Correct application of Auction Market Theory and OrderFlow can keep you on the right side of trades. Charts have all the information- only a proper device (read system) is needed to read them. Our device is AMT + Orderflow.
The charts below are posted every evening in the trade plan and the continuity is to be noted.
We know September series started with a gap open last Monday at 8016 Futures and today we traded upto 8197 F.
On the 2nd of Sept, OrderFlow showed us a divergence even as price printed 8139 we knew that strong hands were not behind the move.
1) Here is the chart of last tuesday annotated with the notes :
We noted the weak upauction from 8075 and spoke of a repair by seeing if the Market would return to 8075 and get us stronger buyers
2) This is the chart of the next session and NF traded above 8140 to 8173 and even as it did that we noted shorts coming in at 8173 F
Chart was annotated at the close that same evening. That was on Wednesday last
3) Now Thursday’s chart . We got a visit to 8092 during the session and we noted that the buy volumes were higher at 8092 and we thought the repair was done and the market was free to run upto 8192/ 8228.
Post that visit we were looking at friday for an auction continuation above 8140.
4) Friday’s chart : The market on friday got other ideas and said that 8092 was not enough and it wanted 8075 !!. So off it went to check the interest there
Our notes at the close clearly mentioned that the initial selling seen that day was weak and the market showed strong response at 8072 and enough buying at the close.
5) Today’s chart :
Contrast today’s chart with that of point 2) above on September 3 when NF did 8140- 8173 like most of today and it was easy to see that the selling was getting absorbed and the market would break over 8173 eventually.