PreMarketSession NQ Consolidation August 25, 2026

Date: 2026-08-25

Short Below NWOG Failure

[00:01] We’re going to try a short. That’s what I’ll do because we traded above the New Week Opening Gap and then failed to hold it.

So we’re going to sell short there—six contracts—and put the stop loss just above the Volume Imbalance high right here.

See that?

We’re looking for a run down into this low, where the sell-side liquidity would be.

We have this candle here, and price is retracing back up into it. It’s sitting at the low of the New Week Opening Gap.

There’s your Regular Trading Hours Opening Range Gap low. Wherever we open at 9:30 a.m. Eastern Time, we have to relate that opening price back to these reference points.

London Trend and Premarket Range

[02:06] Because price had already been trending through the London session, the 7:00 to 9:00 a.m. window is more likely to become boxy rather than continue trending. We took out this high and then rejected it. The New Week Opening Gap couldn’t support price at either the high or the upper half. Price traded all the way down and then closed below it.

So I’m treating this as the likely high of the 7:00 to 9:00 a.m. range.

[03:39] If this is the high, how far can price travel within that 7:00 to 9:00 window without it being considered a trend?

We have Consequent Encroachment of this wick down here, and there’s also a small Volume Imbalance inside the New Week Opening Gap.

The stop will be lowered to just above Consequent Encroachment of the New Week Opening Gap.

And this price action is dog squeeze.

[05:31] See how price leaves the New Week Opening Gap low with that aggressive, stretched-out down-close candle? This is manual intervention. This is them getting involved, not the market simply running algorithmically.

You can see it—it looks like a heart attack. And notice there’s no real follow-through.

[07:45] Price trades down there, but it simply isn’t getting going. What I want to see is whether it can get below this low on a closing basis, because this is where all that energy originated, right off this wick.

The problem is that this wick isn’t anchored to anything over here. I guess you could argue that it’s an Inversion Fair Value Gap, but I don’t like having to go all the way back to the 6:59 candle to justify it, even though this is the candle that creates the displacement leg within the three-candle formation.

IFVG Support and Failure

[08:44] Look at it this way. Normally, if the market is bearish, when price trades up into this area, it should begin selling off and continue lower.

But if it’s bullish, like we were looking at earlier, once price trades above this level, it becomes an Inversion Fair Value Gap that should support higher prices. That’s exactly what happens here. Price trades higher, comes back and uses it as support, fails to even touch it on the next retracement, then accelerates aggressively to the upside, runs the buy-side liquidity, and trades up into this area.

So now, if we’re expecting lower prices, we want to see it lose its characteristics as an Inversion Fair Value Gap.

[08:44] Look at it this way. Normally, if the market is bearish, when price trades up into this area, it should begin selling off and continue lower.

But if it’s bullish, like we were looking at earlier, once price trades above this level, it becomes an Inversion Fair Value Gap that should support higher prices. That’s exactly what happens here. Price trades higher, comes back and uses it as support, fails to even touch it on the next retracement, then accelerates aggressively to the upside, runs the buy-side liquidity, and trades up into this area.

So now, if we’re expecting lower prices, we want to see it lose its characteristics as an Inversion Fair Value Gap.

[10:56] If this isn’t going to be a sell, the market will use the gap to keep price supported and push it higher. That’s what it does here and here. Then it fails to even touch it on this retracement, rallies again, but eventually folds because it can’t keep price above this high.

From there, price drops into the New Week Opening Gap and gives up the ghost. It can’t even reach Consequent Encroachment. It was a little ugly in here, but now it’s starting to behave the way we’re looking for, so we can begin taking risk out of the trade.

Reclaimed Bearish FVG Criteria

[11:28] If this candle closes below the gap, then we want to see no candle bodies in the upper half. A wick can reach into it, but preferably price doesn’t return there at all.

That’s the strongest sign of a reclaimed Bearish Fair Value Gap—price leaves it behind and simply continues lower without coming back.

And now we have the qualification: a close below the gap.

I see no candle bodies buried in the upper half. So ideally, the best-case scenario is that price doesn’t come back and touch the gap at all.

