Understanding Price Movements in Trading

Here's the million-dollar question.

The understanding is how price moves from one level to the next.

But predominantly, it's moving from a level of discount to a

level

of premium, from a level of premium to a level of

discount.

Between the red line and the blue line, they are extremes.

In the middle, that's classified as equilibrium or

balance. Buying imbalance is seeing when price gets

above equilibrium or up into that red level, which would be resistance.

Selling imbalance would be when price gets below equilibrium

and down into the blue

line, or what would be described as discount.

So where would you expect to see price go next?

When you look at charts, you wanna see where price has moved away

from an old high

and it's dropping down from an area of premium.

In other words, it's too, it's too high, so the valuation's gonna be reduced and

dropped lower. So repricing takes place

and the market goes down,

and the price goes lower as a result of it until it gets to a point where it's too

much of a discount, then there has to be a premium built into

it.

The algorithm will do this, moving price back and forth, back

and forth, back and

forth until, again, something of significant impact comes into

the

marketplace and drives the market one-sided and it creates a strong

imbalance.

Otherwise, the market's just gonna gyrate back

and forth looking for liquidity

based on premium and discount conditions.

Your expectation is, is right now price is at a level where it should,

by all standards, move lower because it's at a classic

viewed

resistance level. We don't know how long

that time's gonna be required

before the market does in fact submit to our expectation and see

a lower price. That part is what you're always gonna have to submit

to.

Time is a murderer. It's a killer for, for traders.

Unless you know that some of these ideas are gonna pan out for a long, long time,

you're gonna do a lot of things psychologically and emotionally

that you wish you

wouldn't have done because you haven't submitted to the, the time aspect of

trading. There's two elements in trading you have

to submit to: time and price.

When they both agree with one another and you have waited for that agreement to

come to fruition, that's where profitability

and opportunities are.

So we're looking at price, and we have no idea how long time

is going to be

required of us to wait before th- the displacement takes place.

But eventually, our expectation is we'll see lower prices down to a level

of

discount, and that's what we're expecting

or forecasting as a future price.

In between these two pref-- reference points, again, time and price

is what's essential. You have to submit to the level of time,

which no

one knows how much time is gonna be required before your setup

pans out or goes to profitability. Price is what you're studying.

You're submitting to time throughout the process.

But while you are in the trade or expecting this to unfold,

studying it, you're submitting to the price.

Okay, for a, a monthly chart, okay, what you're gonna do

is you're gonna look at

the current trading range that it's in.

So we're gonna assume that you out- outline the marketplace in terms of old

highs

and old lows on the monthly. In between these two reference points,

the halfway

point, this is always gonna be referred to as

equilibrium.

Now, equilibrium between where you think price

h-- will go because it's been there

before and where it's at right now relative to an old high and old low,

that's the current trading range.

The first thing above equilibrium in the form of an

array is an old high and old low. You wanna be looking for that above

equilibrium. The next thing that you'll be looking for, and this

is in the order of

importance, old high, old low, then the next thing you'll be looking for

is a

rejection block. A rejection block will be just above the

candle's body,

not the wicks. So the actual high and low is the wick.

The next area of importance is the rejection block that would you--

be just

above the candle's body. Then the bearish order block, a fair value

gap, the liquidity void, bearish breaker, and the mitigation block.

If we were at equilibrium and we were moving away from a premium level or

at resistance, in other words, price has already dropped down

and we anticipate

price going lower down to a level of support or monthly discount, we would be

looking for above current market action.

Again, assuming that we're at equilibrium right

now, we would start looking above

current market action in the past on the left side of our chart.

Where's the nearest mitigation block? There may not be one. Okay, check

that off.

Where's the nearest bearish breaker? There may not be one of those either.

Okay, check that off. But if there is one, then you would reasonably expect to see

price trade up to that price point, the breaker.

Then expect some selling to go lower.

And once it moves below equilibrium, then you would be all set to go to the

monthly

discount or support. But let's assume for a moment the

mitigation block isn't there

and the breaker isn't there. What would you look for next?

Okay, well, the next order of hierarchy is liquidity void.

Is there a range that needs to be closed in? Again,

that may not be so clear.

Check that off, no problem. The next thing, is there a fair value gap?

Again, that might not exist either. Go to the next thing, bearish order block.

That's probably gonna be there. Chances are it's very strong

that it's gonna be

there. A mitigation block is gonna be first considered before you

get to the

bearish order block, 'cause the bearish order block's gonna be

really high up in

the premium. Mitigation block is gonna be the lowest.

Mitigation and breakers are basically mitigation blocks,

but generally,

mitigation blocks can occur lower than breakers.

Small little bounces in bear markets would be a mitigation block, basically.

A bearish breaker will keep your ability to get to a

bearish order block, which will be resting higher up in the

premium when an old

high is taken out, that down candle right before the second

high is made,

taking out an old high or turtle soup, in other words.

That down candle, if it's re-traded to, that's gonna be a bearish breaker.

That's gonna keep you from seeing most likely high probability

that it won't allow you to get to a bearish order block.

So whenever you see bearish breakers, just don't expect the bearish order block

to be hit, okay, 'cause it's gonna most likely keep price

lower 'cause that's gonna

be the most dominant array of all these in here.

There is a liquidity void that would be viewed

if there's no breaker.

You can close in that range, and it may take you up into a fair value

gap or a

bearish order block. Breakers by themselves,

even though they're low end on this

list, if there is a lack of bearish order block,

uh,

understanding in what you're looking at currently in the market action because

there may be a lot of wicks, something like that may occur,

then you would look for

a rejection block, which would be just above the body of the

candles.

You would expect that to be ran out, and then you'd be really high on the

premium

there, and then ultimately a who- whole entire run on the old high.

Now, I have here old high and old low. What, what, why would the low be there?

Well, if you're on a very low end of a downtrend

on a higher

timeframe monthly chart, you may be rallying up to a old low.

And if it gets to that old low, even though it's an old low in,

in terms of price, it's really high up in the premium

if it's been rallying a

considerable amount of time and price to get to that level.

But it may need to run out an old high as well.

The expectation is when you're looking up f-

in price for areas where price may go

up to, it's in this order from the lowest up.

In other words, from mitigation block all the way up to

old high and old low.

The farther you go up in this list, the more deeper you go into a

premium market. Certain arrays in here will keep you

from seeing the next higher array.

In other words, if you get to a breaker, chances are you're probably not gonna go

higher than that. You won't generally get up in to close

that void.

If there's a breaker below a liquidity void, the liquidity void may stay open,

basically. That range may stay open.

You can see here the monthly premium arrays.

These are gonna be focused for primarily bearish premium array trading.

In other words, you're gonna be using these areas at

which to frame a trade or look

for bullish targets at these levels.

For monthly discount, these are your bullish discount arrays,

and you would be

looking for these for bearish targets or looking to get long

at any one of these based on the current conditions in the market.