Page 5
Selected Lists and Resources
• High probability price patterns — listed in the order in which Michael presented them; for definitions, refer to the alphabetical listing (pages 1-4)
doji
hammer
hanging man
tweezers
RR tracks
head-and-shoulders top
inverted head and shoulders bottom
three Indians climax reversal
triangle
bull flag
bear flag
coil expansion pattern
turtle soup reversal
rip-tide reversal
reflection pattern
outside day with a down close
inside day
• Smart Money Tools (SMT’s)
Yield triad SMT’s — in each of the following, the SMT consists of an overlay of line charts (of yields, not prices) of the positively correlated instruments listed:
US Treasury yield triad SMT — the U.S. 2-yr, 5-yr, and 10-yr T-notes; (the U.S. 30-yr T-bond may be included in this overlay, as well)
US/UK/German 2-yr yield triad SMT — the U.S. 2-yr T-Note, the U.K. 2-yr Gilt, and the German 2-yr Bund
US/UK/German 5-yr yield triad SMT — the U.S. 5-yr T-note, the U.K. 5-yr Gilt, and the German 5-yr Bund
US/UK/German 10-yr yield triad SMT — the U.S. 10-yr T-note, the U.K. 10 yr Gilt, and the German 10-yr Bund
USDX SMT’s — in each of the following, the SMT consists of an overlay of line charts (of closing prices, unless noted otherwise) of the instruments listed:
USDX/fiber SMT — the U.S. Dollar Index and the EUR/USD pair; note that the USDX is negatively correlated with the fiber
USDX/cable SMT — the U.S. Dollar Index and the GBP/USD pair; note that the USDX is negatively correlated with the cable
USDX/yield triad SMT — the U.S. Dollar Index price, the U.S. 5-yr T-note yield, and the U.S. 10-yr T-note yield; note the positive correlations
Correlated pair SMT’s — in each of the following, the SMT consists of an overlay of line charts (of closing prices) of the positively correlated pairs listed:
fiber/cable SMT — the EUR/USD and the GBP/USD
aussie/kiwi SMT — the AUD/USD and the NZD/USD
Stock index SMT — this SMT consists of an overlay of line charts (of closing prices) of three positively correlated stock indices
US stock index triad SMT — the DJIA, the S&P500 index, and the Nasdaq index
• ICT Session Times and Kill Zones — expanded descriptions of the session times and kill zones defined in the alphabetical listing (pages 1-4)
1. The London Session is defined as the normal business day in London, 8am-5pm London time. During northern hemisphere winter, London time is GMT; during summer, it is GMT+1. The London Open Kill Zone is a (minimum) 2-hour period which brackets the 8am opening of the session. The London Close Kill Zone is a (minimum) 2-hour period which brackets the 5pm close of the session.
2. The New York Session is defined as 8am-5pm New York time, which is GMT-5 in the winter, and GMT-4 in the summer.
The New York Open Kill Zone is a (minimum) 2-hour period which brackets the 8am opening of the New York Session.
There is no New York close kill zone, because the New York close (5pm New York time) occurs at the lowest-volume time of the entire 24-hour trading day. Typically, worldwide forex trading volume is lowest between 5pm and 6pm New York time each trading day. By contrast, the London Close occurs at the end of the London/New York Overlap period (1pm-5pm London time, and 8am-noon New York time), which is the highest-volume 4-hour period of the trading day.
3. The Asian Session — as its name implies — does not fit the pattern of the other two trading sessions. It comprises the trading sessions in Tokyo (and Seoul) in the GMT+9 time zone, plus the trading sessions in Singapore and Hong Kong (and several smaller markets) in the GMT+8 time zone. Tokyo is no longer the largest Asian forex market — Singapore has recently captured that distinction. Together, Singapore and Hong Kong (which operate simultaneously) account for 76% more daily forex trading volume than Tokyo.
The Asian Session is 10 hours long, unlike the London and New York sessions, which are each 9 hours long. The Session begins at 9am Tokyo time (8am in Singapore and Hong Kong), and ends at 7pm Tokyo time (6pm in Singapore and Hong Kong).
The 5-hour Asian Range is defined as the first half of the 10-hour Asian Session. The Asian Range has special significance as a bellwether of the new trading day which has begun in Asia. (Newcomers to the ICT methodology often confuse the Asian Session and the Asian Range.)
