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so market structure is probably the single most important topic and concept
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in the technical analysis module and if you master this and you you know you
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really make sure that you get this right then i promise you that everything else
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will pretty much fall in line and it will be a hell of a lot easier
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so you need to know what size of the market you're on what side of the market
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that you you know you should be on and what you should be looking for and
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structure tells you all of that really and like i'm saying if you don't get
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this right and if you don't build your foundation properly
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then essentially your trading business will fall over you know it's really
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going to struggle if you think of it that way so anytime you go on your
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charts this is pretty much the first thing that
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you need to be thinking about looking at and analyzing and then everything
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behind that is pretty much secondary and comes afterwards
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i think you know market shocks is probably one of the most misunderstood
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concepts uh within trading um you know structure it just tells you everything
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it tells you the best zones the order flow the direction you know it's behind
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your entries and it massively helps with you know getting the most out of your
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trade management as well it just shows you everything you need to
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know so how you view it you know especially when we start to look at
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multi-timeframe analysis it's really going to define how well that you're
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going to be able to trade this stuff and honestly i really just can't stress the
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importance of it enough if you do understand structure properly then
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everything else will become easy basic market structure kind of what you
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learned day one right baby pips what is a bullish market well a bullish market
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is very simply defined by price making a series of higher highs and higher lows
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right so bullish order flow you're going to keep seeing price making those higher
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lows each lower stay intact and intact and it keeps printing a higher low now
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every time price takes out a high to form that higher high we get what is
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called a break of structure so i just annotated that as boss right so price
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moves up it forms a higher high it pulls back to form a higher low it then breaks
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that high so we get a break of structure that high to then form that higher high
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then we pull back to form a high low right pretty basic stuff
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now that's kind of if the market moved in a
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nice utopian sort of fashion but obviously in reality it's a little bit
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more complex than that so this is a bit more of a realistic example where when
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price goes on it breaks structure to form that higher high it can have a bit
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more of a complex uh movement so the way or i guess the most important
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thing probably out of this entire video would be
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nailing where your swing highs and your swing lows are in structure if you can
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get that right everything else pretty much will follow from there so
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let's say we're in the live market we see this high get taken we get a break
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of structure form a higher high as price starts to pull back you can then mark
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out where your high is and you can mark out where your most recent swing low is
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now everything within that high that orange line and that low that orange
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line right everything in between there is just internal structure so the whole
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time prices you know pulling back it's breaking highs it's breaking lows
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price is still bullish we're still within the swing high and swing low this
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is all just what i call internal structure
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now when price finally breaks out through that high to form the higher
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high and we get that break of structure we want to look back and we want to know
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where our new swing low is okay now some people would say this is their swing low
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some people say this is their swing low but the way we're going to do it nice
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and mechanical is a swing low is the lowest point that caused the swing high
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okay so when we see this new high being
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formed and we know that's the new high our swing low is the lowest point that
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caused the high which in this case as you can see as i've already marked that
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is the swing low okay now again this might seem pretty basic
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but as we start to apply more kind of you
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know complex steps to this or we start to look at multi-timeframe analysis
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especially the live markets you can sometimes get a little bit lost so
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it's just really important to then know where the next range you are playing
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within the k so then price can pull back um to form the high low before we get
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that next break of structure now the reason why
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this is so important is because what you'll see a lot of people do in the
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live market is they don't kind of paint the story
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well enough they don't go back far enough in price action and when they're
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trying to define their swing high in a swing low what they do is they're
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actually way too zoomed in on price if i can actually get this to zoom in for me
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uh and let's say they're just looking at this section of price action here and
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they go okay what i can see is price is making series of lower lows and lower
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highs and it's pulling back to form a lower low sorry lower high and now it's
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broken and it's from the lower low right and they're just looking at this section
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of price action in in the orange line right
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so as price is pulling back up to this level maybe there's a supply zone they
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trade from maybe it's a resistance zone wherever you trade and then they try and
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get short from here right whack on okay that's going to spaz
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out for me but whack on this uh wrist reward tool and then boom they get
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smashed right as price moves up higher and they're sitting there scratching
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their head going well prices moving to the downside it was
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making lower lows and never highs i've got sure
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i've just been spanked why is that happening and they go oh maybe that was
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just you know down to probability but actually it's because you're on the
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wrong side of the market and you haven't mapped your swing highs in swing lows
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correctly um and you're trying to trade that internal structure
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and trying to trade against the actual swing trend there so
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yeah it's pretty basic but you'd be surprised at how many people who have
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actually been trading for quite a while can get their structure
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mapped out a little backwards sometimes so that's kind of the main points i
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wanted you guys to take away from this sort of first little bit
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swing high is just the highest point you know it's vice versa on the bearish
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stuff right the swing high is the highest point so let's say this high
