Monday Review On NQ & PreMarket Session Rules Revisited

Date: 2026-08-24

What’s up, gang? How are you?

We’re looking at the daily chart for NASDAQ September delivery. If you’ve been keeping tabs on me, I’ve been telling you that we’re likely to draw down into this buy-side imbalance, sell-side inefficiency.

So let’s add that to the chart here.

Notice this area is slightly grayed out.

When price moves down into these types of imbalances, we want to grade them. The first important thing we were looking for was whether price could close below the midpoint of this wick, which is Consequent Encroachment.

And we got that close right here.

Grading the daily imbalance

[00:43] So we knew last Thursday that price was likely to move lower. The next order of business is this buy-side imbalance, sell-side inefficiency, along with this Volume Imbalance between these two candle bodies.

Even though the wicks connect the two candlesticks, the separation between the bodies is giving us useful information. So when the market reopens at 6:00 p.m. and trades overnight into Tuesday’s Regular Trading Hours, be mindful of that Volume Imbalance.

We also have this small Fair Value Gap right here.

Remember, I told you we would clear out these highs, then trade into this SIBI and the Consequent Encroachment of this wick. Look at what we left behind afterward.

[01:36] Price failed to show any willingness to continue higher and displaced sharply lower.

Nothing up here is smooth.

There are several pockets of inefficiency: this large Volume Imbalance, this Volume Imbalance, and the remaining portion of this buy-side imbalance, sell-side inefficiency.

Now I’m going to add the Fib levels, drawing from the high down to the low of the Volume Imbalance, which is the close of this candlestick.

Then we’ll drop down to the 1-minute time frame and move through this rather quickly. I have a few things I need to take care of.

[02:24] We already had the New Week Opening Gap here, so you can see that clearly.

NWOG and overnight delivery

[03:38] The market opened at 6:00 p.m. Sunday evening, traded aggressively lower, then rallied back up into a quadrant level of that daily buy-side imbalance, sell-side inefficiency.

Remember, we’re still trading inside that larger imbalance. Price comes up and uses Consequent Encroachment, the upper half of that range. If the market is bullish, that’s the type of behavior we want to see. It rallies, reaches an octant, tries to continue higher, fails, and trades lower.

[04:27] Price trades down into 8:30, meanders around, then rallies during Asia. It falls short of reaching this octant and trades softer.

From there, it uses the New Week Opening Gap, sells off, clears the sell-side liquidity, then pulls right back up into the New Week Opening Gap. Notice that it’s also sitting near the quadrant level of the daily buy-side imbalance, sell-side inefficiency we graded earlier. That’s what these horizontal lines represent.

Watch how price gravitates toward them.

It spends some time meandering around here, then as we move into Europe—let’s see if we’re in London—it drops aggressively into Consequent Encroachment, the midpoint of that daily buy-side imbalance, sell-side inefficiency and Volume Imbalance.

From there, price finally trades down into the lower octant, the one immediately beneath Consequent Encroachment.

[05:49] Then price comes right back up to Consequent Encroachment. Look at this swing—beautiful. It returns directly to Consequent Encroachment, trades above it, then comes back down into the level and starts consolidating.

Look at what it leaves behind.

That already looks suspicious. Price spent a lot of time gyrating around in this area, so this is likely to get taken.

We have the buy-side imbalance, sell-side inefficiency, with Consequent Encroachment right here. And relative to the midpoint of that daily buy-side imbalance, sell-side inefficiency, price is now trading in premium.

Premarket liquidity versus consolidation

[06:33] We have relative equal highs after price spends all this time inside the range. Then the market trades lower, bringing us right into 7:00 a.m.

So from 7:00 onward, map out what price is doing. Sure, we get a little pop higher, but that’s simply running liquidity. That’s not a trend.

There’s an important distinction you have to make when defining what happened between 7:00 and 9:00 a.m. Yes, during the first 30 to 40 minutes, price moved higher—but it was simply running the buy-side liquidity.

