ES GDP Commentary - February 23, 2023

URL: https://www.youtube.com/live/R4eV-dYNhi0?si=Dc52dIOrY4YJ62Td Watched Date: February 23, 2023

I just want you to observe what happens—how much movement comes into the marketplace, and how fast it goes below these lows or above the highs, and maybe reaches up into this area.

The benefit of watching it live is that you’ll see, as it’s happening, how it behaves when it hits those areas where real orders are resting. Does it continue moving higher once it goes above that short-term high? Or does it fail to even reach that point and instead aggressively drive down into these levels?

Like if you throw a ball really hard at a wall—what’s it going to do? It’s going to ricochet and come back. That’s the kind of effect I’m watching for here. Does it do that?

If we get down into this area here — that small section of imbalance on the 15-minute timeframe — and it trades into that, then I’m not as interested in the one above. I’d like to see it leave this area open, and also leave the buy stops above untouched for now. Don’t trade to it yet. Wait until 9:30.

At 9:30, whichever side it runs for first will give me a better game plan. The reason I marked this area is that we were looking for a reason for it to drop into it. We went below it. Now, at this price, look at how the bodies of the candles are behaving: even though the wicks poke above, the bodies are clustering right around that midpoint — see where it’s just returned to right there.

That midpoint, with the bodies staying in here, suggests it wants to start exploring lower. But I don’t want to see it do that yet. I want it to stay between the low that has formed and the high that has formed, and go into 9:30 before making its move.

Whatever that first move at 9:30 is, if this range stays the way it is — this high and that low — either both sides have already been knocked out of the marketplace or traders are trapped. So the 9:30 movement, starting in less than an hour, is what I’m expecting to be the fake move — like a red herring.

I don’t really want to see it respect the bottom end of that rectangle. That area here is the candle’s high. I don’t want to see that. But if it does want to go lower, it will respect it. So you’re going to watch this and determine: is it likely to expand ahead of 9:30? If so, then we’ll have to wait for something different at 9:30.

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There are times when I can see something setting up and expect it to unfold, but it’s not the kind of move I want to participate in. So I just sit and observe. Once it happens, if I can see it was likely to occur but I chose not to act, it teaches me discipline—the ability to avoid acting sporadically, emotionally chasing, or getting carried away with excitement.

That’s exactly what I wanted to see—holding the range without breaking lower, staying between that high and low, and saving the real price run for 9:30.

So what we’re watching is this range, from that low to that high, to act like a box. Above or below it, sentiment and expectations shift, new triggers form, and traders start seeing things differently. That’s why we want it to stay compressed, like a spring tightening up. Then at 9:30, it releases. Wherever it breaks first, we’ll watch closely to see if it rejects—that’s the fake move we’re looking for. If either side gets taken out before 9:30, then we’ll need to adjust and use something else.

Now, if I were bearish and wanted to see it move lower before 9:30, the setup would be clear. Price went up into that area, then slipped back down below the shaded zone. As long as it stayed beneath the upper edge of that rectangle, I’d expect it to continue lower. That right there would have been a short entry if I were bearish—then I’d target that range below.