What You Will Learn
Smart Money Concepts (SMC), rooted in the ICT (Inner Circle Trader) methodology, offer a framework for understanding how institutional traders move markets. While retail traders watch indicators like RSI and MACD, institutions operate through order flow — accumulating and distributing large positions in ways that leave identifiable footprints on price charts.
Journely automates the detection of these institutional footprints. Instead of spending hours manually marking up charts, you can ask the AI to identify market structure shifts, order blocks, fair value gaps, and liquidity levels — across any stock, any timeframe. This tutorial walks through the full ICT analysis workflow using Journely.
- Market structure — identify the prevailing trend through higher highs/lows or lower highs/lows and detect breaks of structure (BOS) and changes of character (CHoCH)
- Order blocks — locate institutional supply and demand zones where large players accumulated or distributed positions
- Fair value gaps — find price imbalances (FVGs) that act as magnets for price to revisit
- Liquidity analysis — identify where stop losses cluster and how smart money engineers liquidity sweeps before reversals
- Trade setup synthesis — combine all ICT elements into a actionable trade thesis with defined entry, stop, and target
Step-by-Step: ICT Analysis with Journely
Map the Market Structure
Everything in ICT starts with market structure. Before looking at any setup, you need to know the direction of the prevailing trend and whether it is intact or shifting. Journely identifies swing highs and swing lows, marks breaks of structure (BOS), and flags any change of character (CHoCH) that signals a potential trend reversal.
Current structure: Bullish. NVDA has been printing higher highs (HH) and higher lows (HL) since the October swing low at $108.
Key swing points: Swing low at $108 (Oct 26), swing high at $152 (Dec 2), higher low at $128 (Jan 6), higher high at $149 (Jan 22), current higher low forming near $131.
Break of structure: The most recent bullish BOS occurred when price broke above the $140 swing high on January 15, confirming the uptrend continuation. No change of character (CHoCH) detected — the bullish structure remains fully intact.
Critical invalidation: The bullish structure would break if price closes below $128 (the most recent higher low). A daily close below that level would constitute a CHoCH and signal a potential shift to bearish structure.
BOS vs CHoCH: What Is the Difference?
A Break of Structure (BOS) confirms the existing trend — a higher high in an uptrend or a lower low in a downtrend. A Change of Character (CHoCH) signals a potential reversal — it occurs when the trend fails to make a new high/low and instead breaks the most recent swing point in the opposite direction. CHoCH is the first warning sign that smart money may be shifting direction.
Identify Order Blocks
Order blocks are price zones where institutional traders placed large orders. A bullish order block is the last bearish candle before a strong move up — it represents where institutions were buying while price appeared weak. A bearish order block is the last bullish candle before a strong move down. These zones often act as powerful support and resistance when price returns to them.
Bullish order blocks (demand zones):
OB1: $126.40-$130.20 — Formed on January 3-6 during the higher low. This was the last cluster of bearish candles before the impulsive move from $128 to $149. High-probability demand zone. Has been tested once (Jan 27) and held with a strong bullish reaction — confirming institutional demand.
OB2: $108.50-$113.80 — The October swing low order block. This is the origin of the entire current uptrend. Untested and represents the strongest institutional accumulation zone on the chart. Only relevant on a deep pullback.
Bearish order blocks (supply zones):
OB3: $148.60-$152.40 — Formed at the December high before the pullback to $128. This is the last bullish candle before distribution. Price has not yet cleanly broken through this zone. Expect resistance on the first test.
Confluence: OB1 ($126-$130) aligns with the 50-day moving average ($129), creating a high-probability demand zone with both ICT and traditional technical confluence.
Spot Fair Value Gaps
Fair value gaps (FVGs) are three-candle patterns where the middle candle is so impulsive that it leaves a gap between the wicks of the first and third candles. This gap represents an imbalance in price — institutions moved price so aggressively that not all orders were filled. Price tends to return to these gaps to "rebalance" before continuing in the original direction.
Bullish FVGs (below current price, acting as support):
FVG1: $132.80-$136.40 — Created on January 13 during the impulsive move from the higher low. This gap remains completely unfilled and sits right above the OB1 order block. If price pulls back, this is the first level where institutional buyers may step in.
FVG2: $115.20-$119.60 — Created during the November rally. Partially filled during the December pullback (price reached $117.40) but the lower portion remains open. Deep support level.
