Market Structure - Bootcamp Ep.2

Okay. Hello and welcome to episode two

of the technical boot camp. Today we are

talking about market structure. So in

this class we are going to break down

basically the core element behind all

technical trading which in my eyes is

market structure. I'm going to show you

what it is and how you can plot it on

the charts and understand it when you're

viewing it in the market. I'm going to

show you different trending phases and

how to spot true versus false reversals

so you don't get caught out. and we'll

talk through pitfalls, mistakes that

people make and how you can avoid them

to get the best result. With that said,

let's jump over to the charts and get

right into the class. My goal with this

episode of the boot camp is not to

simply show you how to trade with market

structure, although of course that is an

important element, but it's to show you

why I believe this is the best way to

actually trade the market from a

objective point of view where you're

following the real price structure that

the market is printing for you. Now, I'm

going to start by showing you why this

is and why I want to put so much

emphasis on real market structure. Okay?

We're going to do that by just showing

one of the arbitrary ways that people

try to define the trending direction of

a market without understanding the real

price structure and how this fails in

comparison to what we're actually going

to look at today. So, the tool in

question, the approach in question is of

course going to be a trend line, which

is a very simple tool that a lot of

people use. The idea with the trend line

is, and look, if you already understand

this, please just stay put. It's only

going to take a couple of minutes to get

through this and you will also

understand the emphasis I'm putting on

market structure itself. So the idea

with this trend line tool is you connect

two or more lows and then if this

creates an ascending trend line like

this a trend line that's moving up any

price action above this line is bullish

and you should look to buy. The idea

then is you buy retests. So after these

first two taps you would have bought

this one and then you would buy here as

well which obviously this one would have

lost. And then the idea is underneath

this trend line. If the market breaks

beneath and closes under the level, that

then creates a bearish market. A

situation that you should look to sell

into. So in the approach of arbitrary

tools like this, above the line is

bullish, below the line is bearish. It

seems logical. It seems like it makes

sense. But there is one big problem with

it and it's that we are trusting a tool

or a line that realistically in the real

market is imaginary. It only exists cuz

we just drew it on. We are trusting this

over the real structural printing of the

candlesticks in question. So if we look

at structure from this point onwards

from a real high low structure

perspective which is real price action

what we are looking to do to determine

the direction of a trend is mark out the

highs and the lows and see which way

overall the real price which is what is

being printed by candles is actually

moving. Now in question here that would

be here is our low. Okay we have a high

just here as well. So this is like our

previous high. We have then had a drive

from here to here. This creates what we

call a higher high because this high is

higher than the previous one. We then

pull back down to here and we create a

higher low because this low is higher

than the initial one down here. Then we

again drive higher from this point to

this point creating a higher high again.

Then we come down and create a higher

low again. And then we make the final

drive up to create a higher high over

here. So if we look at what the market's

actually printed, not what our drawn on

imaginary line tells us, we can see that

the market is clearly trading upwards.

And what these candlesticks show is

confirmed and rejected real price

action. It is the real market price

printed second by second throughout the

entire day, never ending in a big flow.

So what this is telling us, the candles,

is significantly more important than

what this is telling us, the trend line.

Because this trend line is just a line

that we draw on the chart. It's not

actually the high low structure that's

being printed by price. Now, if we see

that the real structure of the market is

printing highs that are endlessly higher

than the previous and lows that are

endlessly higher than the previous,

well, we have got the most clear

information there that this market is

indeed moving up. We can see that with

our own two eyes. It's very simple.

Okay. If this market then continues to

make higher lows and higher highs, that

would be a market of which we would want

to buy. If the market was to break into

a lower low, so printing a low that's

lower than the previous, for example, in

this market, it would look like this. If

we were to get a closure down here, that

would create a lower low, which would

change the overall direction of this

market. And what we would want to do

then is rather than looking to take this

higher, actually expect a lower high, a

lower low, a lower high, and so on and

so on and so on until that shifted

again. So when we're looking at high low

structure using raw price action, we are

simply looking which way are the candles

going. Are they creating higher highs

and higher lows or lower lows and lower

highs? And then we trade with the

existing current proven direction of the

market. And that is what makes these

arbitrary tools like trend lines and the

other one is moving averages that people

use. That's what makes these essentially

obsolete or incorrect. Okay? Now, of

course, if you win with trend lines or

moving averages, I am not telling you to

stop. Do what works. You can make pretty

much any system win. But when it comes

to the actual structural view of a

market, it is objectively incorrect to

trust trend lines. Because now that we

understand the real high low structure

of this market, what can we see? Well,

if you were a trader who trusted this

trend line and the standard way to trade

a trend line there is if it breaks, you

sell the pullback and retest of that

level, you'd be looking to go short here

thinking that this market was bearish.

