PreMarketSession NQ Consolidation August 25, 2026 transcript

I'm going to try a short. That's what I'll do. Because we we went above New York opening gap and then failed to hold on to it. So, we're going to sell short. There is six contracts. And we'll put the stop loss just above the volume balance I right? There, you see that? So, we're going to look for run down into this low here where our sell side would be. So, we have this candle where we're moving back up into retracing into it.

It's at the low of the New York opening gap. It's anchored to this upper quadrant from the daily by side imbalance sell side inefficiency. large gap making. What did I just do there? regular mess with the price access. There's your regular trading hours opening range gap low. So, wherever we open up at we have to relate that opening at 9:30 Eastern time when it happens in about an hour and 6 and 1/2 minutes. This is the the other end of the measurement we would use to get our opening range gap and then find mid mid gap.

And because they had sent this trending through the London session. Our in 7:00 to 9:00 where it's likely to be boxy, not trending. We've taken this high out and then we rejected it. New week opening New week opening gap rather couldn't support it either at the high or the upper half. We came all the way down and then we closed below it. Going to add this is going to be the high between 7:00 and 9:00. So, if this is the high, where can it travel to in here between 7:00 and 9:00 but not be considered a trend?

There's consequent closure from that wick down here. And a small volume imbalance there inside the new week opening gap. Stop being lowered down to just above consequent equation of the of the new week opening gap. And this price action is dog squeeze. >> See how they leave the >> [clears throat] >> new week opening gap low aggressive long stretched out down close candle. This is manual intervention. This is them in the the mix, not markets running algorithmic.

You can see it. Looks like a heart attack. See how there's no follow through? It goes down here, but it's just simply not trying to get going. What I want to see is how it can if it can get down here at all. Get below this low on a closing basis. Because this is where the all that energy came from right off this wick, which is anchored to nothing over here. And I guess you could argue that it's an inversion fair value gap, but I don't like the fact that I'm going back to 659's candle and do it, even though this is the candle that creates displacement leg between the three candles.

Like you look at like this. Normally, if it's bearish, when it trades up to here, it starts to sell off and send it lower. But if it's bullish, like we were looking at earlier, this if it can trade above it, it becomes an inversion fair value gap. This send price higher, which it supports the idea here. It goes up and then uses it there. Fails to touch it there and then really accelerates the upside and runs out by side and trades up into here.

So, we would want to see it lose its characteristic of an inversion fair value gap. When it enters it, it needs to show no respect of that. Like don't don't find any kind of bounce at the high or the upper half. It needs to just like start digging into this and pull through all the way down in and get to the the low of it and close below it. Then if it can close below this candlestick's high if it can do that, then this returns back to its original first utilization, which is a bearish fair value gap.

Do you understand what I just said? In other words, simply because this gap exists it failed to present price an opportunity to continuously go lower. And then it traded higher. It acted as an inversion fair value gap, which is the opposite of this cuz this is bearish when you see it as a down close candle. What when order flows bearish, these PD arrays down close candles that are simply an inefficiency between two other candles it warrants price to behave a certain way.

It's first utilization is it's bearish when it's a down close candle, but if price goes above it, it refers back to the opposite of whatever it first was. So, if it's not going to be a a sell they'll use it to keep price up and prop it higher. It does it here here failed to touch it here, rallied up and then folded could not keep couldn't keep the price above that's high. So, it drops. Then we went into new week opening gap and gave up the ghost.

It couldn't get to consequent encroachment. It was a little ugly in here, but now it's starting to do the things we're looking for. So, we can take this this the risk out of the trade. But closes below this, then what we want to see is no bodies in the upper half. It can wick there, preferably not go there at all. That's the best case scenario. That's the That's the strongest reclaimed bearish fair value gap characteristic you can see is it just leaves it and doesn't even come back to it at all.

It just keeps dropping lower. So, now see we got the confirmation of the lower close below that gap. Let me take that vertical line off cuz it's bothering me. So, now you can see it. And here's 9:00. We'll take that off. We don't need that anymore. So, now the bodies are wanted to be buried up in this half. Here, I'll make that I'll make it a little bigger. Also, uh cut this stuff Listen here, grammar police. I said no bodies buried in here in upper half.