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that calls that low so then when price forms that lower low in a bearish market
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that becomes your next swing range the price can pull back as deep as it wants
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right if you come all the way up to this orange line but as long as it doesn't
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breach that line as long as it doesn't form a higher high as long as that lower
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high stays intact then we're still in the bearish market and price can then go
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on to make that next lower low okay then again everything that's in between
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that low and that high that is all just internal structure okay it's not swing
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structure and the final point is again a very simple one but after a break of
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structure we always expect a pullback on that time frame
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pretty simple but you'd be surprised at how many people in the market let's say
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over here right they see that level go they see that high go they see price
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form a higher high and the minute they see that level go
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then they start thinking about buying they think okay well we're forming a
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higher high we're bullish that's a sign of strength let me get along here but
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actually the smart thing to do is when you first see that breaking structure
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that's when he's in your mind and start thinking the opposite of going well
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actually now i'm expecting a pullback so now i need to think about that and
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adjust accordingly right whether you want to short and play the pullback or
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whether you need to manage et cetera et cetera
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so onto the next thing very very simple stuff here but this is the concept of
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strong and weak highs and lows so what easiest way to think about this is
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what is a lowe's job well a swing low's job is to make a swing high if you think
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about that right and a swing high's job is to try and make a lower low okay so
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lows want to make highs and highs want to make lows now in a bullish market
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that is where we have a series of strong lows so the way to think about this is
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this is a strong low this solid blue line because it went on to form a high
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it went on to form that higher high so it did its job
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now when price pulls back this high whether where the pullback initiated
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from right if it doesn't take out that strong low then actually that means it's
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a weak high because it's failed to do its job that high has failed to make a
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lower low so if you get in long here right you can then target that weak high
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that does it high because it's failed to do its job so now we get in in the
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bullish market we like to get long and we target that weak high okay exact same
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thing as long as it pulls back and it doesn't take out that next strong swing
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low we now know that this is a weak high so if we are in any longs here we can
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target that weak high and then we can you know try and target
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that higher either so hopefully that makes sense exact same thing in a
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bearish market not going to go through that just for
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you know trying to keep this video at a reasonably short length but
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that's kind of as simple as this concept is but it's a powerful one because if
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you're getting in long hair on these on these strong high lows and you're going
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okay where am i going to target well you can start to target that weak structure
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this is a weak high why because it failed to take out the low okay it
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failed to do its job this is a strong low in theory right so we should try and
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target that weak high so on and so forth so
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if you think about it really our goal as traders you know we're trying to trade
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those easy trades trade those continuations
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our goal is to catch higher lows in a bullish market right we want to catch
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all of these strong lows and we want to catch lower highs um in a bearish market
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right we want to be trading from here and then targeting those weak lows right
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that's kind of the simplest uh way to think about it so like i was saying here
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right let's say we're in this bearish range here we've had that breaking
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structure price is pulling back at this point we know that this is a strong high
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because it took out the low it did its job so in theory price can pull all the
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way back up to that hot pool all the way back up to the high but because it's a
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strong lower high price should not breach it and kind of another way you
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can think about this is that it took a hell of a lot of money for
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price to actually move down and break that low so i guess you could think
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there's a vested interest in that high being protected and priced not trading
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above that high right um so what that does is we can build trade ideas around
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that right it gives us a hell of a lot of confidence to look to short from here
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and target what target that weak low why is it a weak low well because it failed
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to do its job it failed to take out the high and it failed to form a higher high
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right super simple but it just gives you such
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a clean framework for kind of mapping your structure and knowing where to
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target so train changes obviously bullish market
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doesn't last forever bearish market doesn't last forever well especially in
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forex maybe if you trade crypto or or the stocks it's just bullish forever but
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yeah anyway so we have a bullish market we're making price what price is making
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higher highs and higher lows now at this point here right this low in
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theory is a strong low because it did what it took out that high and it made a
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higher high so it did its job but at some point what's going to happen is
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price is going to break that low and it's going to go on to form a lower low
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so when price was pulling back we expected this to be a strong low the
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expectation is as that bullish trend will continue right so we should expect
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price to do that but obviously hasn't the bullish expectation has failed and
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price has now formed that lower low so we're now in a bearish market okay and
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that's what this dotted line shows it just shows where that trend change
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occurred as soon as we break this level and we form a lower low
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for me that is now a bearish market now some people what they want to see for a
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confirmed trend change is they want to see both a lower low and a lower high
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okay and the reason why that is um is because what can happen is you can
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get a trend change price can form that lower low but it can be a false kind of
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signal and the price can continue upwards and what it turns out is
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actually it was just a liquidity grab it was just grabbing the liquidity behind
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this low to grab that and then continue the bullish market so that's why some
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people they don't confirm a trend change until you get both a lower low so that
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move there and the lower high right so they need to
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see the lower low and the lower high and remember
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we never know where that lower high is going to be
