Mastering Equilibrium vs Premium Markets: Advanced Fibonacci Trading Strategies

welcome back folks this is ict with a fifth installment of the eight in the continuing series for the first month of

the ict mentorship for the month of september uh the previous tutorial in session four

we looked at equilibrium versus discount in this session we're looking at equilibrium versus premium

we went through a great deal of content in regards to discount versus equilibrium so

we won't have to spend so much time with this tutorial because everything we're selling here is basically diametrically

opposed to what you would expect to see in the equilibrium versus discount

teaching so looking at what we have when we look for

premium markets markets that are in a premium now when we talk about commodities later on in this mentorship

uh the the topic of premium will come up again but when i'm referring to premium as it

relates to price action uh i'm actually referring to the current range that we're uh trading in

and the first thing we look for is an impulse price swing which is we have an

impulse price point here we have another impulse price one here we have another impulse price swing here

so the first thing we look for in price is an impulse swing and we see one here

we see another one here we see another one here and

these three price swings actually make up one larger price swing

which is an impulse leg or impulse swing by itself by its own right so

when we define our ranges okay the use of the fibonacci is helpful in this case because we can take

the fib draw from a high down to a price low and i'm using this low here because it's

the most lowest in contrast to this high

and price comes all the way back up to what i have taught in many years the optimal trade entry which is a

standard 79 to 60 retracement level on the fib now i didn't create that but

if it was just simply looking at that alone 62 percent to 700 levels uh looking for buys and sells there

everywhere we loaded it would be no no work at all in terms of uh taking trades but obviously you probably learned very

quickly there's much more to it than just pulling a fib over top of price swings

we have in this larger price swing we have a

smaller price swing here okay and we have the high down to this low and the market starts to retrace

equilibrium or half of the impulse price swing has to be at least touched and then once

it hits that we watch for price to reach up into this area here then there's other

disciplines out there and other mentors other teachers will say that the 50 retracement level is a good level to

trade at based on price swings i don't agree with that um i understand that sometimes it's going to work but what i

want to do is i want to be selling at a market that's at a premium level for a market to be at a premium in this

current price range here and it's assuming none of the price action from this high

down all the way to the right has not happened yet so you'd be watching price in this initial range

and price did not get back up to the midway point or 50 percent of the uh the range that was created from the high

to low that's all equilibrium is is fifty percent on the fit let's have to tell them describing it but the concept

is is you have to see a market price a move above the halfway point once it

does that start it starts going into what is referred to as a premium market that means it's at a really high price

relative to its current trading range we don't need overbought never sold indicators to help us

classify an overvoter we're sold market we just simply need to know the current price range we're trading in and if we

get above the 50 level okay we start getting into what would be deemed as overbought or at a premium level

on this pricing here it obviously never gets above the 50 and everything touches it so it never gives us an opportunity

to get short relative to this time frame or this price swing

so there would be nothing to do there the next price leg here

okay the same thing from this high to this low not nothing in terms of that price swing there it doesn't get back up

to the 50 uh level but look closer there's another smaller price swing that has formed right in here

okay so we could look at that measure the high to the low and the market gets right to

a pre uh i'm sorry equilibrium but does not stay above to go to a premium market it only goes right to the fibonacci 50

level or what we deem as equilibrium so price goes to an equilibrium price point and then immediately sells off this

would be a missed opportunity in regards to looking at equilibrium to premium the reason why we

want to focus primarily on the 62 or 79 trace levels in that range to be selling short

is because the market's going to be really pressed higher and would be really

in terms of overbought never sold it would be very overbought and it would be expecting a willingness to to sell

softer and go lower there's going to be times when the market does not give that scenario to you and you just got to let

those particular price links go without you the next price swing

is this high to this low market trades back up to equilibrium here and move this over so you can see a

little bit better okay so market trades back to equilibrium goes back above it into a

premium market and it goes right on through what would be deemed as an optimal trade

entry okay or selling at a premium so here's a wonderful thing about this you can look at this and say okay if i'm

measuring this high to this low and i'm going to be selling i'm above equilibrium i want to get short

in this area between 62 and 79 chasing level okay you look over here

maybe there's something over here institutionally um in terms of a bearish order block or something like that you

can define we're going to say that that's not there we're going to say that we went short just purely on price

action retracing back into the fibonacci level here it comes all the way up and hits you where your stop would be

when you see these conditions where the market trades above equilibrium and goes through the levels of 62 and 79 certain

trace levels what that does is it gives you a condition that we saw in the equilibrium to discount if it

takes out a previous low when it's in discount it's probably going to be a turtle suit by

