20-Point Failed Breakdown Trade with Order Flow

Hey guys, Dan here from Funded Trader Academy with my Trade of the Week. Let’s break down this 20-point failed breakdown trade from Monday, April 27th, taking out key session levels and recovering. We’re going to look at this setup from start to finish and dial in the specifics using the Order Flow footprint software to qualify this trade. But before we dial into the specifics, let’s provide a bit of broader market context using the Volume Profile. So if you go back a few days, you can see the market consolidating after a long bullish extended run to the upside. Price was coming from some deep lows, recovering for a few weeks, and then shifted into this consolidation mode. Late in the week, price did break that consolidation high and pressed up towards the tail end, leaving this high-volume node, which became the focal point for that Monday morning session. Right? Is price going to break above here, hold, and extend for a further price move upwards, or are we going to fail this high-volume node and rotate back down deeper into the consolidation range? Okay, so now let’s look at the immediate context heading into the day. How did the overnight session unfold? What we saw overnight was consolidation, right? We saw the Asian session surge a little bit, the London session pull back, consolidate, and so on and so forth in a nice tight range. So heading into the day, what is it that I wanted to see take place? Well, we had a couple of key areas to the downside of price that I wanted to see at least tested, taken, or what have you, so that we could make a determination on what price wanted to do on the day. So heading into the session, what I would have liked to see was price come on down here, fail any one of these levels, come and take them out, fail them, and rotate back to the upside for that failed breakdown rotation. Okay, the other possibility heading into today’s session was that I wanted to see price rip straight through here, hold, and then rotate back for that extension and that further rotation back down into the range. Either one of those was fine with me, but these were the two possibilities that I had crafted out for the entirety of the day. And that really rested upon how that first 30 minutes opened up, right? Were we going to take these levels? Were we going to leave them? Were we even going to come down here and test? Or were we going to come back up here and chop around a little bit? At this point, this is the all-time high. I’m not really looking to short the all-time high. Okay, so that was kind of off the table. The only short that I was looking at was if we had price surge through these key levels, hold them, and then rotate back to the downside. Okay, so let’s go back to the open of the day. So, we had our open right here, 8:30. Price kind of chopped around a little bit, came up to near that 7,200, failed it, rotated back down, and chopped back and forth inside this essentially 20-point range. Okay, so finally, off the open, if we drop this down to just a smaller time frame here, we can see price did come down here. We took out our very first level and had a bounce. Okay, so price comes down here. We take out our London session liquidity here, the 7181.50, and we do get a nice delta shift. Price comes down here hard off the open. It fades these sellers, as you can see, 1257 to kick this thing off, 609, 69. You can see these things fading, and then all of a sudden, we get a nice bullish pop here. Some life on the bull side of the equation takes place right here, 607. We still have bullish inertia up in here, and then we finally get that pop back to the upside. And you can see right in here, you have initiative action, 718, reclaiming VWAP. Okay, so what do we have? We have heavy aggressive sellers pushing into a level and bulls popping out, reclaiming another key level. This particular entry did not extend. No problem. This one actually went up for a few points, came back down, and aggressive sellers stepped in right here. It killed this trade after about 3 and 3/4 points. Okay, no problem. So, we wait for the next potential setup. Remember, shorts are off for the day. I’m not looking to short. So, what we’re waiting for is a dip. Okay, so here comes another one. Price, around that 9:30 hour, starts to gain some steam to the downside. 714. You can see 1447. Now we’ve taken out the London session again, and price is coming into these levels screaming hot. Okay, 1447, 865, negative 23, and 13, and then finally, the bulls step in, and we have some traps at the bottom. Okay, we have a couple of traps right through here. We have a delta divergence right through here, and then all of a sudden, the bulls step on the throttle again with some volume. Look at the volume differential between coming in here: 8409, 17,19 contracts coming through here, and then 25,000 coming in through here. Okay, and it just starts to escalate from here. Okay, the throttle of volume just gets stepped on, and price recovers back up again. Okay, this is your failed breakdown. We took out both key levels. We had a shift in delta, and we broke structure. This particular rotation here, this particular failed breakdown, did extend. We took out 7,200, which is where I took initial profits, and then held a runner to that 7208 full extension back up to the Asian session high. So to recap this trade, I framed out the day and set out levels of interest rooted in balance and imbalance before the market opened. I drafted out a couple of if-then scenarios and struck when the model triggered: key level taken, trap, delta shift, and break of structure, and then held that position to the next level of imbalance. Hope that was helpful. We’ll see you guys over in the next video.

Hey everyone, it’s Dale here. I hope you enjoyed the video. If you would like to trade alongside me and our team of prop firm funded traders every day, then click the link below the video and hop aboard. We are looking forward to trading with you.