Terminology

CRT Model Terminology

Grasping the terminology used in this model is crucial for its effective application. This section outlines key concepts and abbreviations.

Sweep

A Sweep is a price action pattern where the price temporarily moves beyond the high or low of the previous candle through its wick but then retreats and closes back within the range of that previous candle. This behavior often signals a false breakout or a market test of liquidity at those levels, suggesting potential reversals or traps for traders.

A Bullish Sweep occurs when the price briefly exceeds the previous candle’s high but fails to sustain above it, closing inside the prior range. Conversely, a Bearish Sweep happens when the price dips below the previous candle’s low but then closes within that candle’s range. Sweeps help traders identify moments where price attempts to push past support or resistance but lacks conviction.

Double Purge (D-purge)

A D-Purge is a more complex form of Sweep where price action aggressively tests both the high and low extremes of the previous candle through its wicks before closing inside that candle’s range. This pattern implies a comprehensive clearing or "purging" of orders on both sides of the market, often signaling a strong liquidity hunt or shakeout.

The last side swept in this process (either the high or the low) indicates the likely direction of market interest or momentum following the purge. D-Purges help reveal hidden liquidity and potential shifts in market control between buyers and sellers.

Change In State of Delivery (CISD)

CISD represents a shift in the market’s price delivery mechanism, reflecting a transition in dominance from buyers to sellers or vice versa. This occurs when the price closes on the opposite side of the opening price relative to the previous delivery state.

For example, a Bullish CISD happens when the price closes above the open of a bearish candle, indicating a potential switch from selling pressure to buying pressure. Similarly, a Bearish CISD marks the reverse, with the price closing below the open of a bullish candle. CISD signals are important because they highlight changes in market sentiment or momentum that may lead to trend shifts.

Mean

The Mean is the midpoint price of the previous candle, calculated as the average of its high and low. It serves as a reference point or baseline against which current price action is measured. The Mean helps traders identify balance areas or fair value zones from which price may either revert or continue trending. If price consistently respects or reacts around this midpoint, it can indicate equilibrium between buyers and sellers, making the Mean a useful level for anticipating support or resistance.

C-area

The C-area refers to the price zone lying between the current candle’s opening price and the midpoint of the previous candle. This area represents a transitional region where price may consolidate or pause before committing to a direction. The C-area can indicate uncertainty or indecision in the market, as the price navigates between the new candle’s open and the established midpoint from the prior period. Monitoring how price behaves within this zone can provide clues about potential breakout or reversal setups.

Projections

Projections are estimates or forecasts of future price movement derived from the dispersion or deviation of price relative to a key reference point, such as the CISD level. They typically use statistical measures like standard deviations to predict the likely extent of price swings or targets.

Projections help traders anticipate where price may reach in terms of potential support or resistance and assess whether the current price movement is extreme or sustainable. When price reaches a high-probability projection level (e.g., two standard deviations away), it may signal exhaustion or a turning point.

Liquidity

Liquidity describes price zones where a large volume of buy and sell orders accumulate, creating significant market interest and often acting as magnets for price action. These areas usually correspond to notable price levels such as swing highs and lows, previous day or week highs and lows, or other structural points where traders cluster orders.

Liquidity zones are critical because they often become battlegrounds for buyers and sellers, resulting in price reversals, breakouts, or stops being triggered. Recognizing liquidity areas helps traders understand where major market moves are likely to originate or conclude.