Market Maker Buy Model Explained (With Real Chart Example)

Okay, so just shortly after the bell for the close of July, we had a bearish outside day. It took out both sides of the prior day’s candle and had a fairly strong close at the end. We did not, at this moment, take out the prior day’s low, but we’ll see what happens in the overnight. A very big, strong rotation here—or at least a big, strong pullback or retrace—from the all-time high we set this morning. We took out that all-time high and then sold off for the balance of the day.

Let’s go into the daily here. You can see yesterday’s FOMC meeting bar right here and the subsequent MAG 7 earnings that took place right through here. That momentum popped us up during the overnight; the Asian and London sessions pushed us higher, and then everything moved downhill in failure. Right off the open, we pushed down and then broke down further, starting to tag these downside targets. We did have a little pullback here—this was kind of the money entry right here—and we’ll dig into that on the 10-minute chart.

There was a ton of good-quality movement today, so let’s go through the daily. I want the 10-minute here. Okay, so as the morning was setting up, I was looking for this failed breakdown right here. This pattern looked good. The deltas on it were very unconvincing. As we broke down and got something like a hanging hammer candle here, this was exactly what I was looking for. This candle up here failed to reclaim VWAP; compression on these candles showed very low delta, and we rotated back down again.

On the downside here, what we ended up having—shortly before the 10:00 hour—was a poke through, a pullback, and then a rip right to the downside. I did end up missing this entry here, but I did catch the one from target one to target two. On this candle right here, we had about 1,000 contracts or so on the negative push up, and then this next candle opened with about 2,300 aggressive buyers pushing it back up. They failed, and price rotated back down. My sell entry went right at the body low here, and as soon as this candle flipped red, I got tagged in and rode it down for 10 points—just to target two.

Then we popped back up, and the next entry was right on the breakdown here, or you could wait for this pullback. But there was another nice run to the downside. For some bonus points—for those of you who weren’t satisfied yet—we did end up coming down and taking out that prior day low, which I believe was around 65 or 66. Right here on this tag, we started to take out the prior day low, creating that outside day. I want to say it was around 64, so we tagged it by just a few points to the downside.

So, moving into tomorrow—we’re essentially going to have this daily gap now filled. We’ll need to reassess what the overnight wants to do and whether we’ll continue further down. The pattern or tendency off these bearish outside days with a strong close is continuation, so we’ll look for that to set up. Hopefully, we get some sideways action—maybe even a slight pop up—which would be even better. Then we’ll look for a break of the low if that does indeed develop tomorrow, and we’ll start watching for these downside targets here and here.

Okay. 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, then click the link below the video and hop aboard. We’re looking forward to trading with you.