Transcription
So indication basically is when price breaks above a high or a low level and indicates that it is going in a certain direction or a trend is starting in that direction. So what we have here is price ranging. So we'll have price ranging for a bit and then there will be an indication and this indication can be either big or small. It doesn't really matter. I normally personally like to look for the 4 hour one hour levels to do this.
So like let's say if we have our swings. So swings is basically when price goes up to a certain point and then it rejects and then heads the opposite direction. So these are swing highs and swing lows. So just like we talked about yesterday, the lower lows, lower highs, higher lows, higher low um higher highs, it is the same thing just price is equaled out and that consolidation. So remember I said we don't trade consolidation. That is because we wait for those indications to play a part. So then we know which direction price is going to be headed. So in this lesson basically going to just mainly talk about the indications.
The indications will be coming from price having that momentum, the higher time frame and just overall trading when price is in session with that volume. So indications can only happen so write this down. Indications can only happen can only happen when it's breaking above or below swings and that is highs and lows. So swing highs and lows, right? So indications only can happen from when price is breaking these swing levels and swing levels that you should be looking for most of the time is going to be on the 1 hour and 4 hour time frame. You can even go for daily, but most of the time if you're day trading, you really want to hit that 4 hour and 1 hour level. I personally use the one hour level. It works for me a lot. There will be some times where I scale to the 4 hour time frame just because the one hour isn't as clear as the 4 hour time frame. But whenever I am um looking for, you know, just overall the trend, I'm on that one hour time frame. And what I'm doing on this one hour time frame is waiting for those swings to be broken into any direction. It could be up or down. Swings broken into that direction. And that will be my indication. And that what it's telling me, what an indication is basically telling you is overall showing you, hey, the trend is trying to push in this direction of the market. And this is indicating you that price is having that momentum above or below that level. So that way you know exactly where the volume is coming from.
Now, what does most of this mean? you're probably asking or like how do you understand it? So, think about it this way. The uptrend and the downtrend that we talked about yesterday, this is how it starts. So, you don't see the whole uptrend yet, but this is letting you know this is where it starts at. So, you're not always you're not going to catch the the the first of it. So, what I showed you yesterday with the uptrends and downtrends, right? So, the uptrends and downtrends. So, we're just going to do this downtrend. This is where that indication mostly starts. This right here, this this this move right here starts that indication. Then this is the correction and then this is the continuation. Without this indication, you won't be able to know when to get into the market because it would just never happen, right? So with this indication, it overall shows you like, okay, price is going to move above this level. So we're going to put this down right here. price is going to move in a bullish manner above these swing highs and it's going to push to a certain level.
So think of an indication as basically the starting point of a trend. So you need that starting point so you can be able to utilize it, understand its pattern, understand its movement and why it's moving so that way you can get into the charts or you can get into the trade later on down the line. So this is basically your let's say let's say it this way right this is the question. So this is the question. This answers the question, right? So what question is this answering? Okay, most people they'll look at the charts and they'll be like, "What is the trend?" Or, "What is the trend?" And they'll be like, "What is the trend? And where is price?" So, they normally ask both of these two things, right? What is the trend? Where is price headed? And the best way to answer these two questions is overall looking at those swings. One second. The best way to answer this is what is the trend? So what is the trend currently? Looking at the swings, are your swings going higher or lower or are they getting lower and lower? So best way to answer it is are your swings getting higher or are your swings getting lower? So if your swings are getting higher, most likely price is becoming into an uptrend. If your swings are going lower, then most of the times your trade is going into a downtrend. Not most of the times, but all the times your trade is going in a downtrend. So the best way to overall look at an indication is is my swings getting is is this making my swings go higher or is it making my swings go lower?
So, in this case, if we're looking at it, these are our swings. So, I'm gonna mark it out for you so you know what swings are. Swings. And because our swing, we have our um swing highs right here. So, swing high, swing high, price, think of a high as the highest point it can go. And if we have those swing highs, if anything goes above those swing highs, then we have new swing highs. And if we have new swing highs that means we have a uptrend starting or price has bullish momentum. So also with that indication this also shows at a certain price point. So let's say this is 500. Let's say this gray area is 500. Right? What this goes to show this 500 level. So this level of 500 price breaks above that 500 level. So then this means anything above 500 will have the same momentum as it had before. So the same momentum that's driving it up to let's say 600, right? So let's say this goes up to 600. So that indication is now going to show this is where that momentum started. It started anywhere above 500. So, anything above 500 has the potential to go to 600, right? That's basically what an indication is showing you.
