Hello! Let's dive into the next crucial topic in our journey.
In the previous lesson, we unpacked the Power of 3 (AMD), which gave you a blueprint for how price typically moves within a day: a manipulation against the trend, followed by a distribution in the true direction. However, this model is only effective if you can anticipate that true direction.
This lesson directly addresses that challenge. Our learning outcome is to analyze weekly and daily charts to determine the likely expansion direction. We'll build a systematic process to establish a high-probability "daily bias," which tells you whether you should be looking for bullish or bearish setups. This is the context that brings the Power of 3 model to life.
1. What is Daily Bias and Why Does it Matter?
Before we get into the "how," let's clarify the "what." Daily bias isn't about predicting with certainty whether a daily candle will close green or red. Instead, as an intraday trader, your goal is to anticipate the draw on liquidity—where is price likely to go to grab stops or fill imbalances during the day?
A clear bias provides a directional framework, preventing you from getting caught on the wrong side of major moves and helping you filter for only the highest-probability trades.
To get a solid overview of this concept and a structured approach to finding bias, let's start with a foundational article.
How To Identify Daily Bias Using ICT Concepts
The article 'How To Identify Daily Bias Using ICT Concepts' by City Traders Imperium provides an excellent, step-by-step framework. It clearly defines daily bias and outlines the key technical elements to look for.
Please read the sections 'What is Daily Bias, and Why Does It Matter?' and 'How to Determine Daily Bias Using ICT Concepts'. Pay close attention to the five steps outlined in the second section, as they will form the backbone of our analysis today.
As you just read, determining bias is a top-down process. We start with the bigger picture (weekly and daily structure) and then zoom in. We'll now explore each of these analytical layers in more detail.
2. The Weekly Perspective: Setting the Stage with Weekly Profiles
The narrative for the week often gives clues about the direction for each day. By understanding typical weekly patterns, you can anticipate which days are likely to be expansive and in which direction. This is the essence of "Weekly Profiles."
The following video simplifies ICT's original six profiles into three high-probability, actionable templates. It also provides a fantastic weekly protocol to follow.
Using Weekly Profiles for Daily Bias (Simplified)
The video 'Using Weekly Profiles for Daily Bias (Simplified)' from AM Trades offers a practical system for using the weekly chart to forecast daily direction.
Watch the video from the beginning up to the live examples (00:25 - 08:49). Focus on understanding: The Three Profiles: Classic Expansion Week, Midweek Reversal, and Consolidation Reversal. Notice when the low or high of the week is typically formed in each. The Weekly Protocol: Pay close attention to the rules about avoiding Mondays and trading around high-impact news events. This is a crucial risk management filter.
To summarize the key ideas from the video:
- Classic Expansion: The high/low of the week forms on Monday or Tuesday, followed by a strong expansion through Thursday.
- Midweek Reversal: Wednesday forms a key turning point, with expansion into Thursday and Friday.
- Consolidation Reversal: Price consolidates Monday-Wednesday, with a manipulation and reversal on Thursday, leading to an expansion on Friday.
This weekly framework gives you a powerful hypothesis. For example, if you see price reverse on Wednesday from a higher timeframe discount level, you can anticipate a bullish expansion on Thursday and Friday, aligning with a Midweek Reversal profile.
3. The Daily Perspective: Refining Bias with Price Action Clues
With a weekly hypothesis in mind, we can zoom into the daily chart to look for more granular clues that confirm or deny our bias. Key levels from the previous day and week act as powerful magnets for price.
This next video provides a toolkit of simple, effective techniques for reading the daily chart's story.
ICT Daily Bias - The Only Video You Will Ever Need!
The video 'ICT Daily Bias - The Only Video You Will Ever Need!' from TTrades demonstrates how to use recent highs and lows to frame a daily bias.
Please watch the first three segments of this video (00:28 - 09:24). Focus on these three core techniques: Previous Day High/Low (PDH/PDL): How are they used as a draw on liquidity or as a level for a reversal? Previous Week High/Low (PWH/PWL): Notice how this works on the daily chart, framing larger reversals or targets. Failure to Displace: This is a crucial concept. When price takes a swing high/low but fails to close beyond it, what does that signal about the market's intention?
