ICT FOR DUMMIES | Market Structure EP. 3 transcript

What is going on, guys? Welcome to episode three of ICT for dummies. We just did candlesticks and now we're on to market structure. And now we're going to help you interpret these candles so you can actually understand the trend of the market. you can see, I have two different types of market structure. On the left side, you have the bullish market structure. On the right side, you have the bearish market structure. What does bullish market structure look like?

Well, it starts with a low and then a high and then a higher low and then a higher high and then a higher low and then a higher high. Continue, continue, continue. As for the bearish market structure, you're going to have the opposite. You're going to have a high, you're going to have a low, you're going to have a lower high and then a lower low, a lower high and then a lower low. Okay, so now this is what it looks like on an actual candlestick chart.

So, we have a low, then we have a high, then we have that higher low, then we have the higher high, higher low, higher high. Guys, this is going to be like really simple and I know you do not want to be learning this right now, but I promise you it is going to help you in the long run, okay? I know we're going to get into models later, we're going to get into a fair value gaps, and you know, liquidity sweeps, all that stuff, but you need to know the basics to incorporate everything that we're going to learn in the future.

And then for the bearish structure, it's the same thing on the candlestick chart, guys. So, we have a high put in place, then we have a low, then we have a lower high, then we have a lower low, lower high, lower low, lower high, lower low. And this shows bearish market structure and this shows a bearish trend in the market. Now, we're going to show you some real-time examples so you can have a better understanding of this.

Okay, so we're going to play this out in real time. You have your low, right? You have then your high that gets put in place, your higher low, you have your higher high, your higher low, your higher low, your higher high, then you have a low, and then we have our little liquidity sweep, we'll get into that later, then your low gets put in place, your higher low, and then a high. Okay, you got it. And although we are not trendline trading and that's not what we will be teaching you, it is still incredibly important for you to understand the foundational movement of price action.

And guys, it's a little bit cringe, but the trend is your friend. At the end of the day, higher time frame is always going to hold higher power. So, I often times see a lot of people just fading the overall trend. We're at all-time highs right now. Stop trying to catch the top and short this, right? We're clearly in bullish market structure. So, catch those longs and you will get the best possible risk reward. You're going to get the best entries and obviously we're going to get those entries using our models that we're going to teach later on, but this is again the foundation that is necessary here.

All right, guys. Little quiz time. Let's see if you can identify the trend here. BEARISH. WHY IS IT BEARISH NOW? Let's do a little mark out while Patty dances for me. So, as you can see here, we made the high, the low, the lower high, the lower low. If you didn't mark this out correctly, you might want to reconsider trading and you might want to I'm just kidding. And then your lower high, exactly like this is not going to be perfect, too, guys.

I want you to know also in a market, it's not going to look perfectly just like this how we draw it out, right? It's most likely going to look something more like this, you know, where we'll do something like this. Like this is the reality of how the market is actually going to be moving. So, spend some time on the charts identifying trends, marking out your lows, your highs, your lower lows, your higher highs. Guys, also, if you want to, looking at this on a line chart makes it also a lot easier.

If you look at the low, you have your high, your higher low, right? And you can identify trends simply using the line chart if you can't understand it with candlesticks yet. Look how easy it is to spot trends, guys. Bullish. Bearish. Bullish. I identify the trends for breakfast. And you guys, just to reiterate this, like the trend is your friend. For example, when you're swimming, right? You want to be swimming with the current if you're in a little river, right?

You're swimming with the current. It's really easy. You're just swimming. You don't even have to put much effort into it. Versus, if you're swimming against the current, what is going to happen? It's going to be a lot harder to push through that, right? And it's, you know, you're going to hit stop Oh my goodness, hit stop loss, bro. That wasn't on purpose. you're probably going to drown, okay? Of course, if you're hyper-fixating on the lower time frame right now, it doesn't take a big brain to realize that the lower time frame is currently in a bearish trend.

But, if you focus too much on the lower time frame and distract yourself from what's actually happening on the higher time frame, which is clearly a bullish trend, then that's where you'll most likely find yourself getting manipulated out of trades and stopped out. So, in a scenario like this where we analyze that there is clearly bearish structure on the lower time frame, but there is bullish structure on the higher time frame, we want to wait for bullish structure to form on the lower time frame.

Maybe something like and we're going to get a little bit complex here, but if we came down, little liquidity sweep, and then started seeing some bullish structure form, and we can catch some longs from there. So, the whole point of ICT concepts, really, is it allows you to understand the higher time frame narrative, and then use the lower time frame to find the most optimal entry points. Okay, so now we're going to get into the market structure, drum roll, shift.

