“Price Action Learning from NQ Futures”

In my trading experience, intraday markets can generally be categorized into two types:

1. Passive Markets – Whether or not you’re watching the screen, the market behaves similarly, and your presence has little impact on your trading outcomes.

2. Reactive Markets – Your observational skill and ability to interpret market signals directly affect your trading decisions and results.

Today clearly belonged to the second type—a day when the market consistently sent out signals. For traders able to observe and interpret these cues, it was a day ripe for decision-making. Some of these signals were not just noise, but lessons that could be distilled into tradeable rules for future application.

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Key Market Signals Today:

1. Early Warning from AAPL:

Not sure how many traders noticed Apple’s (AAPL) behavior at the open, but it provided a significant early warning. On the 15-minute chart, AAPL formed a very bearish candlestick (gap up and close lower), diverging clearly from the broader market trend. This suggested potential underlying weakness. Although AAPL doesn’t represent the entire market, its signal was significant and worth noting. However, this proved minor compared to what came next.

2. Midday Reversal Triggered by Geopolitical Shock:

In the first half of the session, the market looked strong, breaking above the OR30 (Opening Range 30 minutes), suggesting another bull-dominant day. However, at exactly 1:15 PM, a huge bearish volume candle broke the mid-point of the OR30 (COG – Center of Gravity), triggering an immediate reversal. The reason? Trump announced a 25% tariff on Canadian and Mexican imports, effective Feb 1. The news hit the tape, and markets reacted violently almost instantly—barely giving traders time to digest the implications.

3. Additional Market Confirmation Signals:

• DXY Surge: The U.S. Dollar Index spiked sharply, signaling risk-off behavior. Such a move typically correlates with downside pressure in equities.

• OR30 Multiples as Trend Confirmation: As I’ve mentioned before, in intraday tug-of-war, the stronger side usually pushes the market 1x OR30. The dominant side often extends it to 2x OR30. Today, bears took complete control and drove the market down to -2x OR30.

• Algo vs Human Execution: Algorithmic trading systems captured almost the full move (they’re built for strong trends regardless of direction), while discretionary traders like myself—being cautious and slightly delayed—only caught about 85 points on the downside (short from 21,766.5, covered at 21,681).

• Gap Fill Rejection Signal: Another detail worth noting—today’s intraday rally filled the gap from Monday’s DeepSeek-related plunge. The rejection at the upper end of that gap zone was forceful, often a bearish sign suggesting latent weakness. Such rejections increase the likelihood of a further downside move next week, as the market searches for a new support zone (price discovery).

• Trend Model Shift: The algorithmic model also signaled a resumption of the downtrend on the 195-minute chart.

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Trading Rule Recap: The “COG Breakdown Principle”

1. When the market appears strong and trades firmly above OR30, a sudden break below the COG (Center of Gravity) can trigger an immediate shift in tone—often toward violent downside action.

2. This shift often signals a trend reversal, where earlier bullish momentum is suddenly replaced by aggressive selling. Always monitor COG as a key support level. Once it fails, be prepared for heightened volatility and “push-up failure” scenarios.