Transcription
Here we have a low, a high, a lower low, boom. A higher high. How many of you are marking this as a change of character? You are then looking to take longs in this area here expecting higher prices. And as you can see, you get absolutely cooked.
Don't worry, after watching this video, you will never struggle with this again and actually learn how to trade with these instead of against them. So when I'm checking, is this a fake change of character or not? There's always two criteria to look for. That is simply is it small structure or big structure? And do we have an unmitigated zone below or above?
What do I mean about that? Well, let's start with small structure. When you are reading out market structure, okay, big zones like this, big high to lows in an uptrend are perfect. Small ones like this, they tend to be fake. So when I'm reading market structure, I go high, low, higher high. I don't go high, low, higher high, higher low, higher high, higher low. Otherwise, I will have this here as my protected low. What does that mean? That means here I'm going to be swept out thinking we are bearish, thinking that this is my change of character, and instead, we are actually going to just bounce higher. So remember, big zones are what we should pay account to. So when we take that into consideration, we simply mark high, low, higher high. Now we know that this can be a fake change of character, fake change of character, and as long as this low holds here, we are simply bullish. These are sweeps in which we can push higher.
The exact same thing when it comes to a downtrend. Okay, what do we have here? Well, we're looking for break structure to the downside like this, nice and big. How about here? Pretty small. And here? Pretty small. So when I'm thinking, is this likely to be a real change of character or not? I'm thinking no. Why? Because we have relatively small zones and a relatively big zone. So, instead I'm treating this as liquidity for price to come into here and push lower. A fake change of character, fake change of character, real change of character.
The second one we said was unmitigated zones. What do I mean by this? Well, you see price moves like this. We have a high low, higher high in an uptrend. We then draw a zone around this area here. We expect price to come mitigate this zone, push higher. By mitigate, I mean come to 50% and push higher. We then draw a new zone, okay? We then come mitigate this and push higher. I'm always focusing on the last two zones. So, once we create three zones, for example, this one becomes irrelevant and gets deleted.
Now, if we have a situation like this, boom boom, boom boom, boom boom, boom. Okay? I'm thinking is this my protected low or not? Well, let's see. If we draw the previous zone, what do we know? This is still fresh and unmitigated. Remember, when we have these zones like this, we're expecting price to break above them, come mitigate them, and then push higher. Here we broke above this zone. We have not, I repeat, we have not come to mitigate this zone to push higher. What does that mean? It means price is likely to come do it. So, if we know price is likely to come do it, are we willing to put our change of character there? No, because this is simply going to be a sweep to come mitigate this prior zone and then push higher. And of course, it's exactly the same on a downtrend, okay?
We look at breaks of structure, boom. We look at breaks of structure, boom. So, we have this zone here. What do we know? Price came, mitigated it, and pushed higher. So, I can focus on this protected high. Now, am I willing to mark this as a protected high? Yes. Why? Because it's good size. You can see it's not small like this, it's big, and price came and mitigated this prior zone. So, I can get rid of that now. Now, we have a new potential break of structure here with a new potential protected high here. I ask myself, is this likely to be a protected high? Well, the first step is it's kind of small structure relative to this structure, so it's more likely to be fake. And if I look at this prior zone above, what do we notice? Price has not come near this 50% before rejecting. So, what can price do? Sweep this, come to this 50% and dump. That means I am not going to mark this as my protected high.
Let's mark out structure. We have a high, a low. What do we do? Do do do do do do do do. We break this high, high higher low higher high. What do we do? Shift in structure here. So, this technically becomes your first change of character. Lower low, we're expecting we're expecting a lower high beneath here, and then what? Another lower low. That's what we do. Break of structure here. Protected high here. And then what do we do? Lower low, lower high, lower low. So, lower low, lower high. Lower low. So, if I mark out this structure as so, it's low high low high low, sorry. This is the low. So, you don't include wicks as candle close.
Now, let's ask ourselves based on this criteria, okay? Even before we come and take this high is this high likely to be a real change of character or a fake change of character? First of all, let's look at structure. Is it a big zone or a small zone? Well, we have low high low, high low. So, what do we mean? Relative to structure, we had a big zone and we had a small zone. So, what do we know? The small zone is likely to be fake. So, that's my first worry that, you know what? This isn't likely to be a real change of character. The second step is what? Looking at the previous zone. If I mark this previous zone here, has price come near this 50%? No, we're pretty much just tapped 30%. This is all still nice and fresh. This area of supply here is still nice and fresh. Again, another reason why I should not mark this as my real change of character instead as my liquidity sweep and actually look for shorts here after this has been swept targeting a lower low. And if we play that out, as you can see, boom, fake change of character, price dumps.
What about an uptrend? Again, the exact same thing. Let's look at this low here. Is this likely to be a real change of character or a fake change of character? Well, let's see. Again, the first step is the size, okay? Small zones. So, what do we have? We have a high, a low of the previous one, high, low, high. Again, same thing. You can see this high to low, boom, boom, right? If you mark this, is a lot bigger than what? This high to low. So, that's the first step. Okay, this is likely to be fake structure. The second step is if we do mark that prior zone, what do we notice? Completely fresh. Price has barely tapped into it. So, we know that most likely price is going to sweep the small zone, come into this area, and push higher. So, I definitely would not be looking for um a buy position above here or treating this as my real change of character. I'd be looking for a lovely buy position in here targeting the higher high as this is telling me all the steps that this is likely to be a fake change of character. What do we do? We sweep that, come into this zone, and of course, we rocket higher. So, this is all what a fake change of character looks like.
What does an actual real change of character look like? Well, let's see this here. We have a high, you can see clearly an uptrend, and we break structure to the upside giving us a protected low down here. Now, first of all, let's look at the size of this zone. It is, okay, as we can see, it is in fact a big zone. There is no denying that. So, in terms of a small zone compared to a big zone, this is a very big zone. Let's look at the zone prior to it. Well, the zone prior to it was this area here. Price came, mitigated it, right, deeply, and then pushed higher. So, is it small structure? No. Is the prior zone unmitigated? No. So, is this likely to be a fake change of character or real change of character? 100% this is likely to be a fake change of character. So, as we play price out and as it comes and takes out that low, boom, now we can expect lower prices and we're not looking for longs anymore.
Now, this situation is a little more complicated. So, you can see price was trending lower. As we can see, and what did we have? We had a break of structure here and a break of structure here. So, let's look. We have two potential protected highs. Protected high one, I'll mark in red, and protected high two, I'll mark in black. So, which one shall we be looking at? Well, first of all, let's see size-wise. We have a good size zone here and kind of a mini zone here. So, I'd be less inclined to use this protected high here. However, let's see how much of this zone we mitigated. We mitigated just under 50%. So, again, I would not use this as my real change of character. Instead, I would use this high here as my real change of character. Now, as soon as we have taken this high here, there's absolutely no reason for me to think this is fake as we have broken this small zone and broken this big zone above, our mitigated zone. So, everything is telling me to look for longs and guess what? I would rather the favor bullish, expecting price to rocket higher. As you can see, we continue to do that.
So, yeah, I guarantee you no one reads structure like me and no one can read it as accurate like me. These are all concepts I have learned myself and taught myself through years of back testing and live execution. If you do want to get mentored by me one-on-one where I guarantee you profitability, the link for that is in the description below. We also have a premium Discord where you can watch me live stream every single day, ask me any questions, learn my strategy, etc. Link for 3 months access for that is also down below. Apart from that, I do think this video was helpful. So, if you did appreciate it, I appreciate any likes, comments, and subscribes. Apart from that, thank you as always, and I'll catch you in the next one.