Trading The 4 Hour Power Of Three - OHLC / OLHC

how's it going everyone and welcome back to another video we

are going to be talking about the four hour power of three or

how to trade the open high low close of a four hour candle now if you haven't already seen my candle two and candle three video be sure to check those out first, as if you do not understand those, this video will not make sense.

So the first thing we're going to talk about is what is a power of three, or what is AMD.

Well, if you've seen my AMD video, we have accumulation, manipulation, and distribution.

We have a consolidation range, which then has an opposing run, and then we are looking to trade this distribution, or the real move.

Now, this looks a bit confusing, and it's not very mechanical. So how do we define it?

Well, that is where we will use swing points or candle two or candle three.

The first candle will always be accumulation, and then we're going to watch candle two.

If candle two has a small wick, it can be the manipulation as well as the distribution.

But as you can see here, we have a reversal candle, which is just manipulation, and then the third candle is the distribution.

Now if you've watched my candle two and candle three video, you know this, but the whole goal is to be trading that distribution or the expansion candle, that directional candle.

To do this, we have to understand what it looks like on the lower time frame. We're going to let price open.

We're going to let it form its opposing run or its wick. And as long as this is a shallow wick, it supports expansion.

So since we have a shallow wick, it supports expansion, it forms a protected swing, and then I can trade it higher.

So going back to the distribution candles or those expansion candles, what are those two scenarios going to look like?

Candle one is always going to be that accumulation candle. So then I want to take a look.

On candle 2, do we have a large opposing run where candle 2 opens, makes this large move against the direction we want to be trading, and then back up.

When it has a large opposing run, that does not support expansion higher in candle 2, so I want to let candle 2 close and then trade candle 3 as we talk about in the candle 3 video.

Now with a reversal to expansion candle, candle 2 doesn't have a large wick.

Candle 2 makes a small shallow opposing run below candle one's low and then trades it higher, right?

So in this scenario, you can see we have accumulation, manipulation, and then distribution.

In this scenario, we have accumulation and then the manipulation and the distribution happens in the same higher timeframe candle.

So let's take a better look at this. Here you can see this is an example of when we're trading that continuation expansion candle.

We have candle one, which is an accumulation. expansion candle two

forms that reversal but you can see it has a large opposing

run so we don't want to trade within this candle we want to wait

for candle three here you can see candle three opens makes

a shallow opposing run and then has that expansion higher this

is the candle we want to be trading now how do we go about trading this

well we want to just wait for this wick to form so you can see here price opens makes its shallow opposing run has a change in the state of delivery which makes this a protected low.

If this is a protected low, this means this wick has formed, and then we can trade this expansion higher.

Now what does it look like with a reversal expansion candle? Well, this is where candle two has a small wick, right?

So you can see a shallow opposing run. It has a change in the state of delivery. So that means that it formed its protected swing.

We can anticipate this wick to hold, and then we can trade the expansion within the same higher time frame candle.

Now, since we are focused on the four hour candle within this video, if I'm trading futures, these are the timings that I'm going to look for.

And if you trade Forex, these are the timings you will want to be focused on.

So just in summary, we want to align this with a daily bias,

but we are going to use the four hour candles to determine a bias using candle closures and if price should expand as it's already reversed, or if we are looking for it to reverse and expand.

Those are the two scenarios. And the main goal and what I want you to say in your head is I need to let the wick form and then look to trade the body.

If you always try to catch the wick, you're going to get continuously stopped out. Just let the wick form and then trade the continuation that follows.

So let's get into trading view and go over a few examples. So here we are with our first example, and we'll go top down on this one, and then we'll just stay focused on the four hour and the lower time frame structure inside of that.

But I want to give one good example all the way from top down to the lower time frame for entries just to show you what it looks like.

So you can see here, I'm always going to start on the daily. You can see Wednesday we formed a reversal, right? And Thursday had a continuation.

So we can anticipate Friday to continue as well as it closed outside Wednesday's range.

That means we can look for price to trade to Thursday's high. Now, if you take a look, we are respecting the EQ of the previous day's range and that T spot.

So let's go down to the 15 minute timeframe. So here we are on the 15 minute timeframe.

I'm using the 15 minute timeframe in this example, as it is paired with the four hour timeframe. So what do we notice here?

You can see that two o'clock had a reversal, right? We have a reversal candle. So we have accumulation here.