Video Transcript:
Hey guys, Dan here from Funded Trader Academy with my trade of the week. So let’s break down this 14-point trade off of a bearish trap setup from this Tuesday, March 10th, during the New York morning session on the S&P 500. So this setup was framed off of a fake move to the downside, taking out a key level shortly after the open, trapping some retail traders, reversing, and rallying. Okay, so we’re going to look at this setup from start to finish, go through some of the details here on the order flow footprint powered by NinjaTrader, and we’re going to see the specific details of what triggered this trade. So let’s get into it.
Before we dial into the specifics here, let’s provide a little bit of broader market context using the volume profile. So if you go back a few days, you can see we’re coming off of this downslide here. Monday was a big relief rally kind of day. Price popped up and created this upper volume node right here. Okay. So as price was coming up, we reclaimed a key psychological level, or we retested a psychological level here at 6,800, right? Failed it right at the close. Overnight session consolidated. London session popped back up. So we have a bit of consolidation at the top, right? Top of the weekly range, a little bit below Friday’s high.
Okay, a couple of things I’m looking for off the open here. I rewound this back to the open to show you what it is I’m looking for before the bell even rings. So a couple of different scenarios that I like to map out beforehand. The very first one: I’d like to see price come up here. If the price off the open surges, I’d like to see price come up here, give me some failure signatures, and rotate back downhill. That was scenario number one. Scenario number two to the upside is price breaks through here, holds, and then offers me an extension back to the upside. Okay, that’d be the breakout scenario.
To the downside, what I’d like to see in this bullish market is primarily price come down here, fail, and rotate back up to the upside. That’s the ideal situation that I would like to see in this particular setup. If that fails to materialize and instead we push through here and hold, I would look for that sell-side extension back to the downside. So those are the four primary scenarios I’m looking at coming into this session here.
So let’s walk through this trade. Here’s your opening candle right here. Price pops up, attempts to reclaim that 6,800 psychological level, fails, and you have this nice push to the downside. However, if you examine this move to the downside, you will see red candle after red candle, yet you have a whole bunch of aggressive buyers stepping in. So what do you have? You have price going down, delta going up—you have a divergence.
To me, when I see this coming off the open or anywhere in a strong move like this, I mark that as a potential fake move. So price comes down here, we have one final push, a little blow-off bottom where we end up trapping some late retail sellers. You can see them on the wicks—aggressive sellers here, flushed. Aggressive sellers here, flushed. Aggressive sellers here and here, all flushed.
We did fail to take out this 6,762 level, which I would have preferred, but as price is coming down, I mark this as a fake move. We took out the London session low here at 6,786 and induced a sell-off from this candle. Then you see price stabilize. You see a shift in control starting to emerge. Then we flip into bullish aggression. You start to see failure wicks, traps, and we begin rotating back up, reclaiming that London low with strong momentum across these candles.
So now I look for that extension, that break of structure off this candle high, and a reclaim of VWAP. And I’m looking for price to push back up here. That’s all I’m really looking for in this trade.
So what do we get? Price breaks through, opens a new candle, pulls back slightly, then continues higher. That bullish energy carries through, triggers my buy stop sitting at the candle high, and we get that final extension push for a nice 14-point base hit trade.
Let’s recap. This was my trade of the week. It was a very simple trade triggered by a fake move to the downside, taking out a key level, then reclaiming it in a failed breakdown pattern. We also saw a clear shift from aggressive selling to aggressive buying, with traps forming at the lows. Once we reclaimed, I looked for a break of structure to the upside toward the nearest swing high, which was right here. That was the trade. Hope that was helpful. We’ll see you.
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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