When objectively, based on the price

action, it is not. It's a bullish market

because all we can see is that it's

created a higher high and it is now in

the process of pulling back but it

hasn't broken through a very notable

higher low. So price itself is saying no

this market is going up. Okay, we don't

have any reason to believe this market's

going down. We are going up. Every high

we're printing, every low we're printing

is higher than the previous one. So this

is actually a bullish market that should

be bought into. And if you trust these

arbitrary tools, you're going to be

caught on the wrong side of this market

a lot because you're now looking to sell

a bullish market. Now, let's see exactly

what happens next in this example. As

you can see, we drive higher based on

the high low structure. That is

completely obvious because all we've

done is go and print again a new higher

low and then a new higher high over

here. So, when you look at the raw price

action, it's a very simple trade. when

you look at arbitrary tools, you're

caught on the wrong side of the market

where you really don't want to be. So

that is why we are going to focus in in

this class heavily on high and low

structure of real price action. The

information the candlesticks themselves

tell us because this is the real

information of the market, not arbitrary

tools, not indicators, not trend lines,

real price action. So with that said,

we're going to jump in now and talk

through trend phases, but hopefully

that's given you an understanding as to

how important it is to read the market

through the true lens of price. Okay, so

the markets can really only move in one

of three phases. There are only truly

three directions that the market moves.

An uptrend, where the market

consistently prints higher highs and

higher lows, just as we previously

discussed in that example. A downtrend,

where the market is printing lower lows

and lower highs, as we discussed again.

This is where the market's moving down.

And then a consolidation. This one is

pretty much just a mess where the market

is going sideways. Now, a lot of people

will mark out as a consolidation as

pretty smooth like this. It's not always

like that. Okay, a consolidation can be

a point where the market's made a higher

high, but then it goes and makes a lower

low, then it makes a new higher high.

And really, it's just a undirectional

phase of the market, which is really

hard to understand. It's not making

clear upward moves. It's not making

clear downward moves. It's just chopping

back and forth. Okay. Now, the classic

ways to trade each of these different

phases, it's actually very simple, as

you can imagine. In uptrends, we want to

buy. In downtrends, we want to sell. And

in consolidations, we just simply want

to do nothing. That's pretty much how we

trade the market. Now, these things are

so important because, of course, we want

to know when we should be buying a

market. And trends tell us exactly that.

If the market is continually pushing to

make new highs and it is continually

forming lows higher than the previous,

this is a phase of the market where we

can incorporate all of the other

concepts that you're going to learn in

this boot camp to actually buy. If we're

not creating this kind of price action,

then there simply is no buying

opportunity on the table. This, of

course, will filter down trades you

take. You're not going to be taking

trades against the trend. You're not

going to be getting endlessly chopped

out of trades. You are only buying when

the conditions tell you to buy based on

this high and low structure. Downtrends

are the same. If we continue to see the

market breaking structure into new lows,

and we continue to see the highs being

printed lower than the previous highs,

then this is a condition of which you

would want to sell. and anything other

than this is not a selling setting.

Therefore, you're only going to be

taking trades on the downside in prime

conditions to do so. Okay? So,

downtrends for selling, uptrends for

buying, consolidations, as we see. If we

can't make clear sense of whether the

market's going up or down, we simply

don't take any positions. Therefore,

we're not going to be getting chopped

and liquidated back and forth. I'm sure

you've probably experienced that at some

point. If you just stop trading in these

messy ranges, you don't have to worry

about that anymore. Okay? So, these are

the three core phases. uptrends for

buying, downtrends for selling,

consolidation for going and doing

absolutely anything else. Don't get in

these markets. All right, let's talk

through the dynamics of this then and

also what reversals look like in these

markets. So, we have here a clearly

plotted uptrend of higher highs and

higher lows. Now, you can see I've drawn

this little tool on that says BOS. This

means break of structure. I use this

term when structure breaks into a new

high or a new low. I don't use chalk,

MSS, all the weird things that people

use. It's a break of structure.

structure broke. So that's simply what

we call it. Okay. So you're going to see

these throughout here. BOS simply

indicates a point where the market has

broken into a new high or a new low. Now

these tools are most useful for

basically indicating where future breaks

or future movements would become

relevant. But before we get into talking

about how we do this in real time, let

me talk about the general way that we

want to trade this. So with an uptrend

once we've created higher higher low

higher high formation so basically a

move like this in the market where

structure is clearly broken we are then

of course seeing an uptrend and our idea

is then going to be to buy that uptrend.

