gian

@godcomplex96

22 Tweets • 2022-06-17 17:49:27 UTC •  See on Twitter

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1/ prob repeated this a million times but theres

always newcomers and feel bad when they get rekt
utilizing momentum strategies in meanrev
environments so.

a thread
2/ First of all we need to understand that markets
are cyclical. we go from imbalances (trend) to
balances (range) and pretty much loop it.

Markets tend to trend only 20% of the time and

range 80%, this is very important to understand
cause they have completely diff approaches

3/Most kinda 'know' how to trade a trend,

irrational actors tend to feel more attracted to
aggresive participation so its more intuitive to
follow a trend, so we will cover the other one

The bracket, the one that people struggle the most

and unironically happens most of the time
4/ A bracket occurs when it starts trading between
two pivots. This simply means that Buyers and
sellers established a fair value and none of them is
really interested in pushing it forward through a
direction.

In a bracket we are going to be looking for

Responsive Action.

5/ What is responsive action? Responsive is when

buyers respond to price below the value area, and
sellers above. Simply because above they are
finding a premium and below a discount.
6/ The most common mistake is trying to predict
when the bracket is going to break rather than react
once it happened.

A rule of thumb is to:

*LOOK FOR REVERSALS NOT CONTINUATION*

7/ By law of mkt dynamics, once price accepts into
a balance area, the most likely scenario is that
revert to the other side, and once inside is expected
to reject edges until proven otherwise.

Once price accepts outside is likely to become

imbalanced (trend)
8/ So following such rules, instead of trying to
predict when its going to happen, we can respect
the range until we have the confirmation that
accepted outside

/this is going to save u a lot of money/

note * they wont respect perfectly each extreme so

there might be variations
9/ u never want to see biggest delta at extremes if u
want to have a succesfull breakout

if u do a building u want a proper foundation not all

the blocks at the top or its likely to fall.

mkt becomes very predatory in these situations.

10/ or d ones that dont know, the more times we
touch a "supp" or "res" the more resting orders we
consume so technically the weaker it becomes
(Resting orders provide liquidity and liquidity is
what stops price from moving)

So the less liq we have, the easier the price travels

11/ Here is where it gets tricky, simply because we

could test a supp/res 2 times and it could break or
we might need to test it 50 times before it breaks.

The easiest way to get a hint that is going to break is

when Initiative Activity/ Imbalances occur
12/ How do i detect Imbalances

Imbalances show u where buyers overcame sellers

or viceversa. in Footprints its compared diagonally,
we need to pay attention to those that are stacked
together and in CONTEXTUAL levels where market
moved with strength
13 /Its v important to pay attention to how OI and
relative volume behave when such imbalances
form. a High volume imbalance w increasing open
interest will be completely different than a low
volume with falling open interest

Jim dalton explaining increasing or decreasing

volume

14/ Low volume imbalances tend to reverse and fill

quickly, while high vol ones tend to continue in the
direction of the movement prior to being retested.
15/ But such auctions wont happen often in a
Bracket, so we rather need to focus on Absorption
and Mousetraps. going to explain what each one
means.
16/ Absorption happens when high rel. volume
market orders appears at the extremes trying to
break but someone is filling w limits

If someone with size shows up and doesnt move the

price in that direction.. what doesnt happen
sometimes is the most important piece of
information
17/ Mousetraps are pretty much SFPS in traditional
terms, but here we can actually see if most of the
volume is trapped in the wick rather than in the
body, if its in the wick theres a high chance of
people being trapped
18/ Video about mousetrap
19/ Pretty much we are looking for aggresive
breakout traders to position themselves offside
(Open interest needs to be increasing so we know
new positions are being open) if OI decreases its
pretty much shorts closing and has a different
impact.

fav strat for a bracket

20/ This is how it would look in current btc

situation.
 21/ idk if im missing smth honestly too lazy to
review but will add if smth else comes to mind.

massive thanks to @NoPareidolia since most of the

images are examples made by him

hopefully it helps someoen!

sry if its a mess. i lik to ramble w/o checking if i

messed up somewhere

ay!

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