The infographic below provides a methodology for determining market direction using Inner Circle Trader (ICT) concepts. Determining the daily bias in trading is not about establishing a preconceived bias before the market commences trading, as this approach can often prove to be inaccurate. Instead, it relies on experience and adherence to specific rules. For example, being bullish doesn't mean buying every day, and being bearish doesn't mean selling every day. Traders should wait for specific conditions to meet their expectations, such as discount arrays for bullish trades and premium arrays tor bearish trades, during specific times of the day.
Daily and Intraday Bias
Determining the daily bias in trading is not about establishing a preconceived bias before the market commences trading, as this approach can often prove to be inaccurate. Instead, it relies on experience and adherence to specific rules.
■ Bullish vs. Bearish: Being bullish doesn’t mean buying every day, and being bearish doesn’t mean selling every day.
■ Conditions: Traders should wait for specific conditions to meet their expectations, such as discount arrays for bullish trades and premium arrays for bearish trades during specific times of the day.
■ Catalysts: The economic calendar can be effectively employed alongside the daily chart to foresee potential manipulation linked to high-impact news catalysts.
■ Core Principle: Ultimately, determining the daily bias demands the amalgamation of diverse insights acquired through mentorship and hands-on experience.
■ Conditions: Traders should wait for specific conditions to meet their expectations, such as discount arrays for bullish trades and premium arrays for bearish trades during specific times of the day.
■ Catalysts: The economic calendar can be effectively employed alongside the daily chart to foresee potential manipulation linked to high-impact news catalysts.
■ Core Principle: Ultimately, determining the daily bias demands the amalgamation of diverse insights acquired through mentorship and hands-on experience.
1. Identifying Order Flow and Liquidity
To recognize bias, we must identify what "order flow" is currently being respected.
Key Questions to Ask:
2. Key Reference Points (PDH/PDL & PWH/PWL)
One of the key factors in determining daily and intraday bias is using the previous day’s and week's levels as reference points to gauge trend strength and potential price movements.
3. Swing Points and Displacement
Swing points or turning points are areas where price reverses its direction. A failed attempt to displace or close outside a swing point can indicate a potential reversal. Look for opportunities to anticipate price movement back into the range after a failure to displace. Failure to displace over old highs and lows can be used to frame a reversal.
4. The "Next Candle Model"
This model involves anticipating the movement of the next candle based on the behavior of the current candle.
To recognize bias, we must identify what "order flow" is currently being respected.
■ Bullish Markets: We expect discount arrays to support price.
■ Bearish Markets: We expect resistance from premium arrays .
■ Market Shifts: Recognizing a "change in the state of delivery" will be important when timing reversals.
■ Flexibility: Daily bias isn't a fixed concept. It can change over the course of the day due to news events, economic data, or geopolitical influences. Traders must remain flexible and modify their strategies accordingly.
■ Bearish Markets: We expect resistance from premium arrays .
■ Market Shifts: Recognizing a "change in the state of delivery" will be important when timing reversals.
■ Flexibility: Daily bias isn't a fixed concept. It can change over the course of the day due to news events, economic data, or geopolitical influences. Traders must remain flexible and modify their strategies accordingly.
Key Questions to Ask:
1. Is the price indicating a potential movement towards a previous low?
2. Is there a possibility of a surge towards a previous high?
3. Is the market currently trending towards an imbalance below or above the current price?
2. Is there a possibility of a surge towards a previous high?
3. Is the market currently trending towards an imbalance below or above the current price?
2. Key Reference Points (PDH/PDL & PWH/PWL)
One of the key factors in determining daily and intraday bias is using the previous day’s and week's levels as reference points to gauge trend strength and potential price movements.
■ Previous Day High (PDH) and Previous Day Low (PDL). These levels serve as liquidity pools for reversals:
■ Reversal Short: If price reaches the PDH but fails to break above it, this can indicate a reversal. Look for entry points to go short.
■ Reversal Long: If price reaches the PDL but fails to break below it, this indicates a reversal. Look for entry points to go long as price is unable to sustain downward momentum.
■ Reversal Long: If price reaches the PDL but fails to break below it, this indicates a reversal. Look for entry points to go long as price is unable to sustain downward momentum.
■ Displacement: Reversals can be framed off PDH and PDL when there is a failure to displace.
■ Previous Week High (PWH) and Previous Week Low (PWL): These levels are liquidity levels that can be used as a Draw on Liquidity (DOL) or to frame a reversal or continuation.
■ Previous Week High (PWH) and Previous Week Low (PWL): These levels are liquidity levels that can be used as a Draw on Liquidity (DOL) or to frame a reversal or continuation.
3. Swing Points and Displacement
Swing points or turning points are areas where price reverses its direction. A failed attempt to displace or close outside a swing point can indicate a potential reversal. Look for opportunities to anticipate price movement back into the range after a failure to displace. Failure to displace over old highs and lows can be used to frame a reversal.
4. The "Next Candle Model"
This model involves anticipating the movement of the next candle based on the behavior of the current candle.
■ Logic: If the current candle fails to displace outside a certain range, you could anticipate the next candle moving in the opposite direction. Example: If a candle fails to close outside a range, you might expect the next candle to attempt to close within that range.
■ Visual Guide:
■ Visual Guide:
■ Didn't displace above previous day high will go to the previous day low then.
■ Didn't displace below previous day low will go to the previous day high then.
■ Didn't displace below previous day low will go to the previous day high then.
Summary Checklist: Important to Remember
1. Daily Structure/Order Flow: What is the dominant trend?
2. Current Trading Range: Where is the price relative to the highs and lows?
3. Current Draw on Liquidity (DOL): Where is the price "attracted" to go next?
4. Previous Day’s Candle Close: How did it close in respect to the trading range?
2. Current Trading Range: Where is the price relative to the highs and lows?
3. Current Draw on Liquidity (DOL): Where is the price "attracted" to go next?
4. Previous Day’s Candle Close: How did it close in respect to the trading range?
Furthermore, the economic calendar can be effectively employed alongside the daily chart to foresee potential manipulation linked to high-impact news catalysts. Ultimately, determining the daily bias demands the amalgamation of diverse insights acquired through mentorship and hands-on experience. One of the key factors in determining daily and intraday bias is the previous day's high and low. These levels act as reference points that help traders gauge the strength of the current trend and anticipate potential price movements.
To recognize bias, we must identify what order flow is currently being respected. In bullish markets, we expect discount arrays to support price, while in bearish markets we see resistance from premium arrays. Recognizing a change in the state of delivery of price will be important when timing reversals.
It is vital to keep in mind that the daily bias is not a fixed concept. The market's bias can change over the course of the day due to factors like news events, economic data, or geopolitical influences. Traders must remain flexible and modify their strategies accordingly.
Reference: