#sierrachart #daytradingfutures #tradingstrategy
Footprint Charts (Poor Structure)
This section will unfold with a much deeper discussion of Order Flow structure. We covered “structure” earlier in this document and I would like to refresh some of the points covered.
Let’s first understand that Structure is defined as:
I. The way something is built, arranged, or organized
II. The way that a group of people are organized
III. Something (such as a house, tower, bridge, etc.) that is built by putting parts together and that usually stands on its own.
So, if we apply the above definition of “structure” to trading we can see:
➢ (2) The market is comprised of Traders and how they have (1) organized their trades will allow the market to (3) support further moves or if market structure is weak a move will not be supported.
Everything I have expressed to this point is on structure.
I. Our daily preparation is designed to identify very strong supportive structure (POC)
II. Our daily preparation is also designed to identify weaker areas of structure where Traders were overtaken (LVN)
a. Note: The structure is weak not the trade. One side has aggressively overtaken the other.
III. Then there is indeterminant structure in (HVN) areas where we do not know who will be stronger but:
a. From a LVN perspective whoever, Buyer or Seller, aggressively overtook the other now has control.
b. From a POC perspective trading above the POC indicates Buyers are in control. Vice versa, trading below a POC means Sellers are in control.
Webster defines “context” as: The situation in which something happens: the group of conditions that exist where and when something happens
The structure of the market defines the context. Say that again. The structure of the market defines the context. OR we can say that the market context is being defined by its current structure.
Since we now have a clear understanding of structure, I will now shrink down my structural review to my 60Min Footprint chart. This section encompasses different structural patterns and will be lengthy in explanation.
We have shown that poor structure occurs when the market moves rapidly through one or more price levels. This can be seen on VbP displayed as LVNs and this can be seen on our 60Min Footprint chart. The chart below distinctly shows a moment in time where price action was rapid and swiftly moved price through multiple levels. This movement defines a structural change in the market and essentially the context changed from supporting to selling. So, let’s look at this chart and carry our area of poor structure to the right edge. We now have real time work zone. When price enters this zone, we know two things:
I. Sellers took control
II. Buyers will be very cautious
Now add back in the “completed auction” order flow technique and we have a developing work zone that offers opportunity.