Confirmation Model

THE BLUEPRINT

BY KOBENSKI
INTRODUCTION

I know many of you have been struggling and feeling overwhelmed by the
hundreds of strategies and concepts out there. It can be confusing to
know what to do in different situations, especially when you're
bombarded with information. As retail traders, we look for an edge, but
the more complex your trading becomes, the harder it is to stay
consistent and gain that edge over the market.

In my first year of trading, I faced similar struggles and confusion.

There’s a lot of noise out there, and it’s challenging to stick with a plan
during a losing streak when so many people promise the “holy grail” of
trading. However, I learned that simplicity is key to becoming a profitable
trader. The more complicated my trading strategy, the less profitable I
was.

This ebook is all about swing trading and the simplified strategy I’ve
developed to cut through that noise. Unlike the multitude of strategies
that require juggling multiple timeframes or complex indicators, I’ve
streamlined my approach to focus on just one timeframe. This means less
confusion, fewer distractions, and a laser focus on what really matters.

This strategy is perfect for those of you who have other occupations or
commitments and don’t have the luxury of sitting in front of charts all
day. With this approach, you can reduce your chart time to as little as 30
minutes a day, making it ideal for busy professionals. Even with such
minimal time investment, This strategy provides an average of 2 to 8
trades per month, with a win rate ranging between 40% and 60%,
depending on the entry models used, ensuring that you can stay active in
the market without it taking over your life.

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INTRODUCTION

By adopting a straightforward and repeatable approach, I discovered

that you don't need to confuse yourself to be successful. All it takes is a
replicable trading plan and the discipline to follow it. This ebook will
focus on teaching you this simplified approach, helping you become a
consistently profitable and funded trader.

So, for now, I want you to forget everything you’ve learned and keep an
open mind because it can be this simple. Success with this strategy
depends on understanding where price is heading. Some might refer to
this as tracking liquidity. Once we have a clear idea of price's direction,
we can identify entries, which we will also simplify as much as possible.

We will use market structure and the Fibonacci tool to develop a

structured approach for our trading bias and entries, ensuring a
consistent risk-to-reward ratio. This one-timeframe strategy not only
simplifies your trading process but also provides clarity and confidence,
which are critical for a strong trading mindset and psychology. Moreover,
it’s an excellent way to forecast potential earnings by analyzing past
data.

Without further ado, let’s get into the actual content you are here for.

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THE FOUNDATION

Market Structure

In this section, we will explore market structure, a fundamental concept

in technical analysis. Mastering market structure is essential for
successful trading, as it forms the foundation for any technical trade
idea. Without the ability to identify it, effective decision-making becomes
impossible.

This part of the ebook will cover key topics such as identifying swing
points & recognizing trends. We will also discuss the break of structure
(BoS), distinguishing between breaks with and without candle closes, and
how to spot trend continuations and reversals.

Swing points

Now that we understand the importance of market structure, let’s dive

into the first key concept: swing points. These are critical in determining
the current state of the market and serve as the foundation for reading
price action. Swing points refer to the extreme highs and lows visible on
a price chart.

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THE FOUNDATION

For the market to move, there must be participation from both buyers and
sellers. Their transactions create these highs and lows, which tell a story
about market dynamics. By analyzing these swing points, we gain
valuable clues about the market’s direction and potential future
movements.

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THE FOUNDATION

Trends

Since this strategy is entirely based on following trends, it is crucial to

accurately identify it. I know many of you are already familiar with this
concept, but we will still delve into the details.

Financial markets don’t move in one direction consistently. Prices

fluctuate, reaching higher highs and lows or lower highs and lows. To
simplify the concept of market structure, let's define it as the major
highs and lows on a price chart, known as swing points that form a trend.

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THE FOUNDATION

How to identify a bullish trend?

First, we will focus on identifying a bullish trend. A bullish trend is

characterized by a market condition where price generally increases over
time. In this trend, price consistently moves to new highs with
momentum, breaking through previous highs and creating new higher
highs. After reaching a new higher high, price may drop slightly, but it
will remain above the previous low, forming a new higher low — this is
what we call a retracement.

Following the retracement, price typically makes another impulsive

move, surpassing the latest higher high and forming a new higher high.
When price experiences another retracement, we anticipate it will make
yet another higher high, followed by a retracement that establishes a
new higher low. This pattern of consistently peaking at higher points and
bottoming out at higher levels indicates a clear upward trajectory.

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THE FOUNDATION

How to identify a bearish trend?

