Understanding Market Structure and Order Flow

If you're gonna use this as a, a mechanism to get short,

your stop losses can be

limited to consequent encroachment and just a little bit above it.

Now, what's a little bit above it? Hmm.

It would have to be, in my opinion, at least three to four handles above

consequent

encroachment. Because remember, we allow for what?

Little mohawks, a little coloring outside the lines.

So seeing specific PD Arrays, and it's not just simply a fair value gap

that fails.

There's many times I want PD Arrays to fail.

Think about when I'm teaching you order flow, how every candle

supports price. As it's going higher, every down close candle, in that down

close candle, algorithmic buying is taking place.

So it goes without saying, when it goes above that

and it comes back down and

touches it, it's not going to need to go back down in

there because the algorithm

has already extended the opportunity for the algorithms that use

this in a marriage, like a handshaking between the delivery

mechanism,

the price engines that cause the fluctuations in price,

and then the algorithms

that can handshake with it. What are we looking for on the opposite

spectrum? When we're bullish on price, we wanna see down close candles support

price because they're acting as what? Bullish order blocks.

But we wanna see bullish candles on the other side, on the

left side, that would be considered what? Bearish order blocks.

As price was going lower, every up close candle should have offered

what?

Downside delivery, sell side delivery, moving lower.

So we wanna see price going through with ease up through them.

That's real institutional order flow.

But when we look at PD Arrays, if we have met a

range extreme, or we traded to buy side liquidity,

that would constitute

a potential reversal. While order flow has been bullish

and we've maybe

capitalized on that, now if we have seen a run on buy side,

and then

it broke market structure, and then rallied up

and give you a 2022 short entry,

what do you think you would be expecting as the price is dropping down?

Every one of those down close candles that supported price going up,

you wanna see

price eat through that quickly with no hesitation.

So every PD Array has in, in its formation a

application of wanting to see it fail for the purposes of giving you insight, but

then you can use it for a counter trade idea. It has an inverse nature to it.

It may not be an inversion fair value gap that you use as your model, but it gives

you the flexibility to say, "Okay, I use fair value gaps to enter, but

if I get it

wrong, that means it's probably indicating

that I'm really offside.

So if it comes back up and trades back up into this level here,

it might offer some

measure of resistance." So therefore, we could see an opportunity for it to

trade.

And where would it trade to? Here's a daily low right there.

What could you use as a partial before you get to that?

Half of this range, which is what? Right here,

which would be right below Friday's

low, the opening of that candle, and the consequent encroachment of the

wick.

Do you have to take a partial every single one of them? No.

Which one would make sense for you based on how much you're leveraging, where you

got in at, where the entry was? 'Cause it could trade up to here and break

extremely hard, and then the only first fair-