Candle By Candle Price Action Analysis on S&P ES Futures

…Okay. So let’s mark our end of the day chart going candle by candle.
And talk about price action…And how price action needs to
…almost force us into a trade.
And price action telling us how much leverage. We should enter that trade with.
…And one of the things I’ve often said I wonder
if I would be a better trader if I deleted every line off my chart.
And every day I started with zero lines and I only traded.
The newly created lines. Because when we do our end of the day charts at the end of the week we
typically have…10 to 40 trades.
With one loser. That’s not a bad percentage.
So let’s play this candle by candle. actually let me use my stream deck so I don’t mess up
…
…One second
here…Okay There’s my button.
We go one candle at a time…All right So as we’re watching
here, my thought at this moment is is this could be a potential.
Level. Could be a potential level.
You have to be careful about drawing it too early because it will tempt you to trade it.
So if you do draw it early just move it out of the way.
That way you know it’s not a level yet Why is this not a level yet
…Anyone.
To Kindle clearance. That is correct Thank you Whoever said that.
We do not have to candle clearance yet. So
…Let’s hit our next replay.
How many candle clearance do we have now…1, 1, 1 not as correct.
So just for the new people I’ll draw this. How many full candles do we have under that level
one where it opened closed the whole thing.
Just one we need two candles in order to draw that level…And let
me hit…The replay button here Oh…So.
We can draw this. I can also add.
My.…Break level there
…
Okay same type of situation here as was up there
…This could be a possible level.
But it’s not. Because we don’t have to candle separation yet.
But I need to visually start seeing that.
I also need to visually start seeing.
That this…As a possum.
break level I wouldn’t quite put it there yet.
So. That’s it. Replay
…Now we have just one candle separation.
I think I’d feel comfortable making that a break at this point…Now we have two candle separation.
And inside of a fair value gap…Okay…We’re liking.
Obviously we’re starting a ladder down sequence.
So if you were to kind of have your own little arrow, Down.
What’s the most optimal trade…It’s a
short and in fact…Boy this is really great.
Because there are no pre-existing lines here.
You’re not even tempted to go long because they’re not on your chart…That’s interesting
thought…Okay.
Now at this point…1, 2, 3, 4, 5 candles.
One of the questions you have to kind of start asking yourself.
If. If price comes back here do I want to go short…
how must this…Price action returned to this level
for me to go short……You know it is 20 points away If
pricing makes it back to this level…R has things
completely changed because now it’s went 20 points the other direction.
Those are some things to ask yourself because as price gets further away, other variable
start entering into it I wish we had two candles and I wish this third one had went right back
up…Or this fourth one would have went right back up.
But now we’re on a fifth candle so it just adds some interesting questions
…
Okay…So what do we have now…We
…can probably say we’re going to add a break level there
…Same situation here We have a fair value gap
…We have a level, but it’s not a level yet where we have one candle clearance.
So just know that’s what I’m going to draw next but maybe I’ll move it out of the way…Okay.
At this point you have two candles…What should it be a thought I have in my mind at
this moment…
Anyone…We have two candle separation
…But how much separation do we actually have…Very little
…Less than two points.
If price came up right now and hit it would you want to take that short
…Anybody want to take a stab at that
answer…And not that there’s a correct answer.
It can be the correct answer for you. Bigger picture…Stop trading
…All right Stop trading.
So if the next candle came up and touched this, I’d be thinking two things
…Good call Johnny.
One I will enter one MES smallest leverage
possible Cause I want to be in the trade Why do I want to be in the trade?
We’re obviously laddering down. That might be my only opportunity.
To have gotten into the trade. So I would do a singular contract here.
Maybe add a contract at the break…And then I would be in the trade
with two contracts and I would feel comfortable with that.
I wish I had more separation but I don’t.
Cause one of the things to notice is did the backside develop…Nope.
The backside did not develop…So this is a higher risk entry
…Higher risk entry…Or you could just be.
