Transcription
All right. So, top-down analysis, daily bias, whatever you want to call it, it gets over complicated and it doesn't need to be. When you know market structure, that's all you need to focus on. Just a recent price leg, and that is your whole idea for bias. So, let's get straight into it.
So, there's really just two things that you need to understand to get your whole daily bias. And it is simply internal versus external structure. So, if I go to here and I start drawing lines, this is all external structure. So, you first want to ask yourself, what is the external structure? In this situation, my external structure is bullish. As we can see these highs and lows, that tells me to look longs. However, what is my internal structure in this situation as well? My current internal structure is also bullish. Everything is breaking to the upside. There's no break structure to the downside, etc. I have no reason to do anything but long. So, in this situation, my bias would be clearly bullish.
What about if we were doing this? So, first of all, let me rewind that. Where is my external protected low? It is here. So, as long as we stay above here, we are looking for, we are bullish on the external. Now, if we start doing this on the internal, what does that tell me? Now, external is bullish, but if I look at my internal, we're bearish. Now, because I'm day trading, I'm just trying to guess the next couple candles. In this situation, I would be focusing on trading this bearish internal structure. And now I would look for a possible short in here to then continue lower. I'm scalping now within this range, right? This high to this low, trying to catch this lower high giving me a bearish bias.
So, if we look at it, there is three situations. Type A is when your external and your internal are both in that expansion phase, like this. Everything is bullish. I only have reasons to longs. This is good. However, it's slightly hard to catch because when we're just in a straight expansion phase, we don't get many pullbacks to tag us in to then continue higher. But this is a clear bullish bias.
Now, the second one, which is a bit more risky, is the one we just went through, which is when your internal and your external are actually not, uh, sorry, let me do that. When your internal and your external are actually opposing here. I can see that my external is bullish as long as this low holds, but my internal is bearish within this channel here. In this situation, I would trade the internal bearish until we flip and go back to bullish. And that goes to point, uh, number three situation, which is the highest probability bias, the best trades to take, and the best way to get a pull, uh, an entry.
So, we pull back entry is when we do something like this. So, if we look at external structure, that's what you always focus on first. External was what? Bullish between this low and this high. Internal is what? Well, internal was bearish, showing us that we were pulling back. And then it did what? It flipped bullish. So, now the internal is bullish and the external is bullish. And can you see we're in that pullback phase that I've just stopped? So, we've got the pullback. The pullback has stopped. Now, how do we know the pullback has stopped and the expansion has started? Because both now the internal and external are aligned. And now these zones here are the highest probability zones to take your trades in, right? To follow because now we're expecting this ex internal structure to remain bullish. I have a straight bullish bias, right? Looking for longs in all these zones created until we eventually take out this high and then I restart. I restart with my external structure from here to here and go again. Am I bullish? Am I bearish?
And now, let's just get into some chart examples and break it down. So, pick any higher time frame. I day trade. I like using the 15-minute as my higher time frame. You can use the hour, you can use the four-hour, you can use the one-second, it doesn't matter. It's all the same. So, let's see what we have here. So, let me start with my external structure. Boom. So, my external structure is bullish and my internal structure is bullish. I don't really have much internal structure. I just all to the upside. So, I only have reasons on this day to look for longs. I have no reason to look for a short. You'd be stupid. Let's see what we do now. Okay, we make a new low. We respect it. We push higher. I'm still so my external is now bullish between this green line and this green line. So, purely bullish and this is just internal structure. If you know that this is just liquidity for this zone. So, this is not external structure. But this internal structure here is also what? It's also going to just want to make it a bit lighter. So, you can see the difference between the internal and the external. So, now I know that again, I'm purely bullish, looking for longs. Let's see what price can do it to this high, but we haven't closed or changed low. Okay, now interesting. So, now what have we done? The external, now we've got a good real pullback is stuck now between this low and this high. That hasn't changed unless we break one of these now with a candle closure. The internal, however, has done what? Shifted bearish. So, that tells me price is in the pullback phase. And for now, I can start looking for shorts between where? Well, my internal structure is this low line, it but this high as well. So, if I jumped on and this was my current chart, I would be favoring shorts, looking for a pullback to then expand lower. See what we do. As you can see, we break, we pull back, we start expanding lower. So, now I have a new inter, uh, internal range between this low and this high that gave it to me. So, now my bearish B, I still have a bearish bias as long as this high holds. Let's play price. A lot of chop, but as you can see, boom, another bearish bias delivered. So, although external is bullish and overall you should be looking for longs, you can know that internal is still structurally bearish. That way I get a trade opportunity short here. I get a trade opportunity short here. I don't enter long on this pullback and I don't get stopped out, and instead, I get two possible winning trades. So, you need to know your external from your internal structure.
Now, we haven't taken this low. We've just wicked it. So, price is still bullish externally, and I can see that this was my latest internal break structure, and this was my latest internal high. So, let me see what we have there. Okay, now let's revisit this. Boom. We have a break of structure to what? To the downside externally. So, now my external is bearish. I'm only looking for shorts. I'm looking for price to pull back into this area and then continue lower. There is pullback. We've made a lower low. Let's see what we can do. Boom. Perfect.
Now, let's revisit this. We have a new external structure here. What is my internal structure? As you can see, my internal structure is clearly bearish, too. I have no reason to long, only to short. Let's see if I go back, sorry, to this leg here when we got this new external break structure. Where is my internal structure still? My internal structure is still here to here. So, as long as this high holds internally, or bearish in this situation, what was it? My external is bearish, as shown by these red lines, and my internal is bearish, as long as this high holds, as shown by these red lines. So, I'm looking for a short in here. As you can see, we pull back lovely to where? To around 50% of this region, and then we decide to dump lower. So, perfect.
Now, let me look at more. So, now, sorry, the external is here, and my internal is still bearish. So, I'd still be looking for shorts as long as this high holds. Let's see what we do. We break it. So, now what does that tell me? That tells me we have gone from bearish to bullish externally. So, some people might ask, well, I've got stopped out in this range here when I was looking for a short between this higher to low, or no. Did I get any sort of confirmation to take these shorts? Price whipped through. I don't touch a button. I need that confirmation that price wants to reject, which I didn't get. But now I know that external is what? Bullish. So, what do I need? I need to see my internal, and internal is still bullish as well. It's just rinse and repeat. Start with your external, go to your internal, see what price is doing, and gauge a bias on that.
Big tip I can give is don't try to catch amazing tops and bottoms. Just ask yourself, if I have to predict the next one to five candles, would I feel more comfortable buying, or would I feel more comfortable selling? And boom, I promise you, your win rate will go through the roof.
So, as always, I hope this video helped. Any questions, etc. Anything you want me to drop a video on, feel free to drop it in the comment section below. If you do want to work with me directly one-on-one, get access to my live streams, etc. Link is in the description below. Apart from that, appreciate your time as always. Appreciate any likes and subscribes, and I'll catch you in the next.