So, [snorts] ideally, best case scenario, it doesn't come back and touch it at all. Secondary, if it comes back up, shows sensitivity at the low and starts to sell off, that's the next best thing. The best is it doesn't come back at all. The second best is it comes back to the low and drops off. The last one is ideally, as it goes up in here, it can wick and touch consequent encroachment, better if it doesn't, but only leaves the body in the lower half, and then starts to resume going lower and takes out whatever low it creates prior to its retracing up into it.

That's That's the stages of I guess the the the efficiency of the approach using it using candlesticks for order flow. Very simple, the visual. You don't have to go in there and look at numbers and how many orders are supposedly resting here or how many bought this level. Who cares? And it's [clears throat] That's yesterday's weather. >> So, if we don't expect it to be an inversion at the better version >> Oh, it's not an inversion now.

It's not an inversion now. It It returned back to It returned back to Let me Let me draw it out again like this. So, right there it becomes an inversion fair value gap. So, I'm going to take this and drag this back to there. So, it's a bearish fair value gap until it closes outside of it. Then, it trades down in the upper half and it performs as a inversion fair value gap. Inversion fair value gap. It didn't touch it, rallies up.

Now, because we went down through it and closed right there it returns back to Would that be at? Be right there. Now, this can be carried over. No, not that. Yeah, that's how I'll do it. And this right there on that candlestick, it becomes a inversion fair value gap. So, let me bring that to the front. Visual order, bring to the front. And take this one to the back. There you go. So, it's bearish fair value gap until this close above it.

And then uses it as inversion fair value gap here, here, here. And then once it starts going down, while we're bearish now, we're looking for lower prices cuz we're shorting the new week opening gap. Once we close down below it here, it returns back to original characteristic. Okay, and its first utilization was it's a down close candle fair value gap. And two, those are usually when bearish, used as an opportunity to go into and then go short.

So, I missed the partial talking to you. So, let me see if I can get this uh position paid. Take uh six contracts off this booger. Cuz it give me one more little uh chance to get on it. I might I may have missed it cuz it did two times two candles there at that mid midweek consequent encroachment level. Ideally, I want to see it get down to the sell side at 304. Now, something like like I don't I don't want it at all to trade back up to the low of the new of the new return to its first utilization over here.

Like in other words, I don't want to see it come back up to that. It's too far of a retracement. So, what I can bring the stop loss down to that because if it does that, I'm not interested in being in it anymore. So, now I've locked in 5640 on the position. Worst-case scenario, you know, Dad gets 5,640 bucks for having a free look now. I have I have I got no risk in the position and I have the opportunity to see if it can yield to me a run below here, which I'll now put a limit order in for six just below that low.

Well, like I was outlining the the reasons why that gap here should be referred to at all and what what stages of importance was there. Just You want to go back and listen to this part again. Okay, when when I post it, listen to this part over again and then write down what I said and then have that in your [clears throat] journal. So, once you have it written out, you'll see it. And by seeing it in your own in your written word and take a picture of the screen.

So, that way you can draw out with your own hands, like if it does this, like that said, then it's the best. If it doesn't do this, but it does that, this is the second best, then third best. And then the other one is where it when it was trading real close to it in close proximity, the other one is where it enters back into it and it puts a body in here but doesn't close above it. The lowest one is where it puts a um a Mohawk like a little bit of a wick outside of it then closes back down in.

But that consequent encroachment or lower, so the wick would be up here. That's the last line of okay. It's It's permissible, but I don't like those and usually I'm many times taking something off as a partial in the event that it just you know, overruns everything it just did. But let's focus on what it's doing here cuz I'm going to make sure I'm watching this This is a mess. All this is a mess and I don't want to see the upper half of this wick as it's starting to show here.

I don't want it to start showing you discount sensitivity. I don't want it to give a reason for it to go up. I want it to go after that low. We only have a couple more minutes till 9:00. So it's still rangy. If it takes out that low, it's not technically trending. It's just bouncing in here sideways. Now, new students if they watch this or hear with me what I just said, they'll say, "Why ain't this a trend?" Because it's just part of the range that's here.

