Look above two day balance and fail, daily one timeframing higher stops

After the S&P emini Globex session traded to another new all time high at 2367.50 early Thursday in the overnight Globex trading session, the U.S. pit session gapped open above Wednesday’s high, just below the new Globex high. It was the fifth higher gap open in February, four unfilled gaps remain below the market.

Price did not take out the overnight session high and traded lower from the opening bell, filling the gap, and reentering the previous two day trading range. The two day balance high at 2365.00 became resistance.

When price looks outside a balance and fails, and reenters the balance, the opposite end of the balance is potentially the destination trade. Price traded lower for the first four periods, mechanically bouncing from just one tick above the two day balance low at 2352.75 in D period. By trading below Wednesday’s low, the market stopped one timeframing lower on the daily chart. The question now is, did the one timeframing lower on the daily chart just allow short term inventory to come back into balance, or is it a sign of more significant change to come?

Thursday’s low can now be considered a weak low, since it is almost exactly at Tuesday’s low. With apparently no longer timeframe players in the market, short term and day timeframe traders are controlling the market, buying and selling off exacting references. The rally off the D period low can probably be attributed to short covering, the rally stopped exactly at the two day balance high at 2265.00.

The two day trading range has now extended into a three day balance, balance trading rules still apply for Friday: look above or below and continue higher/lower, look above or below and fail, or stay within the range. Depending on where price is at Friday’s open, Thursday’s point of control at 2362.00 could be short term support or resistance. Price acceptance above the POC and Thursday’s high could see price test Thursday’s pit session all time high at 2366.75, and the new Globex all time high at 2367.50.

Failure to find acceptance above 2362.00 could lead to a test of the weak two day balance low at 2252.75, and potentially lower price targets as noted in Tuesday’s market profile report.

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Inside Day Near All Time High

All trends remain up and the market is still one timeframing higher, price did not trade below Tuesday’s low and ended Wednesday’s pit session as an inside day.

Depending on where the market opens on Thursday, balance trading rules could apply – remain within balance, look either above or below balance and accelerate, or look above or below balance and fail.

Acceleration above Wednesday’s high should challenge the all time high at 2356.00, which is also a poor high. If tested, will price find acceptance above 2365.00 or return back into balance?

Price acceleration below Wednesday’s low at 2355.75 will stop the onetimeframing higher on the daily chart and could test Tuesday’s low at 2352.75, and could also attempt to fill the gap from February 15th at 2351.00, as there is no clear evidence of longer time frame participants in the current market. Additional lower price references were noted in Wednesday’s market profile recap.

Wednesday’s profile left a very prominent point of control at 2360.75, where all but one thirty minute market profile period traded through it. If there is to be a break out of balance from the inside day and two day balance, the odds of continuation should be greater if price first trades at that point of control. Support at the point of control increases the odds of a breakout higher, resistance at the point of control increases the odds of a breakout to the downside.

S&P Emini Daily Chart – one timeframing higher with four gaps under the market:

(the above post and all posts 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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