How to Trade Reversals Using Imbalances and Order Flow

All right, welcome, everybody. Dan from Funded Trader Academy here. We are going to take a look at my S&P 22-point trade of the week, which just hit yesterday on June 29, 2026. But we are going to go through a little broader context here, just to start things off. As we look at how this market materialized going into the morning of the 29th, this is what we were looking at just before the bell. We had a 4-hour and a daily bearish imbalance to the upside of price, and we had some bullish imbalances to the downside of price. We had some consolidation and some D-shaped volume profiles in here. There was a little bit of consolidation, a dip, and then a recovery. In the short term, we had some bullish flow hanging out here. That materialized out of a broader weekly imbalance that price was pushing out of, creating some new bullish flow. Okay, so in essence, we had price surrounded by imbalances, one bearish and one bullish, and we really did not know what price was going to do. But we could map out a couple of scenarios going into the market. Whenever we have a scenario like this, we can map out specific ideas that we have going into the market. So, if price comes down off the open and we get a dip off the open, followed by a failed breakdown, then we can look at a failed breakdown scenario and let this short-term bearish inertia carry on back to the upside. There was another scenario as well. The two primary scenarios that I had coming into the day yesterday were price popping up to the upside, failing, and rotating back down for a reversion-to-the-mean trade, or price dipping lower, failing, and rotating back to the upside.

As price was opening up, this was the 8:00 hour. As price was opening up, let’s go take a look at the smaller time frames here and dissect that. Here is this opening. Here is the open right here. So, we were looking at these imbalances to the downside and this imbalance to the upside on the ES. As price opened up, it whipped back and forth a little bit. We got a nice little bullish push to the upside. Price pushed into this bullish, I am sorry, bearish 4-hour fair value gap right through here. We got ourselves a nice bullish push. You can see the bullish deltas pushing price to the upside, getting exhausted, trapping, and then rotating back to the downside. I could not get an entry on this particular rotation back to the downside. We had our little manipulation move to the upside, failure, and rotation. I either missed this one or what have you. So be it. No worries.

Scenario number two came back around. Price dumped all the way to the downside. You can see aggressive sellers just pounding price down back into our other area of imbalance, and price had a nice aggressive selling push into these levels and into this zone. We trapped some late retail sellers at the bottom. The bulls took over and broke structure back to the upside. Here was my entry at 7435. Risk goes at the body lows down here. We risked about 10 points on this trade to get up to about 22 points, which was just a little reversion-to-the-mean trade. We got a little bit extra on top of that, a couple of extra points on top of that.

To recap, we started off the day by mapping out a couple of scenarios. We really just started off by framing our day. That is all we did. We took a look at this consolidation. We looked at areas of imbalance. We looked at areas and levels where we were interested in potentially doing business, and we just waited for price to arrive so we could strike. I did end up missing this rotation back over to the downside off the open, which is totally fine. Price failed up here first, rotated back down, and then gave me my entry back down here with a trap, a delta shift, and a break of structure. I hope that was helpful. We will see you guys over on 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.