<aside> <img src="/icons/row_gray.svg" alt="/icons/row_gray.svg" width="40px" /> Tape reading. The main takeaway from this livestream is why days like FOMC should be avoid for trading/ Sniper analogy / Casino analogy
</aside>
We are monitoring the two reactive points at 15,640 and 15,483. We observe how price reacts after trading to either of these levels. It doesn’t matter to which one we trade first because we are not pushing any buttons. Just watching the speed.
We are currently looking for a range to trade and forming an opinion based on the most likely draw on liquidity. However, the market is currently indecisive and not providing us with a clear direction.
If we don't break outside of this range, and it's like 14:15, then the real move is going to be 14:30 and it's going to be a freight train, and who knows where it's going to go.
It's important that you understand that this event is two stages, and it's imperative that you can at least try to figure out what the initial run was, and right here, it's 50-50. That is not a scenario that we want to go out there and push a button.
We want to see speed above that high. The reason why is because this area here is going to be used as a kind of like Rocket Fuel. They're going to use this area here to really speed up and run to 15,640. But if it fails to do that very thing there, that means we're probably going to hang around inside the range until we get to 2:30, which is not helpful. This is how ICT determines if his idea about a specific level is in fact onside or it will be negated.
We don't want to see any respect of this Range High. Normally this should be a balanced price range, but not in an event where we're reaching for liquidity, and it's also unsettling. The whole premise behind rate announcements, the same reason they would use CPI number, same reason why they would do non-farm payroll. It's a disruptor, its very point of existence is to disrupt the existing order flow. That means that everybody that's been going lower this morning that's been profiting, their stop losses are above relative equal highs or short-term highs. We’re not interested in seeing this as a balanced price range because our interest is higher. These individuals think that they're safe, and we always look at the marketplace with that mindset. **Who has been making money? Where would they be scared? What would make them scared, and what would take them out of the marketplace? And why would their stop loss be taken be helpful to someone else? That's narrative**. That's things that help the trader form and develop an idea about why the market should even go where you think it may go.
Just because there's a down closed candle and the market has shifted above a short-term high and it came back down to that down close candle, unless the narrative is suggesting that the market's going to go to some buy-side liquidity pool or some premium inefficiency above the market price, that's not going to work. There has to be some underlying reason for the market to either reprice to inefficiency above or below the marketplace or trade to stops above or below the marketplace. They're the only two things that can happen, or it consolidates. That's it. Anything outside of that is manipulation.
Here's two o'clock right there. What is the much more obvious run? Did it go down a lot or did it go up and reach further for buy side than it did sell side?
The run up at 14:00 was bigger that the drop down. If it's a two-stage development and delivery in price, they ran for the trailed buy stops, and we want to see, does it show a willingness to get down below the first SSL Pool? And if it does, I'd be looking for the 483 level. What negates that idea, is if it has to run over top of this whole shaded area here and then come back down and find some support. If it does, then it would be a much more bullish environment than we would have expected at the beginning of the day.
<aside> 💡 Nice little experiment: On FOMC, CPI and NFP events, try to imagine how would you feel if you were in a trade, long or short. At what point you would feel discomfort?
</aside>
Quickly back to the 5m. We can see the reaction of the C.E. The only thing that didn’t come to fruition is the Immediate Rebalance on the 1m chart. That would be a nice 60 handle move.
We use this information even though we’re not willing to take the trade on a day like this because it's a big gamble, and we’re more interested in the information that it provides us after it's already in price. **Our interest is really on Thursday and Friday's action to trade.** We use this information to help us frame a bias and give us context as to what we would like to see as a parameter in our analysis. We are always watching these big events and looking at it with this exact perspective. We’re measuring things, looking at whether it has a willingness to go to a specific level, or does certain things that we would like to see. If it doesn't do that, it helps us conclude useful information for tomorrow's trading or Friday's trading.