Second, we will focus on identifying a bearish trend. A bearish trend is

characterized by a market condition where price generally decreases
over time. In this trend, price consistently moves to new lows with
momentum, breaking through previous lows and creating new lower lows.
After reaching a new lower low, price may rise slightly, but it will remain
below the previous high, forming a new lower high—this is what we call a
retracement.

Following the retracement, price typically makes another impulsive

move, surpassing the latest lower low and forming a new lower low.
When price experiences another retracement, we anticipate it will make
yet another lower low, followed by a retracement that establishes a new
lower high. This pattern of consistently dropping to lower points and
peaking at lower levels indicates a clear downward trajectory.

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THE FOUNDATION

Break of structure

The first step in identifying a potential trading opportunity, and one of

the most important aspects of this strategy, is understanding the break
of structure (BOS). When a major swing point is surpassed, it is known as
a BOS. This signals either a continuation of the current trend or a
potential reversal.

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THE FOUNDATION

Bullish Example

In a bullish trend, each time a major high is breached, it is considered a

break of structure.

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THE FOUNDATION

Bearish Example

In a bearish trend, each time a major low is breached, it is considered a

break of structure.

The key takeaway here is that I only consider a break of structure valid
when the price breaks the swing point with a full candle close. If price
merely wicks the extreme swing point, I’m not confident it will continue in
that direction, as this suggests price is weak and slowing down. In such
cases, I prefer to wait for the market to provide clearer signals regarding
its intended direction.

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THE FOUNDATION

Reversals

Now that we’ve covered swing points, trends, and break of structure, it’s
time to explore trend reversals in detail. So, what exactly are trend
reversals? As the name suggests, a trend reversal occurs when the
market shifts direction—either from a bullish trend to a bearish trend, or
from a bearish trend to a bullish trend.

But what does that mean, and how can we identify these reversals?

In theory, a trend reversal in a bullish trend happens when a higher low is

broken, leading to the formation of a lower low. Conversely, in a bearish
trend, a reversal occurs when a lower high is violated, resulting in the
creation of a higher high.

identifying a valid trend continuation structure is straightforward.

However, recognizing a trend reversal can be trickier. The simplest way
to confirm a valid trend reversal is to wait for another break of structure,
indicating the trend will continue.

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THE FOUNDATION

Bullish Reversal Example

In this example, you can clearly see that after price broke structure and
formed new higher highs, continuing the bullish trend, it reversed and
broke a higher low. This indicated a potential trend reversal. When the
new lower low was confirmed with a valid break of structure, it signaled
the start of a new bearish trend.

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THE FOUNDATION

Bearish Reversal Example

In this example, you can clearly see that after price broke structure and
formed new lower lows, continuing the bearish trend, it reversed and
broke a lower high. This indicated a potential trend reversal. When the
new higher high was confirmed with a valid break of structure, it signaled
the start of a new bullish trend.

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THE FOUNDATION

Imbalance

Imbalance is one of the key factors we look for when identifying a trading
setup. It doesn’t work as a standalone signal, but rather, it helps support
our trade ideas and gives us an indication of where price might move
next. It acts as a confirmation, or ‘confluence,’ for our strategy.

In financial markets, there is typically a balance between buyers and

sellers, which allows the market to flow smoothly. However, sudden price
movements can disrupt this balance, creating what we call an
‘imbalance.’ These imbalances occur when there’s a gap in price due to
an impulsive move, and the market will often seek to correct it by moving
back toward the gap.

An imbalance forms across three consecutive candles. The key thing to

note is that the wicks of the first and third candles do not cover the body
of the second candle. Whenever you see a candle body that isn’t covered
by the wicks of the previous or next candle, an imbalance has been
created.

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THE FOUNDATION

We use these imbalances to anticipate potential areas where the price

might reverse, though the exact timing is uncertain. The market typically
fills these gaps eventually. While identifying imbalances may be
challenging at first, it becomes easier with practice.

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THE FOUNDATION

Bearish Example

In this instance, you can see that the price made a strong, impulsive
downward move, leaving behind an imbalance.

As a result, the price will tend to revisit this imbalance to correct itself
before continuing the current trend. By identifying these imbalances, we
can gain insight into potential price movements, making it a valuable tool
to incorporate into our strategy.

Keep in mind that not every imbalance will be resolved immediately, as

this process can take time.

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THE FOUNDATION

Fibonnaci

The Fibonacci tool is one of the simplest and most effective tools for
measuring a trading range and identifying potential trading
opportunities. Many traders mistakenly see it as an indicator, but it’s
actually a measurement tool.

So, how can we effectively use it in our strategy? The goal in trading is to
buy low and sell high, or sell high and buy low. We always aim to enter at
the best possible prices to fully capitalize on market movements.

