Video Transcript:
All right, so let’s go over NASDAQ. The good thing is that NQ and ES are perfectly correlated right now, which is exactly what we want to see. We have trend line liquidity and this big one-hour fair value gap right here. On the four-hour chart, that fair value gap is smaller, but it’s still visible. So, we have both a one-hour and a four-hour fair value gap being respected. We also have trend line liquidity right here, which means we’re seeing conflicting draws on liquidity. This is what happened yesterday. Technically, this is the draw on liquidity—it has to be, because we’re defending both the four-hour and the one-hour levels and rejecting from them. So, the odds are that this area is going to be hit first.
That doesn’t mean we can’t take out some liquidity here and then react differently. If you look at the 15-minute chart, that’s the hourly low, but it’s also Wednesday’s low. Here’s Wednesday’s high. Yesterday, we not only traded between Wednesday’s high and low, but also inside Wednesday’s initial balance. This morning, it looks like we’re going to open inside yesterday’s initial balance after failing twice to attract sellers. This is an excellent 15-minute signal right here—strong overnight momentum to the upside, clean target hits, and liquidity taken out. A long right there, with a stop just below that candle and a target at the afternoon highs, gave a 1.75 risk-to-reward. Easy trade. This is exactly what we’re looking for in an entry model.
We delivered from a fair value gap right here. We took internal liquidity, had a fair value gap to the downside that created displacement, then reversed with momentum and had clear targets to the upside. We still have clear targets above, so this trade could keep going. You can see yesterday’s liquidity and additional liquidity sitting above. There’s also a high-volume area here. So even though this should be the main draw on liquidity, it’s still possible to take out several levels above before heading lower. I think this area is much more likely. If we start hitting this zone and turn lower, I’ll be very confident in shorting down here. If we break above, I’ll need more confirmation, even if we do get a rejection. I’d still expect a reaction after trading into this high-volume node right above POC.
To reiterate, on the higher timeframe we are still moving from internal to external liquidity, but it doesn’t have to be a smooth drop. It could be choppy while building liquidity. We have the symposium this morning at 10:00 a.m. and Trump speaking at 12:00 p.m., so we should see volatility and manipulation today. Just be careful, know the key levels, and understand what to look for when price reaches them. Keep in mind the trend line liquidity that’s being run—it’s possible we clear all this trend line liquidity, take out liquidity above, and then run the liquidity below. That way most traders lose, but we would win if that happens. That would be the perfect A++ scenario.
It doesn’t always work out that way, but you know the key levels. Let’s trade around them, stay careful, and have a good day.
Hey everyone, it’s Dale here. I hope you enjoyed the video. If you’d like to trade alongside me and our team of prop firm-funded traders every day, click the link below the video and hop aboard. We look forward to trading with you.
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