Instrument : YM 06-21 (dow jones futures)
Date : 2021.04.01 15h06 (UTC+2)
I just took a 10 points scalp from the market that I will explain. The thinking process behind it could be interesting from an order flow perspective.
The M5 chart analysis
When I came in front of the my screen, I looked at the M5 chart first and saw something obvious: the price has been going up (not very clear here but it is on M15) but some sellers have entered the market around 14h00 (1).
Then the price continued to go up and it created a divergence with cumulative volume delta going down. Do you see this double top wicks hitting 32963 around 15h00?
The M1 chart analysis
Now we can look at more details from the lower timeframe M1 chart. The double top wicks we saw on the M5 chart is a double top M pattern on the M1 chart. Look at what happened:
- Big buying volume to push the price up for the first M leg but rejected by a big sellers red candle immediately
- When price made the second leg, there was no buyers at all
Then the sellers have been coming back and this was a quick and easy 10 points short trade.
I know some people struggle with the exit so I will answer to this question directly: why exiting at 10 points? why not letting the trade run?
It comes with experience but :
- we are taking our entry from a M1 chart and as such we are looking for a small move, we can’t aim for 100 points target unless we are taking an entry linked to a H1/H4 chart analysis.
- we are just before New York open and its high volatility, it would have been too risky to keep the position.