How To Understand Market Structure | FOREX | SMC (Part 1)

0:01youtube how are we doing

0:04right let's not muck around let's just

0:05get straight into it so

0:08in this video um i kind of want to talk

0:09about something that has probably made

0:11one of the

0:13yeah probably one of the biggest sort of

0:14differences to my own performance but

0:16also really just kind of simplifying and

0:18making my trading strategy as mechanical

0:21as possible and as you probably guessed

0:23by by the title of this video

0:25that is having a mechanical system for

0:28mapping market structure

0:30now no matter what strategy you trade

0:32whether it's you know smart money

0:33concepts uh supply and demand

0:36uh emas fibonaccis harmonic patterns all

0:39that right um yeah no matter what

0:41strategy you trade

0:43if you apply the concepts that we're

0:44going to go through in this video and

0:46potentially the next few videos

0:48i can pretty much guarantee you three

0:49things

0:50one you are definitely going to boost

0:52your strike rate because

0:54if you're mapping your kind of market

0:55structure the right way

0:57and consistently

0:58you're going to find yourself on the

0:59rights of the market a hell of a lot

1:01more times than you're not

1:03you're going to skyrocket your average

1:06reward to risk ratio

1:08pretty much because you're going to be

1:08able to manage your trades a hell of a

1:10lot more effectively and that's kind of

1:12for two reasons so one well you're gonna

1:14know you know where to target but two

1:16you're gonna be able to hold those

1:17trades with just a lot more confidence

1:20to those overall targets as well

1:22and then kind of the third outcome um i

1:24think you'll really get from this it's

1:26just having that extreme clarity and

1:27kind of yeah just confidence when you're

1:29looking at the charts because when you

1:31map it this way you're gonna know

1:32exactly you know what the market is

1:34doing you know and what you're looking

1:35for straight away you know as soon as i

1:37hop on the charts every single morning

1:39the market structure is the first thing

1:41i'm looking at you know i follow that

1:43mechanical system for mapping it um and

1:46it just yeah it just makes everything a

1:47lot more easier and simple more simple

1:49and everything just kind of follows on

1:51from there now

1:53kind of originally planned to do this as

1:55like uh you know like a six-part

1:56mini-series or something like 10-15

1:58minutes each long but

2:00if you can't concentrate for sort of 30

2:02for 40 minutes you know

2:03probably not going to make it bro as the

2:06crypto fanboys love to say so

2:09what we're kind of going to do is we're

2:10going to wrestle through a little bit of

2:12theory first uh and then we're going to

2:14hop on the charts and obviously apply

2:15that theory to the price action and get

2:17a bit more practical so i just want to

2:19kick things off first with this uh

2:21weightlifting allergy

2:23that i came up with that i kind of like

2:25um and yeah if you haven't sort of well

2:27if you don't recognize this movement

2:29it's essentially an olympic

2:30weightlifting movement called the clean

2:32and jerk now when you see an athlete

2:33perform this it looks like a reasonably

2:36well not simple but quite a you know a

2:37fluid clean movement

2:39where they're essentially just lifting

2:40the floor the weight off the floor and

2:42getting it above their head right um now

2:45i think this is quite a good analogy for

2:46training because

2:47when someone is kind of at that pro

2:49level and they have simplified their

2:51strategy into something that makes sense

2:53to them when you see them perform that

2:54right it just looks like they're

2:55clicking buy and sell and it looks

2:57relatively effortless but actually you

2:59know it came from understanding or

3:01having quite a complex understanding of

3:03of the complex parts that goes into that

3:05one fluid movement right

3:06knowing how to deadlift to clean the

3:08front squat on the overhead press

3:10everyone wants to just jump into the

3:11fancy stuff you know doing the front

3:12squat or getting that weight above above

3:14their head but

3:16if you haven't laid that solid

3:17foundation

3:18you know doing the deadlift just doing

3:20the boring stuff right just picking the

3:21weight off the floor

3:23none of that other stuff that follows on

3:24from then um you know is gonna gonna

3:27work or you might be able to do it

3:28initially when you've got focal weight

3:30on the bar but as soon as you start to

3:32put serious weight on there

3:34if you haven't nailed the deadlift if

3:35you haven't absolutely nailed your

3:36technique what's going to happen well

3:38you're either not going to move it or

3:39you're going to pull your back out right

3:41so i think this is a pretty good analogy

3:42for trading

3:44that if you know a market structure and

3:46if you really have a solid way of doing

3:48that that you can consistently map it

3:50everything within your business will

3:51follow from there on your trading

3:52business right um supply demand

3:54liquidity whatever confluence you're

3:55using your strategy entries and

3:57management come last first you need to

3:59build that solid foundation so

4:01that's kind of my little rant uh for for

4:03kind of trying to drill home the

4:04importance of um

4:07yeah of just why i think you know nearly

4:09market structure is so important so i'm

4:11gonna hop on the charts now just to go

4:12through a little bit more theory um

4:14probably should have warned you yes my

4:15charts are white so if you are sitting

4:16in a dark room then yeah apologies to

4:19your retinas that have probably just

4:20been burnt but

4:22um yeah so

4:24some of you are probably rolling your

4:25eyes at this point yes this is very

4:26basic bear with me just for five minutes

4:28i promise you you will learn something

4:30hopefully learn something new um in the

4:32next few minutes or so so yeah like i'm

4:34saying we'll wrap up through this theory

4:35pretty quickly and then we will hop on

4:36the charts and do a walkthrough

4:38on price action now

4:40hopefully if i figured out how to do

4:41this there should be a pdf i guess

4:44scrolling on the screen maybe um i'm

4:46basically yeah i'm going to put this

4:47together into pdf all of the charts that

4:49we're going to go through

4:50and you guys will be able to download

4:51that for free there should be a link in

4:53the description box somewhere below if i

4:56figured out how to do that so

4:58yeah we'll go through this pretty

4:59quickly and then we'll hop on the charts

5:01so

5:02basic market structure kind of what you

5:04learned day one right baby pips um what

5:06is a bullish market well a bullish

