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February 14, 2023 ES Live Commentary CPI Release
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February 14, 2023 ES Live Commentary CPI Release

Foreign Cooks Twitter Check

The speaker requests confirmation from the audience on Twitter regarding the audio quality before delving into the discussion about CPI numbers.

Audio Confirmation and Disclaimer

  • The speaker asks for a "five by five" tweet on sound quality.
  • Emphasizes that today's discussion on CPI numbers is not a recommendation for live trading due to uncertainty.
  • Stresses the unpredictability of CPI movements and advises against trading based on his commentary.
  • Urges caution for new traders, recommending against trading before the upcoming CPI release.

Market Analysis and Strategy

The speaker provides insights into market analysis, liquidity levels, and potential price movements related to the upcoming CPI data release.

Market Analysis and Liquidity Levels

  • Mentions historical volatility of up to 50 to 100 handles post-CPI release.
  • Observes buy-side liquidity near the 4208.50 level, anticipating potential price movements around this area.
  • Highlights the risk associated with trading around CPI releases due to rapid and unforgiving market reactions.

Review of Previous Trading Sessions

Reflecting on previous trading sessions, focusing on gap strategies and market responses.

Gap Strategies and Market Response

  • Discusses gap strategies involving premium or discount arrays in previous sessions.
  • Analyzes responses to new week opening gaps (NWO G) as support/resistance levels throughout the week.
  • Advises adjusting trading strategies based on market consolidation around support/resistance levels like consequent encouragement.

Intraday Trading Insights

Provides intraday trading insights based on candlestick patterns, liquidity pools, and retail support/resistance dynamics.

Intraday Trading Dynamics

  • Examines candlestick patterns for intraday trading decisions.
  • Explores liquidity pools' impact on price movements during intraday sessions.
  • Demonstrates how retail support/resistance levels influence short-term market behavior but are subjective in nature.

Detailed Analysis of Trading Strategies

In this section, the speaker provides a detailed analysis of trading strategies based on market movements and fair value gaps.

Understanding Market Movements

  • The speaker observes the market movement at 8:30 and notes a buy signal outside of efficiency in the upper quarter of the 15-minute fair value gap.
  • A small gap is identified within the market structure, emphasizing specific candle highs.

Technical Difficulties and Market Observations

  • Technical difficulties are encountered with audio feedback, impacting sound quality during the session.
  • The speaker highlights a significant market movement reaching into the fair value gap, followed by retracement to the upper quadrant.

Utilizing Fair Value Gaps for Trading Decisions

  • The importance of fair value gaps is emphasized for traders, focusing on sensitivity around midpoint levels.
  • Traders are advised to monitor fair value gaps for bullish signals and avoid filling gaps to maintain an open position.

Market Structure Analysis and Algorithmic Insights

  • Detailed analysis of market structure shift towards respecting rally through buy side levels is discussed.
  • The significance of fair value gap maintenance as a breakaway cap for price support is highlighted.

Algorithmic Trading Strategies and Price Action Analysis

  • Exploring algorithmic trading strategies in determining standard deviations within micro-market structures.
  • Understanding price action trigger points for identifying bullish market shifts in trading strategies.

Detailed Analysis of Trading Strategies

In this section, the speaker delves into analyzing price action and volume imbalances to inform trading decisions.

Analyzing Price Action

  • The speaker discusses the significance of a bullish order block formed between a high and low in price action.
  • Emphasizes the importance of observing fair value gaps and the implications when price trades back within them.
  • Highlights sensitivity to buying occurrences at specific price levels, focusing on small price differentials for decision-making.
  • Introduces the concept of macro analysis based on time intervals, indicating potential bullish movements within specific time frames.
  • Mentions buy-side levels as key areas for potential market movement, linking them to institutional market structure and liquidity pools.

Utilizing Market Structure for Trading Decisions

This segment explores leveraging market structure and liquidity pools for strategic trading approaches.

Market Structure Integration

  • Discusses using market structure alongside institutional strategies and liquidity pool analysis for informed trading decisions.
  • Emphasizes setting targets based on standard deviations from highs to lows, aligning with short-term market movements.
  • Notes the tendency of markets to smooth out price movements by not stopping precisely at tick levels due to bid/ask dynamics.

Intraday Trading Strategies Based on Market Dynamics

The speaker elaborates on intraday trading strategies influenced by market shifts and fair value gaps.