Extra discipline and go no I want more separation…I honestly don’t know what’s going to happen So let’s just…replay.
Oh, I like the additional separation…I really liked the additional separation
…All right.
That’s true This year I’d be getting pretty excited I’d be saying to myself Okay.
If it does not hit it. On the next candle I’m out.
And on. even said it on this candle. You need to come up and get me Why?
Because I have three candles right here that camped out right underneath my
level…So I’m not really in love.
Would I be a short yes Why Because we’re laddering down I’m willing to go small just to be in
the short…And after this point, I’m not taking the short.
If I was to take the short it would only be at the break level…
Definitely not interested in the short…All right.
Price is kind of going away So what do we have again
…
We need to candle separation Technically you got to candle separation What’s the problem.
There is no clearance. I’m not taking this trade at all.
I don’t care if there’s a line I don’t care if it’s a fair value gap.
There’s not enough distance There’s not enough.
…Christ movement south So I’m not interested in that trade.
I could care less what it does. And now after seeing that camp out like that, there’s no way in the world.
I would’ve been in that trade
…
Let’s continue with.
This until it runs out of candles and then we’ll go back and mark our levels…Oh
…I missed this one that correct Talked about
…That’s why this is hard to do sometimes.
I missed that. And so let’s talk about this.
…We’re laddering down…I missed this.
Entry but we’re laddering down…Do we want to take the very first opportunity to go long
when you’re laddering down…I would say that’s part of our core strategy rules of
no I do not want to take the first long.
When we’re laddering down I only want to take the second or third.
Bounce…When we have a confirmed laddering up.
Pattern. Do not take the first
…That’s it…That’s
how your chart should look at this very moment Probably…If you wanted to throw in a break level here you…could.
I want to throw in a break level down here you could.
And that’s pretty much what your chart should look like right now…And then if you wanted to you could draw this and say I’m not trading.
Until we get out of this chop zone…One way or the other way
…So that’s
how I would have…Tried to analyze that.
We have a little bit of benefit of…hindsight Cause we just lived it…
…A little bit of how price action tells us whether or not we want to enter a trade because this
is a level…It’s inside of a fair value gap You had two candle clearance.
How much did it clear…That’s the top of the candle Six points…
Three points one day somebody really wanted me to give them a number.
How far away would you like to see price go?
I think the number’s five points. Any of my legacy people have any insight.
And what you would want to see as far as.
A gap in price…Because this has only.
It has. Two points and three ticks
…How far would you like to see it go away?
Any insight in that day Wassily.
Anyone else in here Legacy guys…Nobody’s…Go ahead.
I’m not sure if I’ve ever really looked at Yeah I’ve never put a number on it so I’m not sure.
Me neither I was asked last week and I’m like I’ve never put a number on it.
I just want a nice visual distance., The silly just threw a monkey wrench.
Depends on volatility…So.
…To me this is like marginal it’s right there on the edge.
If this was the second or third ladder up I would take that every day of the week…Let me give
you that price action scenario So let’s say this was
…One…two.
And this was the third I would take that all day long.
No problem…As a first ladder up No thank you…More important
to me as a developed a backside 100% agree…So let’s talk about what Vassily just said and what
I’ve said several times as well…You have.
And my opinion…This valley.
Because you basically got consecutive blue candles coming all the way down I consider.
These are all part of this valley…You’re not only…
don’t have a developed a backside, it didn’t even get back to the backside.
It just went halfway up this range. And started coming down again.
Do I want to go long…With weak price action
…No what should we be looking for Ideally.
Ideally. Oh I love that candle there I would love to another nice candle.
I would have loved another nice candle. I would have loved another nice
candle…I would have loved another nice candle.
Because then I could have taken…This long
…That is going long with strength
…That’s all for backside.
This is going long…With weak.
Strength…Does that make sense
…Yup
…And you have to see it Lots of times.
