What is an FC:

The first thing we need to understand for this strategy is what an FC (Failed CHoCH) is.
These are how we define the market, it is our structure and liquidity tied in to one neat
package, so there is no need to think about ‘equal lows’ etc… as all of this is already tied in.

We see an FC as the flow of money through the market, literally BFI printing orders and how
those orders interact with each other, this defines everything for us.

An FC is a range that takes external liquidity, so we will create a CHoCH (change of

character) that then fails. This means that in a bullish FC price has taken bearish liquidity
before continuing up, and a bearish one has taken bullish liquidity before continuing down.
The theory behind it is that BFI will need to take liquidity because of the size of the orders
they are putting into the market.

The way these orders interact with each other is the key for us, which will be covered in
depth during this PDF and the videos, but we need to understand the basics first. Below are
diagrams and chart example of FCs, and how to mark them

Diagrams:

https://www.tradingview.com/x/rMLEZbhc/
Chart examples:

https://www.tradingview.com/x/ylA9EwDb/

Externals and internals:

As we would with ‘normal’ structure we have external and internal FCs. The examples above
are all externals, these make up our ‘swing’ structure on any given timeframe. The higher
highs and higher lows in a bullish market, or the lower lows and lower highs in a bearish
market.

Internals are as they sound, inside the externals. If you were following from a standard SMC
structure POV they would be the sub structure, the structure that forms inside the swing
legs.

We need to find a way to be mechanical with them however, otherwise things can get
messy. With this is mind we only follow internals after the bullish CHoCH in a bullish FC, or
after the bearish CHoCH in a bearish FC

Diagrams:

https://www.tradingview.com/x/Q0Z7eorY/
Chart examples:

https://www.tradingview.com/x/HQiL0Uh2/

What is a Breach:

If we take FCs as our structure, then a Breach is a BOS. This is our signal that the market is
shifting. It is important to understand this from a multi timeframe perspective, which we
will go in to in depth later. For simplicities sake, we will just focus on one timeframe for
now.

The easiest way to understand it is via expectation. In general, the expectation of any FC is
that it will hold, so after a bearish FC, we expect another bearish FC, if this expectation fails
and the high of the bearish FC fails we have a bullish breach and vice versa

Diagrams:

https://www.tradingview.com/x/2PslGzX5/
Chart examples:

https://www.tradingview.com/x/qINR0YZP/

How to mark a Lower TF FC:

Now that we understand what an FC is I will outline how to mark one, and the instances
where we may need to go down to 15s to check the 1m ones. All we are looking for in an FC
is a CHoCH being created, then failing.

For diagrams refer to previous ones in ‘What is an FC’

Chart example:

https://www.tradingview.com/x/GIDmRstV/

There is one instance that we would check on 15s to see if we have a correctly formed 1m
FC (which is a 15s breach breach, same theory as outlined below). When the FC has no
choch back in the correct direction it may just be a 15s FC so we would want to check
Diagram:

https://www.tradingview.com/x/auy82L3Z/

Chart examples:
Invalid 1m

https://www.tradingview.com/x/TZ8rOh7A/
https://www.tradingview.com/x/vOjAFJLe/

Valid 1m

https://www.tradingview.com/x/0KImKUr8/
https://www.tradingview.com/x/0KImKUr8/

It is important to be able to mark these correctly on the lower timeframe as this is how we
build our overall narrative, so spend some time getting used to this.

What is a Higher TF FC:

Following on from being able to mark LTF FCs correctly, we can now start to build higher
timeframe ones, the important thing to understand here is that LTF breaches CREATE higher
timeframe FCs and narrative.

To follow the higher timeframes, we simply follow the sequences of breaches on the LTF.
As an example, we will take a breach of a 1m breach, this gives us a medium timeframe FC.

https://www.tradingview.com/x/FAIQASGQ/
With this concept we can map the market from looking at 1 timeframe. Although we map
everything on 1m, it is understanding these sequences and what needs to happen next that
allows us to formulate trade ideas and not get lost in the sauce on the lower timeframes.

Diagram:

https://www.tradingview.com/x/N41arsJ1/

Chart example:

https://www.tradingview.com/x/5ru4rcpb/