Order Flow Shows You the Target - Ep.1

Summary

In this video, the speaker delves into the art of analyzing market trends using order flow, price delivery areas (PDA), and fair value gaps. By examining multiple time frames (monthly, weekly, daily, and lower ones like 4-hour and 1-hour), the speaker shows how to identify bullish and bearish order flows, and how these trends guide price predictions. Emphasizing the importance of alignment between time frames, they offer a personal example of a successful trade, underscoring the value of understanding these concepts. The speaker encourages viewers to study these techniques to improve their trading strategies.

Takeaways

• 😀 Order flow analysis is essential in determining market direction and bias, helping traders decide whether the market will move up or down.
• 😀 The use of multiple time frames is crucial. Higher time frames (monthly, weekly) provide the broader context, while lower time frames (1-hour, 15-minute) give more precise entry points.
• 😀 Fair value gaps represent areas where price action may face resistance or support, often determining where price might reverse or continue.
• 😀 Bullish or bearish order flow lags help predict the direction of price movement. A bullish lag indicates the market will likely move higher, while a bearish lag signals lower movement.
• 😀 Resistance levels are formed when the price reaches a fair value gap or order flow lag that the market struggles to break through.
• 😀 Price action on lower time frames can reveal key moments where the trend is either confirmed or invalidated.
• 😀 Higher time frame trends (such as bullish or bearish monthly and weekly orders) should guide decisions on lower time frame entries.
• 😀 Understanding the market’s past behavior and context helps predict future price movements, making it less about guessing and more about observing patterns.
• 😀 The importance of resistance turning into support is highlighted, as price might struggle with certain levels before continuing in the overall trend direction.
• 😀 A real trade example was used to show how order flow and price action principles can be applied to make informed decisions and successful trades.

Q & A

What is the primary focus of the analysis discussed in the video?

The primary focus is on understanding price direction using order flow analysis and multi-time frame charting to identify market biases and predict future price movements.

What role do PD rays play in the analysis process?

PD rays represent potential price action targets, and the goal is to analyze which Price Delivery Area (PDA) will be targeted next based on the order flow lags.

How does the speaker determine which PDA to target next?

The speaker uses the order flow lags to assess which swing highs or lows are most likely to be targeted next, taking into account the monthly, weekly, and daily bullish or bearish trends.

Why is it important to consider higher time frames like monthly and weekly in the analysis?

Higher time frames provide a clearer view of the overarching trend, and understanding these larger trends helps in interpreting price action on lower time frames, such as daily or 4-hour charts.

What does the speaker mean by 'fair value gap' (FVG)?

A fair value gap (FVG) refers to a price level where there is a gap or imbalance in the market. These gaps often act as areas of support or resistance, depending on the market's direction.

What happens when a fair value gap doesn't hold, according to the speaker?

When a fair value gap doesn’t hold, it often turns into a temporary resistance, causing price to struggle before ultimately continuing in the direction supported by higher time frame trends.

How does the analysis on lower time frames, like the 1-hour or 15-minute, contribute to trade decisions?

Lower time frames provide more granular insights into short-term price action, helping to identify precise entry points and confirming whether the overall bullish or bearish trends are still intact.

Why does the speaker say that they don’t expect a bearish order flow lag to hold in some cases?

The speaker explains that the overall market bias, supported by higher time frames, is more likely to prevail, meaning bearish signals on lower time frames are often temporary and won’t hold.

How does understanding order flow help in determining the direction of price?

By analyzing order flow, traders can identify whether the market is predominantly bullish or bearish and use this to predict which price levels will likely be tested next, giving a clearer market bias.

What is the significance of the speaker’s trade example at the end of the video?

The trade example highlights the application of order flow analysis in real-time trading. It shows how understanding market structure and using higher time frame trends led to a successful trade.