Finally, the Asian Kill Zone can be thought of as the Asian “open” kill zone. It begins one hour earlier than the start of the Asian Session, but it continues for a (minimum) 4 hours (rather than the minimum 2 hours of the other 3 kill zones). Basically, the Asian Kill Zone extends throughout the morning stock-trading sessions in Tokyo, Singapore and Hong Kong, prior to their lunch-time recesses.
• ICT pivot-point formulas — these formulas are commonly referred to as “Classic” pivot-point formulas; they are built into many trading platforms.
H, L, and C represent the High, Low, and Close of the previous time period (yesterday, for example, in the case of Daily pivots).
P, R1, S1, etc. are price levels computed from H, L, and C, which are projected onto the current time period (today, in the case of Daily pivots).
Here are 9 ICT pivot-levels and their formulas, listed in order from highest price to lowest price (as they would appear plotted on a chart):
Second major resistance level — R2 = P + H - L
Second intermediate resistance level — MR2 = (R1 + R2) / 2
First major resistance level — R1 = 2P - L
First intermediate resistance level — MR1 = (P + R1) / 2
Pivot (also called pivot-point, or central pivot) — P = (H + L + C) / 3
First intermediate support level — MS1 = (P + S1) / 2
First major support level — S1 = 2P - H
Second intermediate support level — MS2 = (S1 + S2) / 2
Second major support level — S2 = P - H + L
(Note that Michael does not use, or refer to, these resistance levels: R4, MR4, R3, MR3; or these support levels: MS3, S3, MS4, or S4)
• Top-tier investment banks (10 largest in the interbank network) — showing each bank’s country of domicile and share of the currency market
CitiGroup (USA) — 10.74%
JPMorgan (USA) — 10.34%
UBS AG (Switzerland) — 7.56%
Bank of America Merrill Lynch (USA) — 6.73%
Deutsche Bank (Germany) — 5.68%
HSBC (UK) — 4.99%
Barclays Investment Bank (UK) — 4.69%
Goldman Sachs (USA) — 4.43%
Standard Chartered (UK) — 4.26%
BNP Paribas (France) — 3.73%
(Note that these 10 banks transact more than 63% of the world’s currency trading volume; source: Euromoney, May 2017)
• Central banks (a partial list)
BdeM — Bank of Mexico
BOC — Bank of Canada
BOE — Bank of England
BOJ — Bank of Japan
ECB — European Central Bank (presides over the central banks of the 18 countries which are members of both the EU and the EuroZone)
FRS (or Fed) — Federal Reserve System (the central bank of the U.S., consisting of 12 regional Federal Reserve Banks)
HKMA — Hong Kong Monetary Authority
MAS — Monetary Authority of Singapore
NY Fed — Federal Reserve Bank of New York (the largest and most powerful of the 12 regional Federal Reserve Banks in the U.S.)
PBOC — People’s Bank of China
RBA — Reserve Bank of Australia
RBNZ — Reserve Bank of New Zealand
SNB — Swiss National Bank
• ICT book recommendations — books that Michael has recommended in his threads and/or in his videos
Intermarket Technical Analysis (1991) — John J. Murphy
Technical Analysis of the Financial Markets (1999) — John J. Murphy
Intermarket Analysis (2004) — John J. Murphy
The Visual Investor: How to Spot Market Trends (2009) — John J. Murphy
Market Wizards (1988) — Jack D. Schwager
The New Market Wizards (1994) — Jack D. Schwager
Stock Market Wizards (2003) — Jack D. Schwager
Market Wizards - Updated (2012) — Jack D. Schwager
Trade Stocks and Commodities with the Insiders: Secrets of the COT Report (2005) — Larry Williams
The Commitments of Traders Bible (2008) — Stephen Briese
Trading for a Living: Psychology, Trading Tactics, Money Management (1993) — Alexander Elder
Street Smarts: High Probability Short-Term Trading Strategies (1996) — Linda Bradford Raschke and Laurence A. Connors
The Trading Game: Playing by the Numbers to Make Millions (1999) — Ryan Jones
Trade What You See: How To Profit from Pattern Recognition (2007) — Larry Pesavento and Leslie Jouflas
• The Babypips Glossary — definitions of 1,000 standard forex, finance and economic terms and abbreviations (most with detailed explanations)
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