Smart Money Concepts versus Long Money ConceptsFor the past 2 years I'd say I endowed myself in the study of a few technical approaches, and I have to say the most flawed is using smart money concept annotations to build a trade bias, as each annotation from a BOS, to order block can be subjective on every time frame.
I feel the overlying goal for any trader is to first align themself with the trend.
As you see on this chart, I have a refined, untapped order block on this 15 minute chart succeeding a bleed off in the previous session followed by what most traders perceive as a dead range but it isn't. I've come to notice in these ranges, price tends to scatter interest using a series of corrections
on lower timeframes. Flats, Running Flats, and Diagonals are scattering price movements, but nowadays they call them complex pullbacks. Shaking my head. It's complex because the language you are trying to codify the price movements with does not align with the environment.
Now order blocks in line with the trend are high probability, but is usually succeeding a correction.
I think ever since liquidity became a focal point of most traders as now it is a buzzword, most traders only look for nuances such as CHOCH, which is simply an ABC, with order flow being extending and clear intentions made in the C leg.
I mean it sounds cool, but its all buzzwords, and have no relation to the true nature of pricing.
Price does not just move, reverse, or stop. It fluctuates in what may seem as unpredictive nature but in all reality its all mathematical and involves keeping a study of price action and the models you build using the same predictive format. Of course with the addition of granularity into the lower timeframes,
trying to trade order blocks may seem incomprehensible, because at most times it is.
Understanding Price cannot be done with SMC alone, and I feel most traders who do employ the idea of SMC are looking for marketability factors for their trading and more or less uses ICT concepts to overlay their own trading understanding,
ICT even said himself that Order blocks are just visual representations. Visual representations of price activity at specific point in time. But what did the order block accomplish? Why are you positioned within the order block itself?
This is why I don't trade SMC and removed it from my trading understanding and rather I u
It doesn't build enough context.
Now lets add context to this bearish order block at (C)5 on the 15M.
We can make assumption that the strong order flow in the sell to buy includes the 3rd wave extension as price made a sub minor correction in the 47 percent area of the sub impulse (C)5, which is the (A) wave.
At the print of the A wave, the bullish sub impulse was so weak, it didn't shift any order flow on the 4H chart, but in contrast, the correction back into order flow gave print to wider range bear candles in comparison to the previous bullish order flow.
Although corrective, price made clear objective to extend price downward over time with a definable 3rd wave extension and impulse back into the untapped supply to demand flip which is another SMC concept. This if course brought in many traders of this concept, and with it trade stops just below the order block which was eventually ran as you can see.
Now for everything else. Ill just update the idea if requested. Im tired of typing at this point. Thank you though and feel free to comment.
Orderblock
$XAUUSD - CoT Suggests A Quick Short Before the Long Run *SMT*Inverse relationship with the dollar may also suggest a quick short as the dollar just dropped from the all time-high. The dollar may start to pull back down and if so we should see Gold rise. But not after it shorts from the next bearish order block to the nearest Bullish order block and by looking at the Commitment of Traders for Gold Futures, it appears that the longs outweigh the shorts over all. But short term there are mostly shorts. Here's the daily up close to see how the CoT Compares.
As we know bonds have not been great this year and currency chases the bond yield . If the yield is inverse the bond then It may suggest that all currency become weaker which would make gold more valuable. That's why I believe this may be the last short to capitalize on before it takes off.
I expect the short to happen during the London session just a little after midnight NY Time, I would expect the gold start creeping higher until it around 2-3 a.m. a rush up into that bearish order block and then a slow drop through the rest of the day until the end of the London session, that's when I would expect it hit the bullish order blck and turn around and start moving back up. We'll see what happens I guess.
Good luck and happy trading :)
OANDA:XAUUSD
COMEX:GC1!
