Price in the foreign exchange market isn't random. It's delivered by a set of logical rules and procedures known as the Interbank Price Delivery Algorithm (IPDA). Think of it as the market's operating system, processing huge volumes of institutional orders to create the price action we see on our charts. This algorithm doesn't guess; it references past data to determine future price delivery.

To understand where price is going, we first need to understand what data IPDA is looking at. It primarily operates using specific look-back periods, which act as its frame of reference for supply and demand.

IPDA uses a rolling window of past data to define its operational range. The most significant periods are the recent 20, 40, and 60 trading days. These aren't arbitrary numbers; they correspond roughly to one, two, and three months of market activity. This is the dataset the algorithm uses to determine fair value.

• 20-Day Look-back: Reflects short-term institutional sentiment and order flow.
• 40-Day Look-back: Gives a medium-term perspective, often capturing a significant swing within a larger trend.
• 60-Day Look-back: Provides the dominant, near-quarterly context. This is the most important range for identifying major shifts in the market.

Approximately every 90 days, the market experiences what ICT calls a Quarterly Shift This is a fundamental reset. Institutional sentiment changes, large positions are rebalanced, and the algorithm establishes a new, large-scale directional bias. This shift is the engine that creates major swing points on the daily chart.

How do we spot a Quarterly Shift? We look for a significant price displacement on the daily chart that causes a Market Structure Shift (MSS). This occurs when price decisively breaks a previous swing high in a downtrend, or a previous swing low in an uptrend. This break signals that the old dealing range is no longer valid and a new one is being formed.

Once a Quarterly Shift establishes a new dealing range (typically using the 60-day high and low), we can divide that range into two zones. The midpoint of the range is called Equilibrium.

• Premium: The area above Equilibrium. In a bullish market, institutions look to sell in a premium. In a bearish market, this is their ideal entry zone for short positions.

• Discount: The area below Equilibrium. In a bullish market, this is the ideal zone for institutions to buy. In a bearish market, it's where they look to take profits on their shorts.

The algorithm's goal is to seek efficiency by returning to these zones. After a strong move up, it will often retrace back into a discount to pick up more buy orders before continuing higher. The specific price levels within these zones that attract price, such as order blocks and fair value gaps, are known collectively as the Premium/Discount Array

Let's review these core concepts before testing your knowledge.

Now, let's see if you can apply these ideas.

By mapping these data ranges and identifying the quarterly shifts, you gain a powerful framework for understanding the market's narrative and anticipating its next major move.