Review of SZ reversal
So last week we had the pleasure of how TraderSZ (twitter @TraderSZ) views the market on the HTF and what he waits for before stalking a setup.
Like many of Saeed’s trades, he waits for what we are familiar with in regards to a confirmation of market breakdown. Market structure and breaking market structure have already been covered in previous posts on this site, so if you are unfamiliar with this concept please revist the previous posts to further understand.
What was brought to attention was the accummulation of strong liquidity over several days in the form of daily highs and lows (H/L) and a simple excercise was devised to plot these levels to mark out the areas of liquidity that had been manufactured by institutions.
As most of you may already understand that daily H/L are strong levels in nature because of the vast amount of buy and sell stops resting there. Profitable traders place their stop losses at these levels trailing the market as they are seen as a safe haven, albeit the market maker sees them as liquidity and they will get raided… eventually.
See below, EURUSD and how the accummulation of lows is underway
And how after a few days they are flushed and long positions are killed quicker than a
8 vs 1 team deathmatch!
So you can see, how clever price manipulation can generate plenty of liquidity for the market maker to devour in a short space of time. So the next question, how do we get on board and do the banks leave clues as to when these moves are going to happen?
As TraderSZ demonstarted last week, absolutely YES!
The task is simple
Plot daily highs or lows that have not yet been swept for roughly seven days. Mark out above or below the market HTF RA or SA (Resistance areas or Support areas) mainly in the form of OB (Order Blocks) or BR (Breakers)
Allow PA (Price Action) to nagivaye towards one of these HTF RA and mark close to this area any previous long term highs or lows that have still to be taken.
See illustration below
Now PA may flush through the HTF RA and carry on to seek higher prices, which if it does just sit back and mark out the next area and move on.
The area within the blue box is where the high probability setup will be taken so lets have a closer look
The key to strart hunting for a short position, is to wait for the market to make an obvious attempt at breaking the market lower by sweeping some of the short term lows set in place earlier. Breaking these lows means that market structure has broken and from here on in, a confirmation is all that is left to get on board and ride the PA downwards.
Notice how the lows from Thursday and the sell stops have been left in tact?
As price breaks lower and then retraces huntng to reload more short positions, mark out any dominant OB or BR levels where you anticipate price to react.
Doing so will present a short term low and as price reloads further short positions without breaking this low, the markets can no longer hide their intentions and any further retracement should be seen as a fake move higher and selling at either a secondary OB or an ICT OTE would be your entry.
Entries should be made withing the ICT London or New York Kill zones.
SL would usually cover the short term high (above the FIB) or for a safer option the initial high that broke down from the HTF RA.
See this example from TraderSZ webinar. Study these images well.
(Printed out on my wall)
And zoomed out a little to show previous high and H1 -OB
I for one will be using this excersise to confluence with my trading concepts. As my setups look to see breakdown and confirmation from HTF RA also, there can only be a better success record from marking these levels before I stalk a trade.
The key to this is simple if you understand market structure. Watch to see if the market leaves any close key lows intact before retraceing to reload shorts. If so, any further moves higher without clearing the immediate lows is the signal to get on board.
As traderSZ always says and I the same, try this on a demo account. Look left on your charts to see for your self. Screenshot a minimum of 30 times you see the setup (recommended 100 times) until your brain can recognise them unfolding subconsciously.
Do the work, spend the hours back testing. It’s the only way you will succeed.