Bull Flag & Delta Analysis: Real Trade Examples from Our 📡Live Room

What I’m looking for, let’s say this was during the 10:00 or 9:00 hour, is what the past four, five, six, or seven 10-minute candles have produced in terms of delta. I want to note that the current candle that’s breaking out has a noticeably elevated level of aggressive buyers pushing through a breakout level. That’s what I want to see.

You guys will hear me say I’m okay with 2,500. Sometimes I’m looking for 3,000, sometimes 5,000. It really just depends on whether we’re dealing with a thin or thick book on the day. That’s really what it depends on.

Let’s go back. This is just a 10-minute candle, and this is all pre-market action. The ATR on a 10-minute chart right now is sitting at five. Let me go back to yesterday — right here. This is what I was looking at yesterday. I did take this one. It was a bit of a chase, but what I’m talking about is when you see a wedge breaking out like this — a bull flag wedge.

Sometimes, if you’re really bullish, again, I’m very cautious when going from target two to target three because it does have a lower probability of extending that far. But what I’m looking at is, okay, so I’m assessing this right here. This is what I drew up.

I can see a noticeable wedge here. You train your eye to spot these patterns over time as they start to develop. This is technically a descending wedge. I call it a bull flag — I call everything a bull flag, even though I know it’s not the proper terminology. It is what it is.

Alright, so I call this a bull flag. It’s actually a descending wedge. We’re in a big uptrend. The bull flag kind of went flat for a bit, pushed up slightly, but there’s a possibility right here that price accelerates hard.

Now, there was a level at 59.20. It just didn’t have the horsepower to break out to a new level. My entry was, I believe, right here. This one held but didn’t pull back deep enough. I let it go for a bit, took some heat, and then it popped up and failed. I killed it just above my entry. I could just sense that it wasn’t going the way I wanted it to, so I closed it.

When assessing delta, if you’re looking at a 10-minute candle, let’s say this is the current candle. Now, you look back at the previous candles. What are they producing?

-1,682 was the biggest drop here. These aggressive sellers were unable to roll the market over. It was all absorbed. We have 407, 48, -436. So, relatively minimal delta here, right? We’ve got between -500 and positive 400. That’s a 900 absolute delta value.

Then this candle comes along, and suddenly, we’re at 2,300. I’m okay with 2,300 in the context of these candles. This shows aggression — a powerful surge likely to continue.

Again, consider the context of the day. It’s late in the day, and my assessment was that if they were going to run it into the close and push to another level, the next level up would have been target three. But they ran out of steam here.

Then the book started unwinding, and people were taking profits after two days of a massive rally, which is normal.

I always like to wait for a 10-minute candle to close. Sometimes, that puts me in a position where I have to chase, and that’s okay in certain cases. My level was right here, at 59.20 yesterday.

So, the fact that we broke the wedge and closed through it — I was good with that. It wasn’t really a chase because my level was here, and it had been respected most of the day.

We had a poke through, but I didn’t have a nice setup. It was a poke through a descending wedge and then a bullish break. I took a shot when that materialized.

Even though the 2,296 delta candle ended up being just a false pop, bulls tried to lift it to the next level but failed. As soon as I saw this, with 2,296 delta, we dug back down a bit more. Buyers couldn’t regain control.

We had descending buyers. You want to see this accelerate, but we didn’t. As soon as the candle closed up here and started to fail, I killed it just above break-even. It didn’t do what I wanted, and I was in it for 25–30 minutes.

CPI was whipping through, creating some conflict. We had this big bullish run-up, but hesitation was evident on the futures side, which is why I flipped to the SPY and ran options there. I don’t need to be as precise with SPY on bigger moves as I do with futures.

So, right here on the opening candle, 2,677 delta ripped through, closed, held VWAP, held the trend stream, and pulled back. The pullback held. The buy stop would have gone right here if I was trading futures and would have pushed me up to target one with no problem.

Now, you have acceleration — 2,677 delta on this candle, a P-shaped profile showing aggression, the outside candle closing through the key level, breaking out. It was around 74.75, I think. Held, then ripped.

Now, we have acceleration — 3,319, 2,555, 228. Then there’s a bit of deceleration, which tells you the buyers are getting exhausted. That’s what I mean by acceleration.

I didn’t have that up here, which is why I killed it. I was looking at this area — a wedge or bull flag. My level was 58.98 and a quarter.

I didn’t chase this one as it closed through. When it happens like this and busts through, you’ve got to let it go. Either it tags without you, or it develops into a bull flag, breaks through, closes, and then you place your buy stop.

Even though it’s painful to watch a 15-point run without you, you’re at the mercy of the candle’s intraday behavior. If you chase it and try to enter up here, it may come back down on you.

Just let it close, then make your decisions.

Now, this one comes back down, creating lower highs and forming that wedge. Now, you have 2,297 delta breaking through, holding the line. Your buy stop goes right here. The next candle opens, pushes down, then breaks up, and the next candle pushes through.

Typically, what I do is put the buy stop a few points below the high to avoid getting whipped out of a decent trade if it doesn’t lose the level or VWAP.

Yes, I know I’m buying at the highs of candles, but that’s a risk I’m aware of. If I buy right at the open of the candle, I’m guessing. I look for the key candle. This is the one that says, “Okay, I better get ready.”

I’ll put a buy stop up here. Once we break through and the next candle closes above, I’m good to go. The buy stop is up there, and if the candle doesn’t take me out, I move it down to the high of the next candle.

If the setup is good, I’m fine with taking it from 59.09 up to 59.20. The signal is the 10-minute candle breaking through the wedge, closing above, holding the line, and showing a surge of aggressive buyers — a 5x or even 6x increase in delta.

Now, you have a big surge of buyers, and that gets my attention. The candle closes through, the setup forms, and the buy stop goes in.

The first candle didn’t hit it, so now the buy stop moves up to the top of the candle. Then you get clipped in, and you take it up to level two.

Hey everyone, it’s Dale here. I hope you enjoyed the video. If you’d like to trade alongside me and our team of prop firm-funded traders every day, click the link below the video and join us. We’re looking forward to trading with you.