Modules 3, 4 & 5
INTRODUCTION
TO
SMART MONEY CONCEPTS
AND
MARKET STRUCTURE
Lesson Overview
In this Class, each student will learn
- Bullish, Bearish and Sideways Market Structure;
- External and Internal Market Structure;
- The Unique Candlestick Patterns used in SMC Strategy.
- Fibonacci Retracement and Extension Levels;
- How To Draw Fibonacci Retracement;
By the end of this Class, each student should be able to should be
able to identify market structure and use the Fibonacci
Retracement Tool properly.
Smart Money Concept is a RULE-BASED Strategy that has
GUIDELINES and RULES you must follow before taking
trades.
We have Terms and Conditions we want the market to
meet before entering the market or placing any trades.
SUPPLY AND DEMAND PATTERNS
There are 4 main Supply and Demand Patterns:
A. Supply and Demand Reversal Patterns
i. Drop – Base – Rally; and
ii. Rally – Base – Drop.
B. Supply and Demand Continuation Patterns
i. Drop – Base – Drop; and
ii. Rally – Base – Rally.
These will be further explained in the next Module.
WHAT IS MARKET STRUCTURE
Market Structure is the overall outlook of the market helping you
identify the market as being either in a BULLISH (Buy) or BEARISH (Sell)
Trend.
Market Structure gives you the overall directional bias of the Market.
Market Structure (price action) is individual price movement on the
chart.
Understanding Market Structure helps you understand the behavior,
condition, current flow and framework of any given market you are
currently trading.
TYPES OF MARKET STRUCTURE
Market Structure can be broadly classified into 3 distinct categories:
BULLISH MARKET STRUCTURE: Also called an Uptrend/Buy Market. It is
defined by a series of Higher Highs (HH) and Higher Lows (HL).
BEARISH MARKET STRUCTURE: Also called a Downtrend/Sell Market. It is
defined by a series of Lower Highs (HH) and Lower Lows (HL).
SIDEWAYS MARKET STRUCTURE: Also called a Ranging/Consolidating
Market. It is defined by the horizontal movement of price without a clear
trend. It is also called a choppy market.
UPTREND/BULLISH MARKET STRUCTURE
A Bullish Structure/Uptrend begins with a Bullish Change of Character
(ChoCh). A Bullish Change of Character (ChoCh) happens when Price makes a
Higher High (HH) which is higher than a previous Lower High (LH).
The Uptrend then continues with a Price Retracement/Pullback to form a
Higher Low (HL), then an Impulse Expansion to form a new Higher High
(HH). Following this, the Uptrend will then make a series of new Higher
Highs (HH) and new Higher Lows (HL).
The Uptrend ends when Price makes a Lower Low (LL) which is lower than
the previous Higher Low (LL). When this happens, a Bearish Change of
Character (ChoCh) has just occurred.
Uptrend Example #1
Uptrend Example #2
Uptrend Example #3
Uptrend Example #4
Uptrend Example #5
DOWNTREND/BEARISH MARKET STRUCTURE
A Bearish Structure/Downtrend begins with a Bearish Change of Character
(ChoCh). A Bearish Change of Character (ChoCh) happens when Price makes
a Lower Low (LL) which is lower than a previous Higher Low (HL).
The Downtrend then continues with a Price Retracement/Pullback to form a
Lower (LH), then an Impulse Expansion to form a new Lower Low (LL).
Following this, the Downtrend will then make a series of new Lower Lows
(LL) and Lower Highs (LH).
The Downtrend ends when Price makes a Higher High (HH) which is higher
than the previous Lower High (LH). When this happens, a Bullish Change of
Character (ChoCh) has just occurred.
Downtrend Example #1
Downtrend Example #2
Downtrend Example #3
Downtrend Example #4
Downtrend Example #5
“When looking at the lower timeframes/internal structure, be very
careful of the story the market is telling you.
Most traders struggle because they focus on the Internal Structures (H4,
H1, M15) and ignore the External Structures (Daily, Weekly).”
Boss Kole Banks
For us in Kole Forex, the most important level is the 50% Level
because it helps us to clearly identify the Premium and Discount
Levels.
How To Setup Your Fibonacci Retracement Tool on TradingView
When you draw your Fib Retracement tool for the first time, it will look
similar to this –
Click on the Fib Settings and You’ll See this –
Uncheck every Level except 0, 0.5 and 1 Levels and click OK
That will leave you with a Fibonacci with a Clearly Defined Premium and
Discount Zone.