5:08market is very simply defined by price

5:10making a series of higher highs and

5:13higher lows right so bullish order flow

5:15you're going to keep seeing price making

5:17those higher lows each lower stay in

5:18attack and intact and it keeps printing

5:21a higher low now every time price takes

5:24out a high

5:25to form that higher high we get what is

5:27called a break of structure so kind of

5:29just annotated that as boss right so

5:31price moves up it forms a higher high it

5:33pulls back to form a higher low it then

5:36breaks that high so we get a break of

5:37structure that high to then form that

5:39higher high then we pull back to form a

5:41higher low right pretty basic stuff

5:43now

5:44that's kind of if the market moved in a

5:46nice utopian sort of fashion but

5:47obviously in reality it's a little bit

5:48more complex than that so this is a bit

5:50more of a realistic example where when

5:52price goes on it breaks structure to

5:54form that higher high it can have a bit

5:56more of a complex uh movement so

5:59the way or i guess the most important

6:02thing probably out of this entire video

6:04would be

6:05nailing where your swing highs and your

6:07swing lows are in structure if you can

6:08get that right everything else pretty

6:10much will follow from there so

6:12let's say we're in the live market we

6:13see this high get taken we get a break

6:15of structure form a higher high as price

6:17starts to pull back you can then mark

6:19out where your high is and you can mark

6:21out where your most recent swing low is

6:22now everything within that high that

6:24orange line and that low that orange

6:25line right everything in between there

6:27is just internal structure so the whole

6:29time prices you know pulling back it's

6:31breaking highs it's breaking lows

6:33price is still bullish we're still

6:34within the swing high and swing low this

6:36is all just what i call internal

6:38structure

6:39now when price finally breaks out

6:41through that high to form the higher

6:42high and we get that break of structure

6:44we want to look back and we want to know

6:46where our new swing low is okay now some

6:49people would say this is their swing low

6:50some people would say this is their

6:51swing low but the way we're going to do

6:53it nice and mechanical is a swing low is

6:56the lowest point that caused the swing

6:58high okay

7:00so when we see this new high being

7:01formed and we know that's the new high

7:03our swing low is the lowest point that

7:05caused the high which in this case as

7:06you can see as i've already marked that

7:08is the swing low okay

7:10now again this might seem pretty basic

7:12but

7:13as we start to apply more kind of you

7:14know complex steps to this or we start

7:16to look at multi-time analysis

7:18especially in live markets you can

7:20sometimes get a little bit lost so

7:22it's just really important to then know

7:24where the next range you are playing

7:25within the k so then price can pull back

7:27um to form the high low before we get

7:29that next

7:30uh break of shut now the reason why

7:32this is so important is because what

7:33you'll see a lot of people do in the

7:34live market is they don't kind of paint

7:36the story

7:37well enough they don't go back far

7:39enough in price action and when they're

7:40trying to define their swing high in a

7:41swing low what they do is they're

7:43actually way too zoomed in on price if i

7:44can actually get this to zoom in for me

7:47uh and let's say they're just looking at

7:49this section of price action here and

7:51they go okay what i can see is price is

7:52making series of lower lows and lower

7:54highs and it's pulling back to form a

7:55lower low sorry lower high and now it's

7:58broken and it's formed a lower low right

7:59and they're just looking at this section

8:00of price action in in the orange line

8:02right

8:03so as price is pulling back up to this

8:04level maybe there's a supply zone they

8:07trade from maybe it's a resistance zone

8:09wherever you trade and then they try and

8:11get short from here

8:12all right whack on okay that's gonna

8:14spaz out for me but whack on there's a

8:16wrist reward tool and then boom they get

8:18smashed right as price moves up higher

8:20and they're sitting there scratching the

8:21head going well

8:22prices move to the downside it was

8:24making lower lows and there were highs

8:25i've got short

8:26i've just been spanked why is that

8:28happening and they go oh maybe that was

8:29just you know down to probability but

8:31actually it's because you're on the

8:32wrong side of the market and you haven't

8:33mapped your swing highs and swing lows

8:35correctly um and you're trying to trade

8:37that internal structure

8:39and trying to trade against the actual

8:41swing trend there so

8:43yeah it's pretty basic but you'd be

8:44surprised at how many people who have

8:45actually been trading for quite a while

8:47can get their structure uh mapped out a

8:49little backwards sometimes so that's

8:51kind of the main points i wanted you

8:53guys to take away from this sort of

8:54first little bit

8:55swing high is just the highest point you

8:57know it's vice versa on the bearish

8:58stuff right the swing high is the

9:00highest point so let's say this high

9:02that calls that low so then when price

9:04forms that lower low in a bearish market

9:05that becomes your next swing range the

9:07price can pull back as deep as it wants

9:09right it could come all the way up to

9:10this orange line but as long as it

9:12doesn't breach that line as long as it

9:14doesn't form a higher high as long as

9:16that lower high stays intact then we're

9:18still in the bearish market and price

9:19can then go on to make that next lower

9:22low okay

9:23then again everything that's in between

9:25that low and that high that is all just

9:27internal structure okay it's not swing

9:29structure and the final point is again a

9:32very simple one but after a break of

9:34structure we always expect a pullback on

9:36that time frame

9:38pretty simple but you'd be surprised at

9:39how many people in the market let's say

9:41over here right they see that level go

9:43they see that high go they see price

9:45form a higher high and the minute they

9:46see that level go

9:48then they start thinking about buying

9:49they think okay well we're forming a

9:50higher high we're bullish that's a sign

9:52of strength let me get along here but

9:54actually the smart thing to do is when

9:56you first see that breaking structure

9:58that's when you use it in your mind and

9:59start thinking the opposite of going

10:00well actually now i'm expecting a

10:02pullback so now i need to think about

10:03that and adjust accordingly right