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until it takes out the low okay so for those people to have a confirmed trend
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change they would need to see a double break of structure because they would
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need to see the lower low price form pull back to form the lower high and
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then obviously it needs to break structure to form or to confirm where
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that lower high is okay now so for me personally i don't
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need that much confirmation the way i keep my training super simple is the
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moment we get that lower low that swing lower low
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that for me is a trend change and now i am looking for that lower height to form
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to continue that bearish move okay so when we get that lower low formed if
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you think about the strong and weak highs and lows concept what has happened
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well a strong low was taken out so that means a lot of money had to step in
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somewhere in this leg to form that lower low right to form that trend change so
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in theory this should now be a very strong high because it took a lot of
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money to cause it low so if you think there's a you know it's a protected high
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right there's a lot of money has a vested interest in price now not trading
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higher than this high so when we form that trend change and
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price is pulling back what we can now do is build trade ideas around this right
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because we can start to look to get short and we know that price should not
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really in theory trade higher than this this level here right this line here and
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then if we do get short in here where do we target well that minimum we want to
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be targeting that weak swing low why is it a weak low well because it failed its
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job it failed to take out that high right so this is really simple stuff but
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it's literally how you build um just a solid foundation for your training
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and then very very quickly right we get a bearish market and then eventually
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we'll form that higher high a lot of money stepped in to take out that strong
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lower high to form that higher high so the bearish expectation where we would
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have expected a lower higher to form that has now failed we've formed a
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higher high so then we can look for the pullback and we can try and catch that
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higher low because this strong low should be protected and we can target
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this weak high high because it's failed to do its job right and then boom we
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continue that bullish market okay pretty simple stuff
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now something called change of character i don't really like the term it's a bit
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of a fancy name but all it essentially means it's similar to trend change but
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it's not the same so for a trend change we're looking for the swing highs and
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lows to be taken out for a change of character
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it doesn't have to be swing structure it can just be that internal structure so
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there's little minor movements in between that is what we're looking for a
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change of character so it's the first sign of weakness or the first sign of
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strength essentially so imagine you just got some nice small
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little price movements making a series of you know high highs and high lows the
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first time you see that high low fail and we get a lower
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low that is your change of character okay generally we're applying that to
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the the internal structure between the swing highs and swing lows
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that is what we call a change of structure then of course eventually at
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some point that series of lower lows and lower
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highs eventually price will break up and form that first uh higher high right um
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and that is essentially what you call a change of character it's basically
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bullet structure changing to bearish structure and vice versa so a bit of a
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subtle difference to trend changes but you'll see how we apply that now
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so if you kind of look at this very basic
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sort of continuation you know price model whatever you want
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to call it price makes a nice swing high it pulls
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back to form a swing low we then get a break of structure so we form that
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higher high okay now when we get a break of structure
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what do we expect we expect to pull back on that time frame
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how can we know when that pullback is about to start well there's a few things
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we can use supply and demand liquidity and all these other things which we'll
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get into in a minute but for this this video we just want to look at structure
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alone so how can we know when that swing run is over and that pullback is about
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to start well this is where change of character becomes really handy where
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essentially this is all one swing leg up okay so we're now playing within this
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next range and we want to know can we play that pullback right
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um so if we see this minor low hair get
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taken out and we get that first kind of you know sign of weakness that change of
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character where that minor low gets taken out and we get that internal lower
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low now the internal structure is bearish
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and that is in line with training a pullback right so now we can trade that
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pullback now how do we know when the pullback is finished and that higher low
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is likely to well have formed we then get a bullish
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change of character okay where that internal lower high gets taken out we
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then form an internal higher high remember the whole time the swing
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structure is still bullish that has not changed we're just looking at the
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internal structure so everything in here is internal structure we're just looking
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for that to switch from uh bearish to bullish and that basically just allows
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us to anticipate when the pullback is starting and then when the pullback has
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finished and then when we get that internal structure to the upside we get
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that change of that change of character now we can look to get long and target
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what target that weak high why is that a weak swing high well because it failed
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to do its job it failed to take out the swing low
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so just to keep this as simple as it needs to be we
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look for those in those internal changes of character to help us know when this
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swing run has ended when we can then start to anticipate the
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pullback and then when we can anticipate that that pullback has now finished and
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we can anticipate that that high low is formed and we can start to target that
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next swing high high hopefully that makes sense
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now what i want to add is changes of character i'm not the holy grail
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obviously they can give you full signals and that is why you need to pair them
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with other complements that we're going to look at right in the next few videos
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so again we get that swing movement up we
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see that change of character that first sign of a lower low okay pullback is now
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starting it stays bearish but then we get a bullish change of character where
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we get that first internal higher high okay maybe now this tells us that the