in this case it's going to be a turtle soup cell it's going to be reaching for stops above

the impulse swings high and you see that here it goes up runs

out the stops here and then goes lower where is it going to go where do you take profits at below lows it's already

established in the marketplace here and here you see that's exactly what the market does

you can also use when you're defining your ranges all price swings from high down to low

okay you you want to anchor your your fibonacci on the market goes down from this high all

the way down to here okay and creates that low as soon as we start seeing it bounce up

you need four candles remember it's the same thing we just saw on the equilibrium to discount

teaching once you see a a swing low form you're watching that fourth candle to show willingness to go higher it does

but then you simply wait here's the equilibrium price point this this fifty percent level in the fifth

price goes through that so now you're gonna be watching it you're gonna want to see if price gets to sixty two the

seven tracing levels it does and it does it while it's running out that high here so two scenarios one you

could have used this high down to this low and got a stop out in the initial

uh 62 to 700 tracement levels where we saw earlier but it ran right through it if you had not anchored your fib to this

high to this low you would never see this optimal trade entry okay or return to a

premium to go short is above the equilibrium price point and it takes out an old high

so we're running stops at an old high and we're going back into what would be a premium market we're above the

equilibrium price point of the range high and the range low and we take stops out

that's really really good in terms of probabilities and the market goes down and sweeps out a previous low remember

when we were looking at the equilibrium discount every time we were buying we were taking profits at above an old high

okay so when you see that all we're seeing is the reverse of that in the equilibrium versus premium market so

we're always looking to sell at a premium premium is defined by has to be above the equilibrium price point or 50

50 level of the fibonacci anchored on a swing of clear

discernible price action in other words if it looks sloppy if you if it doesn't really look like a solid price swing and

obviously obvious price swings are the ones we look at we're not looking at anything it looks questionable if it's a

pure price swing we measure it and this is a high this is a low and we went through all

potential stages of all these high to low high to low high low scenarios really nice scenario here again taking

profits initially below this low here when it would hit that and then you'd hold out for a potential run for some of

your trade to be taken off below this low here now the market goes into another uh area

of premium relative to equilibrium we go back to this larger price swing

here this low all up to this high the market goes right into the 79

79 retracement level hits it perfectly to the pit and then rolls down where do you take

your profits at you're gonna be looking to take profits at below this low here

okay and into the order block down in here which is what you see right there

okay you have another range that you can use

this high to this low okay

now what's up what's really nice about this is if the market's in a consolidation this type of trading

is your go-to okay a long protractionary state in the marketplace where it goes up and down no no real movement higher

in one direction or lower in one direction it just stays in a large consolidation you want to be trading

turtle soups or understanding where premium and discount are if you have the high here and you pull

it down to the low here when the market gets above equilibrium right in here it goes right into the 17.5 or what would

be the optimal trade entry sweet spot okay or ote and the market is a sell-off there where

where do you look to take your profits at below and old low

or below this low right there every time the market makes a swing low

you have to take a look and it only takes three candles this is why i do not use the

williams uh fractal it requires five candles i only need three candles so we have a candle low here a lower candle

low here a small smaller little candle in here the market

blows through that that would be your uh your target right there you would take first profit then you would come back

and end up taking your stop out right there now if you get a stop

and say you don't take first profit the slave doubles advocate for a moment say you're greedy you're impatient you're

developing you just don't want to do anything to take some profits out

or it couldn't happen for you you didn't do it like that the mark comes back and takes your stop loss out

if you see that scenario okay you're gonna be looking for old highs to be breached

while we're above the fifty percent uh level so we're in pre we're at a deep premium okay so markets are overbought

right in here the market runs through this previous high so we're in turtle soup scenario

we could be looking for turtle soup cells mark comes up starts to come down

one more time runs through you takes your stop out again this is going to happen in your trading

do not try to avoid it because it's going to happen same scenario

we have an old high mark goes back above it if it's at a premium and you've defined the range here

you take this scenario as a cell on turtle suit basis for each above an old high sell short

we're going to take profits at below the first low that's here the next low is right here

then we have another range created here so while we're watching this form soon as we see a swing low form this candle

here we know they're probably going to want to run back up into this range here now we have a new range

the impulse price swing is this high down to this low

here's equilibrium price expands to equilibrium once we start seeing that we watch does it get to 62 it does the

bodies of the candle stop perfectly right there you could sell short right there what's nice is you're going to see

the bottom of this candle is up candle that's a bearish overblock which you'll learn more about

that's a cell by itself where you look to take profits at below the old low right in here

