Components

CRT Components

This CRT Model is designed to analyze and interpret price action patterns through various components, each of which plays a critical role in identifying market trends and providing actionable insights.

Below are the key components that make up the algorithm:

• Sweep

• D-purge

• CISD

• Mean

• C-area

• Projections

• Liquidity

Components

1. Sweep

Definition: A Sweep is a candlestick pattern where the price momentarily exceeds the high or low of the previous candle (via the wick) and then closes within that candle’s range.

Formation:

• Bullish Sweep: The price briefly surpasses the high of the prior candle and closes back within its range.

• Bearish Sweep: The price briefly surpasses the low of the prior candle and closes back within its range.

Invalidation:

• Bullish Sweep:

  • Invalidated if the next candle is bullish and its body closes above the high of the prior candle.

  • Invalidated if any subsequent bullish candle closes above the high of the prior candle.

• Bearish Sweep:

  • Invalidated if the next candle is bearish and its body closes below the low of the prior candle.

  • Invalidated if any subsequent bearish candle closes below the low of the prior candle.

2. D-Purge

Definition: A D-purge is a type of Sweep where the price exceeds both the high and low of the previous candle (via wicks) and then closes within the range of the prior candle.

Formation: A D-purge Sweep requires two higher-time-frame candles, with both sides of the previous candle being swept. The side that is swept last determines the direction of the D-purge.

Invalidation:

• Bullish D-purge:

  • Invalidated if the next candle is bullish and closes its body above the high of the prior candle.

  • Invalidated if any subsequent bullish candle closes above the high of the previous candle.

• Bearish D-purge:

  • Invalidated if the next candle is bearish and closes its body below the low of the prior candle.

  • Invalidated if any subsequent bearish candle closes below the low of the prior candle.

3. CISD

Definition: Change in State of Delivery (CISD) refers to a shift in price delivery, indicating a transition between the buy-side and sell-side or vice versa.

Formation:

• Bullish CISD: Occurs when the price closes above the opening price of a bearish delivery.

• Bearish CISD: Occurs when the price closes below the opening price of a bullish delivery.

Invalidation:

• N/A (No specific invalidation).

4. Mean

Definition: The mean is the midpoint of the previous candle.

Formation: The midpoint of the previous candle is marked at the close of the current candle.

Invalidation:

• Bullish: Invalidated if a bullish candle closes above the midpoint of the previous candle.

• Bearish: Invalidated if a bearish candle closes above the midpoint of the previous candle.

5. C-Area

Definition: C-area represents the region between the open of the current candle and the midpoint of the previous candle.

Formation:

• Bullish C-area: The distance between the current candle’s open and the previous candle’s midpoint.

• Bearish C-area: The same as above, but for a bearish candle.

Invalidation:

• Bullish: Invalidated if a bullish candle closes above the midpoint of the previous candle.

• Bearish: Invalidated if a bearish candle closes above the midpoint of the previous candle.

6. Projections

Definition: Projections measures the variation or dispersion of price from a mean, often used to project price swings.

Formation: It’s calculated from the CISD level to the price point of a swing manipulation.

Invalidation: Once the price reaches the 2 standard deviation level.

7. Liquidity

Definition: Liquidity refers to areas of concentrated buy and sell orders at significant price levels, often where price reversals occur (e.g., swing highs and lows).

Formation: Liquidity zones are typically formed at swing points, PDH/PDL, PWH/PWL, and similar levels.

Invalidation: Once the price hits the liquidity zone.