ES Double Distribution

The ES opened within the previous day’s upper distribution Thursday, chopping around in just a 3 1/2 point range for the opening 30 minute period. Price tried to rally in B period, looked above the previous day’s high but immediately reentered the previous range. There was no price acceptance above the prior high.

open-in-upper-distribution

Trading was very mechanical early, including the selling from a tick below the opening print in D period leading to an initial test of Wednesday’s lower distribution. Price was rejected on that attempt and rallied back into the upper distribution above 2158, but failed at the 2163 previous close . The rout was on…

market-profile-split-view-double-distribution

The market broke in G period, reentering Wednesday’s lower distribution for a second time, accelerating lower through the entire distribution and taking out the prior low at 2144 before finding a bottom at 2137.25, 28 points off its high. The selloff started from just one tick above the previous day’s close, a very visual, mechanical level for short term and day timeframe traders.

Thursday’s value area, which had developed higher for the first half of the trading session, ended the day overlapping to lower. After forming a second, lower distribution, the point of control also dropped lower from an earlier 2161 to close the session at 2148.75.

es-double-distribution-selloff

Double Distribution

The 2153.75 late rally high in K period and single print at 2155.25, separating the two distributions, could be early trading references for Friday’s pit session. Each distribution can be viewed as a separate balance, with market profile balance rules applying – look above or below balance and accelerate, look above or below and fail and return within balance targeting the opposite side, or remain within balance.

If price exits one balance area and is accepted into another, the opposite end of that balance is the potential destination.

ES Daily Chart 9/29/16:

short-term-traders-dominate

There are now three daily highs from 9/23, 9/28 and 9/29 all within 4 ticks of one another. Exacting areas like these could suggest liquidation from short term traders rather than new money selling the market. Also, the market closed back within Wednesday’s range at 2148.75 and did not get outside day.

Below Thursday’s low at 2137.25, and more importantly the selling tail low from 9/27 at 2132.75, are a series of similar lows within two points of each other. If there are still many longer timeframe stops below those levels, selling into them could potentially set off a “firecracker effect”, where hitting one set of stops could set off another, driving price lower.

(the above post and every post on es-traders.com is an interpretation of market generated information using the Market Profile, and the information contained within is to be used for informational purposes only and not to be construed as investment or trading advice. Please read our disclaimer)

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ES Rallies on Algeria Opec Deal

After a gap opening higher and an early break in C period following crude oil inventory reports, traders were focused Wednesday afternoon on the coming OPEC decision in Algeria regarding limits on crude oil production.

es-rallies-on-algiers-opec-deal

After release of the OPEC announcement that said a deal was reached to limit oil output production, the ES followed crude’s rally higher as price accelerated through the previous day’s high and the 2158.00 prior trading range high.

Initial focus for Thursday, depending on where the market opens, could be on Wednesday’s upper distribution between the M period pullback low at 2158.50 and session high at 2165.25. Acceptance below the 2157.50 single print puts price back into Wednesday’s lower distribution, and back within the wide Sept. 9th selloff range.

Acceptance above the high should easily target the Sept. 23rd high at 2166.25, and above that the Sept. 22nd naked point of control at 2169.25 could act as a price magnet.

Additional references above the market are the prominent point of control from Sept. 8th at 2173.25 and the poor high from Sept. 7th at 2179.75.

poor-high

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ES Rally Off Overnight Low Leads to Outside Day

After a volatile premarket session following the U.S. Presidential Debate, the ES pit session opened within two ticks above its previous low, quickly accelerated lower to two ticks below the overnight low, and reversed back into and through the previous day’s trading range. Price was not accepted below Monday’s low.

The low at 2132.75 added another potential weak layer to the grouping of the similar lows from 9/19 – 9/21.

rally-off-overnight-low-leads-to-outside-day

After a volatile first three periods the ES rallied in D period, one timeframing higher through I period before stopping exactly at the overnight session high at 2154.00.

Tuesday’s point of control migrated higher throughout the session with value developing overlapping to higher from the previous day.

Price was accepted above Monday’s high, briefly dipping back into the previous range in M period but reversed and rallied back to the high into the close.

The M period pullback low at 2148.75 could be an important short term trading reference on Wednesday. Acceptance below the single print at 2148.50 could see price rotate back through Tuesday’s lower distribution.

Acceptance above the 2148.75 late pullback low could easily test Tuesday’s high, which could be considered a weak high because it was also exactly at the overnight high. Acceleration and/or acceptance above 2154.00 could easily test the prior trading range high at 2158.00. There are also two naked points of control at 2162.50 and 2169.25.

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