Footprint Chart Strategies – Part 2 of the Rain Series

Introduction

• Focus on footprint chart strategies
• Importance of watching until the end for tips and real examples
• Review of previous part: RAIN acronym
  • R: Reversal
  • A: Absorptions
  • I: Imbalances
  • N: Non-belief
• If unfamiliar with terms, refer to Part 1
• Upcoming video will cover support and resistance levels

Chart Setup

• Two prepared charts
  • Left Chart: Downtrend reversal (reaction to resistance)
  • Right Chart: Uptrend reversal (reaction to support)
• Left chart: Ideal textbook example
• Right chart: Less ideal conditions, but valid strategy

Trading Strategy

Reversal Setup (R)

• Key Condition: Price returns to the Point of Control (POC) of the signal candle
• Entry Requirements:
  • Signal candle should be red, close below POC, have a negative Delta
  • Valid trade if all conditions are met, otherwise stay out
• Bonus Condition: Presence of a finished auction near resistance/support level (increases probability)
• Example:
  • Price reaches resistance level; candle closes red, below POC, with negative Delta
  • Enter with limit order one tick below POC
  • Important not to adjust entry level if not filled immediately

Uptrend Setup

• Entry Conditions:
  • Green candle that closes above POC with positive Delta
  • Previous candle can also have a positive Delta but not critical
• Example:
  • Wait for price to dip below entry level to fill order
  • Multiple candles may test the level before order is filled

Key Notes

• All setups lose validity if any candle breaks the high/low of the signal candle
• Importance of waiting for specific support/resistance levels

Live Chart Examples

• Mark support/resistance with blue lines
• React to conditions:
  • Watch volume and Delta indicators
  • Examples of breaking resistance with negative Delta
• Short Order Example:
  • Enter one tick below POC with risk-to-reward ratio of 2
  • Calculate stop loss and target accordingly

Absorption Setup (A)

• Focuses on reversal at resistance level
• Key Factors:
  • High volume spike with high Delta
  • Candles show significant values at the top of the footprint
• Example:
  • Enter short position one tick below POC after confirming absorption pattern

Absorption at Support

• Reversal: Signals going from downtrend to uptrend
• Entry: Based on unusually high volume and Delta at the bottom of the candle

Imbalance Setup (I)

• Focus on immediate market order entries
• Conditions:
  • High volume and closed below POC for downtrend
  • Green candles with significant imbalances for uptrend
• Entry Strategy: Enter market order immediately after signal candle closes
• Test different imbalance settings to find optimal values

Non-Belief Setup (N)

• Based on uncertainty at resistance levels
• Entry Strategy: Wait for price to break POC with a pending order
• Conditions: Candle should have high volume, shift in Delta, but may not close below POC

Final Remarks

• Recommend patience and adherence to setups
• Avoid entering without meeting all criteria: "No rain, no trades"
• Use the patterns as entry signals or triggers for other strategies
• Each pattern invalidated by breaking the high or low of the signal candle

Conclusion

• Aim to enhance trading effectiveness using these strategies
• Thank you for attention.