Shift in the market. So, a market structure shift indicates a change in trend. So, it is shifting from either bullish structure to bearish structure or bearish structure to bullish structure. Bullish structure to bearish structure. Okay, and here on the left we have bullish market structure, right? We have our low, we have our high, we have our higher low, right? We just learned this. When we get a shift in structure is when we break through the last higher low, okay?

So, once we break through this higher low that we have, and we get a closure below this, this can indicate a change in trend, and then we start seeing bearish structure form here, right? We then have our lower high, our lower low, lower high, lower low. Domain expansion, market structure shift. And this market structure shift can then happen back again to the upside. How? By closing above the previous lower high, right?

So, a bullish market structure shift looks something like this, where we close above the previous lower high, and then we keep trending upwards versus a bearish market structure shift, where closing below the recent higher low. All right, so now we're going to show you what a market structure shift looks like on the actual charts, okay? You can see here we're in bearish structure, right? I don't have to explain this, we just learned this.

And then, once we get a closure above this recent swing high that we made, this is a market structure shift, okay? This is going to indicate that price is reversing, and we are going to put in bullish structure. And it has to be a candle closure, okay? I see a lot of times people getting faked out thinking market structure shifts can happen just when the candle, you know, goes over this. Wait for the candle to close.

It has to be the body closing above. It cannot be a wick, okay? If it's a wick, that is not a market structure shift. It's not a true market structure shift. we get deeper into concepts and a little more complex, you'll realize that the bodies and wicks make a huge difference. As you can see here, the body failed to close below this last low, ended up wicking this low. That's a liquidity sweep, but we'll get into that later.

Now, if you look at this price action, what does this look like? Bullish market structure, right? We have a sequence of higher highs followed by higher lows with every swing. Now, what happens? We break through this low, we get a bearish market structure shift. And once we get a body closure below this low, you can see that the trend has now flipped to bearish, and we get bearish market structure. All right, guys, now we're going to show you the importance of body closures in real time.

Clearly here, you can see that we have bullish market structure, right? Price is trending upwards. We get higher highs with every swing and higher lows. And what happens now? Price starts coming down. You think it's going to break through that low, but no. There's a zero body closure below this low. You end up wicking this low, and what happens? Price continues higher, right? So, this is a fake out. This is not an actual market structure shift, and this is why it is so important to understand that in order for a market structure shift to occur, you need a body closure.

All right. And as you can see here, we are clearly in bearish market structure. So, what would a bullish market structure shift look like in this scenario? Well, it will be a closure above the recent lower high. So, if we play out price here, we do not get a closure above the recent high. This is not a market structure shift. Why? Because we did not have a body. So, this is a fake market structure shift, right? A true market structure shift needs a body closure, okay?

And then as you can see, we continue with bearish structure. Okay. So, in this example, we have bullish structure, right? And you wait for now a body closing below this low. Is this a market structure shift, guys? No, it is not, right? Is this a market structure shift? We get a body closing below this recent swing low. This is a market structure shift. I hope you guys are seeing this. Start marking out on your charts.

That's going to be your homework for today. Mark out your market structure shifts. Mark out trends. Try to identify a bearish trend versus a bullish trend, and try to identify when the trend is changing. And then once we get this closure, it also create this bearish fair value gap. We get a turtle soup at these highs, and we get a CRT Once you guys get a little bit more advanced and know all these ICT concepts, you'll be able to find stuff like this.

Nice little low resistance liquidity resting down here. You're going to have a sweep of this buy side liquidity up here, and then you're going to come down, tap into this fair value gap after the market structure shift, and get this beautiful closure down model. All right, guys. Now, a quick little refresher before we let you go. All the way to the left here, you have the bearish structure. Right next to it, you have the bullish structure.

Right next to this, we got the bullish market structure shift. We start with a downtrend in price and then we break through this high, which creates a market structure shift, and then we get an uptrend in price. And then for the bearish side, we have a bearish market structure shift. Why? We were first in bullish price action and then we get a closure below the recent higher low, creating a bearish market structure shift.

Please remember, it has to be with a body, not a wick. Okay, as you can see here, we were in bearish structure and then we got a shark structure shift. Thank you guys so much for watching this. Sorry for the lack of uploads. It was Thanksgiving break. I was spending time with the family, so it was Blake. But we are [ __ ] back and we'll be uploading two to three times a week. So stay tuned. We're going to be doing fair value gaps next and dropping tons of psychology in between there as well.

So stay locked in. And this was ICT for Dummies, episode 3. We teach you how to make market structure shifts.