Intraday Trading Insights

  • Explores how traders can capitalize on intraday volatility by adapting to shifting market structures and identifying key entry points.
  • Discusses utilizing liquidity insights to anticipate future price movements based on fair value gap interactions.
  • Illustrates how subsequent market movements can be predicted by observing encroachments into fair value gaps, guiding trade direction.

Strategic Target Setting Using Market References

This part focuses on setting strategic targets based on reference points within market structures.

Target Setting Strategies

  • Explains the significance of respecting upper boundaries in fair value gaps for optimal trade outcomes.
  • Details the importance of recognizing various levels within fair value gaps for effective trade management and decision-making.

Trading Strategies and Market Analysis

In this section, the speaker delves into advanced trading topics, discussing strategies for market analysis and decision-making.

Understanding Market Dynamics

  • The speaker highlights the significance of the last minute of trading, emphasizing the price levels of 41.50 and 41.50 and a quarter as crucial exit points for limit orders.
  • Personal anecdotes are shared, with mentions of significant events like the speaker's wedding anniversary, Valentine's Day, and his son's birthday. These personal insights provide context to the trading environment discussed.
  • The speaker reflects on his son's soccer team achievements, showcasing humility by acknowledging his son's skill level relative to his talented teammates.

Analyzing Market Gaps

  • Discussion shifts towards analyzing new week opening gaps as real fair value points that attract market interest. The speaker emphasizes the importance of tracking these gaps for market understanding.
  • Detailed explanation is provided on how markets gravitate towards new week opening gaps as points of interest for traders seeking fair value pricing.

Market Behavior and Liquidity

  • The concept of market behavior in relation to liquidity is explored, highlighting how large funds drive market movements based on order flow rather than retail trader actions.
  • Observations on buy-side activity and references to influential traders like Tom Hougaard add depth to discussions on market dynamics and institutional strategies.

Market Volatility and Risk Management

This segment focuses on navigating market volatility, risk management strategies, and cautionary advice for traders during turbulent periods.

Navigating Volatile Markets

  • Detailed analysis is provided on market movements around previous week's new opening gap, illustrating how price action interacts with key levels within this framework.
  • The speaker outlines a sequence of price movements around new week opening gaps, emphasizing key levels such as old highs as potential entry or exit points based on institutional order flow dynamics.

Risk Mitigation Strategies

  • Cautionary advice is given regarding entering volatile markets without proper risk management measures in place. Traders are warned against impulsive decisions that could lead to financial losses.
  • Emphasis is placed on observing market behavior post-CPI release to identify opportunities for capitalizing on inefficiencies while maintaining a cautious approach due to potential rapid price fluctuations.

Understanding Market Analysis

In this section, the speaker delves into market analysis, focusing on gaps in daily charts and the impact of economic indicators like the CPI number on trading decisions.

Analyzing Daily Chart Gaps

  • The speaker notes a small gap in the daily chart above the current level, emphasizing its significance for potential future movements.
  • Referring to specific dates in August 2022, highlighting a liquidity void represented by an actual gap on the chart.
  • Discussing how a bullish turn following CPI data could lead to trading into the identified daily gap for longer-term analysis.

Observations and Market Levels

  • Pointing out the range of the daily chart gap that hasn't been filled yet, indicating expectations for future price action.
  • Mentioning a key upside level at 420.850 as the next target for traders.

Interpreting Price Movements

This segment focuses on interpreting price movements based on market conditions and indicators like the Dollar Index.

Evaluating Market Liquidity

  • Ceasing buy-side actions after reaching an old fair value gap, monitoring Dollar Index movements for potential insights.
  • Observing Dollar Index nearing a significant low from February 9th and anticipating possible reactions in ES trading based on this movement.

Considerations Post Economic Data Release

  • Cautioning against premature decisions post-CPI release, emphasizing ongoing observation of market dynamics before making trading moves.

Analyzing Trading Patterns

Delving into intraday trading patterns and cautious approaches to decision-making amidst market fluctuations.

Intraday Trading Strategies

  • Transitioning to shorter timeframes post-clearance of buy-side positions, assessing price behavior for potential entry points.
  • Drawing parallels between current market movements and historical patterns like non-farm payroll days to guide decision-making processes.

Patience in Trading Decisions

  • Emphasizing patience during volatile periods, waiting for clear signals before taking bullish stances or entering trades.