So we want to get into the market

somewhere from this point down to this

point in order to follow this movement

up. Now obviously we want to buy as low

as physically possible because the lower

we buy the better price we get the

bigger the profit will be on the

movement up. So if we see this higher

low print here and then we see the

higher high print here, our goal is then

to buy as low as possible in this range

above this higher low. If we buy beneath

the higher low if the market gets down

here, then this is actually a bearish

market. This is what indicates reversal.

And what we would actually have here is

a BOS breaker structure to the downside.

We would then anticipate this to be

followed by a lower high. So a high that

is lower than this one. And then we

would want to sell that into a downward

move which would basically indicate the

start of a downtrend. All right. So if

we break through a higher low, we

immediately print a lower low, therefore

changing the direction. But if we stay

above the higher low, we want to buy as

low as physically possible in this point

so that we can take the market higher

through its next impulse. We overall

expect and anticipate this market should

be bullish because it is moving in a

bullish fashion. So we would buy down

here anticipating an upward move. We

would profit heavily if the market does

continue through to the upside and we

would only lose a little bit if the

market goes down here because we can get

out very quickly understanding that this

is basically the invalidation point for

this trade. Okay, so that's basically

how we want to trade it. We don't buy

when a new higher high is printed. We

buy once the market has had some relief,

some exhaustion and the market slows

down. When we start to see that pullback

move, this is our opportunity to get in

at a good price and we can look to take

the market higher from there. Okay, so

that's basically how it goes in terms of

higher higher low structure inside these

market. Now to show you how we do this

in real time then here is an example.

We've printed a high higher low higher

higher low higher high. We are now in a

rather bullish market. Everything is

looking pretty good. But if we wait for

that to happen, we're going to be too

late to the trade. We're going to be

buying at the high and the market can

easily pull all the way back. Meaning

our riskreward would be terrible. The

profit we can make on this trade would

only be small. The downside would be

huge. So what we do instead is we

basically use this as confirmation the

previous trend direction. Okay, if this

is impulsing to the upside creating

these breaks of structure, we just trust

that the market should continue in that

fashion. We buy in as close as possible

to the low profiting from that large

move up. That is generally how we're

going to trade it. And that is why we

need clear trend direction. Cuz if we

don't understand which way the market is

trending, whether a downtrend or an

uptrend, then we're not going to

understand which side of the market we

should be buying or selling into. This

essentially gives us the confirmation

and the backing behind our trades so we

can make those somewhat difficult

decisions in real time when uncertainty

is high. Okay, of course we're not going

to win every trade because sometimes the

markets will go against the overall

direction and create one of those market

reversals. But this is where the really

good part of trading market structure

comes in. If we were to see the market

breakdown, let's say we bought into the

market at this higher low. We have our

stop loss down here, our target

somewhere up there, and then the market

fails on us and actually closes to the

downside. Well, yes, we take a loss, but

what this actually does is truly prints

and truly validates a new setup for us.

The real market price structure, the

candlesticks, the price action that's

being printed have just told us this is

no longer a bullish market. It's a

bearish market and we should be looking

to sell. So now that the market has

created a lower low at this point, we

can look for opportunity to sell

providing it stays beneath the high. So

this is our high. This is now our lower

low. So anywhere underneath that high is

a valid point for us to sell. Okay? If

the market was to push back over this

high, then that of course would change

the direction again like this. But now

that the trend is printed, we generally

will expect it to actually just go

bearish. then we'd be looking to sell a

lower high towards a new lower low. It's

actually rather simple. Okay, so if

we're printing bullish breaks of

structures, higher highs, higher lows,

we buy in this market with anticipation

of continuation. Eventually, it will

fail us and reverse breaking into a

lower low, which just immediately

validates opportunity to sell lower

highs towards new lower lows. That would

be the downtrend. That is basically what

the market structure dynamic looks like

in real time. And that is how you trade

it during uptrends, downtrends, and of

course that crossover point, the

reversal between trades, which in the

moment when you're losing a trade can

feel tricky. But you have to remember

every break we get, every failed

opportunity you get in a market

structure based trade immediately

validates a new opportunity for you to

take the market the other way and of

course win a significant amount on those

positions. Now the trending movements

that we look at, these higher high,

higher low breaker structure moves can

be defined in two different terms. We

have impulse moves, impulsive moves,

correction moves, corrective moves, it

doesn't matter. Same thing. Okay. So, an

impulsive move is a drive that creates a

break-in structure. So, if we take a

look from this low to this high, we see

that the movement that occurred here

broke us past this previous high.

