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Monday, January 15, 2024

The ICT Judas Swing | Michael J. Huddleston

The » Judas Swing « is an engineered false price run meant to trap traders into taking positions in the wrong direction. Traders can use this to catch the high or low of the day and sometimes even the week if the proper narrative is in play. A Judas Swing can happen either in the London or in the New York session; however it is most common during the London session. During the London session Judas Swing price action usually trades above or below the week's opening price and manipulates buy or sell stops. The Judas Swing usually runs into keys levels such as the previous week's, the previous day's High/Low and the previous session's High/Low, into premium/discount levels, and into imbalances (Fair Value Gaps, FVGs).
 
The concept of a Judas goat leading sheep to slaughter can be applied to price action in trading.
The London session Judas Swing can set the session's or the day's high or low. 
This will come as a quick spike price action hunting for buy or sell liquidity. 
 
► The London Session Judas Swing - Bearish Scenario
The London Judas Swing refers to a false move in the market during the London session that tricks traders into believing the price will continue in a particular direction but then reverses. Focus on trading and identifying the London Judas Swing between New York midnight to 5 AM (New York Local Time).
 
  • Mark Highs and Lows of the Asia Session: Identify the highest and lowest price levels reached during the Asia session.
  • Mark New York midnight candle opening: Identify the opening price of the candle at New York midnight (NY 00:00).
  • Check price trading above New York midnight: During the London Kill Zone (typically from the start of the London session until around 5:00 AM NY local time), check if the price is trading above the opening price of the candle in New York midnight.
  • Check for Liquidity Grab at Asian high: If the price is trading above the New York midnight opening during the London Kill Zone, check for a liquidity grab at the Asian session high.
  • Identify Market Structure Shift: Look for signs of a market structure shift, indicating a potential change in the market direction.
  • Find a favorable entry point (e.g. a Fair Value Gap): Based on the market structure shift and liquidity grab, identify a favorable entry point that aligns with the anticipated market direction.
  • Target: In an ideal scenario, set the target at the Asian session low or any visible sell-side liquidity, aiming for a profitable trade.
► The London Session Judas Swing - Bullish Scenario
Here’s a step-by-step breakdown for the bullish scenario, focusing on identifying a liquidity grab at the low of the Asian session during the London Kill Zone, finding the Market Structure Shift (MSS), determining a favorable entry point (FVG or IFVG), and setting the target at the Asian session high or buy-side liquidity:
 
  • Identify Liquidity Grab at Asian Session Low: During the London Kill Zone (between New York midnight to 5 AM NY local time), observe if the price trades above the New York midnight opening and check for a liquidity grab at the Asian session low.
  • Find Market Structure Shift (MSS): Look for a significant change or shift in market structure, such as a clear indication of a potential bullish movement.
  • Determine favorable entry (FVG or IFVG): Based on the observed market structure shift and liquidity grab, identify a favorable entry point (FVG) or an improved favorable entry point (IFVG) that aligns with the anticipated bullish movement.
  • Set Target: In this bullish scenario, set the target at the Asian session high or any visible buy-side liquidity, aiming for a profitable trade.
► The New York Session Judas Swing - Bearish Scenario

  • Time Frame: Focus on trading from 7:00 AM to 9:00 AM (New York Kill Zone)
  • Price Condition: Confirm the price is trading above 7:00 AM and the NY Opening.
  • Buy Side Liquidity Hunt: Wait for a move higher to trigger buy orders (liquidity hunt).
  • Market Structure Shift (MSS): Look for a significant shift indicating a potential bearish direction.
  • Favorable entry (FVG or IFVG): Identify a strategic entry point aligning with the expected bearish movement.
  • Target: Aim for sell-side liquidity or visible sell-side order clusters.
► The New York Session Judas Swing - Bullish Scenario
  • Time Frame: Focus on trading from 7:00 AM to 9:00 AM (New York Kill Zone)
  • Price Condition: Confirm the price is trading below 7:00 AM and the NY Opening.
  • Sell Side Liquidity Hunt: Wait for a move lower to trigger sell orders (liquidity hunt).
  • Market Structure Shift (MSS): Look for a significant shift indicating a potential bullish direction.
  • Favorable entry (FVG or IFVG): Identify a strategic entry point aligning with the expected bullish movement.
  • Target: Aim for buy-side liquidity or visible sell-side order clusters. 

Understanding the ICT Judas Swing.
 
 Ritchie Naso, a 40-year veteran NYSE floor trader:
 » Algorithms control the stock market. «
 
Reference:
 
 
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