ES Gaps Open Higher Following Macron’s First Round French Presidential Election Win. New Trading Range or Island Reversal?

The ES gapped open higher over 24 points on Monday, breaking out of Friday’s inside day and the prior inside week before the Market opened. Sunday’s Globex session open, at 2365.75, was 18 1/2 points above Friday’s 2347.25 pit session close.

After the US market opened, the day’s opportunities were confined to just an 8 1/4 point, low confidence, slow paced trading session that failed to even trade to either the overnight low or high (Globex range = 11.5 points).

US pit session Market Profile chart

island reversal or new trading range

Potential balance trading scenarios could apply for Tuesday’s regular trading session, depending on where price is at the open:

  • look above Monday’s high, repair the poor high from April 5th at 2375.00 and continue higher on a potential quest for a new all time high.
  • look above Monday’s high and fail, potential destination target at Monday’s poor low.
  • look below Monday’s poor low and accelerate, finding acceptance and attempt to fill the prior week’s gap.
  • look below Monday’s low, repairing the poor low, and return back into balance potentially targeting Monday’s high.
  • Remain in balance. It is not unusual for price to form a new trading range after a large gap open to begin a new week, as large gaps are rarely filled on the day or the day after they’re created.
  • (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. DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS WEBSITE. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Please read our disclaimer)

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Balanced, Inside Day – Price Fills in Excess Between Distributions

market profile chart 04212017

With overnight inventory nearly 100% long, the ES opened a tick above unchanged on Friday but could not trade above the prior day’s point of control. The prior day late pullback low at 2351.50 offered no early support as price sold through the low of the upper distribution.

The low confidence, choppy opening continued in B period, with price testing the 2351.50 pullback low from below, to the tick, before printing a poor A/B low and closing as a small, three point inside, balanced bar.

split view market profile chart

Price couldn’t find any real acceptance back inside either distribution from the prior day, with Friday’s C and E period highs failing at the upper distribution low and the D period low bouncing from exactly at the high of Thursday’s lower distribution.

Friday’s regular session closed as another inside day, filling in the excess single prints between Thursday’s upper and lower distribution.

Entering the last trading week of the month, March is still printing as an inside month

ES-monthly-chart

The weekly chart is balancing, and was also an inside week

ES Weekly Chart

The daily chart is balancing, although one timefaming higher for five consecutive days

ES Daily Chart

Balance trading rules could apply in regards to the inside day, and also the inside week – look above or below the high/low and find acceptance, look above or below and fail – returning back into the balance targeting the opposite end (at minimum), or remain balanced (probably the lowest of odds). The longer a market remains within a balance the greater the odds are that a significant breakout will occur.

A potentially important early reference for Monday could be the very prominent point of control at 2347.00 from Friday’s inside day. Not finding acceptance back above the point of control and session close at 2347.25 could easily see price test Friday’s low at 2340.50, stopping the ontimeframing higher on the daily chart.

To the downside, acceleration below 2340.50 could easily see sellers test the April 20th low at 2337.25, finding acceptance below that level would bring the group of three daily lows at 2331.00, 2330.25 and 2328.75 (weekly low) into play, setting up another potential “firecracker effect” (a popular term coined by James Dalton), where hitting one set of stops triggers the stops below nearby price levels.

Taking out the prior weekly low (inside, balanced week) at 2328.75 could trigger further selling as there are now three weekly lows closely grouped together – 2328.75, 2324.00, and 2318.00 (also the March low). Trading below 2318.000 would stop the onetimeframing higher on the monthly chart and could result in a more serious change. More serious selling could bring the unfilled gap at 2312.75 from February into focus.

Although the odds for a downside breakout appear to be good, the market is in a tight balance nearing the end of the month. To the upside, if price finds acceptance above 2347.00 and can break out with continuation above Friday’s high, buyers could target the April 20th weekly high at 2358.25. A breakout of either side of the inside week (balance) could see either price acceleration higher/lower, or a look above/below and fail.

(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. DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS WEBSITE. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Please read our disclaimer)

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ES Rallies, Repairs Poor Highs




Going into Thursday’s U.S. pit session, overnight inventory was 100% long as the Globex low was exactly at the 4:15 ET close of the previous pit session. The market opened near the middle of the previous day’s range, two ticks below the overnight high.

Short term traders were evident early as selling came from half back levels intra-bar in A period, but buyers were waiting below as price bounced from a tick above the overnight half back level at the top of the Globex lower distribution, a very visual short term traders reference.

rally from overnight halfback

Price rallied to Wednesday’s point of control in B period, formed a small, balancing inside bar in C, before accelerating higher in E an F repairing the anomalies and the weak, mechanical high at 2349.25 from Wednesday’s profile (weak because it was one tick shy of the April 12th high), also repairing the poor high (one tick of excess) from April 11th at 2352.75.

break out of balance

The market one timeframed higher from the opening period until K period, developing an anomaly between 2348.25/2349.00, and a larger distribution above 2351.00.

Looking at each distribution as a separate balance, balance trading rules could apply to each on Friday: look either above or below a balance and accelerate or fail – on failures the opposite end of the balance becomes the potential target, or remain in balance.

Thursday’s pullback low at 2351.25, two ticks below the close, could also be an important early reference on Friday depending on where price opens. Not finding acceptance back below that level should technically keep Thursday’s uptrend in tact.

While Thursday’s rally appeared to be strong, NYSE daily volume still did not suggest strong market participation from the longer timeframe. The first half hour NYSE volume was under 300k. End of day NYSE volume was higher than the previous day at 3.64 billion, with a late spike near the close.

Carrying forward Thursday’s mechanical low, just one tick above the overnight half back level, and the D period low within a tick of the opening price and overnight high, what potentially occurred on Thursday were well capitalized short term traders putting the squeeze on the shorts.

With the upcoming French Presidential elections beginning on Sunday, and remembering the unpredictable reactions the markets had to the U.S. election and Brexit, the coming days will probably bring a lot of uncertainty and volatility to world markets.

(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. DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS WEBSITE. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Please read our disclaimer)

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