🎯 Detailed Order Flow Analysis | Trade Confirmation Setups

Hello everyone, it’s Dale here, and today I’d like to do a detailed trade analysis of a trade on the Euro Futures(6E). What you see before you is the Euro Futures(6E) on a 30-minute time frame. This is where the original analysis of the trade was made. Let’s first cover that, and then we’ll go into the details, talking about order flow, order flow confirmation, and how one of our members of our trading group executed the trade.

Let’s start with the level. It was a support level based on a volume profile setup—a trend setup. It was a very clear level because it was based on heavy volumes that formed within this uptrend. Basically, this is the volume profile trend setup where you look for significant volume clusters within a trend and then trade pullbacks to them, like here. This was the reaction to that trade, but there were a couple of things I’d like to discuss.

The first thing is that there was another reason for this long level, and the member who was trading it actually noticed that, which is pretty cool. The thing is, this was a failed level from the past. As you can see here, there was a heavy volume zone. If I extend the line like this, you can see that this level failed in the past. The price went past that strong level. However, if a level fails, it doesn’t necessarily mean it wasn’t strong or that we made a wrong analysis. It simply means the buyers were too strong and pushed through. But the level is still there and adds strength to our new level, which is based on those heavy volumes. So, the level we have here is based on two things: the volume profile setup here and the fact that this was a failed short level in the past. That’s the reasoning for this support level.

Another thing I wanted to mention is that this red candle that occurred before the level was actually a macro news candle. It was retail sales macro news, combined with unemployment claims. Although it wasn’t the strongest macro news, it caused a very strong and aggressive selloff, making this trade risky. This trade wasn’t taken right after the news; the price hit the level about 13 to 15 minutes after the news was released. If it had been right at the time of the news, there would’ve been no point in taking the trade. But because it was after the news, it was less risky to take the long from here.

Now, what our member did here was to place the stop loss a little wider, somewhere in this low volume area. That’s why he didn’t get stopped out when the price overshot the level a bit here. He moved the stop loss to this low volume zone instead of the usual place because of the macro news and the strong selloff, allowing the trade some breathing room due to the increased volatility, which eventually saved him. This was very good thinking.

When the market is spiking against my level, like here, I go to the order flow to see some confirmation that the level is going to work and that it’s not too risky to take the long trade. I need to see significant buyers jumping in; otherwise, it would be very risky for me to enter a long trade from here. Let me now go over to the order flow and show you what exactly happened when the price reached that support zone. This is where we delve more into the details.

This is the order flow layout that I use. All the charts show the point where the price hit the level. This is the long level on this 30-minute chart. This chart is a 5-minute chart, and the level was here. On this chart, the level was here as well—again, on a 30-minute chart, but this one is filtered to show only the huge orders. Lastly, on this chart, the price hit the level. This is a 1-minute chart, and I’ll stop here to talk about this chart.

Let’s focus on this one. This is a 1-minute line chart, and below that is the cumulative delta. Essentially, cumulative delta shows the difference between aggressive buyers and aggressive sellers. I use this chart to look for divergences. Usually, the price and cumulative delta move in the same direction. If the price goes up, cumulative delta goes up, and vice versa. But in this case, there was a huge divergence. As the price was dropping here and hitting this zone, look at what cumulative delta did—it went up. This means that even though the price was dropping, buyers were jumping in. The price didn’t initially react, but buyers were active. The price tends to follow delta, so if buyers start jumping in, the price eventually turns and goes upward. This divergence alone would be enough for me to enter that long trade because I see that buyers started to jump in at the level I wanted to trade from. This is very strong confirmation.

Another confirmation was on the filtered chart, which shows only the huge orders from big trading institutions, filtering out market noise. As the price was dropping towards the level, just a tiny bit below it, a huge order of 119 contracts appeared. Now, when the price is dropping towards support and a large order appears at the bid, it’s likely a limit buy order. This is another strong confirmation, indicating that a big trading institution or trader was waiting at this support with a limit order and went long when the price reached this zone. That’s another confirmation to go long from this level.

One last thing—just a little bonus. If you look at this 5-minute chart showing bids and asks and some other details, notice the red dotted lines. These show unfinished business, which the price likes to test. There was a zone here with many unfinished businesses in the past, which we can call an unfinished business cluster. The price likes to test them, so as the price was dropping, it tested all the unfinished business lines in that cluster, tested the last line, and then, if I zoom out, reversed and went upwards—but only after testing all those unfinished businesses. So, if you’re in a short trade like this, it’s likely that the price will want to test all those unfinished businesses if they’re stacked like this, and you can trail your position accordingly.

Now, let’s talk about take profit. Let me show you where our member took profit. Switching back to the 30-minute price action chart, he made a perfect exit. This is where the trade entry was, where he went long, and where he exited the trade. The reasoning was that this level was support in the past, and when the price shot past that support, it turned into resistance. That’s why he exited the trade here.

There’s also something else I noticed that he might not have been aware of. Let me show you—back to the order flow. I’ll go full screen with this filtered chart. This is the place where the price was dropping, and this is the support where he went long. The greenish line is where he took profit. As you can see on the filtered chart, a massive order appeared here as the price was dropping. Someone placed a huge order at this point, indicating that this level was significant in the past and a very good place to exit the trade. This could have turned the price, especially when combined with the support becoming resistance setup I mentioned earlier.

This huge volume note and combining the two factors gives you a very nice place to exit your long trade.

That’s about it for this detailed analysis. I hope you guys liked it. Let me know if you’d like more detailed analyses like this one. If you’d like to join us and trade with us every day, head over to my website, Trader-Dale.com. If you click on “Trading Course and Tools” it’ll take you to a page where you can browse my trading education and custom-made indicators. Here’s the Volume Profile pack, which will teach you everything about volume profile trading. This is the Order Flow pack, focusing on day trading with order flow. And the latest one, the VWAP pack, was released recently and focuses on trading with VWAP and anchored VWAP. If you scroll down a bit, you can purchase a combo of these packs, which means you can get all three packs together at a massively discounted price.

That’s about it. Thanks for watching the video, and I look forward to seeing you next time. Until then, happy trading!