This video explains the core concepts of Internal vs. External Market Structure (ICC) for trading. The speaker breaks down how to identify and utilize these structures, emphasizing the importance of higher highs and higher lows (or lower highs and lower lows) as external market drivers. The video also touches on distinguishing between internal and external levels, proper charting techniques, and how lower timeframes lead to higher timeframe price action.
The speaker's key advice regarding marking levels on a chart is to avoid over-marking insignificant levels and not to mark out too many internal market structure levels. The focus should be on identifying and marking the external highs and lows that define the overall trends and ranges. The speaker suggests that marking out too many levels can clutter the chart and lead to confusion.
The speaker explains that internal and external market structure don't always align because external market structure is defined by the highest highs and lowest lows of a trend. In order for the market to reach these external highs and lows, it must first uptrend or downtrend internally within that overall range.
Therefore, while internal movements contribute to reaching the external levels, the internal price action (all the highs and lows that occur within the larger trend) is considered "internal" because it happens within the boundaries set by the ultimate external highs and lows. The speaker uses the analogy of an "uptrend within the range of this high and this low" to illustrate this point.
The speaker explains that a new trend is confirmed and the highest highs (or lowest lows) are considered broken when there is a candle closure above the previous high (for an uptrend) or below the previous low (for a downtrend).
This closure signifies a shift in market sentiment and structure. For an uptrend, this means the market has made a higher high, and if it subsequently creates a higher low, it confirms the start of a new bullish trend. Conversely, for a downtrend, a candle closing below a low creates a lower low, and if followed by a lower high, it confirms a bearish trend.
The speaker emphasizes the importance of these candle closures, stating that a wick above or below a level is not enough; a definitive close is needed to confirm the structural shift.