Therefore, this is an impulsive move. An

impulsive move or an impulse move is a

protrend movement. Okay? that confirms

the direction of the trend or sets the

tone of the market direction because it

drives us through a previous high or

low. A corrective move is a movement

that takes place within the range of an

impulsive move without breaking a high

or a low. So, if we take a look now from

this high down to this low, we see that

while the market did make some

meaningful ground, it didn't break

through this low and it didn't break

through this high. So, therefore, it's a

corrective move. You can see a

correction as basically a slowdown in

the market or a point where buyers are a

bit exhausted. Sellers step in for a

short time before buyers step back in

for the new impulse. Okay. So then we do

see after that of course from this low

to this high we get an impulse move

which is broken through this high again

that's therefore creating the impulse.

So corrective moves are counter trend

movements that just slowly pull back.

Impulsive moves are protrend movements

that set the direction of the market by

creating breaks of structure. So those

are the two types of move. Now, let's

look at a little bit of a trickier piece

of price action. This is exactly what we

just broke down in that previous

example. And I know this probably did

catch some people out and confuse people

cuz you might be seeing, well, we've had

breaks here, right? Isn't this a break

of structure at this point? Well, no,

because this is what we classify as

internal structure. Everything that

happens between this high and this low.

Okay. So, to break that down in simple

terms, we're going to follow the same

impulse correction format. If we have

our impulsive move here, that means that

any movement that happens from here

downwards that doesn't break this low is

a corrective move. So we would basically

initially just see this movement as a

correction. Okay? And then this little

pullback doesn't mean anything because

again it's not broken an impulsive move.

It's not a protrend move. It's just a

random bit of pullback in the market.

Then we have the next movement down here

which actually changes the picture a bit

because we do go and break through the

low. So what we've done here is break

through our previous higher low and

create a new lower low. So that

therefore would mean that this entire

movement, so we can simplify this to one

single move is an impulsive move, right?

Because we went from this high and we

impulsed all the way down to here

breaking through this low. So this

entire movement, even with the little

bit of chop and pullback it had in the

middle, is actually now just one

impulsive move cuz it's the next

protrend movement from this high down to

this low. So that is going to be an

impulse move. That then means this move

from here up to here, it didn't break

through the high and it didn't break

through the low. So therefore, this is a

corrective move. All right, that's going

to be counter trend movement that

doesn't create any meaningful breaks.

Again, as we've said, little bit of

relief for the buyers. We get that short

correction and then the market drives

into another impulsive down, creating a

new lower low. Okay, so an impulse is a

protrend move that creates a break of

structure by pushing past a high or a

low. A correction is a counter trend

move that creates no meaningful breaks

and trades within the boundaries of an

impulse. They're going to be messy

sometimes like this one. That's why I'm

showing you it's not always going to be

super smooth. Sometimes they will have

these pullbacks and chop within them.

But essentially, we want to view this as

waves as as larger picture broader

movements following that high low

structure. If we didn't break through

any high or low, then it doesn't matter

how much sideways action we get there.

It's all going to be one impulse or one

correction once the high or low has been

validated whichever way the market

decides to go. Okay, so that is the

theory of impulse and correct. So now

let us return to that bit of price

action that we marked at the start of

the class and we're going to now mark

this up with the impulses and

corrections just so you can see how we

determine this view in a real market.

All right, so we have obviously our low

printed in here. This is the lowest

point in the trend. If we then look

basically we're not really worried about

any of this consolidation because our

previous high was really this point. So

we've driven down like here. This was

one impulsive move. Okay. So that is a

bearish impulse. Now from that we see

the high just here broken just there. So

this then becomes an impulsive move up.

So we have an impulsive move down which

comes out of the back of this downtrend.

Then we have this impulsive move up.