The first step in finding the best entry price is to measure the current
trading range. Using your knowledge of market structure from previous
lessons, this should be fairly straightforward. We’ll place the Fibonacci
tool on the most recent swing points.

Stop-Loss: 1 Fib level

Entry: 0.705 Fib level
Take-Profit: 0 Fib level

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THE FOUNDATION

Liquidity

First, we need to understand what liquidity means. In simple terms,

liquidity refers to money. To find areas of liquidity in the market, ask
yourself, “Where is the money?” In trading, money comes in three main
ways: through entries, stop losses, and take profits.

Whenever you enter a trade, you add liquidity to the market. The same
happens when a stop loss is triggered or a take profit is hit—money
moves in and out of the market.

So, to identify key areas of liquidity, ask yourself: “Where are most
traders placing their orders, stop losses, and take profits?

Understanding Liquidity for Our Strategy

Our goal in this strategy is to identify where liquidity has already been
taken or where it is currently resting before we place our limit orders.
Why is this important? If we don’t know where liquidity has been taken,
we risk becoming the liquidity ourselves.

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THE FOUNDATION

Liquidity in External & Internal Highs and Lows

The first and most important element of our strategy is understanding

the liquidity at market’s highs and lows.

On every high and low, there is resting liquidity. Why? Because many
traders place their stop-losses or take-profits there. Our goal is to wait
for the liquidity to be grabbed before we look to place our limit order

In this example you can see that liquidity has been taken out before
looking for potential entries. We want to see a high or low being violated,
followed by an immediate reaction that breaks the opposing high or low
with a candle close continuing the current trend direction. This confirms
the setup before we start considering entries.

The key point here is that we can only confirm it was a liquidity grab after
the opposing high or low has been broken. Until then, it could be a
possible trend reversal.

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THE FOUNDATION

In this bullish example, you can see that the market is in an uptrend,
forming higher highs and higher lows. After grabbing liquidity, the
market makes a lower high, followed by an impulsive move that breaks
the structure and creates a new higher high. This sets up an ideal
scenario to use the Fibonacci tool and place a limit order.

Building on the previous example, you can see that we can also have
internal highs and lows within a trading range (Trading range = the
movement between one extreme swing point and another.). What do I
mean by internal highs or lows’? These are the highs and lows that form
inside the trading range itself. You’ll often see this happen with patterns
like flag patterns.

The key takeaway here is that price can create a new trend or structure
within the trading range. In some cases, Once an internal high or low is
broken price moves back in the intended direction, breaking the opposite
high or low, this is the moment we can start looking for entry
opportunities.

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PUTTING IT ALL TOGETHER

Now that we’ve covered the foundation, it’s time to put everything
together into a repeatable trading plan that keeps you consistent. As
mentioned, we will focus on just one timeframe—the 4-hour chart. I use
this timeframe for its consistency, allowing me to maintain a 50% win
rate with a 2.4 risk-to-reward ratio, providing a solid return on investment
without overcomplicating the process.

The entry models we will consistently use are what I call External
Liquidity Sweep and Internal Sweep confirmation models. These models
are sufficient, and I recommend sticking to them. The key to success is
simplicity and repetition, as this reduces doubt and confusion, ultimately
benefiting your psychology in the long run.

We will use a systematic approach in our trading, with a trade checklist

provided with each entry model. The first step is to determine if the
market is trending and in which direction. Once we establish this, we
proceed by checking if price has broken structure and if this structure
was broken with a candle close. If the answer is yes, we move to the next
item on our checklist: Was liquidity purged from an external or internal
swing point? Only if this condition is met do we proceed further.

Next, we place our Fibonacci tool from one swing point to the opposing
extreme swing point. Once this is complete, we move to the final step:
identifying imbalance. Here, we check for any imbalance (inside liquidity)
near our entry level. This serves as an additional confluence, helping us
gauge where price might head before reversing in the intended direction.

Once all these steps are checked off, it’s time to place the limit order.

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PUTTING IT ALL TOGETHER

External Liquidity Sweep Confirmation:

This entry model focuses on potential reversals that ultimately turn out
to be liquidity sweeps, allowing the price to continue in the pre-existing
trend. Whenever a potential reversal appears, we wait for the price to
reverse in the original direction and break the opposite extreme swing
point. This confirms that it was not a true reversal but a liquidity sweep.
At this point, we look for potential trading opportunities.

Bullish Example

Setup Checklist

[ ] Is there a clean break of structure with a candle close?

