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This is a transcript from a webinar we did on Reading Market Activity - A full recording is at - https://youtu.be/CRrOa2BP3Yg
On the screen, you'll see the Market Profile chart on the left and the Order Flow chart on the right. The discussion will cover why we focus primarily on market structure, price movement, and volume analysis.
Our core approach prioritizes market structure first, then volume, and finally price action. Good structure attracts volume, and strong volume leads to decisive price movements.
Earlier in the month, I mentioned a change in market structure compared to the seller-dominated months from October through February. Now, midway through March, we see buyers becoming more active. Although buyers haven't fully taken charge yet, sellers seem exhausted, indicating a shift in market dynamics.
However, it's important to remember that markets rarely see a V-shaped recovery. Typically, markets bottom out in a U-shaped pattern, characterized by patience and balance before significant upward moves. This balance phase indicates equal strength between buyers and sellers.
Think of market structure as trekking a mountain. Ascending (buying pressure) and descending (selling pressure) both encounter different degrees of resistance. Market structure helps us understand who has the upper hand, shaping our trading decisions accordingly.
For March, our market outlook was sideways to slightly upward, noting reduced initiative from sellers to push prices lower. This perspective remains valid, as we've not broken February’s lows. Instead, we're moving sideways, entering a balanced market phase, which may lead to an imbalance (a breakout or breakdown) later.
Looking at the weekly profile, we see consistent resistance around the previous gap zone. Currently, the market is clearly in a sideways pattern. To anticipate future moves, we must closely monitor current data, observing if any new significant buying or selling emerges compared to the previous weeks.
Today's session in futures was a classic normal day. The market attempted to go higher early on but failed to sustain above key resistance (22,620 level) and the previous failed auction point. Buyers repeatedly failed at this crucial zone, reflecting weakness at higher prices.
On the downside, today's low (22,500) was supported by last week’s highest volume concentration, indicating strength at these levels. Thus, we currently have a balanced market with limited momentum.
Looking ahead, the market remains balanced, which means tempering expectations for big, swift moves. Significant movements, if they occur, will likely target:
Upside Targets: Above 22,620, aiming towards 22,750 initially, and possibly up to the 22,850–22,900 zone.
Downside Targets: Below 22,500, targeting 22,350 first and possibly 22,190–22,200, an area of strong historical support.
Should the market remain balanced without breaking out, expect quieter, range-bound trading conditions.
The Order Flow analysis today indicated early buyer enthusiasm that quickly fizzled out, giving way to initiative selling. Yet, sellers also failed to generate meaningful supply at lower levels, suggesting neither side is currently strong enough for a decisive move.
Key Order Flow highlights:
Early morning buying attempts failed around resistance.
Initiative selling signals (IS) emerged, limiting upward moves.
Despite sellers pushing lower, limited supply indicated by zeros on the supply side implies weak selling interest.
The market’s normal day today reinforces a balance condition—neither buyers nor sellers have definitive control at this juncture.
High-quality trade setups in Order Flow involve:
Initiative Selling (IS): Activated below the low of the IS candle, stop-loss above its high. Today's IS offered a profitable short opportunity.
Initiative Buying (IB): Though IB signals appeared, they failed activation today. Watch these carefully tomorrow for potential activation if prices break above critical resistance (22,620).
Always maintain disciplined risk-reward management. Aiming for a 1:1 to 1:3 risk-reward ratio is advisable for such setups.
full link at - https://youtu.be/CRrOa2BP3Yg
Or on X at - https://x.com/Am_Shai/status/1901596949620670824