That's why we're not worried really

about the price action that's taking

place here cuz it's underneath the

notable lower high. So, we don't worry

too much about any sideways chop because

until it breaks through a notable high

or low, again, it's not really a valid

or worrying move for us to even think

about. So, essentially, when you're

looking at this impulsive and corrective

price action, it can actually look like

this a bit, right? You can get these ups

and downs inside of these moves, and

your job is simply to find those

relevant highs and lows and mark them

out. So, again, let me just reiterate

this. This is an important point we'll

come to soon. Why is this not marked as

a low and a high? Well, that's because

the closure we have here is actually

just wicks. It's rejection. We want to

see candle body closures to actually

validate highs and lows for viable

trends. Okay? Being a wick with

rejections is not something we need to

worry about too much. Okay? So, the next

movement then is the small corrective

pullback move from here to here. This is

a correction. So, we mark that one as a

correct. We then have a impulsive move

from this low to this high. That's going

to be our next impulse. This is an

impulsive move because it created a

break of structure. So this BOS sets in

motion the new high, right? We've

created a new high. We impulsed through

a previous structural point, therefore

continuing the overall direction of this

market. That would then print this as

our higher low. And then we would be

looking for buying opportunities above

this low. And if the market breaks under

this low, that's where the reversal

comes in. We can see, of course, we

didn't get a break of that low. We just

got a corrective move from the high

there into the low there. So it's a

simple correction. Then the high there

was broken creating a BOS breakup

structure which therefore creates an

impulsive move from this low to this

high. What has this done at the same

time? Well, this has printed us a new

higher low just here. So any movement

that takes place above this low is just

a corrective move. So this is the point

where trend line traders would have been

tricked into thinking the market

structure had shifted just there with

these closures. When price action

traders who view the market based purely

on direct price can see that this is

actually just a corrective move which

therefore remains a buying opportunity

and the expectation will be that because

the market is still bullish it should

continue to trade higher and create a

new break of structure. Okay, like this

which is our next impulsive move. So

that is how you mark these impulses and

corrections in real time. Don't worry

about the small chop. Focus on the

larger broad moves in the form of kind

of waves is one way I see it. You know,

you want to view structure in this

broader perspective. High to low focus,

not the little chop. Don't worry about

that. We want to see the overall flow,

what's going down, and that will

determine our decision-making. That then

leaves us with this high to low piece of

structure. So, what we would do at this

point for a real-time trading

opportunity is mark this low and we

would mark this high because this is our

impulsive move. Okay? As we know,

corrective moves are going to take place

inside of the range of an impulsive move

without breaking a notable high or low.

So, anywhere above the low that we've

just marked on, which is going to be

this low just here. Anywhere above

there, regardless of what the price

does, if it wants to do this for a year,

it doesn't matter, is just a corrective

move. It is not a notable impulse.

Doesn't matter if we come down and we

start breaking structure like this.

Nothing has actually happened in the

broad picture of structure because if we

stay above this low, we will then

anticipate continued upward price

action. And if we do break beneath the

low, so if we do get a push down here,

then this would create a bearish impulse

which therefore would set us in motion

to a selling trend downtrend. So let's

see what this does. Well, we've actually

gone and pushed up here, created a high

slightly. We then see the market come

down and make a closure on the downside.

So, one thing we could be interested in

seeing potentially now, although we do

have obviously imbalances. This is

something we'll get to soon. It would be

the first sign of potentially getting

into reverse. Okay, there's a lot more

context to it to determine whether a

trend is fully ready to buy or sell, but

we're going to be getting to that in

later episodes of the boot camp. But

it's the first indication we have that

there could potentially be some downside

if we started to shift. All right. Now,

due to imbalances, supply and demand,

things will get too soon in the boot

camp. this would not have been the case

and it wouldn't have been a trade I

would have looked to sell from. But it's

it's just the first indication. And as

we get to those classes, you'll start to

see how this all comes together. Now, at

this point, because we are still under

this high, we haven't really validated

upward or downward price action just

yet. We want to see a notable closure up

here, which in this case would then

validate our new higher low, which would

be down at this point, and set us in

motion for continued upward trending

move. If we don't do that and we instead

come down, well then that should

validate continuation of new downward

moves, which as you can see is actually

what took place here. We didn't really

close with strength above here. We just

have these wick rejections. The market

then came down, pushed under this

previous low, creating a lower low. We

then pull back, create a lower high, and

then we pull down, break of structure

there, pulling us into a new lower low.

So, of course, real-time markets are

going to be a little bit trickier.

