Video Transcript:
One consolidation, expansion. Another consolidation, expansion. Another consolidation. Big push higher. Coming down.
Price comes to trade in this area. Very likely it will trade to this area. Comes down. Trades into this area.
Takes the low, and then for the low—right? It’s… uh… and if I have to—so again, market maker model, right?
One level of consolidation. Let me just change the color.
One…
You can say two…
And you can say three…
…on this chart. And what you want to see is that toward the end, there is an explosive move, which I think it’s really setting up for. And then it comes down, right? So that would be the thing that happens. If I look at it on a 5-minute chart, it’s like—can I make out something like this? Of course I can, right? So, you know, you can start from 3:15—you can—but whatever we are looking at, it’s the same thing. Sometimes viewing it on the 5-minute chart just makes it easier for the eyes to understand and recognize.
Now, here, as you see, there’s a lot of wick. I’ll mark that as something like this right here.
This is the third one, still under that. And this is followed by an explosive move at that level, and then it comes down. Now, during lunch, it can actually keep moving in this area. It can keep on doing whatever it has to do. But I think the best setup will only happen once this is taken out. Otherwise, it’ll be one of those days where it may not do anything—it’ll just chop, chop, chop—and then the real action happens, you know, maybe overnight or whatever. So we’ll have to see.
But given the time—given that it’s still A.M.—this could be… if it’s one of those days… I’ll give you a very important clue. If this is buy side, and pertaining to the time, I’ll give you—you know—what you’ll see here is that if something has to happen today—okay, this is all A.M. session, right? From here, you have 10:05 onward. If this has to happen, then what you’ll see is that the high or the smart money reversal will happen during lunch. It has to happen during lunch.
If it drags beyond lunch, right? And if it’s still consolidating and lunch is long gone, then this doesn’t happen. Everything is also scheduled. The algorithm is based on time as well, right?
But if we actually see a quick burst during lunch, and then a reversal, then there’s a likelihood that price can actually get here and below during the P.M. session. So this will then become the A.M. session, and this sell side of the curve will become the P.M. session.
And your smart money reversal will happen during lunch. This is a typical characteristic. So let’s see when the high forms—what time the high is formed. We still have about 30 minutes before lunch is over. So, I mean, this looks like it’s how it’s setting up, right? The buy, the sell—and the sell is going to be high probability because it also aligns with the higher time frame (HTF) order flow and the draw, which is lower. Makes sense?
As you saw in the earlier section, this is what transpired this A.M. There was a consolidation, followed by two smaller consolidations, with the smart money reversal happening around 2:23 P.M. So when the smart money reversal happens that late, the probability is that during the normal business hours, the sell side of the program would not generally be complete, meaning it won’t reach the sell side liquidity. And that’s exactly what happened. The market closed somewhere here during regular hours and was hanging around here. But as we were discussing in the live session, there was a lot of liquidity built on each side of these consolidation bands, and even the higher time frame liquidity was lower today, as we discussed earlier. And that’s exactly what transpired.
Even though it didn’t really happen during the regular market session, post-market we saw a sudden drop that ran the sell side liquidity.
Things I would point out here: you can make out the market maker buy side model from here to here, and then the sell side of the program. There are certain things pertaining to structure, liquidity, etc., that are in play here. And if the smart money reversal happens around, say, lunch—which is between 12:00 to 1:30 P.M. New York time—then you can also see a total P.M. reversal that pretty much runs the sell side, targeting the A.M. low.
That’s a quick one for today. I hope you found it useful, and I’ll see you in the next one.
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, then click the link below the video and hop aboard. We’re looking forward to trading with you.
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