Change In State of Delivery (CISD) Explained: How to Identify and Trade It
A Change In State of Delivery (CISD) is a trading concept used by price action traders (also known as SMC or ICT Traders). A CISD occurs when there is a sudden momentum shift from bullish to bearish, or vice versa, signaling a potential market reversal. A bullish CISD indicates that the current market momentum will shift from bearish to bullish, leading to an increase in price. A bearish CISD indicates that the current market momentum will shift from bullish to bearish, leading to a decrease in price. In this guide you will learn how to identify and trade the CISD pattern.
What is a Change In State of Delivery (CISD)?
A Change In State of Delivery (CISD) is a reversal trading pattern where price’s momentum shifts suddenly from bearish to bullish or vice versa. A CISD can be used as an early signal of a market reversal. This concept focuses on key levels where price sweeps liquidity before sharply reversing direction.
How to Identify a Change In State of Delivery (CISD)
A Change In State of Delivery (CISD) is formed when price sweeps liquidity at a key level and quickly reverses.
How to Identify a Bullish CISD
To identify a bullish CISD, start by confirming the market is in a downtrend. Look for this structure: A High (H), followed by a Low (L), Lower High (LH), and Lower Low (LL). Next, mark key levels such as the lows from the previous session, day, week, or month. Wait for price to sweep one of these levels by trading below it and quickly coming back above. Finally, mark the opening price that initiated the most recent downtrend or series of bearish candles. A bullish CISD occurs when price closes above this level.
How to Identify a Bearish CISD
To identify a bearish CISD, start by confirming the market is in an uptrend. Look for this structure: A Low (L), followed by a High (H), Higher Low (HL), and Higher High (HH). Next, mark key levels such as the highs from the previous session, day, week, or month. Wait for price to sweep one of these levels by trading above it and quickly coming back below. Finally, mark the opening price that initiated the most recent uptrend or series of bullish candles. A bearish CISD occurs when price closes below this level.
How to Trade With Change In State of Delivery (CISD)
A Change In State of Delivery (CISD) should be used as a form of confluence in trading, rather than a standalone buy/sell signal. A bullish CISD suggests that price will continue rising, meaning you should look for long trade opportunities after one forms. A bearish CISD suggests that price will continue dropping, meaning you should look for short trade opportunities after one forms.
CISD Long Trade Example
In this trade, a bullish CISD forms, meaning we should look for long trade opportunities. The bullish candles that led to the CISD formed a bullish Fair Value Gap (FVG). Once price retraces to the FVG, you can take a long entry, setting your stop loss below the FVG and taking a 1:2 risk-to-reward trade.
CISD Short Trade Example
In this trade, a bearish CISD forms, meaning we should look for short trade opportunities. The bearish candles that led to the CISD formed a bearish Fair Value Gap (FVG). Once price retraces to the FVG, you can take a short entry, setting your stop loss above the FVG and taking a 1:2 risk-to-reward trade.
CISD vs. CHoCH
Although a CISD and Change of Character (CHoCH) may look similar at first, they have a few differences. A CISD forms quickly and is an extremely early sign of a reversal. However, a CHoCH only forms when there’s a clear break in market structure, such as swing highs or lows, signaling a trend reversal. A CISD will typically form before a CHoCH. Also, a CISD relies heavily on key levels, while a CHoCH uses swing points. You can learn how to identify and trade with a CHoCH in this article.
What are key levels to watch when identifying a CISD?
Key levels to watch when identifying a CISD include areas where liquidity accumulates, such as support and resistance levels, daily or weekly highs and lows, and significant price points like the daily or weekly opening price. These levels often act as critical areas where price sweeps liquidity before a potential reversal.
What is the difference between a CISD and CHoCH?
A CISD is an early indication of a potential market reversal, characterized by a sudden momentum shift at key levels. In contrast, a CHoCH requires a clear break of market structure, such as swing highs or lows, confirming a trend reversal. CISD typically forms before a CHoCH and emphasizes liquidity sweeps, while CHoCH focuses on structural breaks.
What is the best timeframe to trade a CISD?
You can use a CISD on any timeframe. However, it's recommended to use a higher timeframe when analyzing if the CISD occurs during a trending market or a consolidating market, ensuring you have a bigger-picture look at the market and don't take unfavorable trades.