10:04whether you want to short and play the

10:06pullback or whether you need to manage

10:07et cetera et cetera

10:09so on to the next thing very very simple

10:11stuff here but this is the concept of

10:13strong and weak highs and lows so

10:17what easiest way to think about this is

10:19what is a lowe's job well a swing low's

10:21job is to make a swing high if you think

10:24about that right and a swing high's job

10:26is to try and make a lower low okay so

10:28lows want to make highs and highs want

10:30to make lows now in a bullish market

10:33that is where we have a series of strong

10:35lows so the way to think about this is

10:37this is a strong low this solid blue

10:39line because it went on to form a high

10:42it went on to form that higher high so

10:44it did its job

10:45now when price pulls back this high

10:47whether where the pullback initiated

10:49from right if it doesn't take out that

10:51strong low then actually that means it's

10:53a weak high because it's failed to do

10:55its job that high has failed to make a

10:56lower low so if you get in long here

10:59right you can then target that weak high

11:01that does it high because it's failed to

11:03do its job so now we get in in the

11:04bullish market we like to get long and

11:06we target that weak high okay exact same

11:08thing as long as it pulls back and it

11:10doesn't take out that next strong swing

11:12low we now know that this is a weak high

11:14so if we are in any longs here we can

11:16target that weak high

11:18uh and then we can you know try and

11:19target that higher either so hopefully

11:21that makes sense exact same thing in a

11:22bearish market

11:23i'm not going to go through that just

11:24for you know trying to keep this video

11:26at a reasonably short length but

11:29that's kind of as simple as this concept

11:30is but it's a powerful one because if

11:32you're getting in long hair on these on

11:34these strong high lows and you're going

11:35okay where am i going to target well you

11:37can start to target that weak structure

11:39this is a weak high why because it

11:41failed to take out the low okay it

11:42failed to do its job this is a strong

11:44low in theory right so we should try and

11:46target that weak high so on and so forth

11:49so

11:50if you think about it really our goal is

11:52traders you know we're trying to trade

11:53those easy trades trade those

11:54continuations our goal is to catch

11:57higher lows in a bullish market right we

11:59want to catch all of these strong lows

12:00and we want to catch lower highs um in a

12:03bearish market right we want to be

12:04trading from here and then targeting

12:06those weak lows right

12:08that's kind of the simplest uh way to

12:10think about it so like i was saying here

12:11right let's say we're in this bearish

12:13range here we've had that breaking

12:14structure price is pulling back at this

12:16point we know that this is a strong high

12:18because it took out the low it did its

12:20job so in theory price can pull all the

12:22way back up to that hot pool all the way

12:24back up to the high but because it's a

12:26strong lower high price should not

12:28breach it and kind of another way you

12:30can think about this is that

12:32it took a hell of a lot of money for

12:34price to actually move down and break

12:36that low so i guess you could think

12:38there's a vested interest in that high

12:40being protected and priced not trading

12:42above that high right um so what that

12:44does is we can build trade ideas around

12:45that right it gives us a hell of a lot

12:46of confidence to look to short from here

12:48and target what target that weak low why

12:51is it a weak low well because it fell to

12:53its job it failed to take out the high

12:55and it failed to form a higher high

12:56right

12:57super simple but it just gives you such

12:59a clean framework for kind of mapping

13:00your structure and knowing where to

13:02target so

13:04trend changes obviously bullish market

13:06doesn't last forever bearish market

13:07doesn't last forever well especially in

13:09forex maybe if you trade crypto or all

13:11the stocks it's just bullish forever but

13:13yeah anyway so we have a bullish market

13:15we're making price what price is making

13:17high highs and high lows

13:19now at this point here right this low in

13:21theory is a strong low because it did

13:23what it took out that high and it made a

13:25higher high so it did its job but at

13:28some point what's going to happen is

13:29price is going to break that low and

13:31it's going to go on to form a lower low

13:34so when price was pulling back

13:36we expected this to be a strong low the

13:38expectation is that bullish trend will

13:40continue right so we should expect price

13:42to do that but obviously hasn't the

13:44bullish expectation has failed and price

13:46has now formed that lower low so we're

13:48now in a bearish market okay and that's

13:50what this dotted line shows it just

13:51shows where that trend change occurred

13:53as soon as we break this level and we

13:54form a lower low

13:56for me that is now a bearish market now

13:59some people what they want to see for a

14:01confirmed trend change is they want to

14:03see both a lower low

14:05and a lower high okay and the reason why

14:07that is

14:09um is because what can happen is you can

14:11get a trend change price can form that

14:12lower low but it can be a false kind of

14:14signal and the price can continue

14:16upwards and what it turns out is

14:18actually it was just a liquidity grab it

14:19was just grabbing the liquidity behind

14:21this low to grab that and then continue

14:23the bullish market so that's why some

14:25people they don't confirm a trend change

14:27until you get both a lower low so that

14:28move there

14:29and the lower high right so they need to

14:31see the lower low and the lower high and

14:33remember

14:34we never know where that lower high is

14:36going to be

14:37until it takes out the low okay so for

14:40those people to have a confirmed trend

14:42change they would need to see a double

14:44break of structure because they would

14:45need to see the lower low price form

14:47pull back to form the lower high and

14:48then obviously it needs to break

14:50structure to form or to confirm where

14:52that lower high is

14:53okay now so for me personally

14:55i don't need that much confirmation the

14:57way i keep my training super simple is

14:59the moment we get that lower low that

15:01swing lower low that for me is a trend

15:03change and now i'm looking for that

15:05lower height to form to continue that

15:07bearish move okay

15:08so when we get that lower low formed if

15:10you think about the strong and weak

