Breakout of Balance




After the market’s failed breakout attempt of the five day balance to the downside on Tuesday, one scenario was for the market to break out and find acceptance above the five day balance high at 2454.00 on Wednesday. Potential targets were the upper distribution high from the 8/17 selloff profile at 2459.50, and the single prints above to the high from that day at 2464.00. Wednesday’s high was at 2459.75, a poor high with no excess.

breakout of balance
After a failed breakout of the 5 day balance to the downside a day before, the market broke out to the upside the next.

If price opens above 2454.00 on Thursday (the prior 5 day balance high) the higher price levels noted in Tuesday’s market profile report could still be relevant.

Acceptance above 2459.75 and back into the excess single prints from the 8/17 selling tail could first target the high from 8/17 at 2464.00, and the wide point of control at 2467.75 and remaining unrepaired anomalies from the 8/16 profile. The matching highs from 8/9 and 8/16 at 2474.00 are within striking distance if the market finds acceptance above 2464.00.

Wednesday’s late pullback low at 2453.00 could be an important early reference on Thursday, depending on where price opens. Generally, the prior balance high (2454.00) should be support if the market broke out higher on strength. If Wednesday’s pullback low at 2453.00 fails to hold and price is accepted below that level, it puts price back into the five day balance, questioning the last two day, low volume rally (NYSE daily volume was very light at 2.51 billion).

split view profile breakout of balance

Potential lower targets are the single print at 2449.50, previous resistance, acceptance below that level probably tests Wednesday’s excess buying tail. Tuesday’s lower distribution high at 2436.00 comes into focus below Wednesday’s low.

End of month options expiration should bring volatility.

(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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Failed Breakout of Balance




A late afternoon press release on Monday stating North Korea had launched a ballistic missile over the northern Japanese island of Hokkaido that fell into the Pacific Ocean, possibly to demonstrate its capability of reaching the U.S. island territory of Guam, caused U.S. markets to open sharply lower on Tuesday.

failed breakout of balance

But following the 15.5 point gap opening lower the ES short covered back into the prior five day range, and traded back into Monday’s range. Price only stopped one timeframing higher in one period (H) and not again until until the final period, closing back near the high of the previous session.

The rally put price back near the center of the August range, again lowering the odds of the monthly one timeframing higher to come to an end by the end of this month, as all timeframes appear to be balancing and there is substantial excess at the all time high. The ES has been one timeframing higher on the monthly chart since the November 2016 Presidential election.

But if Tuesday’s move higher was mainly short covering (NYSE daily volume relatively low at only 2.73 billion), that could weaken the market. If the ES closes the month near the lower end of the August range, the odds are still high the monthly one timeframing could end in October.

Tuesday’s profile left two distributions. Price acceptance below the late pullback low at 2445.00 should attempt to repair some of the anomalies in the upper distribution, and potentially test the lower end of it at 2438.25

anomalies in market profile chart
(anomalies shaded in red)

Acceptance back below the single print separating the two distributions at 2436.00 could test Tuesday’s lower excess.

But Tuesday’s auction higher, after the gap opening lower, was a failed breakout of the five day balance to the downside. If price opens inside the upper distribution, the odds are probably good that Tuesday’s high will be retested, along with the Monday’s high at 2449.25.

Acceptance above that level first targets the five day balance high at 2454.00, potentially the upper distribution high from the 8/22 selloff profile at 2459.50, and the single prints above to the high from 8/17 at 2464.00.

The matching highs from 8/9 and 8/16 at 2474.00 could be within striking distance if the market rallies to find acceptance above 2464.00.

(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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5 Day Balance

5 day balance
5 day balance in ES. When the market breaks out of balance, the high or low of the range could be potential support or resistance from outside of the balance area.

ES Monthly Bar Chart:

ES monthly chart through 8-28-17
The ES has been one timeframing higher for 9 consecutive months. Trading below 2405.25 in August stops the one timeframing higher.

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