Not every chart needs a trade. Sometimes the job is simply to identify where the risk/reward starts becoming interesting. While screening for potential shorting opportunities, I came across this setup. The idea was to combine market structure + liquidity + imbalance + trend rather than short simply because price was falling. ๐ What caught my attention? 1️⃣ Bearish structure Price had already experienced a strong decline and was trading below a downward-sloping moving average. That suggested that the broader momentum was still favouring sellers. 2️⃣ Equal High = liquidity above The Equal High marked on the chart is an area I would watch closely. Rather than assuming resistance will hold, I look at clustered highs as a potential area of buy-side liquidity. A move toward or through that area can become important when assessing a potential reversal. 3️⃣ IFVG — potential resistance The purple Inverse Fair Value Gap (IFVG) becomes the key area I'm watching. If price retraces into this z...
Open Mindedness is the single most important psychological factor in active trading - Pattern recognition is the core cognitive skill involved in active trading. One mistake many beginning traders make is that they equate patterns in markets with chart patterns. For the rational, evidence-based trader, patterns are only meaningful if they have explanatory value. When trading short time frames, the patterns in markets that are meaningful are ones that track actual supply and demand among market participants. From the sequencing of trades in a market, we can observe increasing or decreasing volume and whether the volume has a directional bias. Across many trades, we can detect trends and cycles. When there is relatively stable participation in markets, we can expect the patterns of trending and cycling that we've observed in the recent past to continue in the immediate future. That sets up potential opportunity...