<aside> ❓ When the market is in consolidation how do you know which side it will run for?
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We have to go back to the HTF premise. We need movement, first and foremost. Movement is instigated around the time of day. Time is a crucial part of the analysis concept, driving the algorithm. It's not about price; it's about time. There's a time for everything in price action, from macros to short scripts where price engines create short-term fluctuations. These occur at specific times of the day:
There are specific times when the algorithm creates fear or greed. Greed is often engineered as a chemical response; as humans, we watch candlesticks or other chart elements, leading to the feeling of missing a move or a better entry point that when you're looking at it and thinking, 'I'd like to buy that, I think it's going to go up from there,' but you don't really execute on it. You've been there a thousand times. But when you know what you're looking for, there are going to be times where you still miss that move or that better entry. These little times of the day will really exaggerate that desire to get into it because you think, 'Oh no, especially on a day where maybe you've had drawdown or you didn't do any trades in the first part of the day, you're feeling like, 'Well, I need to do something. I'm missing out on something.' Even if the movement is so minute you normally wouldn't trade it, but you feel like you have to do it because you know that's what traders do, right? Well, you shouldn't have that mindset, but there are certain times of the day where these little things occur, and they're scheduled. They're literally scheduled, just like an economic calendar has a scheduled event every single month. There are certain events that come out.
S&P 500 E-Mini Prices and S&P 500 E-Mini Futures Prices - Barchart.com
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Protocol for choosing the contract:
The current contract ESZ23, has a volume of 1,016.185. Next Delivery month ESH24, has a volume of 1,334,375.
The current contract ESZ23 has Open Interest of 1,686,069. Next Delivery month ESH24, has a Open Interest of 750,582.
Trading through the 3 months of a given contract, we use the contract with higher Open Interest. When the comes (4 times per year),💎We rollover to the next month contract when Volume is larger and there is much more going on there. Notice that 💡Open Interest is a lot higher on the current contract. Butt because the Volume is now larger, since today, This is the last time we trade ESZ23. From the next day we trade ESH24.
Back to the main topic: What do we do while we are inside the consolidation?
💎We go the 15m chart to find the correct Highs and Lows that the algorithm will target for Liquidity.
If you had control, if you had control to steer price, and you had the benefit of controlling price with the expectation of knocking out other traders so that you could take their position over, where they get out with a loss. Your intention is to take that trade over exactly where they get out with the maximum pain that they felt and incurred loss at. You, because you're in control of price, take price to that level to take them out; their orders would be executed because of their stop-loss. Or for the folks that would be trying to trade as a breakout using that same location to keep trading in that direction, either way, it's still using that liquidity for a counterparty purpose.