it goes right down below that and does what trades back up higher

if we use the price swing from that high we just anchored two to this low

the same thing occurs here we have this high all the way down to this price low price comes all up into the 79 trace

level above equilibrium we start watching it now we're in an area where the price is going into equilibrium i'm

sorry from equilibrium up into premium okay premium is above equilibrium in a range that's been defined from high to

low and look what's happening we're running out an area of stops above it or high

again very very good uh probabilities for getting short take that as a turtle suit inside of a

premium based market and you could look to take profits on a swing low

here's your swing low here the market trades down through that you'd have to take profits below here

market trades down in two small little consolidation here and i'm not going to define anything else that's

in this chart because i could do all kinds of other things to it would look like sugar coating but

you'll learn other things to look at and it has to do with this can over here so we'll refer to this candle later on

and uh recapitalize bullish shoulder blocks and bear shorter blocks but

the market creates another range this high down to this low here so this high down to this low market

goes above equilibrium here where is it going to go to we want to watch it go to at least 62 percent tracing level it

does that goes right after the 70.5 ote optimal trade entry and then sells off where you take profits at below swing

low right here's the swing low take profits right there now they're not astronomical trades okay they're not

enormous trades but to get short in here at 98 big figure and covering below the low on this

candle here at 96.94 that's over 100 pips nothing wrong with that this is a daily

chart we're trading off of again this is helping these folks that cannot be doing

day trades okay you don't need a great deal of movement on a daily chart to make a decent amount

of pips we're going to go back to this high and use that same old low here okay

from this high down to this low if you went short here based on stop run above here and we're at a premium we're above

the equilibrium we've defined our range we're looking to sell into strength it's scary when you first start looking at it

as a new trader but that's exactly what you want to be doing as a professional trader you want

to be selling at premium prices think about it you could sell something if you own it say you own a car and you

want to sell your car do you want to sell it at a discount that doesn't make any sense you want to sell at a premium

so professional traders sell their long positions or they sell new short positions at premium prices

ain't no better place in the world to sell short or sell longs above an old high because there's going to be willing

buyers right there in the form of buy stops so when we see this area here we get

short from this area here going short and if you just took profits once this low

formed that low comes in at 39 97 39 and the open is

97.99 so we're going to say we went short somewhere around about 98 big figure the low comes in at 97.39 so that

means your stop i'm sorry your limit order take profits would be below 97.39 so you get the low here say you're

aiming for 10 pips below that low below this low right here you'd be looking for

97.29 roughly 97 30. that's 70 pips using a setup that's on a daily chart you're not interested

trading you're not looking at five minutes 15 minute charts you know you're not you're not being forced to do what

ict does most of his teachings through intraday uh trading but the same concepts appear in these higher time

frame charts so don't discount it that i'm teaching you in a 15-minute basis because all the concepts are universal

and i know it's hard for you to understand that as a new trader because it just seems like i can't be watching

that chart so therefore i can't trade that's not true that's not true at all so

by having these ideas of looking at price over the course of a premium market if we go down to a

say we go down to an hourly chart okay and what's nice is you don't have to trade with a bias

most people are always asking me hey looking can you give me a a a way of trading with a a daily bias give me the

trend direction michael i need to know that well you don't really need to know that you don't need to know it

and the reason why you don't need to know it is because you need to know how to trade inside of a range

because those ranges are always there whether you're in a trending market whether you're in consolidation or

whether in a reversal market those profiles will always give you ranges to trade in and you don't need to

break out of the range to make money we have a swing high here why am i using that swing high michael

not this one here not this one here because this is the most recent one prior to this down move i could use this

one here but i'm going to use this because it has more price action around it

this high down to the lowest low okay market trades up to the equilibrium in here

okay does it get to premium no it doesn't get up there yet it comes down off of this a little bit then trades

right up into 79 tradesmen level right in here closes in a range which we'll talk about

in the next teaching over here the market sale that sells off

and where you're going to be looking to take profits at you have a small little swing low here you have a certain real

good swing low here so if you're getting short up here and on an hourly basis

say we got short at 97.70 nice round number to get out that level here's 42 pips to

get out below this low here 60 pips so if you go 10 pips below that that'll give you

oh nice 70 pips and give you a nice 70 pips and there

look at the reaction going 10 pips below here yeah this range low

from that high up here where we would have been selling at based on the concepts again it's all hypothetical in

hindsight here but the conceptual idea is the same going forward range is 60 pips 10 pips below will be

70. you got at least four pips below that for uh for spread to take you out and absolutely does that and it doesn't

go very much a little at all