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high lows is in place and we can target that higher high price tries to do that
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but then what happens it fails to do so and now we get another bearish change of
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character k because now we've got another lower low so the internal
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structure has now switched bearish again okay maybe that means we're gonna have a
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deeper pullback so we pull back deeper wait for a buddhist change of character
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okay now the internal structure has a line bullish again it's back in line
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with the overall swing structure okay now maybe the high low is in place and
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now we can get long and we can target that weak swing high okay so yeah that's
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basically as simple as we use change of character but obviously when we
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uh combine that with multi-time analysis
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supply and demand etc etc that is how we can increase um our strike rate of using
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it and very quickly the same applies to you know if you're using this for
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reversals so let's say price is bullish with the
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swing structure right making a series of higher highs and high lows now let's say
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we come into a really clean supply level that we like resistance level whatever
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your strategy is and you are anticipating a trend change so you are
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anticipating that bearish reversal now what you can do and the safest thing to
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always do is to wait for this swing higher low so this being the lowest the
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most recent swing low you just wait for that to be broken right because then
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once this is broken and we get a lower low that trend change is now confirmed
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okay now we have that confirmed bearish trend change and you can wait for price
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to pull back to form that lower high now we can get short that's the safest
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way to do it but of course we don't have to wait for that
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we can anticipate that reversal beforehand by looking at that internal
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change of character right so price takes out that minor low that internal low we
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then get that internal lower low that change of character wait for price to
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pull back and then we can look to short and we anticipate that trend change okay
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but of course like anything it's on 100 strike rate we can get that internal
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change of character we can get short right but then what can happen is this
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is still a strong low and a strong high right sorry a weak high until it's taken
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out so when the market is bullish and we're training to the upside
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yes we can get that change of character there and we can anticipate the reversal
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like what we were expecting to happen over here but there's no guarantee
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because this is still a strong low right so the odds are that this strong low is
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going to be protected and we're going to continue to to the upside
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so if you do get short and you're trying to trade that reversal you see that
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change of character but then if you see that bullish change of character again
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you have to take that message from the market that actually
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this low is going to be protected it's likely the higher low is now formed and
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now we can target that high high again right and take out that weak high so
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yeah just kind of that's how we use change of character
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we just need to know that of course it's not you know 100 of the time now before
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we apply all of this onto the charts one other thing we need to look at is
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actually you know how do we map this on
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candlestick charts right because we're not just going to be looking at line
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charts so kind of two main ways you can do this
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both ways we're always going to draw structure from the wicks of candles okay
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so wherever you draw your swing high and swing low we're always going to draw it
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from the wicks of candles but the difference between the two types is what
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you need to see for a break of structure to have occurred so for type 1 when you
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draw your structure from the candle the wick of the candle you need to see a
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candle close above that that that swing higher k for there to
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now be a high height for there to be a break of structure
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now this is a bit more of a conservative way of mapping your structure because
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it's going to take a lot more money right to actually get price to breach
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that high and to stay and to maintain above that high and to close above that
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high so here you can see where price spiked above it actually it was just
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what's called a liquidity grab right it grabbed the orders behind that that high
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but it failed to close above there so for me at that point that would not be a
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higher high that would not be a swing higher high because it didn't close
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above until we get this closure here now the second way is type two this is a
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bit more aggressive because we map structure the same way from wix but we
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only need to see price literally just wick it for there to be a break of
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structure so as you can see this is the exact same price action but you can see
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how the trend changes you know a lot more quickly it's a lot more aggressive
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you get those turning points um a lot sooner because as soon as price breaks
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that high that then gives us our higher high so then if we look back where was
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the lowest point that caused the high it was this point here okay so that becomes
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your swing low so you map that then price breaks that so now we're bearish
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so we're playing within this range here but then price moves up and then it
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forms a higher high so you can see how that's a lot more aggressive
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we can potentially get you into trade sooner um but it can give you a lot more
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full signals where basically you're viewing liquidity grabs as trend changes
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okay so for me personally the way that i use
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these i use both which okay you may be
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thinking right give me a simple answer but i always use both so i use type one
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for um i'll show you here i've done this little diagram which hopefully makes
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this explanation a little bit more simple
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so i use type one mapping where i want to see a candle closure
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for swing breaks of structure so when i want
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to know if we formed a swing higher high or
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swing level low or whatever i need to see a candle close above that higher low
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so as you can see here these are the two type ones there and here because they're
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my swing brakes of structure i want to see a candle closure at both these
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points to confirm those higher heights now where i use type 2 so where i just
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want to see a wick break i use those for the changes of character so on the
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internal structure i'm happy just to see a wick break there to know that i've had
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my change of character um now i know the pullback's starting and now i know maybe
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the pullback's ended and we can get that next higher high okay so hopefully that
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makes sense38674
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