Market Structure Flashcards
What fib level would be a healthy retrace?
.386 or even .5, if retracements are too shallow, it is not healthy as the asset is not grabbing enough liquidity to continue.
What should we be trading with?
The trend
How to determine high low or low high?
Two OPPOSITE color candles in a row. Exception if 2 opposite candles are contained within a previous candle in the path. If so skip the pull and go to the next.
How do we confirm a higher low?
When the previous higher high is TOUCHED again. Notable we don’t need a close, however, we wait for a close to get confirmation for entry.
Is an equal high considered a BOS?
No
What template is used for an SFP
Red X
Why do we identify BOS?
Identify and confirm OB, identify areas of supply and demand/help identify the trend, determine if the trend is gaining momentum or getting weaker?
How to determine if a trend is getting weaker?
Each BOS is decreasing in overall size.
After getting the transition BOS, what should we typically do for best RR?
Wait for retrace
What does the internal structure confirm on the primary pull?
We are targeting the higher high or lower low
Each higher TF expansion leg will have?
Various levels of internal structure within.
What are examples of internal structure?
Draw in a daily, then can draw the 4, 1, 15, 5, etc
What is needed if we are going to rely on lower TF confirmations?
Higher confluence zone (i.e. order block, FIB on larger MS leg, POC, etc). Have we hit the 50% retracement on the larger pull?
When should we TP?
Take partial profits out at pivot points on internal level higher up from trade. For example, if take a trade on 3, take some out at previous 15 min swing point.
When to move SL?
When see internal break go against you after a move in your direction.
What should we keep in mind if price transitions without mitigating demand/supply?
It can ALWAYS go back for it.
If we are in a trade where multiple higher TF structures have broken in our favor, should we panic on lower TF breaks going against us?
NO!
Can we start an internal pull from the lower high on the expansion pull?
YES! If investigating a 4 hr expansion leg down, you can always investigate starting your internal pull from the beg of the expansion leg. I.e. if 4 hr leg down, start your two hour pull at the lower high when trying to determine where you get MS transition. Keep in mind the example of a 2 hour pull that broke bullish only to go back bearish to mitigate a OB that didn’t get tapped.
Is internal structure allowed to flip and maintain trend?
Yes. For example, if waiting for a 4 hr higher low, it is completely normal for 1 hr/2hr structure to flip bearish. We wait for the flip back to bullish on the 1/2hr structure to confirm the 4 hr higher low is in.
Should we trade old SFP levels?
Depends. Don’t just trade an SFP of an old high like many do. However, if the high relates to current MS, on the way up for example we wicked the current higher/high, AND it was an old liquidity level, then we have a targeted low related to current structure.
Should we try to trade weak highs/lows in no mans land?
No! Only apply in areas of support/resistance that make sense. If we are already in an area of supply and demand then we use the approach.
In an uptrending environment, the job of a low is to what?
Take out the high that created it. If it does so with a candle body close, the low is now considered PROTECTED LOW.
In an uptrend, why does price tend to pull down after creating a higher high?
It needs liquidity to continue the move. Needs to come back for the stop losses of people that longed late in this example.
Will we analyze previous movements when analyzing structure?
Yes, it’s not just about the now. It’s about the “then” and the “now”. Which is why sometimes we need to draw structure starting from where a break happened.
Why do BOS’s need to be staircased?
The wick invalidates the previous level as an important market structure point. Now the wick itself is the important level to break.
How do we confirm a weak level after the SFP?
Need a transition in market structure in our direction. Remember, if the wick is on a higher TF, be careful how low of a time frame you go to confirm the level.
After confirming a weak level, potentially with SFP into order block. The order flow objective is to target what?
Only the weak level on the TF we are trading. We can let some run and hope it works, waiting for structure to shift against the trade. However, for the RR should only calculate the objective.
Will you always hit the full target of the weak leve?
No, price may just hit a notable Fib level, DZ/SZ, 50% of range (range equilibrium). On larger TF expansion legs, price even less likely to hit the full target. Also keep in mind liquidity always overrides the weak level.
What creates a strong/protected high?
The low that created it is taken out by a body close.
In a downtrend, if we are continually putting in lower lows and lower highs but see a transition in internal structure prior to creating a lower low, what happens?
The high that created it and fails to break structure becomes targeted/weak and will likely be run.
Name some attributes of a high probability long?
Downtrend is exhausting, internal flip in structure (zone that makes sense), using range tool see it’s in discount pricing, have a target (the high that failed to create a new lower low prior to the flip in internal structure.
Do only SFP’s create weak levels?
No, even if a MS point wasn’t SFPed, if structure switches prior to getting there and you see an aggressive trend, you can conclude the level that the high or low that created it is weak.
Why is it sometimes necessary to stair case a BOS
For added confidence the trend has shifted. Getting the staircase gives us much better confirmation of the MS technical target.
If we get a candle close above the original MS point, just not the wick, is that considered a BOS?
Yes. However, typically you should wait for the staircase to break. However, if we get the original BOS (not staircase), and retrace back to an area that make sense based upon what is going on, it might make sense to take a trade that didn’t have the staircase break.
A staircase break gives us another _______ when waiting for a retrace to take a trade.
Checkmark. Using checkmarks is a good way to mentally add up the confluence when trying to determine to take a trade.
