Hello fellow traders,
I am sharing with you my analysis of today's price action of Nasdaq index futures (MNQ) at the New York open. I am hoping that you will find it useful for your own trading and benefit from it. The concepts I am sharing here are very much what I use on a daily basis to make money in the market. The concepts are: Market Structure (swing vs internal), supply and demand zones, liquidity concepts and premium/discount price levels.
- The first clue that we had today was around 6:30 am ET on the 15 m chart, when the MNQ broke and closed below the internal low signaling a bearish change of character and potential drop to the demand zone highlighted below.
- Usually, a change of character is followed by a pull back, initially I was anticipating liquidity grabs at the internal high but then after the open, price went all the way above the swing high and reversed back down.
- This is called a liquidity grab --> big money is selling into buy orders (both stop losses and fresh buy orders from breakout traders) so they can enter their shorts at the highest possible price.
- When I saw this happen, as soon as we dropped back below the supply zone, I went short since liquidity grabs are very high probability setups! For the execution I always drop down to the 15 seconds chart!
- Price then dropped and formed internal high.
- We grab liquidity at the internal high and then drop to the demand zone.
- Demand steps in and pushes price above the latest internal high, we grab liquidity and then drop back to the swing low!
- Another liquidity grab takes place and we have a bullish pullback.
I hope you find this helpful and learn from it!