Market Analysis Strategies

Exploring strategies related to analyzing breakers and identifying opportunities within evolving market conditions.

Assessing Breaker Signals

  • Encouraging comparison between manipulated days like CPI releases with regular trading days to gauge breaker effectiveness in driving price movements.

Clarity in Decision-Making

Foreign Currency Analysis

In this section, the speaker discusses foreign currencies, focusing on the pound-dollar and euro-dollar pairs, analyzing their potential movements in the market.

Analyzing Foreign Currencies

  • The speaker advises caution regarding foreign currencies potentially dropping down, highlighting a specific sell-side point for pound-dollar at 121.35.
  • Observations suggest that both buyers and sellers are active in the foreign currency market, with a preference towards not being a buyer currently due to certain trends in euro-dollar and cable (British pound versus US dollar).
  • Notable divergence patterns are observed between euro-dollar and British pound, indicating potential upward movement for euro and indices.

Market Trends and Observations

This segment delves into market trends, particularly focusing on bonds' impact on currency movements and anticipating price fluctuations based on various indicators.

Market Insights

  • Bonds are identified as not providing significant assistance currently, contributing to delays in market movements.
  • The relationship between equities and foreign currencies is discussed, suggesting that a higher dollar signifies risk-off sentiment while lower foreign currencies indicate risk-on behavior.
  • The speaker utilizes bond yields analysis to confirm or negate price runs in ES (S&P 500 futures) and Forex markets, emphasizing the importance of divergences for decision-making.

Technical Analysis Strategies

This part focuses on technical analysis strategies such as SMT (Smart Money Technique), examining patterns across different instruments like Dow futures and NASDAQ to predict short-term market movements.

Technical Analysis Insights

  • SMT is applied to analyze Dow futures against NASDAQ performance, identifying bullish near-term signals despite minimal significance at present.
  • Emphasis is placed on monitoring gaps in ES trading for potential support or resistance levels influencing price actions.

Fair Value Gap Strategy

In this section, the speaker discusses the Fair Value Gap strategy and how to utilize it for trading decisions.

Understanding Fair Value Gap Levels

  • The speaker explains three specific levels within the Fair Value Gap and how they can be used for entry points in trading.
  • Emphasizes the importance of not letting a trade go against set rules, highlighting the significance of having clear stop-loss levels based on the Fair Value Gap.
  • Discusses the necessity of adhering to predefined rules and processes in trading to avoid emotional decision-making when a trade is not favorable.

Importance of Capital Preservation

  • Stresses the critical role of capital preservation in trading, emphasizing that preserving capital should be prioritized over aggressive leveraging or maximizing profits.
  • Compares having no money in an account to being unable to move a luxury vehicle without fuel, reinforcing the idea that without capital, one cannot engage effectively in trading activities.

Influential Price Action Factors

This part delves into influential factors affecting price action and emphasizes specific levels and gaps for strategic trading decisions.

Strategic Trading Levels

  • Highlights orders below certain levels indicating potential buying interest and selling stops, underscoring how these levels influence market dynamics.
  • Clarifies that a rally above a Fair Value Gap triggers a specific protocol involving support at various defined levels, emphasizing the importance of clear boundaries in trading decisions.

Imbalances and Price Action

  • Explains imbalances as differences between candlestick lows and highs, illustrating how these imbalances impact price movements and signal potential market directions.

Detailed Analysis of Trading Strategies

In this section, the speaker delves into the importance of focusing on downside consequences in trading strategies and emphasizes the need for patience and discipline in managing trades effectively.

Importance of Downside Consequences

  • The focus on downside consequences is crucial to cleaning up the sell side below specific lows, allowing traders to make informed decisions.
  • Impatience and impulsivity can lead to reckless trading behavior, akin to risking driving under the influence. Patience and self-control are essential in managing trades effectively.
  • Emphasizes the significance of finding setups that resonate with individual preferences and insights, reinforcing the importance of sticking to familiar strategies.

Waiting for Market Structure

  • Highlighting the necessity of waiting for clear market direction post-opening session at 9:30 a.m., underscoring the importance of observing price action before making trading decisions.
  • Discusses waiting for price movements towards specific levels like 4137.25 and 4135.25 as potential trade setups while cautioning against entering aimlessly without clear setups.