[13:11] The second-best scenario is that price comes back to the low of the gap, shows sensitivity there, and starts selling off.

The last acceptable scenario is that price trades up into the gap. It can wick into Consequent Encroachment—preferably it doesn’t—but the candle bodies should remain in the lower half. Then price should resume lower and take out whatever low formed before the retracement.

Those are the stages, or degrees of efficiency, in how I read candlestick order flow around the gap.

[13:44] Very simple. It’s visual.

It’s no longer an Inversion Fair Value Gap. It has returned to its original characteristic as a Bearish Fair Value Gap.

It’s a reclaimed SIBI.

[17:52] Like I was outlining, there are specific reasons why this gap should be referred to at all, and there are different stages of importance to how price behaves around it. When I post this, listen to this section again, write down what I’m saying, and keep it in your journal.

Once you write it out in your own words, you’ll start seeing it more clearly. Take a screenshot of the chart and draw the scenarios out yourself: if price does this, that’s the best-case scenario; if it doesn’t do that but does this instead, that’s the second-best; then comes the third-best.

[18:58] Another scenario is when price is trading very close to the gap, enters back into it, and leaves a candle body inside without closing above it.

The weakest acceptable version is when price leaves a little mohawk—a wick poking outside the gap—but then closes back down inside it, ideally at Consequent Encroachment or lower.

[19:26] That’s the last line of defense—the point where I say, “Okay, that’s permissible.”

But I don’t particularly like those situations. Many times, I’ll already be taking something off as a partial, just in case price overruns everything it just did.

All of this is a mess, and I don’t want to see price start showing discount sensitivity in the upper half of this wick.

[19:58] I don’t want it giving me a reason to think price should go higher. I want it to attack that low.

We only have a couple more minutes until 9:00, so it’s still rangy. Even if it takes out that low, that doesn’t necessarily make it a trend. It’s still just bouncing sideways inside this larger range.

New students may hear that and ask, “Why isn’t this a trend?”

Because it’s still trading within the existing range. It’s simply overlapping all of this prior price action inside that same structure.

Obsidian Risk and Exit

[20:34] We’re basically trading inside the range, but I’m looking for external liquidity, which is resting below here.

Now, I don’t want to see price violate this wick. Watch this wick to here, and then this wick to here. If price gets above this level on a closing basis, I’m going to kill the trade.

This is the Obsidian PD Array. In other words, price is permitted to trade up into that area and then sell off. That’s what I’d rather see.

It needs to show a willingness to go lower.

I just closed six contracts. I need to remove that buy limit for six contracts.

Even if price starts dropping here, that push above the level isn’t something I’m interested in sitting through. It suggests price may want to go back up and touch the low of this area, and I want to get paid if it does.

[21:56] I’m not looking to hold the trade any longer because we’re still inside a consolidation period. Once we get closer to 9:30, I think we’ll start seeing a little more protraction.

The fact that it’s rangy and choppy—and that price was getting into those levels rather quickly—matters. Add in the nature of the week with the Jackson Hole Symposium, plus the fact that we’re in the last part of August during the summer doldrums, and you have to be very, very nimble.

[23:08] That’s why I’m regretting not taking something off here. I would’ve been very pleased to take at least four contracts off at that point, but that’s reality.

I still have four contracts on, so let’s cut that down to two. If price can take out this low, I want two contracts off there, and then I’ll leave the balance of the trade targeting the liquidity right here.

If it can drop down—let’s say it that way, because there’s no guarantee that it will.

[25:44] This wick right here needs to see price close below it. Otherwise, I’m going to start looking to take a partial immediately.

This is the wick I was referring to. We want to see the candle bodies stay below it.

[27:27] Take note of how price is behaving and trading. It’s reluctant to continuously move because of the time of day and because of what happened in the prior session, which was London.

London was allowed to trend, so you have to anticipate the likelihood that price will bounce back and forth inside the 7:00 to 9:00 a.m. range. That’s why I’m not interested in holding this any longer. If it stops me out, that’s wonderful. Then I don’t have to worry about anything else.

