How To Frame A Daily Bias

The speaker introduces the topic of framing a daily bias, emphasizing that the concepts shared are based on their personal approach rather than original claims. Key topics include alignment, key levels, candle types (C2, C3, C4), confirmations, and practical examples.

Alignment involves using higher time frames to set bias. The speaker primarily uses daily to 4-hour swing formations and confirmations, but also mentions monthly to weekly, weekly to daily, and daily to 4-hour as fractal approaches.

Key levels for daily bias include old highs and lows (swing formations) and fair value gaps. These are also fractal, meaning they can be applied across different time frames like monthly, weekly, and 4-hour. The speaker mainly uses weekly and 4-hour key levels.

The video discusses reversal and continuation candles. A reversal candle (C2) indicates price closing inside a previous day's range after hitting a higher time frame key level. Continuation trades (C3, C4) occur when price closes beyond previous levels, showing strong movement away from a key level.

Candle 2 (C2) is a reversal candle that forms after hitting a significant level (e.g., weekly swing low) and closing back inside the range. While C2 signifies a reversal, it's not expected to deliver a large price movement immediately. Targets are typically daily open or a lower time frame swing high. Confirmations are needed for a true reversal.

C3 and C4 candles follow a C2, signifying continuation. For bullish continuation, C3 and C4 should expand higher with small opposing wicks, indicating strong directional movement. If C3 doesn't hit a new relevant level, C4 is expected to continue to the next target. The same principles apply for bearish continuations.

Confirmations are crucial for C2 and continuation candles. One confirmation is the one-stage Smart Money Technique (SMT), where one asset takes out a relevant high, another does the same, and a third fails to take out the high, but all expand away from the SMT formation. This can be applied to swing highs/lows or consecutive candle highs/lows.

The two-stage SMT is similar to the one-stage but identifies strength switches. Here, all assets might take out a high, but some show a flip in strength (e.g., higher high followed by a lower high), making them more favorable for a reversal. This also applies to consecutive candle SMTs and indicates which asset is more likely to reverse.

Another confirmation involves identifying strength or weakness through candle closures. If all assets take out a relevant high, but one closes bearish while others close bullish, it indicates a strength flip. This is fractal and can be used on different time frames to identify high/low of the day or week.

The speaker provides an example with RTY, aligning a monthly key level (fair value gap) to a weekly swing formation. A weekly C2 candle forms by hitting the level and closing inside the previous low. This fractalizes down to the daily, where daily candles close through previous highs, indicating continuation trades based on candlestick closures.

The second example uses NASDAQ, aligning a weekly relevant swing to a daily swing formation. A daily C2 candle forms by trading down, hitting the level, and closing back inside the range. Subsequent daily candles show continuation by closing through highs. An SMT confirmation is identified on the daily, where NASDAQ takes the low while YM does not, confirming a reversal.

The video concludes by summarizing the process of analyzing higher time frames, qualifying reversals with SMTs or PSPs, and looking for continuation trades on the daily time frame. The speaker also mentions an upcoming video.