Trading Major News Events | D'onte Goodridge

News events typically inject momentum into the market, often prompting traders to anticipate where price might trend in response to the news. Making educated predictions about these movements is a common strategy rooted in technical analysis. Position yourself AFTER major news releases (NFP, CPI, PPI, PMI, FOMC etc.) with either a Pump & Dump or a Dump & Pump trading setup.

Sell Scenario/Setup: Wait for the buy side liquidity pool on the 15 minute timeframe to be raided first. After that, go to the 1 minute timeframe entry above the killzone's opening price. Then, anticipate that price will revert back down to a sell side liquidity level.

 

 

Buy Scenario/Setup: Wait for the sell side liquidity pool on the 15 minute timeframe to be raided first. After that, go to the 1 minute timeframe entry below the killzone's opening price. Then, anticipate that price will revert back up to a buy side liquidity level.

 

When price moves above the opening price of a killzone, it's in a premium. This is where to find ideal sell entries. 

When price moves below the opening price of a killzone, it's in a discount. This is where to find ideal buy entries.

Reference:
D'onte Goodridge (July 14, 2024) - Trading News Events. (video)

 

 Major news July 15–19 (UTC -6).

Broadening Formations & The Third Universal Truth | Robert F. Smith

The Third Universal Truth is this: There is only ONE price pattern. Everything trades in a continuous series of broadening formations because there are only three scenarios that can possibly play out from one bar to the next. Therefore only THREE types of bars exist: the Outside Bar, the Inside Bar, and the Directional Bar. It is impossible for price to do anything else. Range expansion on both sides occurs ONLY because Outside Bars exist. 

Broadening Formation on quarterly, monthly, weekly, and daily Apple Inc (AAPL) charts.

Inside Bar = 1 | Directional Bar = 2 | Outside Bar = 3

Almost every book on technical analysis claims that the broadening formation is extremely rare, when the truth is it is one of the only things that can possibly happen. A broadening formation is a pattern where ranges continue to expand on both sides, thus an outside bar is a broadening formation when you shorten the time frame of the chart. It must be because by definition the range is expanding on both sides. While many traders will talk about stocks making higher lows and lower highs, one thing is that securities will always trade in a series of higher highs and lower lows. Even if a stock is in a steady uptrend from, say, $80 to $100, somewhere along the way that stock will make a series of higher highs and lower lows on some time frame. 

 

 Basic Diagram of the Broadening Formation.

While this may seem irrational, it helps to analyze this statement from the perspective of supply and demand. When a stock reaches a new high, it means that a new group of buyers have been identified above the previous high. Eventually, that buying pressure exhausts, and the stock retreats. This new group of buyers becomes trapped, and this will create pressure to the downside, either on a short-term time frame or a long-term time frame. Inevitably, the stock will eventually get pushed towards a previous low, whether it's a recent low on a 15 minute chart or a major inflection point on a monthly chart. As the stock pushes towards this low, those buyers at highs will succumb to the selling pressure, drive the stock to a new low that is bought up by the sideline traders or natural buyers, and the stock will resume higher until it reaches the next new high. This series repeats itself, which creates a formation that can be fit into a triangle.

 

 Nasdaq (Daily Bars)

Inside Bar = 1 | Directional Bar = 2 | Outside Bar = 3

Every chart shows but Broadening Formations, nested series of Range Contractions and Range Expansions

on yearly, quarterly, monthly, weekly, daily and lower time frame charts. Full Time Frame Continuity occurs when all time frames point in the same direction, providing a more reliable assessment of the market's direction.

Nasdaq (4 Hour Bars)

Inside Bar = 1 | Directional Bar = 2 | Outside Bar = 3

 

Broadening Formations = ICT Seek & Destroy Profile

 

How to find a Broadening Formation?

1. Identify an Outside Bar on a Higher Time Frame.
2. Remember an Outside Bar takes out BOTH sides of the previous bar's range. This is how we gauge the potential magnitude of an expected move.
3. An Outside Bar = A Broadening Formation on a Lower Time Frame chart. This is a FACT. Ignore previous Technical Analysis textbooks.
4. Locate the High of the Outside Bar and DRAW BACK to a previous Higher High (HH Point #1 to #2). Generally try and use an extended line type drawing tool on your charting software as this will extend the line forward.
5. Locate the Low of the Outside Bar and DRAW BACK to a previous Lower Low (LL Point #1 to #2).
6. View the same chart on a Lower Time frame and watch the magic happen. Now you have a Broadening Formation.
7. Note depending on your charting software you may have to adjust your lines at key high and low points when switching between different time frame charts this is normal and due to the difference in candlesticks between timeframes.

Reference:

Robert F. Smith (2020) - What Do We Know to Be True About Price Action?

Robert F. Smith (2020) - The STRAT Method of Trading.

Robert F. Smith (2021) - The Broadening Formation Phenomenon A-Z (videos).

Robert F. Smith (2022-2023) - YouTube Channel.

Michael J. Huddleston (2017) - ICT Weekly Seek & Destroy Manipulation Profile.

 Darya Filipenka (2023) - ICT Optimal Trade Entry (OTE).

Darya Filipenka (2023) - ICT Draw on Liquidity.    

