering a potential low risk liquidity run buying for a target above a recent high just like we were referring to earlier you're going to be aiming for something on the daily chart preferably and you're going to be looking for buy stops above the marketplace on a daily high it could be an um it could be yesterday's high it could be last week's high that you can see on the daily chart it could be last month's high it could be intra week high okay but try to find something on the daily chart to give you a trade in terms of uh framing your idea that you want to be a buyer and then preferably look for something in the weekly chart that would support even higher because if you have something higher on the weekly chart you probably will have a lot better odds behind your trade if you're looking to move into a level on the weekly chart and preferably obviously the monthly chart if it's bullish you will be in sync with the institutional overflow that will be seen by studying that time frame so let's take a look at the monthly weekly and daily on the dollar index and give a conceptual idea of what i'm referring to here using bullish over blocks let's take a look at the resistance levels you see here we have equal highs here okay and price came down and hit level of [Music] support [Music] so that happened here okay so we know that there's equal highs up here so what's above equal highs what was taught to you in september it's going to be in the form of buy stops it's too clean too neat and price come down cleared out an old low but we're not going to talk about stop runs here we're going to look at this as a support level okay all we're doing is classifying this as a support price comes down hits that okay and we're gonna wait to see if there's a willingness to trade away from it we see it happen here when that occurs this up candle violates the down candle right before the level was hit at this support level so once we have that [Music] we now have a order block that's validated so now we can be a buyer if price comes back down into this candles opening where it starts to body the candle that price level is 94. 58 and just double check that the opening is 90 458 yes correct so when price trades back down into it as you can see here move a little bit more show more data [Music] price trades down into it on this candle now it quickly moves away from it on this candle here [Music] but at that moment when it hits this okay the the low on that candle comes in at 9406 9407 and the level we had here is 94. 58 so about uh about 50 pips [Music] thereabouts in terms of movement through the level and again this is a monthly chart so a little bit of uh flexibility is necessary i'm looking for very easy to find low resistance liquidity runs with a bullish order block so when price hits it this particular month is august of 2016 so we could expect to see some bullishness in august and i'll let you see the rest of the data here you can see clearly that the market did in fact trade all the way up through to equal highs here the present time of this recording uh december 2016.
and we're going to take another look at this down candle here because this order block becomes another support level remember if we anticipate bullish price here doesn't that by nature support price in the form of support and resistance ideas so this level here if we see a down candle off of that level that could be a potential bullish order block as well remember it's going to be trading down into that level and why are they doing this they're going down there to pick up more opportunities to get long at a cheaper price more discount price so when price was a bearish can locator that's when the order block would have been hit again okay and then what do we have here on this candle it violates this down candle's high okay and the open on that candle is the open is 95. 98 and the level is 95. 98 on our level here on the segment and you can see price hits that level here it opens on this candle and trades all the way down hits it this would be another support level chances of 18 prices trade higher so we're going to do is we're going to drop down into a weekly chart and we're going to start looking at this month here and we're going to put a vertical line there delineating everything to the right of this vertical line and i'm going to highlight it big and bold so we can't miss it and we'll just make it a big old bright red color okay so now we're going to drop down into a weekly chart and we'll see how this gives us a weekly bias as well here's here it is here price trades down into that level okay price rallies away when price rallies away like that we're going to be looking for an objective to go long on this level in here right in here so how many times did price move away from this down candle is by and identified again we're going back out to a monthly chart [Music] that's this level here so in may prices validated that order block in may okay so we're going to move over into may there's may okay and here's the order block level on the monthly chart so price trades down into it here and we wait to see does price want to rally away we're in this is the level you have to be identifying because it's the monthly order block the bullish order block on a monthly level so we're gonna broaden that one up a little bit [Music] okay and then price is trading down into that so what are we waiting for we're waiting for evidence to support the idea that the large traders want to send price higher price does that here it violates this down candle right here it's it's high is broken right there okay right there so now this order block on a monthly level can be refined to this level right there okay so price trades through this down candle now this down candle in a weekly has been refined from a monthly level so now we can anticipate this level if it's traded back down into it we could be a buyer at that level we see that happening here price trades down into it notice the down candles midpoint or mean threshold right here just pierces it just a little bit but does not go down below the body of the down candle what do we do we identify we're in a range the range is this low to this high it's trading back down into internal range liquidity absorbing some more buys in this down candle we should see the responsiveness on the upside now mind you this is a weekly chart look at the body's respect of this down candle's opening okay yes it trades down through a little bit but we could be a buyer at that level here with the expectation that we're going to see a run we're at right above these highs okay right above these highs so now here's when bearish order blocks are not considered this up candle great for this down move here we would not look to that as a selling point we don't look at that as we're going to get short here when it trades up to that this up candle we don't look at that and say okay we're going to get short why because the higher time frame is suggesting we're going to be going higher overall long term in the long term trend direction is going to drive a lot more significant price action than looking for sales in other words we're going to be looking to be buyers on dips and selling on the rallies to take profit so that's when you want to avoid uh bearish order blocks because you're standing in way of institutional order flow so there's going to be buy stops above these highs here that we're going to sell our longs to they're willing buyers great we're going to be willing sellers if price gets up to that point from down here in the form of pips we have a range of almost 300 pips 290 pips potential range there okay and there's nothing wrong with that so now also we have this level in here we can be keying off of on a daily time frame and we can use a four hour time frame as well to refine that we're going to look at this level here price shows the willingness to want to move away and it does we can now identify this level here which was the other monthly higher bullish shoulder block we're going to refine that level too well how are we going to refine it well we have this down candle right before the price moves higher this candle trading through the last down candle right here that validates this down can that's the bullish order block so we can borrow this level for a moment put it right on the opening okay price validates the bullshotter block right there okay and you can see that it trades back down through it in this instance we didn't get that much of a move away we want to see price move away we want to see that preferably what i'm looking for is a move of whatever the order block is now this is a notation for your notes okay this is the first time i've included this if you see a move here's your order block what i like to look for is two to three heights or the range if you will of the order block i want to see at least two to three times that as a rally away and that will give me a nice decent expectation to see a retracement back into to getting another opportunity to buy long we have that there price rallies up to this point here and then comes all the way back down into what we have this down candle we could have kept that there and it would we would have missed any new opportunity but look what we have here this down candle has traded into that old order block as well so now we have a higher bullish order block right here because this candles open is higher than this candle so now we can refine that same level just up to a higher time frame or not a higher time frame but a higher order block so now we can refine our level to that point right there price moves away trades through this channel's high right here validating this is a bullish order block again we're going to be looking for a rally of two to three times the order blocks body's height so it has to trade about here here here so at this point here we have a valid swing so now we can look for a retracement back down this candle's opening is 95.
85 the low on this candle is 95.