You'll get smooth price action like

this. You'll get the uglier price action

like this. Well, you'll have to bring in

other concepts to determine directional

biases and then you'll move back into

smooth price action again like this. So

again, as we've said, if you can't make

sense of a phase, if the market is

making new highs, then new lows, kind of

like this phase here, you can classify

that as consolidation and simply not get

involved until the market's moving in a

new clean trend direction. All right, so

there you go. That's the impulses

through an uptrend. a messier

consolidation phase, but even though not

direct, not valuable. A messier

consolidation or directionless phase,

which even though it's not pretty, 100%

worth covering in this video so you can

understand what to expect in markets.

And then a downtrending phase, pretty

clean here with the lower low and lower

high structure. That is how we mark

these impulses and corrections. And this

is what structure would look like in

real time. Okay. So, from what we've

discussed so far, we've basically

defined that impulsive moves are

protrudes that break through structural

highs and lows. Corrective moves are

pullback moves that don't break through

any structural highs or lows and exist

within the confines of an impulsive

range. Okay? So the impulsive range

would be this low to this high. Anything

that takes place here is simply

corrective until we make a high or low

break. Now I'm using this then to tell

you about a internal structure mistake

that you've probably made or are making

right now. A lot of people mess this up

and this is one of the biggest points

where people go wrong when they're

trading real price structure. I know a

lot of people that trade structure as I

do and they say it's so difficult and

it's so confusing. In reality, it's not.

But there are many places you can kind

of trip up and get lost that make it

seem very difficult. One of those is

what I've just drawn on the chart here,

which is the trap internal structure.

So, as I've said, within a corrective

move, we can have any amount of chop

like this without actually changing the

overall direction of the trend,

providing we stay above the higher low.

But what people make the mistake of

doing is they see a movement like this

where the market comes down in a

corrective move, prints a low, prints a

lower high, what looks like it, and then

a lower low. So it's kind of a smaller

trend here inside of the larger trend.

Now, this is what we call internal

structure because it's happening beneath

the high of the impulsive move and above

the low of the impulsive move. But

people who don't understand this will

see this break of structure here and

say, "Okay, this trend is no longer

bullish. It's instead bearish and we

should be looking to sell this market."

So then people will go ahead and place

orders to sell the market from let's say

a supply zone or any area of interest up

here. They'll have stops above the high

and they're looking to take this market

lower because they think this breaker

structure here is indicating a change in

the trend. In reality it is doing no

such thing because the market can easily

trade higher simply then printing this

as a corrective move and then the next

upward move as the new impulsive move.

Right? So this is where people go so

wrong with structure by trusting

corrective movements and internal

structure movements as true price

structure. Realistically, it doesn't

give us any further information as to

breaks in the trend. It is simply a

corrective pullback before a

continuation of the overall impulsive

direction. So that is an internal

structure mistake that people mess up

with a lot. Let's go look at this on a

real chart. So you can see pretty much

exactly where you've probably gone wrong

in the past or are going wrong now with

this mistake. Okay, so here we have a

uptrend which has shifted into a

downtrend. We have an impulse. Then we

have another impulse which shifts us

down here. This begins the downtrend

with these closures under this previous

low. Then we have our corrective move

which is basically all the way from here

through to here at this point. Then we

have our next impulsive move which is

where we create a new lower low down to

here. So if we look at this trend

structure for what it truly is, it's

simply a impulse correction impulse.

Okay, despite all of the little mess and

chop that we've got, we've got three

clear structural points. We've got our

low, our high, and our low. Now, this is

where people get caught up. They will

then see the market making these

internal breaks. So, like this breaker

structure here, and they will treat this

break here, this breaker structure we've

got there, as a piece of information

that tells us this is now shifted back

to buys. But if we remember what we've

been saying for this entire class, if

the impulsive move high, which is going

to be the lower high, stays intact.

Anything that happens under this is

simply part of a corrective. For this to

actually show reversals, we would need

to see the market closing up here. Then

we could happily take buy opportunities

like this because we'd begin because we

would be beginning a new uptrend. We'd

be seeing that point where the market is

shifting. Okay? So, it would be impulse,

correction, impulse, but then impulse,

correction, impulse. That's the way that

we would want to view that. Now, what

we've got right now on the flip side of

that is simply impulse correction.