15:12highs and lows concept what has happened

15:14well a strong low was taken out so that

15:17means a lot of money had to step in

15:19somewhere in this leg to form that lower

15:21low right to form that trend change so

15:23in theory this should now be a very

15:25strong high because it took a lot of

15:27money to cause it low so if you think

15:29there's a you know it's a protected high

15:30right there's a lot of money has a

15:32vested interest in price now not trading

15:34higher than this high

15:36so when we form that trend change and

15:38price is pulling back what we can now do

15:40is build trade ideas around this right

15:42because we can start to look to get

15:43short and we know that price should not

15:45really in theory trade higher than this

15:46this level here right this line here and

15:48then if we do get short in here where do

15:50we target well at minimum we want to be

15:52targeting that weak swing low why is it

15:54a weak low well because it failed at its

15:56job it failed to take out that high

15:57right so this is really simple stuff but

16:00it's literally how you build um just a

16:02solid foundation for your training

16:04and then very very quickly right we get

16:05a bearish market and then eventually

16:07we'll form that higher high a lot of

16:08money stepped in to take out that strong

16:10lower high to form that higher high so

16:12the bearish expectation where we would

16:13have expected the lower higher to form

16:15that has now failed we've formed a

16:16higher high so then we can look for the

16:18pullback and we can try and catch that

16:19higher low because this strong low

16:21should be protected and we can target

16:23this weak high high because it's failed

16:25to do its job right and then boom we

16:27continue that bullish market okay

16:30pretty simple stuff

16:31now something called change of character

16:33i don't really like the term it's a bit

16:35of a fancy name but all it essentially

16:37means it's similar to trend change but

16:38it's not the same so for a trend change

16:40we're looking for the swing highs and

16:42lows to be taken out for a change of

16:44character

16:46it doesn't have to be swing structure it

16:47can just be that internal structure so

16:48there's little minor movements in

16:50between that is what we're looking for a

16:51change of character so it's the first

16:53sign of weakness or the first sign of

16:55strength essentially so

16:57imagine you just got some nice small

16:58little price movements making a series

17:00of you know high highs and high lows the

17:02first time you see that high low fail

17:04and we get a lower low that is your

17:06change of character okay generally we're

17:08applying that to the the internal

17:10structure between the swing highs and

17:12swing lows that is what we call a change

17:13of structure then of course eventually

17:15at some point

17:16that series of lower lows and lower

17:18highs eventually price will break up and

17:20form that first uh higher high right um

17:23and that is essentially what you call a

17:24change of character it's basically

17:25bullet structure changing to bearish

17:27structure and vice versa so a bit of a

17:30subtle difference to trend changes but

17:31you'll see how we apply that now

17:34so

17:35if you kind of look at this very basic

17:37sort of continuation

17:38you know price model whatever you want

17:39to call it

17:41price makes a nice swing high it pulls

17:43back to form a swing low we then get a

17:45break of structure so we form that

17:47higher high okay

17:49now when we get a break of structure

17:51what do we expect we expect to pull back

17:53on that time frame

17:54how can we know when that pullback is

17:56about to start well there's a few things

17:58we can use supply and demand liquidity

18:00and all these other things which we'll

18:01get into in a minute but for this this

18:03video we just want to look at structure

18:04alone so how can we know when that swing

18:07run is over and that pullback is about

18:09to start well this is where change of

18:11character becomes really handy where

18:13essentially this is all one swing leg up

18:16okay so we're now playing within this

18:17next range and we want to know can we uh

18:20play that pullback right

18:22um

18:23so if we see this minor low here get

18:25taken out and we get that first kind of

18:27you know sign of weakness that change of

18:29character where that minor low gets

18:30taken out and we get that internal lower

18:31low now the internal structure is

18:34bearish

18:35and that is in line with trading a

18:36pullback right so now we can trade that

18:37pullback now how do we know when the

18:39pullback is finished and that higher low

18:41is likely to

18:42well have formed we then get a bullish

18:44change of character okay where that

18:46internal lower high gets taken out we

18:48then form an internal higher high

18:50remember the whole time the swing

18:51structure is still bullish that has not

18:52changed we're just looking at the

18:54internal structure so everything in in

18:56here is internal structure we're just

18:58looking for that to switch from uh

18:59bearish to bullish and that basically

19:01just allows us to anticipate when the

19:03pullback is starting and then when the

19:05pullback has finished and then when we

19:06get that internal structure to the

19:08upside we get that change of that change

19:10of character

19:11now we can look to get long and target

19:13what target that weak high why is that a

19:15weak swing high well because it failed

19:17to do its job it failed to take out the

19:18swing low

19:19so just to

19:20keep this as simple as it needs to be we

19:22look for those in those internal changes

19:24of character to help us know when this

19:26swing run has ended

19:28when we can then start to anticipate the

19:29pullback and then when we can anticipate

19:31that that pullback has now finished and

19:33we can anticipate that the high low is

19:35formed and we can start to target that

19:37next swing high high hopefully that

19:39makes sense now what i want to add is

19:42changes of character i'm not the holy

19:43grail obviously they can give you full

19:45signals and that is why you need to pair

19:47them with other complements that we're

19:48going to look at right in the next few

19:50videos so

19:51again we get that swing movement up we

19:53see that change of character that first

19:55sign of a lower low okay pull back is

19:57now starting it stays bearish but then

19:59we get a bullish change of character

20:00where we get that first internal higher

20:02high okay maybe now this tells us that

20:04the high lows is in place and we can

20:06target that higher high

20:08price tries to do that but then what