So, it's showing you where your entry is going to be and it's showing you where the exit is going to be because when price gets to a certain level. Um, we're going to talk later on about time frames, but now price is going to go and time frames and corrections because those are both important. But what price is going to end up doing is having that correction, which we'll talk about in another video. But that indication will later on have a correction which then you'll look for price to switch the trend, switch the market structure and come back above this level. And that will be your entry point for the next go around. And you know, like I said, there's going to be more videos. There's going to be more videos down the line to basically show you like the the the correction, the continuation, how to seek those reversals, how to find those reversals based off the swings. But the most important part is finding that indication and understanding indications can only happen from when it's breaking swing levels.
So with this being said, since our swing highs are broken, now we have a new high. And after a new high or after any new market structure is um shown to the market, normally price ends up grabbing liquidity. But I'm not going to confuse you just yet. But after price makes a new high, just prepare to see price have some type of correction, some type of movement to shake the people out because the reason why we don't trade this is because of that liquidity that comes after. It could be very strong, it could be subtle, it could be, you know, not the biggest or it could be no liquidity grabbed at all, but most of the times after price makes a new high, it ends up grabbing liquidity in the market, taking people out and then having that second goround, you know.
So in this case, we already know what an indication is. Let me show you what it looks like on the charts. Um, let's see here. We can go to a 30 minute time frame and we can kind of just start from here from this week. So this 30 minute time frame as well, you can use 1 hour, 4 hour, 30 minute, right? So in this case, we have that swing high level, right? So, we're going to focus on this swing high level, and I want you to see the indications that happened above this level that showed you that above this level, price was going to have that bullish momentum, right? So, first we have our swing high. Swing high is holding up a level. So, we have our swing high, swing low, just like we seen in the picture that I just showed just a couple seconds ago. Swing high, swing low, and then price has that indication. That indication pushes above the swing highs that we have. And since that did that, it had that correction, took people out of the markets just a tad bit and then continued to go up and make a new high. So now we have a new swing high. So overall, we can see that price continues to break it swing highs and keeps getting higher. So this means price is in a uptrend, right? And as well, I want you to take note as well that price when it's making these swing highs is making supports too as well. So this is our previous support and then we can see price goes up and we can count this as support. It's a very subtle um support. Y it's a very subtle support but you can still count it as support. Overall price was holding this level which made this whole movement in general but you at the time you would have never seen that price was going to just make this subtle support and then continue. But you knew that this was the push up. So once again, we have that support. Price retested that support. So overall, not breaking any structure to make us think otherwise than our uptrend. And then if you want to count this as a support too as well. So if we count this as a support, I'm going to kind of show you what I mean. If we count this as a support, right, then we have that push off the support and then we can see that price ends up making that new high and then breaking the structure that we had on that support. If we mark this as support. So if we looked at as this as support then we can see that oh price is breaking the trend or price is trying to reverse which I'm going explain later on down the line in the other videos is if we have this so if we have if if we have price showing us like hey price is breaking the support the reason why we wait that second time around is to avoid these fakeouts because this will not bother us because we don't have that second push down. It broke once but eventually came right back above that same level that we had the indication in the first place and bought even more. Right? This happened only because price has a new high.
So, that's what I'm trying to get you guys to understand is like when it comes to trading based off those breakouts, you want to be very, very careful because price can sometimes liquidate you and you won't even know it because you're just trading based off the breakout instead of trading based off the market structure. So, you can trade long term. You don't want to trade where you're, you know, in a trade for a bit and you're not able to capitalize off the whole trend. You want to be able to put yourself in a good position where you can capitalize off the whole trend, not just a little bit of it. And it is very possible to be able to catch a bigger piece of the trend than just a small day out of the trend. So you don't want to constantly try to keep looking for different days where you can get into the trend when you can only trade one day and be able to hold for the next three, four and maximize your profits based off that.
So once again, that low was made and it respected the It didn't break any further than what it did, but this movement down was based off it having a new high. I guess you could say a new indication. And a new indication. So, new indication will cause price to drop dramatically or drop in a certain way because of all that liquidity that the market can grab. If it sees that a lot of people are getting into the markets on a breakout, then price is going to make a subtle movement to the opposite direction to wipe out as much money as possible. And also as well, this was news as well. But those this just goes to show when it comes to the indication, you want to avoid trading the indication, but more so of looking at it as information.
So, the whole point of this video is to look at the indication as a as a I guess you could say a blueprint up to what you're going to do, right? So, look at it as where your entry is going to be, where your exit's going to be. And after the correction, that's when we'll go over the stop-loss levels and where you need to set your stop levels. But the indication is overall to provide you the entry and the takerit that you're going to use.