Market Profile balance trading rules applied on Wednesday as price opened within the lower end of the previous two day balance, traded below the low of the balance area in C period and accelerated, one time framing lower for five consecutive periods.
The move coincided with a sharp break in crude oil futures after the release of the EIA petroleum inventory report cited a decline in crude production.
After balancing in G and H periods the market reversed and short covered to close back into the previous day’s range, one timeframing higher from the low.
Wednesday’s late rally high at 2171.00 could be resistance on Thursday if price opens below that level. Acceptance above 2171.00 targets Wednesday’s poor high at 2172.75 and Tuesday’s unrepaired wide point of control at 2174.25, followed by the single print at 2177.00. Acceptance back into Tuesday’s upper distribution could then possibly target the poor high from Aug. 29 at 2182.25.
Potential destination trades to the downside, should price fail to find acceptance back above Wednesdays rally high, include Wednesday’s low at 2159.50, the prior week’s unrepaired poor low at 2157.50 and potentially the prominent point of control at 2153.25 from Aug. 3rd. There is also an unrepaired poor low at 2141.50 from Aug. 2nd.
Another possibility is for Thursday to be a low volume balancing trading session ahead of Friday’s monthly jobs report and the long US Labor Day weekend.
Price rallied off the open of Monday’s ES pit session, stalling at and later pulling back to the approximate midpoint of the prior multi day trading range and leaving a three TPO wide selling ledge at 2178.25 in L, M and N periods.
Value ended the day overlapping to higher, with the point of control also migrating higher intraday from an earlier 5 TPO wide at 2177.25 to 8 wide at 2179.25 by the close, but NYSE volume was very low at just 2.65 billion suggesting shorter term traders in control with no continuation of the earlier apparent short covering move.
2178.25 could be a go/no-go level. Monday’s market profile chart left a poor high at 2182.25. Any downside break should probably be looked at more cautiously if the high isn’t repaired first, monitoring one timeframing for potential continuation lower.
Accelerating through Monday’s high could target the prominent point of control (2187.75) and all time high (2191.50) from Aug. 23rd.
ES Daily Chart
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Federal Reserve Chair Janet Yellen’s comments of reasons for a rate hike strengthening triggered a selloff in the stock market on Friday, sending the ES 30 points off its high, but the S&P 500 emini futures did not end the session as an outside day.
Futures volume was high but NYSE daily volume was relatively low at 3.3 billion compared to the size of the move in price.
The drop in the ES saw price break below the previous weekly low and through the prior multi-day trading range low at 2165.50, filling the gap and trading through the very prominent point of control from Aug. 4th.
An important trading reference for Monday, should the market open at the lower end of Friday’s range, could be the late day rally high at 2170.25. Failure to trade with acceptance back above that level could keep the downside breakout intact.