Phase 1: Accumulation (or consolidation)
Phase 2: Manipulation. Buyside liquidity gets captured while rebalancing into FVG above. There doesn't need to be a FVG above, for price to be delivered from after the sweep, but if there is, it's more confluence towards the setup/trade, and higher probability in my opinion.
Phase 3: Distribution. We then have a displacement leg down (MSS - Market Structure Shift). This is the first level of distribution. Price shifted down below reaching into a daily FVG. This displacement leg (MSS) forms and leaves a FVG (imbalance) as a result of the rapid downward movement. The shift in market structure can also be confirmed at the breaker block price (first short term low after Liq Sweep above), but the stronger one below it is more clear.
After the MSS, we then have about 60% retracement back up into the FVG. This retracement has led to a balanced price range, creating the possibility for a subsequent downward movement, this will be the next real distribution phase. Price has also approached the breaker block, which refers to the prior bullish order block responsible for the buyside liquidity sweep above (last bearish candle before the sweep above is the OB). Following this downward shift (MSS), price broke below this block, hence the name 'breaker block'. This sequence appears to be intentional and planned. Remarkably, the entity that originally went long at this level is now actively shorting from the very same price point. The engineered order block that was previously bullish becomes bearish.
The first distribution phase is usually smaller than the second. The first is Smart Money showing their hand. The first is the MSS that usually leaves a FVG. We then look for an Optimal Trade Entry (OTE) to get in on the second phase, which is the actual phase than moves price to a new range. The OTE is the retracement back to the FVG (or Breaker). The retracement is ideally at a golden Fibonacci ratio, typically ranging between 60% and 79% of the Displacement leg down (MSS). There are equal lows below current market price, just over 700 points lower. These equal lows will be breached. The equal lows are the target.
The only conflicting data here is: HTF discount.. and the Daily FVG that price came down into. It could be a strong zone for price to bounce back up from. This means we'd have a Judas Swing, which is two levels of manipulation: 1. Up (true direction) to trick buyers too early 2. Down below to trick sellers in (liquidity grab), then reversal back to the upside and continuation higher. The question then becomes: is there any reason or are there any PD arrays above for price to target..? Nothing that close to current price.. However, there must be a pool of liquidity (sell stop order & buyers SL's) below the equal lows. Buyside liquidity above has already been taken. There is more imbalance below current market price than there is above. Theres more reasons for the Dow to reprice lower from current price. If you also look on lower time frame starting from the 1H, you can see how the bodies of the candles are respecting and staying inside the FVG.
Recap.. We have:
Draw on Liquidity ✔️
Market Structure Shift ✔️
Which Leaves a FVG ✔️
And Breaker Block ✔️
Retracement back to FVG and BB ✔️
All in the Power of Three (PO3):
ACCUMULATION, MANIPULATION
DISTRIBUTION ✔️
NOW WE WANT TO CATCH THE DISTRIBUTION
LEG DOWN WITH THIS OPTIMAL TRADE ENTRY
(OTE)
On lower timeframe 1m-5m, you'll also be able to look for an even more accurate and better timed OTE. If analysis is correct and we are going lower, and you'd rather enter on smaller timeframe to prevent taking too much heat, look for a high to be breached on lower timeframe and the same thing (fractal): MSS; displacement back down breaking below nearest previous short term low which leaves a FVG. Wait for the next candle(s) to retrace up to the FVG and boom, short activated.
Phase 2: Manipulation. Buyside liquidity gets captured while rebalancing into FVG above. There doesn't need to be a FVG above, for price to be delivered from after the sweep, but if there is, it's more confluence towards the setup/trade, and higher probability in my opinion.
Phase 3: Distribution. We then have a displacement leg down (MSS - Market Structure Shift). This is the first level of distribution. Price shifted down below reaching into a daily FVG. This displacement leg (MSS) forms and leaves a FVG (imbalance) as a result of the rapid downward movement. The shift in market structure can also be confirmed at the breaker block price (first short term low after Liq Sweep above), but the stronger one below it is more clear.
After the MSS, we then have about 60% retracement back up into the FVG. This retracement has led to a balanced price range, creating the possibility for a subsequent downward movement, this will be the next real distribution phase. Price has also approached the breaker block, which refers to the prior bullish order block responsible for the buyside liquidity sweep above (last bearish candle before the sweep above is the OB). Following this downward shift (MSS), price broke below this block, hence the name 'breaker block'. This sequence appears to be intentional and planned. Remarkably, the entity that originally went long at this level is now actively shorting from the very same price point. The engineered order block that was previously bullish becomes bearish.
The first distribution phase is usually smaller than the second. The first is Smart Money showing their hand. The first is the MSS that usually leaves a FVG. We then look for an Optimal Trade Entry (OTE) to get in on the second phase, which is the actual phase than moves price to a new range. The OTE is the retracement back to the FVG (or Breaker). The retracement is ideally at a golden Fibonacci ratio, typically ranging between 60% and 79% of the Displacement leg down (MSS). There are equal lows below current market price, just over 700 points lower. These equal lows will be breached. The equal lows are the target.
The only conflicting data here is: HTF discount.. and the Daily FVG that price came down into. It could be a strong zone for price to bounce back up from. This means we'd have a Judas Swing, which is two levels of manipulation: 1. Up (true direction) to trick buyers too early 2. Down below to trick sellers in (liquidity grab), then reversal back to the upside and continuation higher. The question then becomes: is there any reason or are there any PD arrays above for price to target..? Nothing that close to current price.. However, there must be a pool of liquidity (sell stop order & buyers SL's) below the equal lows. Buyside liquidity above has already been taken. There is more imbalance below current market price than there is above. Theres more reasons for the Dow to reprice lower from current price. If you also look on lower time frame starting from the 1H, you can see how the bodies of the candles are respecting and staying inside the FVG.
Recap.. We have:
Draw on Liquidity ✔️
Market Structure Shift ✔️
Which Leaves a FVG ✔️
And Breaker Block ✔️
Retracement back to FVG and BB ✔️
All in the Power of Three (PO3):
ACCUMULATION, MANIPULATION
DISTRIBUTION ✔️
NOW WE WANT TO CATCH THE DISTRIBUTION
LEG DOWN WITH THIS OPTIMAL TRADE ENTRY
(OTE)
On lower timeframe 1m-5m, you'll also be able to look for an even more accurate and better timed OTE. If analysis is correct and we are going lower, and you'd rather enter on smaller timeframe to prevent taking too much heat, look for a high to be breached on lower timeframe and the same thing (fractal): MSS; displacement back down breaking below nearest previous short term low which leaves a FVG. Wait for the next candle(s) to retrace up to the FVG and boom, short activated.