It's just overlapping all of this price run here inside that range. So, we're just basically trading in the range. But I'm looking for external liquidity which would be below here. Now, I don't want to see this wick here. Watch. This wick to there and then this wick to there. But if it goes above this on a closing basis, I'm I'm going to kill the trade. This is the obsidian PD array. In other words, you can go up in that area and then sell off.

That's what I'd rather see. Okay, so it needs to show willingness to go lower. I missed the opportunity talking to you, son. I should have I should have said, "Stop talking for a second." >> [laughter] >> We were getting too close to where I was looking for a partial. It's my fault, not your fault. I'm just saying that I'm regretting now because I'd rather it not be doing what it's doing. Yep. So, I just closed six of the contracts.

I got to remove that. Buy limit for six contracts. Even if it starts to drop here, that push like that above it not not something I'm interested in because then it wants to probably go back up and touch the the low of this. And I want to get paid if it goes there. I'm not looking to hold on to it longer cuz we're still part of a consolidation period until we get to like 9:30, then I think we'll start moving. A little bit more protraction.

Look at that reaction there. They'll say that's in Wyckoff, too. You wish. Fact that it's rangy and choppy. Like I said, the the fact that it was getting in there rather quickly. The nature of the week that we're in with Jackson Hole Symposium. Um it's the last bit of August in the summer doldrums. Um, he's got to be really, really nimble. And when like I said I'm saying like I'm regretting not having taken something off here.

I would have been very much pleased if I could have taken like at least four off here. But that's reality. So I have four contracts on. Let's do this. Let's go down to two. If you can take this low out here, one, two there, and then the balance of the trade. Look at the right there. So when it drops down, if it can drop down, let's say it that way, cuz there's no guarantee that it will. The limit here should fill on that, and then this order becomes a different order becomes two to close.

So there'll be two below here and two below this low. Actually, let me let me extend that down a bit more. Just in the event it it's quick. It may not fill it and then I'll end up putting me long. Net long. You time tracks if it doesn't give it time to to assess what it's doing. Plus it if depend upon if it can drop, it might be something I want to hold on to the end last two maybe just take one off when it's below here and leave one contract that's a runner.

You see there's a level down here is an octant. So I'm going to try aim for that again just above it. In the event it wants to keep moving lower. Get it early start. That wick right here needs to see price close below it otherwise I'm going to be looking to take a partial. And so we now So that's this wick right here I was talking about. We want to see it stay body below that. But they say this stuff existed before me.

Everybody used to do this stuff. Well, you don't see one person anywhere talking about that stuff. And referring back to anything. It's fun reading about it though. Now we want to see See how these two wicks here, this wick and this wick are constant encouragement. We really want to see a power move like drop down here and close below. Then it will build momentum. I'm going to lower the stop now here because I'm not interested if it goes back above this high.

So now I've squeezed more into this paycheck. Take note of how it's behaving and how it trades because it's reluctant to continuously move because of time of day, because of the session prior to this one which was London. London was allowed to trend. So you got to be you got you got to predict the likelihood of it bouncing back and forth in the range that you're in between 7 and 9 if London was trending. That's why I'm not interested in If it stops me out, that's wonderful.

Then I don't have to worry about anything else. I'm I'm paid out and I'm done. See what it's doing? This should not be happening if it's bearish. So go ahead and pay me. And then we can uh call this a a wonderful morning session and be done. I ain't going to complain if it uses the obsidian high and goes lower. I ain't going to complain about that at all. Look just stop there. All right, so then cancel out the the buy limit order.

And done. Done in the books. So now if you're going to stay with it, you would watch and see if it wants to come up here and then use the low of this as a reclaimed bearish fair value gap. And then we would want to see if it has the willingness to want to roll over. Don't take first hit to go short. Look for it to go there and then break down and then start looking for something extra past the reaction that goes here.

Not just trade there because it could trade there and then if you go short, it could dig into this deeper, throw a mohawk in there and then go lower. So it's a matter of weighing out things like that because it's more likely to use this entire fair value gap that's here because we're inside of 7:00 and 9:00 period of consolidation because London session 2:00 a.m. to 5:00 a.m. was allowed to trend. This is trading inside the range.