[07:30] So the buy-side liquidity gets taken. Then what happens? Price pulls right back inside the range between the low and the high and starts gyrating around the midpoint.

Is that consolidation? Yes.

How can you call that a trend? It’s not being allowed to protract, so it’s consolidating.

By the time we get to 9:00 a.m., there are several important details in the candle bodies. Forget the wicks for a moment. Look at the bodies.

See that? So within this structure, where was price actually made jagged?

[08:14] Down here. So where is price smooth? Look at the candle bodies—right here. See that?

Now, this large wick needs to be disregarded because that’s where the damage is allowed to occur. The information we care about is in the bodies.

So we’re going to anticipate a rally.

As we approach 9:30, price rips higher and clears those bodies. We can disregard the wick because price is already trading above its Consequent Encroachment, so it’s no longer a factor.

Normally, if we were bearish, we’d want to see price remain in the lower half of that wick. But we can’t apply that logic here because we already have reason to believe price may trade above these bodies.

Opening-range liquidity draw

[09:04] When we have a group of candlesticks like this, we want to identify where the liquidity is. This is the extreme.

Granted, price does move slightly beyond it, but I’m not focused on that. I’m focused on the candle bodies. The highest body here represents the buy-side liquidity.

During the first few minutes of the Opening Range, price may flutter around and run above those bodies. That’s exactly what it does.

Then, right at 9:30, it takes off and gives me absolutely no chance to get into the trade.

[09:50] I was sitting with Caleb this morning, and I told him, “Look, they’re going to take the sell-side liquidity here, then the sell-side liquidity here, and then reach into the Volume Imbalance near the low of the daily buy-side imbalance, sell-side inefficiency.”

That’s this area right here.

But right out of the gate, the market just dropped like an elevator. It moved so quickly from the open that it gave me no opportunity to get short.

[10:21] It simply moved too far, too fast, so I stayed out and watched.

I told Caleb, “Let’s pay attention here. This will likely become an Order Block.”

At this point, I’m removing the 7:00 a.m. gradient levels, so now we’re back to grading only the daily buy-side imbalance, sell-side inefficiency. That’s what these horizontal lines represent.

The market breaks down aggressively, and I miss the entry completely because of how fast it moved.

So I told him, “Let’s just watch this.”

Bearish order block framework

[10:58] There was really no participation on our part.

This opening price here marks the Change in the State of Delivery, and price trades back up into it. Notice that this Order Block is anchored and tethered to an octant. That means it’s a valid Order Block, provided you already know where the market is likely to draw.

I had a slightly lower target in mind. Before I close, I’ll go back to the daily chart and show you where those levels are because I wasn’t thinking ahead when I started this recording.

[11:35] So this is a Bearish Order Block.

Price trades up into it, gives up the ghost, and trades lower into the octant immediately below the quadrant level. Then it begins consolidating and gives us a Silver Bullet.

Let’s mark 10:00 to 10:30 so we have enough time represented on the chart.

We’re hunting the Silver Bullet starting at 10:00. At 10:00, the first Fair Value Gap presented is a SIBI, while the market is not being allowed to go lower.

Bullish IFVG Silver Bullet

[12:40] We already used this area once to try to sell off, but price came back above it. That gives us a Bullish Inversion Fair Value Gap.

Price initially tried to move lower using this as a Bearish Fair Value Gap. It started to sell off, took out that swing low, and also took out the candle bodies. See that? Look at this body here, then look at the lower one.

[13:25] That’s a run below the bodies even though the wick itself wasn’t taken out. Why? Because the wick is allowed to do the damage.

The narrative—the real volume that gives us useful information—is visible right there in the candlesticks. No gimmicks required.

Then price rallies and comes back down into the Bullish Fair Value Gap.

Look for price to trade up into this high because we have the low of this SIBI right here. That’s the draw.

So the market rallies. Why, again, is this Fair Value Gap valid?