And what do you have to do? You have to do your end of the day chart.
If you guys just finished the day and wait for me to post your end of the day
charts, your progress is going to be 10 times slower.
Then someone else is doing their own end of the day charts.
Then you throw in the guy who says okay, At the end of the day I’m going to walk through this
three minute day candle by candle Just like we just did.
And on the weekend he’s going to go back and do it again. Monday Tuesday Wednesday Thursday Friday.
He’s going to ReWalk everyday. That guy is going to be.
10 times better than you. And then just a month.
You’re gonna be like how did he get it? He’s just getting it.
No he just worked his tail off…So he can see these patterns over and over
…
…So official.
Three minute end of the day charts. I’m going to mark it.
But I want to also add the note…Don’t take.
burst. Ladder up…And the other note could easily be
…No backside development
…
…You could also am on a three minute I am.
You also have this…What note would I add to that one
…I’m going to put…
…I don’t like the sideways action.
I want to see it go down and come back.
…Not…Great.
Level of development is what I would call it. Not a great level
development…No.
both of those trades worked out…If you took those trades price action should be telling you.
One MES my opinion. You might be in a
different league of money and one EMEA and one ESS.
Nothing and that’s okay. But just…adjust your leverage accordingly.
To what the price action is telling you. Because in both of these cases, What is missing?
There was zero backside development
…Zero backside development.
I want to go over that again. I was like, I was going to ask.
Did anyone want me to go over but I’m not going to do it anyway…Tuesday.
December 6th…I’ll put all those in a folder.
Turn them off…So…Less
…
…
Okay.
Here’s a decent example…So let’s take
…
This…And tire.
Valley
…
Forget what’s happening inside of this What I want you to see?
Price went away. And then it came back to the backside.
This had backside development…Price
was allowed to go get out of this.
Valley. And we had backside development…At
…So.
Christ came down and it went up and then it came back down to this level
…At this moment in
time…There was no backside development.
This…should be smallest leverage If you’re going to take this trade…
Now you know what I would say about this trade I don’t like how we camped out…But if I was
going to take this trade…Which as I’m looking at this
entire picture, one ladder up second ladder up I’m taking this trade.
Even though I don’t like this It’s a second ladder up.
I’m going to do it with one MES because I don’t have backside development.
I don’t like how the candles camped out So this is smallest leverage possible…Then.
got lucky price shot up really strong.
Developed the backside…This is where you go long, much larger
…This is
a better trade location I had backside development.
This is the weakest trade location. Although this trade might’ve made me more.
That’s awesome. I went small…I went small and I benefited from a 10 point run.
And here instead of one contract I might’ve went long with 30.
And I made. 30 times four.
I made three X. Because I was able…to leverage up
because of a better trade location…I was able to add to my trade with backside
development…So when you don’t have backside development, Let’s go back and look at our
example today…
…
I’m going to…cut it off right here…Same scenario.
Here is…The V
…What would we want to see price action Do.
Whoops…
……up.
Now I have backside. Now price can come back and hit I can go along
…This is the exact example we just looked at.
Price came down It went up it came down and hit…A level.
Inside of a valley. that did not have a backside.
Developed. There should be the smallest leverage.
Possible. Or no trade at all.
Why is this a better no trade. What’s the difference between this and the other one.
This is the first ladder up…And, I forgot where it was It was the third ladder.
It was the third ladder up If I remember on our previous example maybe you can go back and watch this recording.
This is the first ladder up with no backside development.
This is a I know I’m not entering this trade. It’s just a rule I have I’m not entering this.
I need to see it start laddering and probably on the second ladder up or the third ladder up I will be entering.
Much more aggressively…First ladder zero Leverage
…Thanks Jordan.
And where would that change? If it if we develop the backside
…Who said that…
Oh thank you Brian…Does that
make sense guys…Yes.
Was that valuable? That helps a lot
. For sure…