20:09happens it fails to do so and now we get

20:11another bearish change of character k

20:13because now we've got another lower low

20:15so the internal structure has now

20:16switched bearish again okay maybe that

20:18means we're gonna have a deeper pullback

20:19so we pull back deeper

20:22wait for a buddhist change of character

20:23okay now the internal structure has a

20:25line bullish again it's back in line

20:26with the overall swing structure okay

20:28now maybe the high low is in place and

20:30now we can get long and we can target

20:32that weak swing high okay so yeah that's

20:35basically as simple as we use change of

20:36character but obviously when we

20:38uh

20:39combine that with multi-time analysis

20:41supply and demand et cetera et cetera

20:43that is how we can increase um our

20:45strike rate of using it and very quickly

20:47the same applies to you know if you're

20:48using this for reversals so

20:50let's say price is bullish with the

20:52swing structure right making a series of

20:53higher highs and high lows now let's say

20:55we come into a really clean supply level

20:57that we like resistance level whatever

20:59your strategy is and you are

21:00anticipating a trend change so you are

21:03anticipating that bearish reversal now

21:05what you can do and the safest thing to

21:07always do is to wait for this swing

21:09higher low so this being the lowest the

21:11most recent swing low you just wait for

21:13that to be broken right because then

21:15once this is broken and we get a lower

21:17low that trend change is now confirmed

21:19okay now we have that confirmed bearish

21:21trend change and you can wait for price

21:22to pull back to form that lower high

21:25now we can get short that's the safest

21:27way to do it but of course we don't have

21:28to wait for that we can anticipate that

21:31reversal beforehand by looking at that

21:33internal change of character right so

21:35price takes out that minor low that

21:36internal low we then get that internal

21:38lower low that change of character wait

21:40for price to pull back and then we can

21:42look to short and we anticipate that

21:43trend change okay but of course like

21:45anything it's on 100 strike rate we can

21:48get that internal change of character we

21:49can get short right but then what can

21:51happen is this is still a strong low and

21:54a strong high right sorry weak high

21:56until it's taken out so when the market

21:58is bullish and we're training to the

21:59upside

22:00yes we can get that change of character

22:02there and we can anticipate the reversal

22:04like what we were expecting to happen

22:05over here but there's no guarantee

22:07because this is still a strong low right

22:09so the odds are that this strong low is

22:11going to be protected and we're going to

22:13continue to to the upside

22:15so if you do get short and you're trying

22:16to trade that reversal you see that

22:18change of character but then if you see

22:19that bullish change of character again

22:21you have to take that message from the

22:22market that actually this low is going

22:24to be protected it's likely the higher

22:26low is now formed and now we can target

22:28that high high again right and take out

22:29that weak high so yeah just kind of

22:31that's how we use change of character

22:33we just need to know that of course it's

22:35not you know 100 of the time now

22:37before we apply all of this onto the

22:39charts one other thing we need to look

22:40at is actually

22:42you know how do we map this on

22:44candlestick charts right because i'm not

22:45just going to be looking at line charts

22:46so

22:47kind of two main ways you can do this

22:50both ways we're always going to draw

22:52structure from the wicks of candles okay

22:53so wherever you draw your swing high and

22:55swing low we're always going to draw it

22:56from the wicks of candles but the

22:58difference between the two types is what

23:01you need to see for a break of structure

23:04to have occurred so for type 1 when you

23:06draw your structure from the candle the

23:08wick of the candle you need to see a

23:10candle close above that that that that

23:13swing higher k for there to now be a

23:15higher height for there to be a break of

23:17structure

23:18now this is a bit more of a conservative

23:20way of mapping your structure because

23:22it's going to take a lot more money

23:23right to actually get price to breach

23:25that high and to stay and to maintain

23:28above that high and to close above that

23:29high so here you can see where price

23:31spiked above it actually it was just

23:32what's called a liquidity grab right it

23:34grabbed the orders behind that that high

23:36but it failed to close above there so

23:38for me at that point that would not be a

23:40higher high that would not be a swing

23:41higher high because it didn't close

23:42above until we get this closure here

23:45now the second way is type two this is a

23:48bit more aggressive because we map

23:50structure the same way from wix but we

23:52only need to see price literally just

23:54wick it for there to be a break of

23:56structure so as you can see this is the

23:57exact same price action but you can see

23:59how the trend changes you know a lot

24:01more quickly it's a lot more aggressive

24:03you get those turning points um a lot

24:04sooner because as soon as price breaks

24:06that high that then gives us our higher

24:08high so then if we look back where was

24:10the lowest point that caused the high it

24:11was this point here okay so that becomes

24:13your swing low so you map that then

24:14price breaks that so now we're bearish

24:16so we're playing within this range here

24:18but then price moves up and then it

24:19forms a higher high so you can see how

24:21that's a lot more aggressive

24:23we can potentially get you into trade

24:24sooner um but it can give you a lot more

24:27full signals where basically you're

24:29viewing liquidity grabs as trend changes

24:31okay so for me personally the way that i

24:33use these

24:35i use both which okay you may be

24:36thinking right give me a simple answer

24:38but i always use both so i use type one

24:41for um i'll show you here i've done this

24:43little diagram which hopefully makes

24:44this explanation a little bit more

24:45simple so i use type 1 mapping where i

24:48want to see a candle closure

24:50for

24:51swing breaks of structure so when i want

24:53to know

24:54if we formed a swing higher high or

24:56swing level or whatever i need to see a

24:58candle close above that higher low so as

25:00you can see here these are the two type

25:02ones there and here because they're my

25:04swing brakes of structure i want to see