Impulse correction. So, although this in

itself looks like a point where the

market has shifted structural direction,

this should not be opportunity for us to

look for significant buys because the

lower high of the impulsive movement

down is still intact. This is where

people go so wrong. So now, if we play

this forward, what you're going to see

actually happens instead is the market

just chops around a bit in here and it's

around here. at the point people would

be buying in trying to take this market

significantly higher and then eventually

it just fails and goes down into a new

low. That's because the overall bearish

structure of this movement is still

completely intact. We've got a break of

structure here. We've got a break of

structure here. And to mark those

impulses and corrections on just up to

the current point, we basically have

then initial impulse which is going to

be the movement down from there to

there. So that's impulse number one.

Then we have impulse number two from

here to here. And then we have impulse

number three from this high down to this

low. and everything that took place

between these points. So this one that's

a correction and this one here that's a

correction. When you've got it mapped

like this, it becomes very obvious

impulse correction, impulse correction,

impulse. But in the moment, if you're

not factoring this bigger picture

structure of impulses, corrections,

highs and lows, you can get caught up

very easily in this kind of substructure

price action which actually isn't

showing you any notable reversals. Okay.

Now, there is a way for us to utilize

what we call substructure, which is how

we can trade this internal structure

safely without making that mistake. And

we will get to that soon. But for now,

just understand pretty much the picture

we've just showed. That is how this

market works. And if you're getting

caught up trading against the market,

expecting big reversals from small

pieces of price action that exist within

the impulsive moves of the larger trend,

then yeah, you're going to get killed by

the market continuous. Now, one thing we

must discuss is how we determine viable

valid breaks structure. So for this

example, I just want you to focus in on

the price action we've got here. Okay,

what we've got basically is a bearish

impulse, bullish correction, bearish

impulse, bullish impulse, bearish

correction, and then this is where we're

really going to focus our attention for

this example. So we have our valid

breakup structure down here because the

market went and closed and made a new

low. Then we have a valid breakup

structure up here because the market

actually came up and closed as a new

high. So this validates a bullish

impulsive move. This is where we would

be looking to start buying the market on

pullbacks. So, for example, you could

look at a buy from down here. Now, what

we've actually had is this is where

people go wrong. A break that looks like

a continuation of upward trending price

action, but actually didn't yet create a

valid break. And that is simply because

we only have a wick closing over the

high. We don't have a candle body. Now,

if you think back to episode 1, price

action, we discussed how wicks show

rejected price action. Candle bodies

show confirmed price action. So if the

only piece of structure that has broken

through a previous high is a wick then

that is not confirming continuation.

This actually shows rejection of those

higher prices. So what we would not want

to do whereas this movement is a valid

impulse. We would not want to treat this

move also as a valid impulse. This means

we would not set this as our valid

higher low just yet because we don't

have a valid higher high. So this is not

yet confirmed. Now if we got a candle

body that went and closed over the

previous high. to somewhere in this

range above this level, then that would

turn this into an impulsive move that we

could then happily buy from a corrective

move when it comes through. Okay? But

because we haven't had that closure, we

don't want to start buying if the market

pulls back. So, we don't want to buy

here with stop- losses here because we

haven't yet seen this validate a

closure, which means it's not yet a

valid higher low, which means it's not

yet a valid higher high or higher low.

low with only this wick closure above.

We don't worry about this point just

yet. And we actually keep our higher low

focused in where it previously was or

our low, should we? So, we've got our

low, our high, and then all of this is

actually just chop for now because we

don't have that candle body closure.

Now, I'm going to show you what can

happen. Let's take a look if you trust

wick. So, let's say you bought into the

market because you saw this wick close

and you thought, okay, this is a

confirmed higher high. Well, the market

actually trades lower and ends up going

underneath what you could have seen as

your higher low. So, you would have been

stopped out down here if you were

trusting this low and trusting this

break and you had your stop loss under

that level. You'd have been stopped out

before the market actually made the

move. Now, why does this happen? Well,

this is something we call liquidity

sweeps. We're going to get into

liquidity in depth in a future class,

but to explain it now because it does

have relevance at this point. If we get

a wick that shows rejected price action,

closing us over a structural high or

closing us under a structural low such

as this one here, which at the moment is

just internal, this is a point where

actually we are seeing massive buying

pressure kicking in at this level and

driving higher and massive selling

pressure kicking in at this level and

driving lower. Remember, we're always

trying to read the battle between buyers

and sellers. Closures show clear control

from buyers breaking through a previous

high. Wicks show a clear reversal in

control from buying to selling, failing

to close above a high, which means we

can come all the way back down through

what we could see as basically a false

low. That's why we should just stay

focused on the initial low that we had

printed. So, this is our impulsive move

and everything that's taken place here

is still just correct because we haven't

made a closure above the high or below

the low. Okay? So, we can simply draw

this out further. This is still our

range impulsive move. Everything here is

corrective. We need to see a candle body

closure over here or a candle body

closure down here to validate this as an

impulsive bearish move or to invalidate

this as an impulsive bullish move. Okay,

so now let's see what happens next.

