Trading an inside day, week or month

There are many nuances to trading an inside candle or daily profile structure, and they often yield a good risk-reward set-up. The most important things to observe are the extremes of these structures.

The best moves away from balance come where we have multiple days of tight, overlapping balance, where buyers and sellers have accepted value: a move away from a long-standing consensus. This often happens when the market is waiting for new information into major news events or year end. We just so happen to have been consolidating for the last few weeks into YE 2022.

In balance you'd expect the POC, VWAPs and mids to be easily traversed, and the VA extremes to see responsive behaviour. We can often identify potential initiative moves by watching price action at these key levels.

Once a breakout occurs, I'm very conscious of pace and volume to gauge participation. A breakout is more likely to sustain when we have HTF participation.

Questions I often ask:

• Are higher prices drawing in HTF participation, and therefore is the imbalance move from balance likely to sustain?
• Where are buy- or sell-side imbalances likely to find support or resistance, and how are those areas interacted with?
• What is the pace of the auction?
• Are we leaving behind singles and LVNs?
• Are pull-backs aggressively contested and quickly reverted, or is the move consolidating or even struggling?

All moves start in balance and end in excess, although sometimes that excess shows up as exhaustion. How can we identify these characteristics so that we can better reduce risk and lock in profits?

ExampleThe breakout of the 8-day balance following the June 2022 ECB meeting. Look at the price action as we move away from the lows after the meeting.