$BTC - Last Short before Pivot to Bulishness: Near $15,825 *SMT**SMT* = Smart Money Theory = everything you think that is not retail related to trading. First, SMT does not believe that triangles, wedges , trendlines , channels, harmonics, etc. has any effect on how price reacts. I'm Sorry, but you won't convince me that Tasla or Bitcoin knows it has created a triangle and that it knows how to react from that? It does and will remember price levels, that's it. The second is to recognize that the price is not random, it is set by an algorithm controlled by those that control the asset. The Third thing to remember is regarding what price action will do - 2 things 1) move toward attacking where there is Liquidity (Equal Highs, Equal Lows, phantom Trendlines,etc.) and 2) Move toward Imbalance (Fair Value Gaps, Liquidity Voids. Open Gaps) Halfway points in fair value gaps, order blocks, Breakers, are always a price to aim for. Support and resistance onnly exist to protect profits, as soon as an institution wants more, they'll all use the same Options strategy amd that's then Support and resistance is broken. That's the basics. The rest is very unique in the vocabulary you need to have and the concepts that wrap around these ideas.*
Bitcoin - It dropped pretty hard after entering a 4 hour fair value gap. This is called an institutional order flow entry drill (IOFED). It drops down to "Support" To where retailers would probably start buying. However, If you haven't done a monthly time dframe analysis on this chart, you will be lost. There is a monthly fair value gap below current market price. After the current price hit support and came back up it then hit a bearish order block followed by another (IOFED) And this is where I believe the price will definitely take a dive as most retail positions are buying.
Here's the chart depicting such safe support and retail buying in one area
Options on the Bitcoin micro, for an institution to protect their asset would buy a put and buy a call. Therefor if it reaches the put strike price they can excericise the right to buy at that price and they want it lower so they can buy at a discount. So institutions know what retail is doing there for they can sell their assets and short the future/option to hedge against the sell. to get the price to start dropping. Once retail sees that it is dropping further than they want, then they eill start selling with Institutions pushing it down further. Institutions usually knmow the gap theory and will end their option/future at the midway of the monthly fair value gap and start buying up again at an enormous amount because this time it will be in the $15k range. This is about an 80% pullback from the previous low, which is exactly how the chart from 2017/2018 acted. So this should be the last hurrah of a drop. It can fill up the entire Fair value gap below but it doesn't have to. We'll just have to wait and see.
Heres a chart of the monthly and where that fair value gap is.
That gold line is the imbalance that price wants to fill.
2017 80% pullback VS 2022 80% Pullback
1. 2017/18
2. 2022
At first you were probabbly scratching your head or laughing at my idea. But go back and look through my last 5-6 ideas. I've pretty much been spot on the more I am involved in studying smart money. At least getting near an entry zone and hitting a take 1 profit. Thats All I need daily and I can do this for a living.
What do you think? Is $16k ish too low? or do you think lower? Why?
I think we're nearing the end of the pullback journey. based on history and Smart Money Technical Analaysis.
Also the Commitment of traders report has the institutions adding shorts to their positions. See barchart.com chart, so if the institutions believe it's still shorting, why wouldn't we? See below Barchart CoT. It's the indicator at the bottom of the chart, and the red line represents Institutional Positions. As you can see it's lowering which means it's adding more net shorts.
www.barchart.com
So good luck and happy trading.
COINBASE:BTCUSD
BITSTAMP:BTCUSD
SPX Top Down Analysis 9/27/22We are trading within a range near the most recent low on the daily after a big move to the downside. Definitely still overall bearish but we are trading into HTF points of interest to the downside, basically buy to sell setup's in the making. Missed the trade yesterday off of the range high but that's okay. Lots of news today so I won't be so quick to pull the trigger and just be more reactive today.
7:30am
USD
Fed Chair Powell Speaks
8:30am
USD
Core Durable Goods Orders m/m
0.3% 0.2%
USD
Durable Goods Orders m/m
0.1% -0.1%
9:00am
USD
HPI m/m
0.0% 0.1%
USD
S&P/CS Composite-20 HPI y/y
17.1% 18.6%
9:35am
GBP
MPC Member Pill Speaks
9:55am
USD
FOMC Member Bullard Speaks
10:00am
USD
CB Consumer Confidence
104.0 103.2
USD
New Home Sales
500K 511K
USD
Richmond Manufacturing Index
-10 -8
$XAUUSD to short after reachng 4HR FVG *SMT+\*SMT* = Smart Money Theory = everything you think that is not retail related to trading. First, SMT does not believe that triangles, wedges , trendlines , channels, harmonics, etc. has any effect on how price reacts. I'm Sorry, but you won't convince me that Tasla or Bitcoin knows it has created a triangle and that it knows how to react from that? It does and will remember price levels, that's it. The second is to recognize that the price is not random, it is set by an algorithm controlled by those that control the asset. The Third thing to remember is price will do 2 things 1) move toward attacking where there is Liquidity (Equal Highs, Equal Lows, phantom Trendlines etc.) and 2) Move toward Imbalance (Fair Value Gaps, Liquidity Voids. Open Gaps) That's the basics. The rest is very unique in the vocabulary you need to have and the concepts that wrap around these ideas.*
Even though Im calling short could also long it until it starting, However, I feel like the move to short will be a quick on and unless I set a take profit on Longing it, I may lose out on the full potential of shorting, in which I have 3 take profit goaks.
