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MARKET CYCLE

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1. Retracement
2. Reversal
3. Consolidation
4. Expansion

It’s important to identify what cycle the market is producing before entering a trade.

Went ahead and a made small brief explanation for each.

Would appreciate if you share.

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1. Retracement

The market pulls back to an area of liquidity. It can either deviate and or run a significant low to trend the market.

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2. Reversal

The market reverses after engineering liquidity. Market Structure is broken and the trend is shifted whether it’s short, mid or long term.

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3. Consolidation

One of the cycles that tends to chop and cause directional flip in bias multiple times. The market trades in a tight range before deciding its next directional trend. Not the best cycle to plant setups.

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4. Expansion

After a tight consolidation coming off a healthy reversal point the market decides the trend into the next area of liquidity pocket whether it’s a swing point and or a SR level (supply).

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Conclusion.

Market structure is key.

Identifying what cycle the market is painting in Market Structure will allow you to know which trades to avoid and which have the highest hit rate.

Under and know your market. 

PA20200119

Beautiful PA today.

Currently sitting in a long and wanted to go on a step by step process on what the market displayed today.

1. Market Structure Break
2. Breaker Forms
3. Market Structure Shift
4. OTE + FIB
5. Price back to discount (Breaker)



2/4

1. Market Structure Break
MS breaks indicating we have shifted LTF trend.

2. Breaker Forms
Up candle that led to break in MS failing to hold as institutional context flips into a breaker.

3/4

3. Market Structure Shift
Market shifts closing above previous key swing highs.
Breaker is confirmed as level of demand

4. OTE+ FIB
Fibonacci extension tool from bottom to top of the move market by .705 as optimal trade entry (OTE) which is found inside the untapped breaker

4/4

5. Discount Breaker

Price returns to breaker and OTE before moving away at a discount.

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