Break Out Of Balance to the Downside

After a look above and fail of the extended trading range on Tuesday, price broke out to the downside on Thursday, trading through the excess lows of the range to take out two more prior weekly lows, before finally closing 23.5 points below Wednesday’s low.

ES market profile chart 8-10-17

With overnight inventory 100% short heading into the Thursday’s regular trading session, price opened at the lower end of Wednesday’s range, well below the very wide POC. Price failed to trade back above the prior week’s low at 2463.50 (the weekly onetimeframing higher ended the prior day).

Thursday’s emotionally driven selloff, following more severe Trump/Korea rhetoric, left multiple anomalies in the stretched out profile. Other notable market profile references on the chart are the K (11th) period rally high at 2453.50, and the late day spike base at 2442.75.

ES split view market profile chart 8-10-17
ES split view market profile chart 8-10-17

Failure to find price acceptance above 2442.75 on Friday could keep the current downtrend in tact, as nothing would have changed relating to Thursday’s downward trend.

Acceptance back above the base of the spike on Friday could see price attempt to repair at least some of the anomalies from Thursday’s profile, with potential resistance at the 9 TPO wide POC at 2449.50, and the rally high at 2453.50, below the 2457.00 prior trading range low.

ES daily chart after August 10 selloff

If price opens within Thursday spike, below 2442.75, it would imply that price did not go low enough on Thursday to cut off the selling, and could have good odds of testing Thursday’s low. Acceptance below 2435.75 could bring in more liquidation, first targeting the top of the unfilled gap from July 11/12 at 2434.75, then potentially the gap fill at 2427.25.

(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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Potential for Change

ES weekly chart as of 8/9/17:

an end to weekly one timeframing higher
An end to weekly one timeframing higher

Although Tuesday’s ES selloff left substantial excess at the highs on the daily, weekly and monthly bar charts, and price had stopped one timeframing higher on the weekly chart, the market is still trading within an extended trading range from the July 27th profile’s excess low and (prior all time) high.

ES remains in an extended trading range.

Trading is about change. Although the potential for change exists with the ending of weekly one timeframing, it is just one data point that could just be allowing inventory to return to short term balance after trading to the latest all time high at 2488.50. The market is still one timeframing higher on the monthly chart (currently in its 9th consecutive month), and would have to trade below the July low at 2405.25 (7/6) for that to end.

According to Market Profile Guru Jim Dalton, “Balance and excess are the two most important concepts you will be introduced to because they signify change or the potential for change to take place.”

On Wednesday, after a gap open lower following Tuesday’s selloff, price traded back down into the excess single prints near the July 27th low in the opening period, but failed to find acceptance or take out that low at 2457.00. Price spent the remainder of the day Wednesday in balance, before short covering back into Tuesday’s range and closing basically at unchanged (+ .25).

For any chance of meaningful change to occur to the downside in regards to the current multi day balance, price will have to remove the excess lows (7/27, 8/9) at the lower end of the extended range.

Wednesday’s profile left a very wide point of control at 2466.75. Depending on where price is at the open, that level could provide early support or resistance. Acceptance above the wide POC targets Wednesday’s near unchanged settle and high of day. Acceptance above the near back to back closes targets at least some of the remaining anomalies from the stretched out August 8th profile.

Trading below Wednesday’s low at 2459.25 targets the 2457.00 low from 7/27, acceptance below that level could put the market in a short term down trend.

(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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