On a Higher Time Frame (4 hour) There are two imbalances neat the current price. 1 above and 1 below. The question is why do I believe it will strike these imbalances in this order? First it will appear as if that market is taking it up because there is liquidity on the sell side. More than likely it will break the little liquidity point above within the 15 min fair value gap. Here I would expect it to consolidate through the Asian Session but break the swing/spiked high during that time frame, leading retail investors to believe it will continue bullish, but will move back down under that high. At midnight NY time is when the algorithm will take effect. Whatever price it is at that time is what kind if effect price will do moving forward. I believe that after midnight it would slightly drop to convince retail traders that it's shorting, then the Judas swing kicks in. This is where it will run up into the 4 hour fair value gap where there is a daily bearish order block. Here is where to expect the price to get rejected and maybe spik e up to fill the 4 hour FVG, then you start to see the price decline due to the curtrent equal lows where there is liquidity. Institutional investors would want to hold on to their investment but make a profit of the shorting of gold and place sell stops just above the low. As all that liquidity floods the market, the price runs down into the 4 hour fair value gap below the liquidity line. At this point the price is now a duiscount in whjich institutional investors quickly pick up the tab on the cheap prices and at his poinmt yo may see the pivot toward bullishness as the dollar may start finally lowering.'
Additionally, After checking the CoT report Institutional investors have been adding longs to their positions, expecting a long eventually but until they start adding shorts, is when I expect to see longs.
Just my thoughts and thew esperience I've seen from these types of charts and formation via Smart Money,
I'm Testing my students and many have the same thoughts, so we'll just have to see what happens :)
-BodiesXWuiix
EUR/USD Order Block Setup - Support BounceEUR/USD has been bouncing between support and resistance for a month.
On the 4-hour chart, we can see the price bounce perfectly between these two zones.
The support zone - 0.99
The resistance zone – 1.005
We have a nice order block at the bottom of the support zone. I have highlighted this zone in orange.
We take the most previous bearish candle before an impulsive move upwards. Currently, we can see that the price has pierced straight into the order block zone and is currently retracing.
MY target for this OB zone is previous support at the 0.9969 price level.
We have some nice confluence for this order block zone.
We have the OB zone lining up nicely with previous support that the price likes to bounce off of.
We were also expecting the price to come back down to this level because of the price gap we see when looking to the left. I have explained this imbalance in the video below.
Not every single order block will hold. We need to find the ones that have the most confluence surrounding them and enter with proper risk management. We cannot find one and just assume that it will work. Please always do your due diligence before entering an order block.
The Vortex Trader
Topglove. Where is its orderblock & CHoCH lvl? 9/Sept/22Topglove “Conservative” traders may wait price to break RM1.140 which is CHoCH level ( subwave wave B (yellow) of last impulsive wave 5 ( Cyan Circled) to “ confirm the “long term” downtrend is “game over “ and waiting to buy at “pullback “ after the “ break out.”
Gold. Its OB, And more importantly where its CHoCH? 9/Sept/22Gold. As a “contribution” to tradingview ( many thanks to tradingview for providing such a good free charting platform) community ( Today I’m going to share my own interpretation of OB ( order blocks), and most importantly where is the “exact “ location/pivot/level of CHoCH ( change of character)?. A concept with BOS ( break of structure) which has been used by advanced naked/ Price action trading traders without any indicators. . It will cut “novice traders” learning curve from 3-5 years even 10 years where they are searching for “holy grail “ trading system/indicators..The biggest question for this concept of trading will be “where” is the exact location of CHoCH? ( change of character = change of “previous underlying trend” )..The “ANSWER” is! = at subwave b of any last leg of impulsive wave which is wave 5. < p/s unlike conventional Elliottwave rule there is ONLY abc subwaves “inside” any impulsive wave..> Last but least many thanks to @makuchaku and @Efe for coding the such a great “super OrderBlock..” script/ indicator which help us/traders to “visualize “ where is OB, FVG Although we still need to find where is “CHoCH” “manually”..
GBPUSD - Retracement, then Short
DXY is showing the willingness to go higher, which should lead GBPUSD to go lower.
