Five Easy Tapes: Open Drive

Don't Short America: July 3rd

Each week I review key moments from recent price action in the indices. These instances will be analyzed using three methods: the tape / DOM; footprint; and candle chart. Synthesizing the three allows an understanding greater than the sum of its parts, leading to a complete understanding of the auction process. There are many great resources out there, although I am not aware of any that provide such a comprehensive study guide.

Image 1. Five Easy Pieces. B. Rafelson (1970)

Live Tape

In this and coming examples I will share my screen with the tape and footprint during live trading sessions. Not all of these worked out, the key is to understand what is going on during the session, as well as appreciate when things suddenly change - or your reading was off.

I had to rewatch this film as the title was right there - after all I have three recorded sessions and two more planned for next week. The only thing missing are crude (CL) trades.

With these ‘five easy pieces’ I hope to catch a variety of conditions for you birds to review.

What better action to start with than an open-drive!

July 3, Bidding an Open Drive

Again, I typically plan my entries on absorption → exhaustion → counter-initiation. This is true even in an open-drive. Even though price is quickly ‘running away’ there is NO need to chase. A more opportune entry is usually around the corner.

And if not, that’s okay the market is always open tomorrow!

Apologies for the video quality/dimensions - this was a live round where settings were off. Thesis and execution are what counts.

Video 1. ES tape / 5m footprint. Trade entry

Setup: Open-drive after a strong overnight session. Little to no inventory correction (strong buyers!)

Thesis: A potential retest of the opening 5m candle POC / key level 6300 on responsive selling, for a possible rebid/continuation of strength.

Observations: