Textbook ES Short Using Smart Money & Order Flow

All right, welcome, everybody. Dan from Funded Trader Academy. Let’s take a look at this 6.5-point base-hit trade from Monday, August 17, 2026, on the S&P futures contract. We’re going to assess this trade from start to finish here using a couple of tools. We’re going to use this Order Flow tool called Deltaflow, which incorporates the flows of delta throughout these one-minute bars here. So, we’re going to take a look at that for this rotation that took place up here. But more broadly speaking, let’s start from the higher time frame, where we’re really going to assess some Smart Money concepts framework. Okay, so heading into Monday, let’s just kind of recap where price was, right? We were in this consolidation band here heading into the latter part of that week. Then Thursday shows up and price pops to the upside, taking out the previous all-time high, setting a new one, and then moving right back into consolidation. Then we had that Friday bearish inside day that introduced a little bit of short-term bearish flow on top of that broader bullish flow. So, heading into Monday, this was in contention. We had to deal with that. Okay, so as we head into the market, let me go ahead and just move this back here for a second. As we were coming into the open, we’re looking at this and, broadly speaking, we have two major imbalances to contend with. We have the bearish imbalance here that was injected on Friday, and then we have that broader bullish flow. So, as we’re heading into the open, the assessment is that I’d like to see price move down, and I want to assess how price responds. Okay, do I see failure down within here, or do I see a bullish rip back to the upside off of that, or do I see a displacing move somewhere in here to move prices back down? Okay, that’s kind of the thinking going into the open. If the move is up and we displace up, then we’ll play that. But that obviously didn’t happen, so we won’t go over that. Let’s walk this forward. Okay, so that’s kind of the thinking. We want to see price move down, and we really want to see how price responds around these two imbalances right here. Okay, so let’s walk this forward. Right off the open, what do we get? We get price moving down kind of in a grinding way. Oh, we haven’t actually opened up yet. Hang on one second here. We’re getting close. Okay, so the market is opening up. You see all these transactions start to pump in. We go side to side, and price is moving and moving. We don’t really have any clarity at this particular moment off the open. Okay, so price is shoving down. It’s kind of grinding its way down, and you can see that taking place here on the one-minute candles. So let’s keep going. All right, so we have this sideways motion taking place. Okay, so now what just happened? We just rotated into the 9:00 hour. We’ve got a brand-new candle coming in. That initial impulse move to the downside, or this trend down, is carrying forward. We’re pushing right into this 4-hour imbalance. Okay, but what do we note? We note that right up in here, we had a 4-hour imbalance hold and create a new 1-hour imbalance. Okay, so that’s seemingly a little bit bearish. If we can find any kind of buy signatures down here to rotate back to the upside, we could look at that. All right, so let’s keep watching. Do we see any bullish behavior coming down? We see aggressive bears dominating, pushing price down. Some bulls step in here. They get absorbed and run over. Heavy bearish flow is pushing price down. Potential trap situation here. We have bullish flow coming in. More potential traps as price rolls through. Okay, so let’s keep rolling. Do we have any kind of moment of clarity here yet as the market is moving? All right, we’re now almost an hour into the market, and really, not yet. We have more grinding motion back down, right into this imbalance. We’re not seeing any bullish transactional flow come in with any kind of horsepower able to lift this market up. We’re seeing the exact opposite. We’re seeing weakness, right? Every pop-up gets smacked down. Every pop-up, again, is getting smacked down in this very minimal range. You know, we’re operating within about a 15-point range or so. Okay, so let’s keep rolling. Just noteworthy as that rolls through. Okay, so price continues to chop. We’ve got our initial balance. We have just some more grinding chop, essentially, as price moves down into this higher time frame. This is on the hourly over here. This is on the one-minute, and we’re just kind of assessing both of those time frames. Okay, so now we have more bears coming in. Now we just took the initial balance low right here, and we still have some more grinding and some more chop. Okay, we’re approaching the 10:00 hour here, Central Time, right? We’ve created a 1-hour bearish imbalance here. We’ve created a 15-minute bearish imbalance over here. Okay, so if price comes on up here and we test it and it fails, I’m