Have a look at Wyckoff. Looks like a spring...
Also it could be classified simply as a failed breakout, you see it quite often in ranges.

vvhg

That is what Wyckoff called as "Spring". You get detailed analysis of Springs and Upthrusts in Wyckoff Trading Course. It is an excellent place to initiate trade with tight stop loss.

Ofcourse one must be aware of different types of springs, the importance of their location in the trend etc. If you are interested go through Wyckoff trading course

Upthrust is just the opposite of spring.

David Weiss, veteran Wyckoff trader, says one can make a living by trading springs and upthrusts alone.

Hope this helps
R. S. Iyer

Let us assume that this "classical transfer of funds from one group to another" happened in 3 red bars which are just below that blue horizontal line. While most others were selling, "This Smart Group" was on the buying side. Now how would this thing reflect in the Delta or any other tools. Is there some way to properly quantify it, so that we can then create some Alerts etc. which will hint us about a similar opportunity being created in real time.

Thanks Fadi, looks like a nice setup, the way you have explained it.
Do you take such trades just based on the Candle Formations alone or you pay attention to some other conditions / indicator values, as well.

And any comment regarding the frequency of such setups on your favorite instruments GC, CL, 6E, ZB.
Have you noticed this kind of phenomenon happening more often in one particular instrument, compared with others, or does it look like to be a common pattern in most of them ?

Thanks for your input.

Hi there
This setup has worked on all instruments, futures, stocks and forex alike.
It also works for me on both sides (long/short) you just need to inverse the logic of course.

Take any instrument you want, and check back the historical chart, I am sure you can derive statistics out of it, I've never calculated any occurrence probability, and have no interest in doing so, sorry.

Either way, the failure rate of this technique is around 20% to 30% so just keep that in mind if you wish to try and trade it.
The best success rate, is when you see an extended move, three or more wide bars for example followed immediately by the bottoming tail and on relatively high volume.
At the close of that candle in the shape of a tail, I usually place my buy order at a retrace of 50% or more of that same tail.

If you are watching ZB on the daily chart, today's candle could qualify as a bottoming tail somehow if we close at the bell at 146 or above. Not the best tails, but could work. I however usually favour long tails, real long tails and the higher the volume the better...

In delta you will see lots of red, and much larger than usual volume. Nicely enough, the initial bar (the pinbar as you refer to it) has about 2x volume more than the bar which forms the low itself (indicating less selling interest on the probe lower). My guess would be very red delta on the pinbar, then on the low bar a bit more mixed, with still negative delta.

So, be aware of volume. But don't assume that you buy this automatically, unless you want to get steamrolled on a regular basis. This game is only won by those who have the capital to actually make it work. So the volume is a nice heads up, and then if you are looking to buy you will notice that the market only spends 4 minutes below this support line you have drawn, and then those willing to put capital towards a long hold it above your support line. This is the time to enter. It's the classic tradeoff -- you want to know where the low will be. But you don't have any objective confidence it was the low until after it has proven to be the low. Guessing the low and the high for taking on risk (entering trades, not exiting) is a loser's game. No one likes to hear this, and many people say they are good at this, but they have a selective memory and remember the 1 out of 5 times they get it right.

Said another way, let those with the money take the risk transfer--they can afford it. Make them prove to you they are serious about supporting your trade idea. Make them show you they will work on your behalf. What this means to you may be different from what it means to you, but the premise is still the same. Then join them.

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Mike