Key auction reversal (V Reversal) - dark colors at bottom - high volume/volatility

(large range/rotation)

responsive at bottom (discounted price)

initiative on next rotation - buyers stepping in, buying higher prices

Responsive to responsive - dark colors at extremes but market rolls back over-
breakout opportunities at extremes
Balanced Market - ranging between prev day high/low, neutral C. Delta

Imbalanced market - breakout

Imbalance within rotation - buyers or sellers more aggressive
3. Initiative initiative - buyers aggressive on the way up, sellers take over and are
dominant on the way back down - high volume both ways
Responsive - market responds at highs and lows- buyers absorb at low, sellers get
out of positions, driving prices higher - absorption at extremes
Delta pocket - area of momentary consolidation/absorption - always high volume /
delta
Highlight high volume and imbalances

min diff- eliminate small imbalances - not very important

Templating:
1. Absorption and Auctioning
Best in an imbalanced market (trading at or beyond of extremes of previous day
range

High volume (dark colors) at extremes

Volume and delta pick up at break

Other variations:

1 & 2 breakout
3 false breakout and reversal

high volume and deltas at range extremes - responsive buying/selling

when breakout initiates, light colors until liquidity (sellers) respond, high volume
and delta - imbalance shows start of initiative

Entry point is absorption at break of range -resistance becomes support

False breakout, then reverses

Look for a calm before the storm

Low volume trading at high of day
Response from buyers followed by imbalance or low volume zone before breakout

Usually buyers buying into aggressive seller response at highs of range (dark blue) -
now aggressive selling into aggressive buyer (darker red) - clue

Reversal

dark colors at extremes - negative c. delta

now light colors at lower extreme, then absorption of buyers (from sellers) at low -
clue
breaks below range, then buyers step in and absorb sellers at low, followed by
aggressive buying and buy side imbalances
Sellers more aggressive than buyers - darker at low
Clues - break of high/low of range, or switch in absorption (dark blues at low or
dark reds at high)

Go with trend - high negative c. delta - downtrend

Sellers step in at level where they previously did not, break level

stop loss above rotation

Strategy 1 Template:
2. Hiding behind the Elephant
Big buyer absorbing selling at low, breaks below momentarily with lower volume,
reverses with initiative when price comes back to previous elephant level - good for
scalp

Relative high volume at elephant

Enter at retest and break of elephant level

Low volume/imbalance areas are good targets

Raise stop loss to new rotation higher low

3. Failed Support/resistance break
This is a breakout:

Low volume on the break

+ C. Delta with breakout

Wait for imbalance/low volume area to be filled

Breakdown of resistance, testing that level

Enter partial on retest of resistance, enter full at break of swing low

initial break of resistance - buyer absorption, then buy imbalance, then higher buy
absorption
small pullback with heavy absorption - clue of breakout

then more light volume and extention

Low volume area is filled out - signals strategy

Enter at break below rotations that have tested below resistance level (line, circled)

Imbalance at break of support - breakout sign

Responsive buying just below break- false breakout sign

Bounces back up, buyers showing initiative, buying higher
4. Imbalances
strong imbalance (dark colors) will likely continue

weak imbalance (light colors) will likely reverse

keep imbalance between 200% - 400% (settings)

More than 3 prices showing imbalance within 4 price range - ideal

Initiative - imbalance

hits liquidity, then retraces - market always tests imbalances

look for absorption in front of imbalance level - tells you the buying initiative still
exists

ideal in an imbalanced market

trade in the direction of the imbalance

Imbalance on high volume and delta

Wait for a retrace and absorption, then enter long

Retest of imbalance level with absorption

Second retest of imbalance level breaks into imbalance zone, enter to ride to other
side of imbalance zone and look for reversal and fill out
retest of imbalance level, absorption, enter long. Retest again, breaks below
imbalance level, go short to fill out imbalance zone
Enter at break above absorption

Stop loss at low of imbalance zone

----

If the imbalance starts to fill out it can spend a while in a range there

if price drops below absorption, look for scalp from high of imbalance to low
best in a balanced market
5. Exhaustion Reversals
Go short at lower high

Scalp long at pullback with absorption - highest probability

Long - bad high/low - high volume imbalance

1st rotation - large imbalance zone, absorption, imbalance at low

Go long at absorption at low of 2nd rotation

No absorption at high of 2nd rotation to go short

Imbalance at high, absorption at low of next rotation
Imbalance at low, absorption several rotations later
Large negative delta at first red rotation - divergence - high price, negative delta

and absorption
6. Initiative drive
At open or mid session

look for imbalances at open during drive

look for high volume during drive mid session

After strong drive, enter at 1st pullback

Dark deltas at highs/lows of pullback consolidation

stop loss about same length as pullback rotation

Sellers will be absorbing more than buyers at tops of consolidation. Once buyers
step up and absorb more at the highs, look for extension
Opening drive, consolidation and pullback. Look for signal after pullback

Drive, pullback, enter at selling absorption at low of pullback

Buying absorption at high prices - clue of extension
Pullback should be for at least a couple of minutes or rotations
Buyers stepping in at high of range, high delta
7. Key Auction Reversal
time based rotations - better to see relative change

point and figure rotations - better with trends, momentum

Enter when absorbing shifts from bid (red) to offer (blue)

look for large engulfing candle, enter when pullback reaches previous high volume
area
aggressive buyers at top, then aggressive sellers just below.. pullback to high volume
area, then more aggressive selling
Aggressive buying at top, aggressive selling just below, engulfing candle, enter at
pullback to previous absorption area
at low - heavy selling/buying, then light colors (response then initiative), last
rotation - heavy buying/absorption
at top - buyers strong at first, then sellers absorb them and price heads lower

Engulfing pattern produces a steadier downtrend than v shaped

If weak close with high volume and negative c. delta, expect a continuation the next
day
8. Breakout
best with point and figure rotations

Breakouts need initiative

 ]

absorption - usually dark blue - buyers aggressive

delta - dark color just before break

volume increase

prices per rotation (bar size) increase

stop loss just above clue/signal
absorption from buyers, then aggressive buying
clue - absorption - dark blue then price goes down
Imbalances form at low - initiative taken

big shift in delta - big clue

Exhaustion imbalance at low of breakout rotation, pulls back to previous absorption
level- enter

Look for absorption at extremes (highs/lows)

Breakout pullback:
During consolidation, no initiative from sellers at lows. Then initiative comes in,
breaks level, then darker colors and buyer absorption
9. Delta unwind
Lines in sand:

Previous day high/low

Single prints

absorption

start of move

50% of day

Identify bias - c. delta with strength signal - imbalance, low volume area, single
prints
exit when delta is "fully unwound" or extreme of day is hit

enter at absorption just before "line in sand"

delta is unwound - very low
10. Risk Event
Enter on the way up

reenter in front of low volume area

move too fast to enter - enter on pullback at absorption area