The Monthly Price Action
In this type of price action, we focus on the month, week, and day. As an intraday trader, I spend most of my time analyzing the daily market movements. This approach utilizes Michael's theory of liquidity and the Power of Three.
The Power of Three, as taught by ICT, refers to a concept related to the daily open, high, low, and close bar on a daily chart. It involves buying near or below the opening price on bullish days and aiming for a higher close. This strategy focuses on capturing the bulk of the daily range by entering trades strategically based on the opening price and anticipating a higher close. The Power of Three can be applied to various timeframes, emphasizing the importance of understanding price movements and order flow to make informed trading decisions.
Liquidity refers to the ease of buying or selling an asset without causing significant price changes. It's about the volume of buy and sell orders in the market. As traders, we seek areas with high liquidity to find potential trading opportunities. Understanding liquidity helps us identify where buy and sell orders are concentrated, influencing market movements. In essence, liquidity is crucial for traders to navigate the market effectively and make informed decisions based on the presence of buyers and sellers at specific price levels.
Sell-side liquidity refers to the presence of sell orders or sell stops in the market. It represents the level at which sellers are willing to enter the market, anticipating a price decline. Smart money traders often target these sell-side liquidity pools to buy from them, especially when looking to cover their short positions. By identifying these areas of sell-side liquidity, traders can anticipate potential price movements and market behavior based on the actions of smart money players.
What is Price Telling Us?
As we can see, the first week of this month opened on Monday, April 1, 2024 (using the -4 time zone). The first week opened with bearish momentum, and the low of that week was formed on Tuesday, while the high was formed on the closing day, Friday. In this theory, we first look at what will form first - the low or the high - as we trade every day, seeking entry and exit points in the market. Understanding the Open, High, Low, and Close (OHLC) helps perfect our exits.
As we go along, price forms a new high in the second week of April. Since we are analyzing the first and second weeks, we can now agree that price is targeting the monthly high, and we are waiting to see if the first week's low will be liquidated. As we can see, the first week's low was liquidated, and we can say that price has formed a new high in the market."
In this type of price action, we focus on the month, week, and day. As an intraday trader, I spend most of my time analyzing the daily market movements. This approach utilizes Michael's theory of liquidity and the Power of Three.
The Power of Three, as taught by ICT, refers to a concept related to the daily open, high, low, and close bar on a daily chart. It involves buying near or below the opening price on bullish days and aiming for a higher close. This strategy focuses on capturing the bulk of the daily range by entering trades strategically based on the opening price and anticipating a higher close. The Power of Three can be applied to various timeframes, emphasizing the importance of understanding price movements and order flow to make informed trading decisions.
Liquidity refers to the ease of buying or selling an asset without causing significant price changes. It's about the volume of buy and sell orders in the market. As traders, we seek areas with high liquidity to find potential trading opportunities. Understanding liquidity helps us identify where buy and sell orders are concentrated, influencing market movements. In essence, liquidity is crucial for traders to navigate the market effectively and make informed decisions based on the presence of buyers and sellers at specific price levels.
Sell-side liquidity refers to the presence of sell orders or sell stops in the market. It represents the level at which sellers are willing to enter the market, anticipating a price decline. Smart money traders often target these sell-side liquidity pools to buy from them, especially when looking to cover their short positions. By identifying these areas of sell-side liquidity, traders can anticipate potential price movements and market behavior based on the actions of smart money players.
What is Price Telling Us?
As we can see, the first week of this month opened on Monday, April 1, 2024 (using the -4 time zone). The first week opened with bearish momentum, and the low of that week was formed on Tuesday, while the high was formed on the closing day, Friday. In this theory, we first look at what will form first - the low or the high - as we trade every day, seeking entry and exit points in the market. Understanding the Open, High, Low, and Close (OHLC) helps perfect our exits.
As we go along, price forms a new high in the second week of April. Since we are analyzing the first and second weeks, we can now agree that price is targeting the monthly high, and we are waiting to see if the first week's low will be liquidated. As we can see, the first week's low was liquidated, and we can say that price has formed a new high in the market."