Analyzing Market Movements

  • Mentions repricing towards previous week's opening gap levels as a potential opportunity for traders, emphasizing the value of identifying repetitive patterns in price action.
  • Encourages novice traders to look for consistent patterns resembling "cookie-cutter" setups that offer clear entry points based on observable market movements.

Interpreting Price Action

  • Advises focusing on where orders may be resting rather than relying solely on indicators or patterns when analyzing price action, highlighting the importance of understanding market dynamics beyond surface-level observations.
  • Stresses interpreting candle bodies over wicks to discern market sentiment accurately, indicating potential sell-side movements towards specific levels like 4137.25 or 4135.25 based on observed price behavior.

Detailed Market Analysis and Trading Strategies

In this section, the speaker delves into market analysis and trading strategies, emphasizing the importance of specific levels and patterns in making informed decisions.

Analyzing Price Movements

  • The speaker discusses the significance of observing price movements and mentions the accumulation of shorts by smart money at certain levels.
  • Emphasizes the importance of monitoring key levels such as 1.2135 in pound dollar for potential shifts in market sentiment.
  • Reflects on the rewarding nature of identifying fair value gaps based on scientific measurements rather than random occurrences.

Utilizing Specific Levels for Decision Making

  • Stresses the use of specific levels derived from fair value gaps to determine market direction, highlighting a structured approach over ambiguous indicators.
  • Explains how staying below certain consequential levels indicates a bearish outlook for the day, underscoring the need to consider previous opening gap highs for decision-making.
  • Advocates for a logical and systematic process in framing a narrative to establish a bias for trading sessions, emphasizing the importance of rationale over conjecture.

Market Trends and Trading Strategies Continued

This segment focuses on ongoing market trends, technical analysis, and strategic considerations essential for effective trading decisions.

Monitoring Market Dynamics

  • The speaker requests an audio check while discussing key market indicators like previous week opening gap lows and fair value gaps.
  • Highlights the significance of early session lows and emphasizes the need to surpass specific high levels to potentially shift towards bullish sentiments.
  • Discusses transitioning biases based on price movements above critical levels, outlining strategies for navigating fair value gaps effectively.

Objective Analysis vs. Subjective Approaches

  • Contrasts objective imbalances with subjective trend lines, stressing the importance of precise data interpretation over generalized analysis concepts.
  • Critiques herd mentality in trading decisions, advocating for individualized approaches rooted in algorithmic market understanding rather than collective analysis methods.

Insights on Forex Trading Strategies

This part delves into specific Forex trading strategies, focusing on practical approaches to leverage market dynamics effectively.

Leveraging Data for Decision Making

  • Emphasizes deriving insights from high-level flows and understanding time dynamics to make informed trading decisions without relying on external services or software packages.
  • Provides detailed instructions regarding annotated chart analysis on pound dollar's February 13th candlestick pattern at 09:45 AM GMT for strategic positioning within liquidity zones.

Strategic Positioning and Market Observations

Understanding Market Dynamics

In this section, the speaker delves into analyzing market levels and dynamics to make informed trading decisions.

Analyzing Market Levels

  • The quarter level at 4137 is significant for understanding market movements.
  • Observing the midpoint, low, and previous week's opening gap aids in identifying liquidity pools and price movements.
  • Focus on the difference between the midpoint and low or old new week opening gap to gauge market behavior.

Trading Logic and Analysis

  • Utilizing logic based on key levels like 4137.25 guides trading decisions, focusing on price reactions at critical points.
  • Emphasizes the importance of considering inter-market relationships for robust technical analysis beyond chart patterns.

Influence of Interest Rates on Trading

This segment explores how interest rates impact various markets and why traders need to monitor them closely.

Impact of Interest Rates

  • Interest rates serve as a fundamental driver affecting long-term macro influences across different markets like currencies and equities.
  • Understanding interest rate fluctuations is crucial for comprehending commerce dynamics related to lending, borrowing, and overall market performance.

Market Opening Strategies

The speaker discusses strategies for interpreting market openings to inform trading decisions effectively.

Pre-Market Preparation

  • Transitioning from electronic hours to regular trading hours before the opening bell helps set up for the trading day ahead.
  • Highlighting yesterday's closing price aids in assessing current market positioning relative to previous sessions.

Opening Range Analysis

Day Trader's Edge

In this section, the speaker discusses a unique strategy used by day traders to gain an edge in trading.