[28:14] I’m paid out and I’m done. See what it’s doing? This should not be happening if the market is bearish.

So go ahead and pay me, and we can call this a wonderful morning session and be done.

If it uses the Obsidian high and goes lower, I’m not going to complain about that at all. There’s the stop-out.

Now, if you’re going to stay with it, watch to see whether price comes back up here and uses the low of this area as a reclaimed Bearish Fair Value Gap.

Confirmation Within Consolidation

[29:08] Then we want to see whether it has the willingness to roll over. Don’t take the first touch as your short. Let price trade into the area, react, break down, and then start looking for additional confirmation after that initial reaction.

If you simply short the first touch, price could trade deeper into the Fair Value Gap, throw a mohawk above the level, and then go lower.

So you have to weigh those possibilities. In this case, price is more likely to utilize the entire Fair Value Gap because we’re still inside the 7:00 to 9:00 a.m. consolidation period, following a London session from 2:00 to 5:00 a.m. that was allowed to trend.

[29:51] This is trading inside the range. When we anticipate the market being in a consolidation, you have to approach it differently.

You need to be a little more nimble.

I’m not trying to teach you to be hard on yourself. But my students listening to this will recognize that this is something they wrestle with.

It’s simply proof of concept that when we’re trading inside a range and expecting consolidation, mapping the range out like this matters.

That discount wick Consequent Encroachment is an area where you definitely want to be taking a partial.

[30:30] You definitely want to take that partial. When you don’t and price starts trading like this, you’ll feel that little gnawing twist in your side: “I knew I should have done that.”

But you’re learning. You’re learning to recognize the characteristics of different session types—trending, reversal, consolidation, expansion—and each one has its own unique protocols for how you should expect the market to behave.

See, it hit the low of that, so we’ll see if it wants to drop down into this area. I’m not going to reposition because I’m going to wait until 9:30.

[31:12] I’m not going to sit with you through that, okay? That’s fine.

What we would want to see is price close below Obsidian, which is the midpoint of two opposing wicks.

Isn’t that beautiful? Look at it right there. Why would price stop there?

Ideally, I’d like to see this candle—or the next one—close below the Obsidian low, then start working its way lower toward that sell-side liquidity and eventually reach into the lower 0.375 octant.

[34:00] Now look at how these candlesticks are behaving inside the Obsidian—the two blue lines I drew from those wicks. Look at how price is finding support within it.

There’s literally nothing else in traditional technical analysis that would give you an expectation for price to behave this way. But when you know what you’re looking for, and you know how these highs and lows should form, man, it looks like wizardry.

It literally looks like wizardry to someone who’s never seen it before.

[35:35] We’re still trading inside the range that began at 7:00 a.m., between that low and the high that formed afterward.

That’s why it’s so important to recognize the type of session you’re in. We just came out of London, where price was allowed to trend, so during this range-bound environment you have to be much more selective about your entries and, especially, where you’re going to take profits.

Wick-Based Partial Profit Areas

[37:07] There would’ve been nothing wrong with taking a partial down here. We have Consequent Encroachment of this wick and the candle body right here forming that Rejection Block. Either would have been a reasonable area to take something off.

Ideally, though, I would’ve taken the partial at Consequent Encroachment of that wick, because it’s the longest wick and marks the low of the session. Look at the candle bodies—they couldn’t even touch it.

What does that indicate? Price is likely to retrace higher. It’s like an early warning device.

[37:39] And you don’t need to look inside the candlestick at order-flow numbers or volume. You don’t need any of that. Everything you need is in the open, high, low, and close.

As long as you stick to the rules I’m giving you for reading real order flow visually, it can’t hide from you. It’s not left open to interpretation. It’s very specific.

Look at how wild price is getting as we approach the 9:00 session close. The 7:00 to 9:00 a.m. window is now complete, so we’re entering a period where the market is allowed to become trending.

[38:52] Price can begin making one-directional runs, although usually it will meander around until 9:30.

Then 9:30 arrives, it kicks off, and boom—price starts running. That’s going to be it for today.