25:06a candle closure at both these points to

25:08confirm those higher heights now where i

25:10use type 2 so where i just want to see a

25:12wick break i use those for the changes

25:13of character so on the internal

25:15structure i'm happy just to see a wick

25:17break there to know that i've had my

25:18change of character um now i know the

25:20pullback's starting and now i know maybe

25:22the pullback's ended and we can get that

25:24next higher high okay so hopefully that

25:26makes sense so that wraps up the theory

25:29like i said below there should be a pdf

25:31link um in the description below if you

25:33want to save these uh and go back over

25:35them

25:36so let's hop into the charts and apply

25:38this so what we're going to do is we're

25:39going to go through a bit of price

25:40action on the four-hour chart i'm not

25:42gonna do like a full-on long long long

25:44walk through just because this video

25:45will go on for hours um but we'll just

25:47look at a few kind of random bits of

25:48price action um yeah and i'll just show

25:50you the way that i kind of apply that

25:52theory that we've just gone through

25:54and hopefully it will make a lot more

25:55sense i went through it at a reasonably

25:57quick pace some of you who kind of trade

25:58this way super simple stuff some of you

26:01who don't it might be a little bit

26:02confusing but hopefully as we go through

26:04this now you'll kind of see my thought

26:05process how i how i look at everything

26:07we've just discussed um and you'll see

26:10how simple it can be obviously watch

26:11this video as many times

26:13as you need to so

26:15let's just zoom into this section of

26:17price action here so

26:20so my camera did just cut out there but

26:22hopefully i can edit this together so

26:24right now we're on the charts uh what

26:26i'm going to do just zoom into kind of a

26:27random bit of price action um i'm just

26:30going to kind of yeah just talk through

26:31i guess that process that we just looked

26:33at

26:33and hopefully this will start to make

26:36quite a bit more sense so

26:39as we can see right on the four-hour

26:40chart price is making these series of

26:42higher highs and higher lows and then we

26:43take out this low to switch to a bearish

26:46trend so let's kind of just go from this

26:48point onward so as we get this breaker

26:50structure here on the four-hour chart

26:53all right we'll just mark that out as

26:54our breaker structure now where is our

26:56swing high on a swing low that's

26:57basically what we always want to find

26:59out

26:59what swing range are we playing within

27:01and then everything from there on right

27:03follows so as we get that breaker

27:05structure to the downside our swing high

27:07is the highest point that took out the

27:09swing low so we traced back pretty

27:11obviously in this case it would be that

27:12high up there

27:14now after we get a break of structure

27:15what do we expect we expect to pull back

27:17on the time frame how do we know when

27:19that pullback is likely to start we get

27:20a change of character so where is the

27:22change of character well if you look at

27:23price action ignore the color of the

27:25candles that's irrelevant what you want

27:27to be looking for is those counter-trend

27:29movements where

27:30the next candle fails to break the low

27:33or the high of the previous candle right

27:34so in this case we're bearish we want to

27:35look at where those candles stop

27:37breaking the prior counters low here's

27:38the first point right we get that pull

27:40back but we continue bearish right we

27:42get another pullback and then we can

27:44continue bearish and then we take out

27:46that internal lower high to form an

27:48internal higher high right so that's the

27:50change of character we're looking for so

27:52when we see that that gives us our

27:54signal that there is now a bullish

27:56change of character right from that

27:57inside bar

27:59and now we have the internal structure

28:01switching bullish which is aligned with

28:03that pullback starting

28:04how do we know when that pullback is

28:05likely to finished and the next spring

28:07leg is likely to have started purely

28:09just thinking about structure here right

28:11don't have much time from analysis just

28:12yet not looking at supplying demand not

28:14looking at liquidity sweeps around that

28:15stuff purely just simple structure we

28:17look for a change of character back to

28:19the downside so we have this bullish

28:20movement up we have a pullback we then

28:23have that internal higher high again

28:24which means we now have that internal

28:26low there right zoom in that now becomes

28:28a low so when price comes down and takes

28:30out that low to form a lower low

28:33now we have that change of character to

28:34the downside the internal structure is

28:36now bearish which means it's aligned

28:38with the swing structure so now that

28:40gives us a really solid signal that the

28:41lower high has likely formed and now we

28:44can look to get short as price pulls

28:45back into supply right and the model we

28:47target we target at a minimum that weak

28:50swing low why is it a weak swing low

28:52because it failed to take out the swing

28:53high right it failed to do its job and

28:55then we get short target there and

28:56potentially further okay

28:58that's it that's as simple as it is

28:59that's the process of follow

29:01um pretty much um obviously across more

29:03than one time frame which we'll get into

29:04in a bit um but yeah that's it so then

29:06we get our break of structure now we

29:08need to know what's the next range we're

29:09playing with it so where's our swing

29:10high pretty obvious uh

29:12in this case so just marked out it's the

29:14highest point that took out the low uh

29:15what do we expect after a break of

29:17structure we expect to pull back on that

29:18time frame how do we know when the swing

29:20run is over and that pullback is likely

29:21to have started we get a change of

29:22character so here this is just a very

29:24minor pullback right and then all of

29:25those candles break the prior candles

29:27low so for me this is the high that

29:28needs to go for there to be a change of

29:30character okay so that confirms kind of

29:32the pullback started

29:34now how do we know when that pullback is

29:35slightly to have ended and we can catch

29:36that next lower high we look for a

29:38change of character to the downside so

29:39where does that happen well if you look

29:40at the price action you had a movement

29:42up that's a pull back there because

29:43that's an inside bar but then all of

29:45these candles

29:46uh break the prior cameras high so that

29:48is all part of the up move then we pull