more apt to go short than I am to look for a long because this flow is holding, we’re creating new bearish flow, and price is shoving downward. Okay, so as we keep rolling through, we take that initial balance and we start to see new bearish flow. Okay, so at this point right here, this is our point of clarity on the day. This is where we know, with a high degree of certainty, that the flow is pretty bearish. My cautiously bullish bias heading into the day has been shot. Okay, now I haven’t done anything. We’re an hour and a half into the market. At this particular moment in time, we have short-term bearish flow holding up and creating new bearish flow to the downside. All right, so we keep going. Now, at this point, we’ve created this 1-hour bearish flow right through here, this 1-hour bearish imbalance right here. Okay, so at this point, the level of thinking is that if price pops up into here and I get bearish sell signatures, I’m more than happy to take a short in here to retrace back down to that prior swing low. So, that’s the thought process as we keep rolling through. Okay, let me just get rid of this. All right, so as we keep rolling through, price does just that. Okay, so we see very weak bullish momentum in here. You can see there’s just an absence of aggressive bullish behavior. There’s only that one green bubble on the way up, showing a big bullish imbalance. Just one. So that tells me that we have very weak bullish activity here, or just some passive bulls pushing price up, grinding their way back up. All right, so we get up to our point of interest. Okay, we get back up to this psychological level of 7,800. Price gets up there. What do we see? We see potential traps. We see exhaustion. And then we see this right here. This bubble right here is showing that there are heavy, aggressive bearish sellers pumping into the market at this particular moment in time. Okay? And they’re coming in fast. That dark ring around the circle shows me that we have more than 50 contracts per second going off at this particular moment in time. Okay, so now my interest is piqued. We’ve pushed into an area of imbalance. We’re at a key level, the 7,800 psychological level, for a retest, and the bulls popped this thing up very weakly. Okay, and broadly speaking, on this immediate leg, the bearish flow is dominant. Okay. All right, so we have a downtrend. We have a potential short situation. We see a potential trap. We have exhaustion. And we have sellers pumping in. Now, what do we need? We need a shift in control and a break of structure. Okay, so as we look through here now, we want to see the bears come in and break this structure. Okay? At the very bare minimum right here, we want to see failure, a break of structure, and bears start to pile in. Let’s see if we get that. Close, right? Came in close. All right, let’s keep going. Oh, there are some more bears. Some more exhaustion bears right here. Heavy, aggressive bearish flow closing strong with momentum through this structure break, this one and this one right here. Take your short. Here’s your base-hit target. Right. Let’s go ahead and sell. Stop loss is going to go up here. Take profit is going to go right here. Okay, not the greatest R:R initially, but as price moves, you can tighten up your stop, right, and keep rolling on a per-contract basis. There you have your base-hit run. Okay, so let’s recap here. On the broader time frame, we had an all-time high. Price stalled out. Okay, a nice deep run into all-time highs here. On that Thursday, we had price stall out on Friday, and then we introduced some new bearish flow on Friday. Okay, so coming into the day, we wanted to see one of two things. We wanted to see which imbalance was going to win out. Okay, so this imbalance and this imbalance essentially framed your day. So, when price moved down here, we wanted to see one of two things. We wanted to see price rip through this, pull back into a new area of imbalance, and move down. Well, it didn’t quite work out that way, but we did do something pretty telling here, right? The bearish flow held up. The short-term bearish flow held up here during the pre-market, and the New York session confirmed it with the creation of new bearish flow. Okay, the market went down off the open. There was an absence of bullish behavior down here, and instead, we had bears dominating. So, on a weak pop-up into this 1-hour imbalance right here, the thought process going in is that if the bulls pop this thing up and we see our sell signatures right through here—and what we’re looking at right here is almost a textbook sell signature into an area of imbalance—we have traps, exhaustion, bears stepping in in a big way, and then the bears come in and clobber it and shove price down with a break of structure right through here for a base-hit run. Okay. All right. Well, I hope that was helpful. We’ll see you guys over on the next video. 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.