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March 07, 2023 Live Tape Reading \ Fed Chair Testimony 10am
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March 07, 2023 Live Tape Reading \ Fed Chair Testimony 10am

Audio Check and Morning Update

The speaker conducts an audio check and provides a morning update for the audience, focusing on Chairman Powell's upcoming testimony and the implications for trading.

Audio Check and Morning Update

  • The speaker ensures the audio is working properly.
  • Chairman Powell will testify at 10 o'clock today and tomorrow, impacting market dynamics.
  • During Powell's testimony, it is advised to observe market reactions without bias or speculation.
  • Market movements post-testimony can be influenced by liquidity changes and inefficiencies.

Understanding Market Behavior

In this section, the speaker emphasizes the importance of paying attention to market behavior even when not actively trading. They discuss the significance of understanding how the market behaves and the role of factors like the Federal Reserve.

Importance of Market Observation

  • It is crucial to observe market behavior even when not trading to understand how the market operates.
  • The speaker mentions that they will only provide information when pertinent, highlighting selective communication based on relevance.

Analysis of Dollar Index Movement

  • The Dollar Index has moved up, surpassing previous highs, indicating significant market activity.
  • The speaker shares their approach to analyzing markets without executing trades, emphasizing strategic observation and analysis.

Annotating Market Movements

  • Annotation of buy-side liquidity pools on charts aids in understanding potential price movements.
  • Detailed annotation on chart levels helps predict where prices may be influenced by external factors like the Federal Reserve.

Utilizing Liquidity Pools for Analysis

This segment delves into utilizing liquidity pools for market analysis and understanding price movements based on annotated levels on charts.

Analyzing Liquidity Pools

  • Identifying buy-side liquidity pools and observing price reactions at specific levels enhances predictive analysis.
  • Annotating key levels allows for a deeper understanding of how prices may react to different influences in the market.

Interpreting Market Trends

Here, the focus shifts towards interpreting current market trends and making informed predictions based on observed patterns and historical data.

Predictive Analysis

  • Speculative analysis regarding potential price movements based on observed trends and historical data.
  • Discussion on current market conditions, including new week opening gaps and potential repricing scenarios based on index expansions.

Using Gaps for Market Projection

Exploring how gaps in trading data can be utilized for projecting future market movements with a focus on practical application rather than theoretical concepts.

Gap Utilization Techniques

  • Analyzing pound-dollar movement from fair value gaps as an example of using gaps for projection.

Discussion on Dollar Index Movement

In this section, the speaker analyzes the movement of the dollar index and its implications for trading decisions.

Analyzing Dollar Levels

  • The high on March second Thursday at 105.18 is about to be breached.
  • Previous levels of interest were at 105.34 and 105.63.
  • Shorting without confirmation is risky; waiting for a close candle for entry is advised.

Influence of Market Factors on Trading Decisions

This part delves into how market factors influence trading decisions and the importance of strategic entries.

Market Influence and Entry Strategies

  • Differentiating between weak open gaps and strategic narrative-based trading.
  • Market repricing based on fair value, irrespective of buying or selling pressure.
  • Waiting for confirmation before shorting in specific market conditions.

Interpreting Dollar Index Chart Patterns

Here, the speaker interprets chart patterns related to the dollar index movement and potential future trends.

Chart Analysis Insights

  • Observing rejection blocks and consequent encouragements in chart patterns.
  • Speculating on potential movements based on consolidation phases.
  • Linking volume amounts to possible bullish trends in the dollar index.

Market Behavior Analysis: Dow Jones Comparison

This segment compares market behaviors by analyzing Dow Jones data alongside other indices like NASDAQ.

Comparative Market Analysis

  • Using Dow Jones as a barometer for market comparison.
  • Identifying divergences between different indices' price actions.
  • Highlighting algorithmic versus manual interventions in market movements.

Impact of External Factors on Trading Outcomes

Discusses how external factors such as Fed announcements can impact trading outcomes and traders' decision-making processes.

External Factor Influence

  • Critiquing post-event justifications in financial markets.
  • Emphasizing controlled nature of market movements even with manual interventions.

justify why I think price is going to go somewhere

The speaker discusses the importance of focusing on high-probability scenarios in trading and the impact of analyst accuracy on trading outcomes.

