Market States and the ICT Interpretation Layer
Describe four observable market states before connecting them to ICT reference language.
After the foundation, ask a simple question: what is price doing now? ICT Month 1 repeatedly uses four states. Treat them first as ordinary descriptions of a sequence, then as a framework layer.
Four observable states
Expansion is a clear departure from an old area, often with more directional candles and less overlap. It shows that price is leaving; it does not say that following the move is appropriate.
Retracement is a move back against a prior expansion. It remains a retracement only while the earlier structure is still a useful explanation. An opposite candle alone does not prove reversal.
Reversal means the earlier directional explanation has been damaged and a competing movement is being established. Look for failed continuation, a meaningful structural change and follow-through rather than one candle.
Consolidation is repeated overlap inside a range without a clear departure. It is a reason to reduce narrative confidence, because small internal breaks do not automatically establish a new direction.
How ICT adds interpretation
ICT connects these states with order blocks, FVGs, liquidity references, pools and equilibrium. A safe translation is: state provides the background in which a reference may matter. The label does not prove a hidden mechanism, a market-maker intention or a required path.
Participant language can be useful as a question: why might an obvious high or low attract attention? It becomes unsafe when a chart label is treated as proof that a particular participant acted. Say “the ICT framework interprets this as …” and keep the visible evidence separate.
Practice
Choose a timeframe and range. Write which state is closest, list the visible evidence, and finish with what the state cannot establish. If the evidence conflicts, use “mixed” or “insufficient evidence” instead of forcing a label.
Boundary
This lesson identifies states and explains the interpretation layer. It does not turn a state into a signal, fixed session route or prediction.