29:50back and then we take out that low so

29:53now we have that internal change of

29:55character right the internal price

29:57action is now bearish it's back in line

29:59with the swing trend or the swing range

30:01that we're within right that's the swing

30:03higher that's the swing low

30:04we've had the pullback we've now had the

30:06bearish change of character we're back

30:07in line with the bearish swing trend so

30:09now we can look for shorts right price

30:10pulls back into supply boom we can get

30:12short catch the lower high and target

30:14that weak low right so on and so forth

30:17and that that is literally it you just

30:18always want to know where is my swing

30:19range where's my swing high where's my

30:20swing low um what is the internal

30:22structure doing is the internal

30:24structure

30:25currently against the swing structure

30:27then that means it's likely pulling back

30:29and then when it realigns with the same

30:31trend as the swing structure then you

30:32know it's very likely that the pullback

30:34is now finished the lower high may be in

30:36place

30:37and now we can then target that that

30:38weak swing structure um yeah that's it i

30:40mean i don't want to go through every

30:41bit of price action here just look at a

30:43few kind of more interesting i guess

30:44examples so here we're still bearish

30:47then we get a pullback let's kind of

30:48measure that pull back how big is that

30:50so

30:51yeah over 40 pips so

30:53on a four-hour chart for me that counts

30:54as a swing pullback um so for me i would

30:57mark that out as a break of structure

31:00okay and then we are playing within what

31:03range well that would be the swing high

31:04because that's the highest point that

31:05took out the low and then obviously

31:07that's going to be the swing range we

31:08are within so this is obviously where we

31:10get a reversal with the benefit of

31:11hindsight but let's see how you know how

31:13i would read this in a live market okay

31:15so

31:16um actually let's use this i wasn't

31:18going to do this but let's do a little

31:18bit of bar replay um which is on this

31:21example just because if we do it for

31:22everything it will take forever but

31:23we'll kind of finish up on this right so

31:25we're clearly bearish we pull back we

31:27break structure that's right so this is

31:29our current swing high now we don't

31:31really know where the swing low's going

31:32to be until we pull back but we've had

31:34the breaker structure what do we expect

31:35to have to break a structure we expect

31:37to pull back how do we know when the

31:38pullback uh is likely to start we look

31:41for a change of character so

31:43we see how all of these cameras break

31:44the prior counters low that's all part

31:45of the down move but then with this

31:47candle here it's an inside bar it's got

31:49a little indicator that makes it a white

31:50candle but essentially you can see that

31:52this candle here failed to take out this

31:54candle's low so that's part of the

31:55pullback right so now we know that we

31:56have a minor low

31:58so move along now price has taken out

32:00that low that now means we have a minor

32:02high here so i'm literally if i'm

32:03looking for that bullish change of

32:04character i'm waiting for this high to

32:06get taken out and then i know that i

32:08have that bullish change of character

32:09and we can potentially anticipate a

32:11pullback starting so let's move this

32:13forward okay now we get that high taken

32:15out that means we've had a bullish

32:16change of character so now i can look

32:17for a pullback into where into this

32:20swing high up here okay so the

32:21expectation purely just looking at

32:23structure i'm purely just looking at one

32:25time frame the expectation at the moment

32:27is that price will not trade higher than

32:29this swing high here why well because

32:31technically it should be a strong high

32:33because it took out a low so it was to

32:35remain bearish price can trade all the

32:36way up here and then it can go as long

32:38as it doesn't breach that high okay

32:40but we've had a bullish change of

32:41character so now we can look to trade

32:43this pullback back up in towards the

32:45higher okay so price pulls back into uh

32:48demand we get a nice movement up that

32:50would be a great area to look for long

32:51positions right to play that counter

32:52trend pullback now as price starts to

32:54pull back what i'm looking for this

32:56entire time is i'm looking for price

32:58as it's putting back to have that

33:00bearish change of character so the

33:02internal structure realigns with the

33:03swing structure then i know that the

33:05lower high is likely to have formed and

33:06then i can try and trade that short okay

33:08so what do we have here price is still

33:10bullish okay we just start to get a bit

33:12more corrective but we're still bullish

33:13okay now we've had that bearish change

33:15of character because we have taken out

33:17this lower okay so you can see how

33:19price moved up it pulled back it went up

33:21it pulled back it went up and then we

33:22got that internal lower low so now the

33:24trend or the internal structure is in

33:26line with the bearish structure we can

33:28look for shorts okay

33:29now we pull back okay now what happens

33:31here you see this is a warning sign

33:33because we move down we form a lower low

33:35internal lower high an internal lower

33:37low but then we take out that internal

33:39low high so what's happened we've had a

33:41bullish change of character so that

33:43gives us a warning sign that potentially

33:45you know we're going to move up at a

33:47bare minimum i would expect this high

33:49here to get taken out to get run because

33:51it's failed to do its job it's failed to

33:52make a level low so at a bare minimum i

33:54would expect that but generally when

33:57this happens especially right at the top

33:58of the range

33:59this is usually a warning sign that that

34:01it's going to fail and we are going to

34:02form that higher high so now you can

34:04look for for longs and then boom we

34:05anticipate that trend change and our

34:07prices change trend so then at this

34:09point

34:10right you start looking for longs or pro

34:11trend longs

34:12and we get priced there uh trading there

34:15to the upside so

34:16yeah i mean i'll tell you what we'll

34:18look at one last example

34:20let's look at reversals they're usually

34:21a bit more interesting and then we can

34:22look at the continuation from there so

34:24price is clearly bullish

34:26for quite a while um and then this would

34:28be our swing low down here right move

34:30this out of the way and we get that