There we go. We get a closure and this

closure pushes us above what we have as

our valid higher low. And this closure

pushes us above what we have marked as

our valid higher high. Therefore

creating a new higher high. So at this

point we can indeed move this to be our

valid higher low. So to break the

structure down from impulse correction

we have the low to the high. That's

impulse number one. Then we have this

entire phase is simply corrective

because there was no closures above or

below the impulsive range. And then we

have this drive up which is our

impulsive move. That sets this area here

as a higher low. And now anything that

takes place basically below this high,

above this low is again a corrective.

All right. So let's actually just

continue it a little bit more. See what

happens. We've gone and closed above

this high. And again here's another

example. This closure just here with

this wick. I wouldn't really like this

too much because this is showing

rejections over that high. But when we

came in and created this bullish candle,

this does set in motion a validated

high. So now we've got our next

corrective move which is the drive down

here. And then we've got the next

impulsive move which is from this high

or this low to this high which sets in

motion this as our valid higher low. So

impulse correction impulse correction

impulse. And we do not worry about wicks

because they do not validate highs. They

do not validate lows. They are

rejections, not confirmation. Okay, so

to recap everything we've discussed so

far, which is going to be the

foundational layers of market structure.

We're going to take a look at this

flowing example. To begin with, we have

an impulsive movement to the upside.

Then we have our higher low printed here

on a corrective move. We have another

impulsive move to the upside. This phase

of price action with the impulse

correction impulse breaking structure

into highs validates that we are in a

upward trending move. And remember,

don't get caught in that internal

structure trap of trying to sell the

market here because that of course is

not a valid point to do that. It's just

a corrective move. This sets us into an

uptrend which therefore means we are

going to look to buy the higher lows

that form for new corrective moves. The

new corrective move just here continues

the impulsive upward trending price

action. And that is the simplest way to

trade continuation. Simply buying higher

lows when the market is continuing to

form higher highs and higher lows. Okay.

Of course, as to how we do that will be

discussed in the boot camp in a future

class. Our next class, we'll start

getting into that. But so far, we've

basically got impulsive movements up,

corrective movements down. That's an up.

Now, I've deliberately made this messy

so you understand what to encounter in

real markets. Sometimes you will get

that lower low. This is going to trick

you into selling. So, providing this was

a candle closure, we would actually

consider this an impulsive downward

move. But obviously, we then see an

impulsive upward move forming a new

higher high. So at this point basically

you would have been stopped out of a

trade here most likely if you'd taken it

or if you'd waited for confirmation

maybe avoided it but this then sets us

into a stage where okay this market is

not really making much sense right now.

We would ideally want to see this really

make some clear directional moves before

we get into any trades. All right so

this is that kind of consolidation phase

where you can't really make sense of

that market due to the fact that it's

not really giving you clear direct. So

that's going to be taking place around

there. This movement of course is going

to be your clear uptrend. So this will

be their buying taking place here. So

you buy through the clear uptrend. You

stay out during this consolidation or

misdirection. And then when we start to

step into this clear bearish impulse in

price action, you can step back in to

trade through a downtrend. Okay? And as

we've said, although we have some chop

in here, all of this movement from this

high to this low just achieved one

thing, which was an impulsive bearish

move into a lower low. So that would be

one impulse. Then we have continued

impulses down, breaking structure to the

downside. And of course, those movements

in between are going to be the

corrective movements back. So we have

impulses down, corrections up through

the downtrend. We have impulses up,

corrections down during the uptrend. And

then we have kind of impulses everywhere

during the consolidation phase, which is

where we just stay out the

basics of market structure. Everything

we've covered so far, market structure

will be elaborated upon, but this is

what you need to understand for now

before we move into all of the other

important trading concepts. We will get

into substructure, trends inside of

trends, and more advanced concepts for

understanding how to pair market

structure with other concepts later in

the boot camp. But for now, I've given

you the foundational layer that you need

to understand so you can see why raw

price action and raw price structure is

the best way to view the market

directions. And so you can see how to

utilize that to actually take continual

good opportunity. So with that said,

that's the end of this class. Thank you

for watching and I'll see you in the

next one.