Lecture 6: Pre-News Catalyst Environment (PPI/CPI) & Reclaimed FVGs

Title: Pre-News Catalyst Environment (PPI/CPI Week) & Reclaimed FVGs
Date: August 12, 2024
Mentor: Michael J. Huddleston (The Inner Circle Trader)

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1. Executive Summary & Core Objective

Lecture #6 provides critical risk guidelines for trading weeks featuring major economic drivers (PPI / CPI) and introduces the concept of Reclaimed Fair Value Gaps when time and narrative diverge [402, 405, 416, 419].

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2. Core Concepts & Technical Mechanics

A. Pre-News Catalyst Protocol (PPI / CPI Weeks)

• High-Risk Catalyst Warning: Tuesday and Wednesday of this week carry major PPI and CPI inflation reports capable of violent, erratic repricing [402, 405, 416].
• Monday Rule Ahead of CPI/PPI:
  • Mondays preceding CPI/PPI carry extreme manipulation risk ('Seek and Destroy' profiles) [405, 416].
  • Unless an obvious, high-probability setup presents immediately post-7:00 AM ET, traders should refrain from live or paper execution on such Mondays [405, 416].

B. Reclaimed Fair Value Gaps

• Mechanism: When the higher time frame narrative and time parameters do not support a FVG, price will trade right through the gap without respecting it as support or resistance [419].
• Once price passes through the FVG decisively, it becomes a Reclaimed Fair Value Gap and can be utilized in the opposite direction for continuation [419].

C. Shelf-Life of NDOGs

• New Day Opening Gaps maintain an active high-probability shelf life of approximately 5 trading days, though historical NDOGs remain active magnets when nested with current price [407].

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3. Trading Discipline, Mindset & Psychology

A. Accepting Low-Probability Conditions

• Professional trading requires identifying when not to trade [405, 423].
• Sitting on your hands during pre-news consolidation protects equity and preserves mental clarity for post-news expansion [422, 423].

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4. Step-by-Step Action Plan & Homework

1. Check the Sunday economic calendar weekly for PPI, CPI, NFP, or FOMC releases [402].
2. Mark Mondays before major CPI/PPI reports as high-risk filter days [405, 416].
3. Observe how price uses historical NDOGs as magnets during low-probability consolidation days [407, 408].

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Reference Source Link:
Watch ICT 2024 Mentorship - Lecture #6 (August 12, 2024) on YouTubeWatch on YouTube