An important step to a potential change to the current up-trend occurred Thursday as price took out the prior three daily lows, stopping the one time framing higher on the daily chart, leaving a poor high on the market profile chart along with a questionable low, almost exactly at the low from 12/11.
The late rally high at 2661.75 could be an important market profile trading reference for the next day trading session. Failure to find acceptance back above that level could keep the previous day’s down trend intact.
Acceptance below 2654.25, the near matching lows from 12/11 and 12/14, could easily test the prominent naked point of control at 2650.50, with further liquidation possibly testing the top and bottom of the first gap below at 2646.50/2643.75. Price would have to trade below 2626.75 to stop the one timeframing higher on the weekly chart.
Thursday’s selling left a no excess, three TPOs wide poor high at 2671.25, probably signaling the market had gotten too long in at least the short term time frame. Price acceptance back above 2661.75 targets at least some of the multiple anomalies in the profile, and potentially tests the prior day’s poor high, and could lead to another attempt at the latest all time high.
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Two ticks of excess on the latest new record high in the ES could be considered a “good” high. There currently is excess on all time frames – on the daily, weekly and monthly bar charts, but only ticks of excess on the market profile TPO chart probably leaves good odds that the auction higher has not ended.
Auctions usually end with a more aggressive counter auction that leave either buying or selling tail, or through simple exhaustion. When excess (the tail) is created, it could mark the end of one auction and the beginning of a new one. With simple exhaustion, the momentum just ends.
The ES is in its 13th consecutive month of one timeframing higher. The longer term trend remains up. The weekly chart is also back to one time framing higher, now in it’s 4th week. The daily chart is one timeframing higher for 5 consecutive sessions.
For signs of any potential meaningful change, value should begin develop lower and the excess at the high would have to hold. One timeframing higher would have to stop.