Chapter 04
At 8:00 a.m., about an hour and a half before the U.S. equity open, mark every hourly swing point from the previous day up to the current morning, including the overnight London and Asian sessions. If the market has already traded beyond yesterday's range, use the next most recent day that still has untouched levels.
Only mark swing points that have not yet been traded to. A level that price already revisited has had its stops cleared. It is spent. The map should show only the pools of resting orders that are still out there.
This step is deliberately boring and it is the one Kyle warns about hardest: if the levels are wrong, nothing after this works. The whole system reads price against these lines.
The mistake most people make with turtle soup or liquidity-raid concepts is entering the instant price sweeps a level. No confirmation, straight in, and then the market keeps going and takes their stop too.
The daily sweep waits for the hourly candle to close. Price breaks the swing low, and the trade only becomes a candidate when the candle closes back above that low. On the 1-hour chart, that close is the higher-timeframe confirmation that the sweep failed and the reversal is real.
After confirmation, the expectation is that the next few hourly candles print in the trade's direction. That expectation sets the holding period: this is a trade measured in hours, not seconds.
After the 1-hour swing failure confirms, drop to a lower timeframe for the entry: 15-minute, 5-minute, or 1-minute. Kyle looks for displacement, usually a fair value gap, and prefers to enter as price trades away from the level and rejects it rather than as it trades into it.
The stop loss goes at the invalidation point: beyond the low of the failure, the place where the sweep idea is provably wrong. Too tight inside the structure and the market stops you out before the move; if your idea eventually panned out but your stop was hit, the idea was right and the placement was wrong. That distinction is what you study in review.
The target is the nearest pool on the other side: the most recent untraded swing high, or the previous daily high or low. Nothing exotic. The trade is over when the opposing pool gets tapped or the invalidation is hit, and if the invalidation is hit, the day is over too.
No clear structure means no trade. If the market is stuck in consolidation with no sequence of higher highs or lower lows, there is no bias, and without a bias the system does not fire. Sitting on your hands is a position.
Holiday tape is another sit-out. Sessions with a gap in overnight data, like the day after Thanksgiving, make swing failure reads unreliable because the levels were built on missing participation. Kyle marks the levels and stands down.
The pattern behind both rules: the system needs real participants getting trapped at real levels. Thin tape has neither, and a valid-looking pattern on invalid tape is still an invalid trade.