This "failure to displace" is a critical confirmation signal. If you have a bullish weekly bias and price sweeps below the previous day's low (PDL) but then closes back above it, that's a strong indication that the manipulation is over and the true bullish move is about to begin.
Test your understanding!
It's Tuesday morning. Your analysis of the weekly chart suggests a potential "Classic Bullish Expansion" week is forming. On Monday, price traded down into a 4H Fair Value Gap (an area of institutional support).
Looking at the daily chart, you see that Monday's candle swept below the prior Friday's low but closed back above it.
Based on this information, what is your directional bias for Tuesday, and what does this imply for applying the Power of 3 (AMD) model?
Show answer
Your directional bias for Tuesday is bullish.
Here's the logic:
- Weekly Profile: A "Classic Bullish Expansion" suggests Monday or Tuesday will form the low of the week before expanding higher.
- PD Array: Price has already traded down into a higher timeframe support level (the 4H FVG).
- Daily Price Action: The sweep and close back above the prior low on Monday indicates a "failure to displace" to the downside. This suggests sellers lacked strength and that the move down was likely a liquidity grab.
With a bullish bias, you would anticipate a bullish Power of 3 (AMD) template for the day: Accumulation near the open, a manipulative move down to form the low of the day (perhaps during the London session), followed by a strong distributional move up towards buy-side liquidity.
4. A Structured Checklist for Determining Weekly Direction
We've covered several layers of analysis. To make this process systematic, it's helpful to use a checklist. This ensures you are evaluating the most important factors before deciding on your bias.
The article "ICT Weekly Range Expansion Model" provides an excellent checklist that synthesizes many of the concepts we've discussed.
ICT Weekly Range Expansion Model - Stages of ...
Let's refer to the 'ICT Weekly Range Expansion Model' article on Tradingfinder to consolidate our process into a structured checklist.
Please read two specific parts of this article: Start with the section titled 'Internal and External Range Liquidity in Identifying Weekly Direction'. This distinction is critical for identifying the primary 'draw on liquidity'. Next, read the section 'Checklist for Identifying Weekly Direction Before the Start of Expansion'. This provides a five-point checklist to confirm your bias.
This checklist is your pre-flight check for the week. Before you even think about placing a trade on Tuesday, you can run through these points on Sunday or Monday:
- External Liquidity: Where are the major weekly highs/lows that price is likely targeting? (This is your main draw on liquidity).
- Price Location: Is price in a Premium (sell) or Discount (buy) zone of the higher timeframe range?
- Imbalances: Are there any large Fair Value Gaps on the daily or weekly chart that price needs to rebalance?
- Structure Shift: Has the daily chart recently had a Break of Structure (BOS) or Change of Character (ChoCH) that aligns with your anticipated weekly move?
- Liquidity Distance: Is price close to the target or far away? If it's far, there is room for expansion.
If you get three or more of these criteria pointing in the same direction, you have a high-probability bias for the week. This systematic approach is something we will eventually translate into logic for your trading bot development.
Conclusion
Today, we've built a robust, multi-layered process for determining directional bias. You've moved from understanding the daily price template (Power of 3) to anticipating its direction.
Key Takeaways:
- Bias is a Top-Down Process: Start with the weekly narrative and zoom into daily price action clues for confirmation.
- Weekly Profiles Set Expectations: Use the Classic Expansion, Midweek Reversal, and Consolidation Reversal models to anticipate the flow of the week.
- Daily Clues Confirm Bias: Look for price's reaction to the Previous Day's High/Low (PDH/PDL) and watch for a "failure to displace" as a key signal.
- Liquidity is the Target: Your primary goal is to identify the draw on liquidity (often external range liquidity like an old weekly high/low).
- Use a System: A structured checklist combining order flow, liquidity, price location (Premium/Discount), and market structure provides a reliable method for determining bias.
Preview for the Next Lesson:
We now have a framework for anticipating the direction of the week (bias) and the template of the day (Power of 3). The final piece of the time puzzle is knowing when during the day to act. In our next lesson, "Identify the ICT Killzones (Asian, London, New York) on a chart," we will pinpoint the specific time windows when volatility is highest and these setups are most likely to occur.