Importance of Analyst Accuracy

  • Emphasizes the need to focus on scenarios where probabilities are in favor, highlighting the role of accurate analysis for successful trading.
  • Stresses the significance of understanding market environments to identify high-probability opportunities, especially during events like Fed announcements.
  • Dismisses individual opinions on market movements, emphasizing that markets move independently of popular sentiment or predictions.

Market Analysis and Observations

The speaker delves into analyzing market indicators such as the Dollar Index and its potential impact on other indices like ES.

Market Indicator Analysis

  • Observes a higher high in the Dollar Index, anticipating a potential short-term low formation in ES if certain conditions are met.
  • Considers deeper analysis into market gaps and balances to gauge potential price movements accurately.
  • Monitors various timeframes for the Dollar Index to assess its upward momentum and its implications for ES performance.

Impact of Market Movements

The speaker discusses how specific market movements can signal potential reversals or consolidations in trading strategies.

Market Movement Insights

  • Compares Dow Jones futures' lower low with ES's performance, indicating reasons for concern regarding consolidation or short-term reversals.
  • Explains decision-making processes based on market movements, highlighting considerations like position adjustments during uncertain trends.

Analyzing Price Delivery

The speaker analyzes price delivery patterns and their implications for future trading decisions based on current market conditions.

Price Delivery Assessment

  • Notes the absence of a higher high in price delivery, signaling caution and potential impacts on trading strategies.

New Section

In this section, the speaker discusses monitoring the fair value gap and Dollar Index movements on a one-minute chart for trading insights.

Monitoring Fair Value Gap and Dollar Index Movements

  • The speaker advises watching the fair value gap to observe potential movements.
  • Emphasizes avoiding a breach below midpoint for efficient trading.
  • Focuses on monitoring candle bodies rather than wicks for trade decisions.
  • Notes the fair value gap at 10:21 in the Dollar Index.
  • Highlights the significance of specific candles within breakers for trading cues.

New Section

This segment delves into analyzing the fair value gap and bearish breaker on the Dollar Index for trade strategies.

Analyzing Fair Value Gap and Bearish Breaker

  • Stresses keeping an eye on key levels like the fair value gap and bearish breaker.
  • Discusses fib projection levels and consequent encroachment analysis.
  • Mentions tracking market reactions based on historical patterns.
  • Explores inter-market relationships and critical rejection blocks in trading.
  • Links daily chart patterns to current price action dynamics.

New Section

This part focuses on utilizing swing projections and premium market levels for strategic trading decisions.

Utilizing Swing Projections and Premium Levels

  • Demonstrates using swing projections from low to high points for trade estimations.
  • Discusses setting stop-loss points based on market conditions.
  • Advises distributing long positions strategically during premium market phases.
  • Emphasizes reading market range without relying solely on indicators.

Detailed Trading Strategy Explanation

In this section, the speaker explains a trading strategy involving limit orders and specific price levels for entering and exiting trades.

Understanding the Trading Strategy

  • The level at 40.22 is crucial as it marks a significant high, with a distance of nine and a half handles to an old high.
  • Placing a limit order just above this level can be beneficial for the first function when having three contracts.
  • Consider taking one contract off at the high to ensure a secure exit, even if it means sacrificing an even 10 handles.

Effective Trade Management Techniques

This part delves into managing trades effectively by setting appropriate exit points based on market movements.

Implementing Exit Strategies

  • When the trade hits a specific level, consider turning your limit order into a market order to sell two out of three contracts.
  • Aim to exit near the midpoint or upper end of the fair value gap but adjust one tick lower to account for spread variations.

Market Analysis and Conclusion

The speaker concludes by discussing market analysis and signaling the end of the session.

Market Analysis Wrap-Up

  • Set your limit order one tick below the shaded area's low price to accommodate bid-ask spreads when selling your final contract.

Session Conclusion

  • The speaker hints at wrapping up due to potential speech fatigue, alluding to another session tomorrow following FED events at 10 o'clock.
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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.