Darya Filipenka (2023) - ICT Advanced Market Structure.

Darya Filipenka (2023) - ICT Market Maker Buy Model and Sell Model (MMXM).

 

 Robert Franklin 'Rob' Smith (1964-2023).
Life and death of a sporty American reborn Christian trader. R.I.P.

 

#TheStrat Setups with Entry, Stop and Target Levels. 

#TheStrat Risk/Reward Ratios are mostly sub-optimal.

ICT Optimal Trade Entry (OTE) strategies do improve poor #TheStrat RR-Ratios significantly.

 

28 #TheStrat Setups = 14 bullish + 14 bearish. 

 Inside Bar = 1 | Directional Bar = 2 | Outside Bar = 3

ICT Optimal Trade Entry (OTE) | Darya Filipenka

Timing is an important factor in trading, and a well-defined strategy can significantly increase your chances of success. The ICT Optimal Trade Entry (OTE) strategy is one approach that traders can utilize to identify high-probability trade setups. It’s important to pinpoint the specific time and day when the OTE is most likely to occur. Typically, this happens between 8:30 AM and 11:00 AM, New York local time.

 

Market Structure - As the market rises and declines and makes higher highs/lower lows, each new swing higher/lower in price is anchored or directly reacting to another swing higher or lower. Every swing in price has an equal counter swing it is unfolding from and attempting to fulfill. 

 

Market Structure Shift (MSS) - comes from the HL or LH levels, it will serve as one of the reasons for us to enter the trade. A market structure shift is depicted as a significant level on the chart where the prior trend Is invalidated. When the market is in an uptrend, the market structure shift level is typically identified as a point where a lower low is formed. Conversely, in a downtrend, the market structure shift level Is often observed at a juncture where a higher high emerges. Notably, these market structure shifts tend to arise following a displacement, signaling a potential shift in the overall trend direction.

1. The Premium Zone represents the price correction range situated above the 0.5 (50%) level in the context of a downward momentum. Traders pay attention to this zone when considering selling opportunities.
2. The Discount Zone refers to the price correction range located below the 0.5 (50%) level in the case of an upward impulse. Traders observe this zone for potential buying opportunities.
3. The Equilibrium Zone denotes the price range where the asset's average price is located. In other words, it represents the fair price zone or the level of balance between buyers and sellers.

 

 Concept of Premium & Discount.

Traders and market makers seek opportunities to buy at a Discount and sell at the Premium zone. As a result, traders often disregard the 0.236 and 0.382 Fibonacci levels in their analysis and instead wait for the price to move above or below the equilibrium level. We focus on the Premium / Discount Zones, since the price does not always enter the OTE zone. Sometimes it is enough for price to adjust by 0.5 (50%) in order for the big man to gain or lose a position.

 

To select the high and low points of a dealing range, follow these steps:

1. Run a Fibonacci retracement tool from the highest high to the lowest low within the dealing range. This will help establish the overall range of price action.
2. Pay attention to areas where the algorithms consolidate. These consolidation areas indicate fair value and are important in determining the proper dealing range.
3. Consider the nearest high when the 50% Fibonacci level aligns with the common consolidation area. This will help identify the appropriate high point of the dealing range.
4. Select the lowest low as the low point of the dealing range. This ensures that the range encompasses the relevant price action and aligns with the areas where algorithms are active.

To implement the OTE strategy, follow these steps:

1. Determine the current market structure, whether it has a bullish or bearish bias. This ia crucial as Fibonacci levels work best within a trending market.
2. Identify significant swing highs and lows to draw the Fibonacci grid. These highs and lows are often visually prominent and easy to label.
3. Use the Fibonacci retracement tool to assess the correction potential in an uptrend (from bottom to top) or downtrend (from top to bottom).

Using OTE during Silver Bullet: After identifying the MSS, I recommend drawing an OTE retracement from the Swing Low (High) to the Swing High (Low). The optimal entry point for trades is typically at the 62% retracement level of that range. Once the trade is entered, the first target is typically set at the -27% extension level, and the second target is set at the -62% extension level. Wait for price to trade back into the FVG (Fair Value Gap) and then reprice out of the FVG towards the targeted pool of liquidity. Usually a FVG lines up with the 62% retracement level.  

 

Reference:

Darya Filipenka (July 22, 2023) - ICT Optimal Trade Entry - OTE.

Darya Filipenka (May 7, 2024) - ICT AM NY Session A+ Setup based on Quarterly Theory. 

Ayub Rana (May 2, 2024) - ICT Market Structure Shift.

Darya Filipenka (April 3, 2024) - ICT Fair Value Gap.

Darya Filipenka (March 18, 2024) - ICT Algorithmic Price Delivery & Time Macros Intro.

Darya Filipenka (March 6, 2024) - ICT Advanced Market Structure.

Darya Filipenka (2023) - Unlocking Success in ICT 2022 Mentorship: The Smart Money Guide to the Full ICT Day Trading Model.

Michael J. Huddleston (May 7, 2020) - OTE Pattern Recognition Series. (videos)

Michael J. Huddleston (Sep 29, 2017) - OTE Primer - Intro to ICT Optimal Trade Entry. (video)