The sell off yesterday after the US opening, was this visible somehow in the order flow? Is there in situation like this a kind of "announcement" in the order book visible or recognizable? Probably during the sell off, but before it happens "signs" would be exciting....Thanks!
This is an excellent question for DT Pete. I too am looking deeply into this exact issue and have videoed the Market Replay of that sell-off, along with several other similar events recently (would be better live of course). Seems algos are employing shock tactics to throw us 'slow humans' off long enough to get price down before us 'humans' are sucked in to sell into the same algos buying contracts back! With the Jigsaw tools we ought to be in much earlier.
My focus has been on looking at the momentum on the D&S as noted by DT Pete in his webinars, but that can be so wild and intimidating. Now taking a closer look at the Summary tape which shows incredible bursts of activity at each price level that can easily be missed or misinterpreted on the D&S.
Look forward to DT Pete's comment on this topic. Gonna be crucial going forward I feel. And once we nail what is happening it will no doubt change.
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Your question sounds a bit like can we predict such a reaction ahead of time? The best you can do is to form an appreciation of the situation along these lines (dts-pre-market-prep) and try to seize an opportunity when it presents itself around key areas. As can be seen in the commentary, the old breakout point at 1947.50 was a key area.
Here was my analysis of the situation. The location of supply along with the bearish channel was favoring a short at the open. I don't think you can do much more than that in terms of expectation given the context.
P.S. this chart shows the PA of the ES but using a CFD contract so the levels may differ a little bit but the overall picture is about the same.
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Good points and you are right to say we must keep our eye on the overall market profile and other clues. From pure price action the opening last Thursday was certainly a swing sell based on Wednesday's closing action (wedge top).
But original query is still valid in that how do we best use order flow to validate high momentum breakouts as these can happen, and have been recently, at any time of day. Order flow is short term, sure, but do the Jigsaw tools show when we should be joining a breakout rather than waiting too long. Holy grail stuff perhaps but worth asking DT how he handles these flash events. Especially at the open when many big orders being placed may have no relation to profile or PA.
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"The bottom line is this: A change in order flow comes BEFORE a change in price."
It would be nice if one could see this i.e. at the mentioned situation or should i bring it to the point: are the jigsaw tools another interesting instrument, which show "only", what should i have done in hindsight? (i admit i´m still working through all the videos and essays, so i´m not completly informed...sorry for my early question about this)
Waiting, Discipline and Patience Pays!
Last edited by pipandrun; June 29th, 2014 at 08:17 AM.