📈 MARKET BASICS
These turning points create the highs and lows we use to identify market structure.
What are swing highs and swing lows?
This term describes concentrations of resting orders in the market, such as stop losses and take profits.
What is liquidity?
(1) A decisive close above a meaningful structural high is called this.
(2) A decisive close below a meaningful structural low is called this.
What is a bullish BOS?
What is a bearish BOS?
Every candlestick represents these four pieces of price information.
What are Open, High, Low, and Close (OHLC)?
The 4H is bullish, but the 15M is making lower highs and lower lows. The 15M bearish movement could simply represent this within the larger bullish structure.
What is a retracement/pullback?
True or False: A break of a trendline is enough confirmation to enter a trade.
What is False?
(A trendline break should be combined with other evidence such as a POI or structural break.)
(1) Previous highs generally contain this type of liquidity.
(2) Previous lows generally contain this type of liquidity.
(1) What is buyside liquidity?
(2) What is sellside liquidity?
Large candle bodies, acceleration, little overlap, and aggressive movement away from an area describe this.
What is displacement?
(1) On a bullish candle, which is higher: the open or the close?
(2) On a bearish candle, the top of the candle's body represents this price.
(1)What is the close?
(2)What is the open?
(1) In a bullish range, traders generally look for favorable buys on this side of equilibrium.
(2) In a bearish range, traders generally look for favorable sells on this side of equilibrium.
(1) What is discount?
(2) What is premium?
When drawing trendlines, connecting these captures the true price extremes and potential liquidity sweeps, while connecting these can provide cleaner support/resistance levels.
What are wicks and candle bodies?
Wicks = extremes/liquidity sweeps. Bodies = cleaner S&R.
Price trades above a previous high but then rejects and closes back below it. This is more indicative of this event than a breakout.
What is a liquidity sweep?
Price sweeps sellside liquidity and gives you a bullish rejection candle, but there is no bullish displacement or structural shift yet. What should you do?
What is WAIT?
A candle trades significantly higher during its formation but closes well below its high, leaving a long upper wick.
(1) What does the wick tell us?
(2) What is the name of this type of candle-stick?
(1) What is price traded higher but was unable to maintain those higher prices (it was rejected)?
(2) What is a bearish pin-bar?
According to our recent homework review, what TWO events should establish a valid range before applying Fibonacci?
What are a liquidity sweep + break of structure in opposite direction (range formation)?
Price has been creating higher highs and higher lows during NY, but suddenly fails to make a new high at the start of Asia.
(1) Does this confirm that the market is now bearish?
(2) Why or why not?
(1) What is No?
(2) Failure to make a new high gets our attention, but we still need evidence that the bullish structure has actually changed.
A series of similar highs or lows forming along a trendline can become important for this reason.
What is a buildup of liquidity/resting orders?
Price closes convincingly above a previous 1HR structural high, leaving behind an FVG just below the breakout.
(1) Should this be labeled a bullish BOS?
(2) What is the significance of the FVG?
(1) What is Yes
(2) The FVG shows volume/momentum and can serve as a potential entry if price revisits it/holds as support following the bullish BOS.
A candle that has a similar (or the same) opening and closing price is called:
What is an indecision candle? (doji/plus-sign)
On the 4H, you see one large bullish candle. When you drop to the 5M, you see bearish movement, a liquidity sweep, bullish displacement, BOS, pullback, and continuation.
Did the market suddenly create a completely different story when you changed timeframes?
What is No?
The lower timeframe is revealing the price action occurring inside the higher-timeframe move.
More detail does not necessarily mean the larger narrative changed.
Price is moving sideways between a clearly defined 15-minute range high and range low. How should this market condition be classified?
What is ranging / consolidation?
Price aggressively closes below a previous 5-minute low, then immediately trades and closes back above it on the very next candle. Another trader says, “Price broke support, now it's retesting, we are bearish.” What important distinction are they missing?
What is the difference between a liquidity sweep and acceptance/BOS?
Trading through a level does not automatically mean price accepted beyond it. How price closes and responds matters, time-frame is important!
Gold is bullish on the HTF, its 8PM EST (Asia session), price sweeps sellside liquidity beneath NY's low, produces a bullish pin-bar, displaces aggressively higher leaving behind fair value, and then closes above the structural high that led to the liquidity sweep.
What information is missing for you to take a trade?
What is NOTHING? Pull the trigger!
A candle starts at $100, goes to $95, reaches $120, and ends at $115.
(1) Identify its OHLC.
(2) Is this a bullish or bearish candle? How do you know?
(1) Open: $100
High: $120
Low: $95
Close: $115
(2) Bullish because the close ($115) is above the open ($100)
A trader identifies:
4H: Bullish structure
↓
1H: Price pulls back toward a meaningful POI
↓
15M: Price appears bearish during the pullback
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5M: Sellside liquidity is swept
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5M: Bullish displacement + structural break
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1M: Price retraces into a favorable entry location
The trader refuses to buy because:
“The 15-minute chart was bearish.”
Question:
What mistake is the trader making?
What is confusing lower-timeframe price action with higher-timeframe context?
The 15M bearish move can be the retracement inside the larger bullish structure.