[ ] Was liquidity purged before the move happened?
[ ] Is there any imbalance near our entry level?
[ ] Apply Fibonacci tools to the extreme swing points.
[ ] Place a limit order.

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PUTTING IT ALL TOGETHER

External Liquidity Sweep Continuation:

This entry model builds upon the external liquidity sweep confirmation
model. Whenever this entry model forms, we aim to anticipate one more
break of structure that follows, enhancing the setup as liquidity has
already been purged at a prior point.

Bullish Example

Setup Checklist

[ ] Is there a break of structure?

[ ] Was liquidity purged before the move happened?
[ ] Did the trend continue with a new, valid break of structure?
[ ] Is there any imbalance near our entry level?
[ ] Apply Fibonacci tools to the extreme swing points.
[ ] Place a limit order.

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PUTTING IT ALL TOGETHER

Internal Liquidity Sweep Confirmation:

In this entry model, we look for the formation of internal structures or

swing points. When this occurs, and the price breaks structure toward
the extreme swing point in the direction of the trend—confirming that
liquidity was swept at an internal swing point—we then look for potential
trading opportunities

Bearish Example

Setup Checklist

[ ] Is there a clean break of structure with a candle close?

[ ] Was liquidity purged before the move happened?
[ ] Is there any imbalance near our entry level?
[ ] Apply Fibonacci tools to the extreme swing points.
[ ] Place a limit order.

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PUTTING IT ALL TOGETHER

Internal Liquidity Sweep Continuation:

This entry model builds upon the internal liquidity sweep confirmation
model. After printing the confirmation model, we will wait for a new
break of structure in the same direction. Once this occurs and meets all
our criteria, we will anticipate taking one more entry.

Bullish Example

Setup Checklist

[ ] Is there a break of structure?

[ ] Was liquidity purged before the move happened?
[ ] Did the trend continue with a new, valid break of structure?
[ ] Is there any imbalance near our entry level?
[ ] Apply Fibonacci tools to the extreme swing points.
[ ] Place a limit order.

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PUTTING IT ALL TOGETHER

Reversal Continuation:

This entry model is also a trend-following approach, where the goal is to

enter the trend after it has been confirmed to be changing, thereby
avoiding becoming liquidity ourselves. Whenever a potential reversal is
signaled, we wait for a new break of structure before considering
potential entries.

Bearish Example

Setup Checklist

[ ] Is there a break of structure?

[ ] Was liquidity purged before the move happened?
[ ] Did the trend continue with a new, valid break of structure?
[ ] Is there any imbalance near our entry level?
[ ] Apply Fibonacci tools to the extreme swing points.
[ ] Place a limit order.

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PUTTING IT ALL TOGETHER

Reversal External Liquidity Sweep Confirmation:

This entry model is a bit more complex, as we aim to anticipate

being part of a trend reversal. The key takeaway from this model
is that, instead of entering on the potential reversal, we wait for
an additional liquidity sweep of an external swing point to occur.

Bullish Example

Setup Checklist

[ ] Is there a break of structure ?

[ ] Was liquidity purged before the move happened?
[ ] Did price sweep more liquidity before we had a new valid BOS?
[ ] Is there any imbalance near our entry level?
[ ] Apply Fibonacci tools to the extreme swing points.
[ ] Place a limit order.

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PUTTING IT ALL TOGETHER

Reversal Internal Liquidity Sweep Confirmation:

This entry model is a bit more complex, as we aim to anticipate

being part of a trend reversal. The key takeaway from this model
is that, instead of entering on the potential reversal, we look if an
additional liquidity sweep of an internal swing point has occurred.

Bullish Example

Setup Checklist

[ ] Is there a valid break of structure ?

[ ] Did price sweep internal liquidity before the break of structure?
[ ] Is there any imbalance near our entry level?
[ ] Apply Fibonacci tools to the extreme swing points.
[ ] Place a limit order.

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PUTTING IT ALL TOGETHER

Passive vs. Aggressive Entries

The final topic we’ll cover in this blueprint is the difference between
passive entries and aggressive entries, and when to apply them. Most of
the time, we will use our standard entry model. However, there are
instances where the price may not produce clean price action and instead
form internal structure within the trading range before breaking
structure. When this occurs, we can choose to take either an aggressive
or passive approach. Ultimately, this decision depends on what you feel
most comfortable using.

Passive approach to entries

When using the passive approach, we apply the Fibonacci tool to the
entire range, from one external swing point to the other.

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PUTTING IT ALL TOGETHER

Aggressive approach to entries

When using the aggressive approach for entries, we apply the Fibonacci
tool from an internal swing point to an external swing point.

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