Okay, so trading inside the range when we anticipate the market be being in a consolidation. Okay, so when it's consolidating, you have to trade it differently. You got to be a little bit more nimble. You got to be more like I said, like I wanted to take partials down here. And I'm more and I'm not trying to teach you to be hard on yourself, but I'm my students, if they hear this, they'll they'll say, "Okay, that's something that they wrestle with.

But it's just proof of concept that while we're in a range, when you map this out like this like we did, that's an area where you definitely want to be taking a partial out. You definitely want to do it. And when you don't do it and it's trading like this, you'll feel that gnawing little twist in your side like, "I knew I should have did that but because you're learning you're learning the the characteristics between session type meaning trending reversal consolidation expansion those types of things they have their own unique protocols how you should let market behave.

See I hit the low of that. So we'll see if it wants to drop down in here. I'm not going to reposition because I'm going to wait till 9:30. I'm not going to sit with you on that, okay? That's fine. I mean we want to see a close below obsidian which is two opposing wicks midpoints. Isn't that beautiful? Look at that right there. Why would it stop there? I'm sure Elliot Wave and supply and demand and volume profile and all that other stuff would have gave you some kind of all those other guys knew about this kind of stuff.

I'm trading daily highs and weekly highs. Yeah. >> [snorts] >> They're all eat up with envy, man. They can't stand it. That's all right. >> So, ideally, I'd like to see this candle or the next one close below obsidian low. And then start to work its way down and go after that sell side and then reach into that lower octet level at .375. Now, these candlesticks are behaving inside that obsidian to two blue lines I drew out on those wicks.

Look how it's finding support in that. There's literally nothing else out there in technical analysis that would indicate any expectation of seeing price behave that way. And when you know what you're looking for for highs and lows and they form, man, it's just like looks like wizardry. Literally looks like wizardry to someone that's never seen it before, which is in Dad's case, most everybody else watching me. >> [clears throat] >> Yeah.

I'll stay with it till 9:00 just to close the 7:00 to 9:00 a.m. session. >> how hard it is for it to extend or in this range that was created at 7:00 a.m. and the high was formed, it's just it's inside that range. So, that's why it's really, really important. If you know you're in a session that's going to behave like that, because we just left London where it was allowed the trend, you have to pick your shots on where you're going to get out at.

And there would have been nothing wrong for us to take a partial below here. Uh this wick consequent encouragement in the body right there, that rejection block, that would have been a good area take a partial. Ideally, right there a consequent encouragement that wick cuz that's the longest and the low of the session. And you can see that the bodies Look at the bodies we're doing. It It wasn't touching it. So, that indicates it's going to likely do what?

Retrace higher. It's like a early warning device. And you don't need to see any kind of order flow inside of a candlestick, look at numbers and volume. You don't need all that stuff. You don't need any of that stuff. Everything is an open, high, low, and close. And the people that use all that gimmicky stuff, if they use the logic I'm teaching, their trades are going to go through the roof, like straight up parabolic.

Like it's unbelievable. And some of [clears throat] my students have caught on to that cuz they they either came from that school of thought using unique volume profile and footprint and all that, order flow stuff, blend in how to read a candlestick. Okay? If you know how to read a candle, you don't need anything extra. But if you feel confidence is increasing when you see all that other stuff, then okay. As long as you stick to the rules I'm giving in terms of reading real order flow that you can visually see, it can't hide from you.

It's not left for interpretation. It's very specific. Look how wild it's getting. 9:00 session close. So now between 7:00 and 9:00, that part is done. So now we enter the time when it can become trending. It can start having one directional price runs. But usually it just meanders around until 9:30 and then it kick off and then boom, it starts running. >> [sighs] >> But that's that's going to be it for today. So it's 75 30 on the day.

Less commission cost and I got to get out of this chair. I've been sitting too long. I got to go back up in the computer room and start standing in front of the screens again. Spending too much time sitting here is hurting my back. But I'll I'll catch up with you later on. Just give me a call later on and see you. I'll I'll talk to you then, okay? >> All right. >> All right, love you, bye. >> All right.