Day Trader's Secret Strategy

  • Day traders have a secret strategy involving nuances in price movements that are not commonly shared.
  • Electronic trading introduced algorithmic tools that offer fair value calculations, turning support into resistance when breached, indicating underlying weakness if not surpassed convincingly.
  • Price movement below the previous day's fair value gap suggests potential further decline, especially if it breaches certain levels early in the trading session.

Chart Analysis and Trading Algorithms

This part delves into chart analysis and the utilization of historical data for developing trading algorithms.

Utilizing Chart Data for Algorithmic Trading

  • Emphasizes the importance of tracking previous week's opening gaps on charts for algorithmic reference and insight into price movements.
  • By analyzing relationships between price delivery and specific chart patterns, traders can develop effective trading models and strategies based on historical data.

Market Indicators and Inter-Market Relationships

The speaker discusses market indicators and inter-market relationships crucial for market analysis.

Leveraging Market Indicators

  • Prioritizing attention towards the Dollar Index chart before market opening to gauge potential price directions.
  • Analyzing Euro-dollar movements through fair value gaps on specific time frames to anticipate market shifts accurately.

Predictive Analysis and Trading Strategies

This segment focuses on predictive analysis techniques and strategic considerations for effective trading decisions.

Predictive Analysis Techniques

  • Observing key levels such as CostCo encroachment to anticipate potential price movements at market open.

Discussion on Market Analysis and Trading Strategies

In this section, the speaker discusses market analysis, trading strategies, and the importance of understanding key levels in trading.

Analyzing Market Levels

  • Understanding the significance of staying below 4128 as a sell-side indication.
  • Exploring the relationship between live candles, narrative building, and logic behind candlestick patterns.
  • Reflecting on the fruitful study related to CPI without aiming to influence others to act.

Key Trading Levels

  • Highlighting the importance of the fair value gap at 4128 as a critical level for traders.
  • Discussing how traders interpret price movements based on being above or below certain levels.

Insights into High Frequency Trading and Algorithms

This segment delves into high-frequency trading (HFT) strategies, algorithms, and their impact on market dynamics.

High-Frequency Trading Dynamics

  • Illustrating how high-frequency traders capitalize on small price differentials continuously throughout the day.
  • Differentiating between traditional price engines and algorithms used by high-frequency traders.

Navigating Market Dynamics with Personalized Strategies

The speaker emphasizes individualized approaches to navigating market dynamics effectively.

Personalized Trading Approaches

  • Drawing parallels between trading strategies and highway navigation for personalized trading decisions.
  • Encouraging traders to embrace mistakes as part of the learning process in developing effective trading strategies.

Closing Remarks and Importance of Chart Lines

The speaker concludes the session, emphasizing the significance of chart lines for backtesting and understanding price movements over time.

Importance of Chart Lines

  • Emphasizes the necessity of having chart lines in backtesting to observe teachings over time.
  • Stresses the importance of toggling through different charts and time frames for trading, highlighting the need for a comprehensive understanding beyond a single timeframe.
  • Discusses key levels like 41.28 and potential market movements based on price action, indicating the importance of observing these levels for trading opportunities.
  • Mentions a scenario where a shift in market structure could occur if certain price levels are breached, urging traders to anticipate such opportunities.
  • Encourages revisiting the video multiple times to grasp concepts discussed initially that may not have been clear at first.

Price Action Analysis and Market Behavior

Analyzing recent price action, focusing on specific price levels, market behavior, and implications for trading strategies.

Price Action Analysis

  • Explains the significance of price levels like 41.37 and a quarter as reference points for market movements.
  • Highlights how bearish trends are characterized by staying in lower price ranges rather than moving higher, indicating controlled accumulation by smart money.
  • Discusses utilizing specific price levels as reference points for trade decisions and observes how markets respond accordingly to these references.
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Video description

Government Required Risk Disclaimer and Disclosure Statement CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN Trading performance displayed herein is hypothetical. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance trading results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. Trade at your own risk. The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action. Past performance does not guarantee future results. Simulated performance results contain inherent limitations. Unlike actual performance records the results may under or over compensate for such factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses to those shown. The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. If you purchase or sell Equities, Futures, Currencies or Options you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain your position. If the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you may be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a “limit move.” The placement of contingent orders by you, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.