[14:14] This is Candlestick 1, Candlestick 2, and Candlestick 3. Candlestick 3 is tethered to that octant, and that’s what validates this Fair Value Gap. That makes it useful.

We use it here. Price rallies, begins consolidating, then trades back down into the 0.75 quadrant. It accumulates there, moves higher into another octant, consolidates again, and then trades into the Order Block.

The opening price of this candlestick marks the Change in the State of Delivery. Price rallies, reaches the low of that SIBI, and from there we want to see it drop into this small gap right here.

[15:07] That’s the smallest gap immediately before this run higher then price drops.

That’s the draw up here. Then the market trades around this level, which is the low of the SIBI.

[15:41] This is the SIBI over here—the sell-side imbalance, buy-side inefficiency.

We don’t need to extend it across the chart because we’ll end up with too many levels on here.

The market accumulates here and pops higher, tags that small gap, meanders around, then reaches the Consequent Encroachment of the daily BISI and trades up into it once more. Look how aggressively it sells off from there.

Price trades higher, breaks lower, and continues down into this area.

[16:41] As we move toward the close, things get a little sloppy. I’m curious to see where we’re going to open, so I’m going to hang out with you for a couple more minutes until the 6:00 p.m. restart.

We also have the Jackson Hole Symposium this week. I believe Day 1 is Thursday. If it’s not Thursday, then it’s Friday—check your economic calendar and don’t hold me to that because I could be wrong.

[17:14] The week of Jackson Hole can create some unusual price action. It’s not necessarily like an FOMC, CPI, or PPI release, but you should still expect the market to behave a little strangely at times. So don’t over-leverage this week.

But overall, the rule still stands: when the market is consolidating between 7:00 and 9:00 a.m., that’s the information you work from. Those are the rules, buddy.

[18:02] I’m going to highlight the Volume Imbalance levels.

I missed the opportunity to get into a move I was already expecting. I even talked about it in the Twitter Space this weekend. I wanted to see price trade down into this Volume Imbalance right here.

Unreached volume imbalance target

[18:46] But you can’t have everything, right?

I wanted to be short, and specifically I wanted this gap I highlighted a moment ago to become an Inversion Fair Value Gap.

Originally, it was bullish. If order flow remained bullish and we were expecting higher prices, then price trading into it and continuing higher would have made sense.

But I was expecting price to trade down into the Volume Imbalance. I told my son we could trade down to the high of that Volume Imbalance, possibly reach Consequent Encroachment, or maybe even fall short of Consequent Encroachment.

[19:40] Either way, I was wrong about that part. Price never got there.

So my son got to watch his dad not do too well with NQ today.

What I wanted to see was price trade below this gap, then rally back into it and use it as an Inversion Fair Value Gap. I would have sold short six contracts there and looked for the break lower.

After that, anything in here that created another PD Array could have offered another opportunity, but price simply moved too quickly for me. This was the first up-close candle, so we had the Order Block there, and you already watched me walk through everything else that followed.

All right, so we have the New Day Opening Gap, and looking at this, it looks a little too clean.

[21:10] It jumped off the chart at me, so price may want to come up and bump that level. But we’ll see whether it wants to continue lower.

I suspect it may still want to trade down into that Volume Imbalance it couldn’t reach during Regular Trading Hours.

So keep this level highlighted, along with the low of the buy-side imbalance, sell-side inefficiency.

If price gets below that and starts accelerating, things could get very interesting.

[21:52] Hopefully you weren’t hurt today. Hopefully you were inspired by seeing the rules I gave you play out.

There is an algorithm, folks. I can’t physically take you to it, place it in your hands, and say, “Here, study the source code.” I can’t do that.

But what I can do is point you toward specific things that are not part of any other discipline out there.

Just watch and see how we deal with these highs.

[24:02] If price trades up into this area, takes those highs, and then starts breaking down aggressively, look for that Volume Imbalance near the lower end of the daily buy-side imbalance, sell-side inefficiency to be traded to.

Again, that’s this area right here.

Until I talk to you next time.