Bearish FVGs (above current price, acting as resistance):
FVG3: $146.80-$149.20 — Created during the December sell-off candle. This gap sits within the bearish order block zone. Expect price to struggle here on the first approach. A clean break and close above $149.20 would be very bullish.
Trading implication: The $132-$136 zone (FVG1 + OB1 proximity) is the highest-probability pullback entry zone. Multiple ICT concepts converge here.
Check Liquidity Levels
Liquidity, in the ICT framework, refers to clusters of stop-loss orders sitting above swing highs (buy-side liquidity) or below swing lows (sell-side liquidity). Smart money deliberately drives price into these levels to fill their large orders against the stop losses of retail traders. Understanding where liquidity sits tells you where price is likely to be drawn — and where reversals often occur.
Buy-side liquidity (above current price):
BSL1: $152.40 — All-time high from December. This is the most obvious liquidity pool on the chart. Every swing trader with a short position has stops above here. Smart money will target this level. When (not if) price reaches $152, watch for either a sweep and rejection (bearish) or a clean breakout with follow-through (continuation).
Sell-side liquidity (below current price):
SSL1: $128.00 — Most recent higher low. Breakout traders who went long at the BOS have stops below here. A sweep of this level would trigger stop losses and create a buying opportunity for institutions.
SSL2: $108.50 — October swing low. This is the ultimate stop-loss cluster for the current uptrend. Only gets swept in a major correction.
Recent liquidity event: Sell-side liquidity at $131 was swept on January 27 before the sharp reversal higher. This is a classic ICT pattern — smart money pushed price below the obvious level, triggered retail stops, filled their buy orders, and then drove price up. The reversal from the SSL sweep validates the bullish bias.
Why Liquidity Sweeps Matter
Institutions cannot simply place market orders for millions of shares — they need counterparty liquidity. By driving price into stop-loss clusters, they trigger a wave of sell orders from stopped-out traders, which institutions buy against. This is why price often reverses sharply after sweeping a key low. Recognizing this pattern prevents you from being the liquidity that smart money consumes.
Get the Trade Setup
With market structure, order blocks, fair value gaps, and liquidity mapped out, ask Journely to synthesize everything into a trade setup. The AI combines all ICT elements with risk management to present a structured thesis with entry zones, stop placement, and profit targets — all grounded in the institutional footprints identified above.
Bias: Bullish. Market structure is intact (HH/HL), the recent sell-side liquidity sweep at $131 confirmed institutional buying, and the primary order block at $126-$130 held.
Entry zone: $132-$136 (bullish FVG + proximity to tested OB1). This is the optimal pullback entry where multiple ICT concepts converge. An aggressive entry can be taken at the top of the FVG ($136); a conservative entry at the lower bound ($132) where the order block begins.
Stop loss: $125.50 — below the OB1 order block at $126.40. If price breaks through the institutional demand zone, the bullish thesis is invalid. This gives 5-8% risk from the entry zone.
Target 1: $149 — bearish FVG zone. Expect resistance here as price rebalances the December gap. Take partial profits (50% of position).
Target 2: $152.40+ — buy-side liquidity at the ATH. If price breaks through the FVG resistance at $149, it will be drawn to the liquidity above $152. Trail stop to breakeven at Target 1.
Risk/reward: Entry at $134 (mid-FVG), stop at $125.50, T1 at $149 gives a 1:1.76 R:R. Holding to T2 at $152 gives 1:2.12 R:R. This is a favorable setup with institutional backing.
Key Takeaways
- Structure first, always — never look for order blocks or FVGs without first establishing the market structure direction. Trading against structure is the most common mistake in ICT
- Confluence increases probability — the strongest setups occur where multiple ICT concepts overlap. An order block that aligns with a fair value gap and sits near a recent liquidity sweep is far more reliable than any single element alone
- Liquidity is the magnet — price does not move randomly. It moves from one liquidity pool to the next. Understanding where stops are clustered tells you where price is headed
- Sweeps before reversals — smart money consistently sweeps obvious stop-loss levels before reversing. If you see price dip below a key low and immediately reverse, institutions are likely accumulating
- Define risk before entry — every ICT setup should have a clear invalidation level (below the order block for longs, above it for shorts). If the institutional zone fails, the thesis is wrong — exit without hesitation