Inside Our Live Trading Room | POC + VWAP Confluence → Delta Flip Short

All right, everybody. Let’s take a look at my trade of the week here on day trading the S&P futures. So, heading into the day, just to kick off the background here and set up this trade, it took a little bit of analysis. You can see right here we are in a kind of a P-shaped weekly profile. We’ve got some D-shaped profiles up here, creating a little bit of a range on this Monday and Tuesday. Then here on Tuesday during the cash session, we broke above and failed a new all-time high, and rotated back down into the range, right back down to the value area high. During the overnight session, we kicked off some continuation selling from this failure, pushing us straight back down. So, on the open of the New York cash session, price was right here.

So, heading into the day, I was looking to see how price was going to respond around these POCs. Are we going to break down through them, or are we going to bounce into them, have these levels hold again, and then bounce back to the upside? Well, you can see here clearly that during this particular moment in time, price came down off the open with a big delta surge to the downside. Now, right in here, in my estimation, there wasn’t much to do because we had some 9:00 news coming in, and I don’t want to be in the middle of a trade during that 9:00 news. Once the 9:00 news settled, we were about right here. So, there’s not much to do here for about the first hour of the open. Instead, I let the market go and do its thing.

So, the market drops off the open, pulls back a little bit, and drops again. Now we come back down to the other key area, which was this thin print created back on January 5th. We had some thin prints right here on the Volume Profile. We tapped into them a couple of times here and there and failed them again right through here. And so now we come back in, we fill them, and we bounce. Okay, so now we’ve already broken down through here. The sentiment on the day is very bearish. It’s highly unlikely that we’re going to pop, break, and keep carrying on. It could happen, but it’s very unlikely.

So, let’s take a look at that secondary bounce here after we filled the thin prints down here. Price popped up very aggressively. We built a nice bullish delta here along the bottom, showing a little bit of a building block. Then price popped up hard and aggressive, bringing us back up above that POC right through here. As we broke to the upside here, we look to our left and we can see that we have a massive sell stack right through here on the way down. This massive sell stack, coupled with this little zone right in here, was a prime area to look for failure. So, as price comes up here, we start to see heavy aggressive buyers fade a little bit. We see a nice delta flip, and we see failure to break above and through this sell stack over here. We failed VWAP by a couple of points, and then we had a nice rotation to the downside. You can see the delta fade and then finally flip on this candle.

Now all I need is a structure break. So, we break down right below here. On the very next candle, price opens up here, rips down, and we get a triple stack market order to take this thing down. All right. So, this was all premised on letting that first half hour 30 minutes, 45 minutes, even an hour run free. Sometimes you’re going to miss an opportunity or you’re going to miss a big movement, but without a setup, it’s kind of all irrelevant. So, as price pops back up here, we had that failure, we had the delta flip, and we can check all the boxes. We had a break of structure, we had sell stack initiative rotating back to the downside, a delta flip everything at key levels.

Understanding those key levels when you come into the marketplace is pretty crucial, especially when you’re looking for one of two things to happen: either price breaking to the downside, bouncing, and then failing to retest the underside of those key levels, or failing within that zone, which is exactly what happened. We can move forward on this one to see that rotation all the way back down.

On the way down, once I’m in the trade, my stop goes up here. If price ends up giving me a failed breakdown within here and we pop back to the upside, this would invalidate my trade idea, so I would take the loss over here. As soon as this candle closes, this candle opens, and we clear below this low, this is where I begin to move my stop down to either break even, or just a few ticks above or below break even in this instance, to secure a few bucks. Then price surges to the downside. So once this candle closes, this candle opens, and we clear that low, I again move my stop, in this case, at about the halfway point down.

My target was this swing low right here. So, as soon as we come up here, I’m targeting this swing low. I ended up taking it about a point or so before that swing low, but on the way down, I’m notching my stop loss right behind the very next closed candle. And so I took some profits here, left a runner all the way back down to here for about a 19 and a quarter point trade on this one, which was a really excellent trade of the week.

All right, I hope this was all helpful. Thanks for watching. Hey everyone, it’s Dale here. I hope you enjoyed the video. If you 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’re looking forward to trading with you.