34:31breaker structure to the downside so let

34:33me zoom in into here

34:34so price now switch switches bearish so

34:37obviously we're trying to anticipate

34:38that lower high to get that next various

34:40trend change right so

34:42price

34:43we get a breaker structure what do we

34:44expect after breaking structure we

34:45expect to pull back how do we know when

34:47the pullback started we get a bullish

34:48change of character so we get that

34:49bullish change of character now we could

34:51just straight away you know if you trade

34:52supply or whatever look to get short

34:54from here and that's absolutely fine

34:55maybe we want a little bit more

34:56confirmation so how do we know when that

34:59pullback is slightly likely to have

35:00ended and the next spring run is likely

35:02to have started we wait for the internal

35:04structure to align with the spring

35:06structure the spring structure is

35:07obviously bearish so now we want to wait

35:09for the internal structure to switch

35:10bearish so we come into supply we pull

35:13back we go in and then we take out that

35:15minor low right which is down here so

35:17now the internal structure just drawn a

35:19little bit more accurately

35:20you can be really aggressive with taking

35:21inside bar or let's just take that minor

35:23low there right now we have that bearish

35:25change of character so now what now all

35:27systems are aligned all systems go we

35:29pull back into supply

35:31everything's there boom we get short

35:32where do we target at a minimum that

35:34weak swing low why is that a weak low

35:36well because it failed to take out the

35:37swing high okay then we get our breaker

35:39structure we now get a lower low how do

35:41we anticipate when that pullback is

35:42slightly to start well we get a change

35:43of character so you see how we take that

35:45minor high right we take the low we take

35:47the high that is our bullish change

35:48character let me give it all these lines

35:49because it's getting messy as hell

35:52um

35:53so we get that breaking structure okay

35:55here

35:57breaker structure then we get that

35:58change of character as we take that

35:59minor high there then we pull back into

36:01supply how do we know when that lower

36:03high is likely to have formed we wait

36:04for the internal structure to switch

36:05bearish so we take that low out we get

36:07bearish pull back into supply right and

36:09then short at a minimum that low there

36:11right then we pull back how do we know

36:13the pullback's over we wait for that low

36:15to go see this is a minor low there we

36:17get that bearish change of character

36:18pull back into supply boom we're off now

36:20obviously you can't anticipate how far

36:22price is going to go no one knows how

36:23far price is going to go but that's when

36:25we start to bring in multi-timeframe

36:26analysis behind demand yeah and we can

36:28start to do it and you just follow it on

36:30you know again when when is the swing

36:32run likely to ended because we dumped

36:33for ages but we never get a chipboard

36:35change of character until when until

36:38boom then we get the change of character

36:39okay pull back's now started how do we

36:40know when the pullbacks ended we get a

36:42bearish change of character look we take

36:43out the low pull back into supply then

36:45we target the weak low why is that a

36:46weak low because it failed to take out

36:47the swing high all right i'm going to

36:49leave that there just because i don't

36:50want this to turn into like two out two

36:51hour video

36:52i don't even know how long we've been

36:53running already but

36:54yeah hopefully

36:56oh i feel like i went through that a

36:57little bit too quickly but hopefully

37:00that's made sense um let me know if it

37:02has it hasn't um any feedback is

37:04appreciated

37:05for some of you who trade this way it

37:06might be a little bit simple like i was

37:07saying for some of you who are a bit

37:08brand new to this um

37:10just watch this as many times as you

37:11need to and it will start to click but

37:14yeah it's literally the first thing i'm

37:15looking at every time i'm on the charts

37:16i map out my swing high my swing low

37:18figure out if i'm trading pro trend or

37:19counter trend how's the pullback started

37:21do we have that change of character has

37:23a pullback ended do we have that you

37:24know change of character back in line

37:26with the swing structure and then i'm

37:27looking for where are my weak highs

37:28where are my weak lows right and i want

37:30to trade in that direction okay

37:31targeting

37:32um yeah those weak points of structure

37:34so if you take any value from that um

37:37yeah please let me know in the comments

37:38below give me any feedback any requests

37:41that you want to see for content as well

37:43um obviously i do have my own uh

37:47course and mentoring program at photon

37:49as well if you want to check that out

37:51um hopefully on screen i'm just showing

37:52you now that we have a full course

37:53showing you the end to end you know if

37:55you literally know nothing about fx and

37:56you want to start i have covered

37:58everything in there um all the way

37:59through to you know really advanced

38:00technical analysis and it's kind of my

38:02mechanical strategy laid out there for

38:04you um full trading plan and everything

38:06um you know i've kind of laid out the

38:08course in a way where essentially i'll

38:09show you the theory like this then i'll

38:11do a walkthrough then i'll give you a

38:12section of price action for you to then

38:14go away and apply the concept that you

38:15just learned

38:16and then in the next video you can then

38:18watch me go through that exact bit of

38:20price action that you just attempted

38:22your analysis on and then you can

38:23compare and contrast and yeah it just

38:25makes it a really kind of uh dynamic and

38:27effective way for learning um

38:30also you know there's regular market

38:31content breakdowns commentaries every

38:33week uh you know i post my analysis um

38:35before that session every morning uh

38:37full tray recaps markups a lot so if

38:39you're interested have a little bit

38:40below if not i'm gonna be posting um

38:42content pretty much aiming for every

38:44week now on youtube so yeah like i said

38:47if you literally comment below anything

38:48you want to see um i will take note of

38:50all of those but there's in a

38:50spreadsheet and get those uh videos done

38:53for you so i don't think there's

38:54anything else i wanted to add

38:55like i said if you do want those

38:57diagrams they should be in a pdf in a

38:59link below the video so

39:01yeah enjoy and see in the next one

39:18you