We have an M formation. When we have an M formation, we want to see price retrace up to its neckline (the lowest point in between the M).
Price created a Volume Imbalance / Vacuum Block in price. This is a huge gap that price usually hurries back up to fill. I expect the majority /the whole Volume Imbalance to get filled and then go lower from there...
We have a Market Maker Sell Model which should lead price to go below the grey boxes (consolidations aka Liquidity Pool).
Easy Order Block Setup On EUR/USD – Major Bias Still ShortI see a possible Order block short setup on EUR/USD in the 4-Hour Chart.
Last week, I suggested that the major 4-hour support has been tapped multiple times. We were speaking about how lines of support eventually break if the price keeps tapping the same price point.
Well, we have seen a breakthrough. Now, we need to be careful of false breakouts.
We have a descending trend line acting as resistance and we have seen multiple order blocks succeed in the past few weeks for EUR/USD.
Taking all this into consideration as well as the fact that our bias is still bearish, we have reasons to look for further short entries.
I have highlighted the order block zone in yellow. I always look for the most recent bullish candle before the price impulsively breaks to the downside. We can see that this particular order block entry lines up nicely with the descending trend line.
We must beware of false breakouts. As we are so close to broken support, I would not risk my usual one percent or so on this setup. I would risk half of that. I would grade this particular setup as a grade B setup. We have all our requirements, rules and criteria met. However, because we are so close to broken major support and we do have strong bullish volume, this concerns me. So whilst I would trade this just like any other order block, my lot size would be smaller and my risk would be less.
I am waiting for the price to push back up into the yellow order block zone. I always aim for a minimum risk to reward of one to two, or one to three. My stop loss would be placed a few pips above the high of the order block zone. My entry would be somewhere in the middle of the order block zone. My target would be the previous price structure which is the broken support level at the 0.991 price point.
This is just one possible setup out of many. If this setup hits my stop loss, I'm perfectly ok with that. I simply move on to the next one. Remember, trading is a game of probabilities. We don’t know which way the dice are going to roll. However, if we know that if our edge wins a certain amount of times out of a hundred, then we know that eventually, sooner or later, we will come out on top and in the green.
I hope you all have a great Wednesday.
The Vortex Trader
EUR/USD Order Block SetupToday I am trading a possible Order block setup on EUR/USD in the 4-Hour time frame.
Looking left, we can see that we had 4 wicks touching the previous support level. We then had a candle push through and close below that level.
This setup is very similar to yesterday's post on AUD/USD. The same rules for the position have been met.
I looked for the most recent bullish candle before the bearish impulse sending the price below this support level. I highlighted this candle from bottom wick to top wick and extended it right. This yellow zone is called the Order block zone. We can also abbreviate it and call it the OB zone.
I am now waiting for the price to retrace back into this yellow OB zone before opening up my short position targeting the previous price structure around the 0.997 price position.
EUR/USD is still bearish in my opinion. This means I am still looking for short entries.
Depending on where we place our entry will impact our possible risk to reward. Some traders place their entry at the very bottom of the OB zone. Some traders use the very top point of the OB zone. I prefer to place my entry somewhere in the middle of the OB zone. My stop loss will be a couple of pips above that previous large wick. I use this area just so I can protect myself from any possible stop hunts.
My risk to reward will be 1 / 2
Order blocks need copious amounts of backtesting. There are so many ways of trading them. Some traders will spot them in higher time frames and then use lower time frames to enter them. I am a swing trader and only have time to enter on the 4-hour chart. This is why I trade them as I do. Use volume to help confirm price movement and always remember to trade with the current trend. Trading against the trend is more tricky and can be hazardous to your trading account.
Remember to be mindful whilst trading.
See you on the next one.
The Vortex Trader
Bearish bat Usdjpy has created a bearish bat pattern in h4 chart, we see the XA leg as an impulsive leg because the swing in A broke a previous low and this thing is really positive because shows that the sellers are becoming stronger and it could be a first signal of a Change of Character (market changed from bullish to neutral now).
We have fundamentally 2 possibilities to trade this kind of setup , the first one has the imbalance as target, that specific zone is really intereasting because there is an orderblock whereas the second opportunity can let us make big money if price breaks the lat low and starts a mean reversion.
Send me a message if you want to be updated and trade with me and my team!
Enjoy your trading and apply solid MONEY MANAGEMENT RULES!!
tHE ITALIAN TRADER!