Understanding Market Dynamics and Short Selling

Power 3 is Accumulation,

Manipulation, Distribution, okay, that's the three components.

The power aspect is if you understand those relationships

on what the daily range is doing,

the open on a day that's bearish, okay,

the open and anything above it, that is accumulation of shorts.

Now, it's not limited to just open and above,

that's where smart money and people like myself and my students,

that's where we're aiming to enter getting short.

The open to the high, whatever that range is,

you take that range and you subtract it from the opening price,

that is your opening range.

That's where your fair value gaps,

that's where your stop rates are going to happen,

that's where optimal trade entry is going to happen.

Every potential shorting candidate,

every premium array will reside and form in the range

between the open and its high, in other words,

if you're watching price and you're bearish,

the day opens up and then it rallies up,

that's a judo swing.

The range from the opening price up to the high,

that range is what you project below the opening price.

When I say opening range, that's opening range.

So what that does is gives me an area

at which to bracket out how much leeway

I can give the market when it starts to go below the opening price

and still take a favorable entry because

power three is I'm bearish, I'm expecting the market to open and rally above.

If I can get something on short there,

that's the ideal scenario.

This is called close proximity entries.

Having the opening range, when you're bearish, whatever

the high is from the opening, project that down,

your sell setups are going to form in that.

That is accumulation of shorts.

The manipulation is the initial rally up,

that's the sucker play.

That's typically the breakout artist thinking, oh, it's going to go higher, no.

It only goes up just to go down,

that's a fake run.

Then it goes lower,

creates the low of the day and

then closes near the low of the day.

So between where the low of the day is and where it closes,

that's distribution.

What's being distributed?

Smart money's short positions.

So they're selling at the open and above or just below it.