Short covering into the close



With long overnight inventory coming into the regular trading session, price opened above the base of the spike from the prior session but failed remain above it, trading back into the spike in the second half hour period. In times of high volatility, standard market profile trading references are not often as in reliable “normal” trading environments.

short covering negates prior spike

The high of the third period (30 minute) bar could not get back above the spike, reversing at it exactly before selling lower into Friday’s lower distribution in the fourth period.

Split view profile 3-26-18
Split view profile 3-26-18

Price one timeframed higher off the D period low, eventually rallying into the close, to trade as high as 2662.75, one tick below the top of the spike from the 3/22 profile.

Some of Monday’s rally appeared to be very mechanical, for example, bouncing near the current session midpoint at the G & H bar lows, and rallying when the K period low failed to trade back below the opening (A) period high. NYSE daily volume was also considerably light compared to the size of the market rally, at only 2.4 billion shares.

Value for the session was overlapping to lower, despite the apparent strong rally into the close.

Monday’s stretched out profile repaired the anomalies from the prior session’s profile, but left more anomalies of its own. Anomalies are often repaired soon after they are formed. If price opens within range the odds could favor their repair, at least partially, on Tuesday considering the “mechanical” nature of Monday’s rally.

If the rally continues, price could target the point of control from 3/22 at 2672.50 and the un-repaired anomalies from that profile. The next potential targets would be the high from that session at 2698.25, the bottom of the unfilled gap above, and 2712.50, the top of the unfilled gap from 3/21.

With a light news week ahead and the futures market closed on Good Friday, the odds could favor more balance the remainder of the pre-Holiday week.

The longer and intermediate term trends are balancing, trading in a range from the February correction low at 2535.25 and, arguably, the recovery high at 2807.50. The short term trend, on the daily bar chart, is down with a two day balance.

Currently, March is an inside month.



(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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Market Profile Spike



Another downward spike in the Market Profile chart:

spike in market profile

If price opens above the spike it could be considered positive, since the price probe lower was rejected, leaving a buying tail. Price acceptance back above the base of the spike could target the prior point of control, and potentially target the top of the distribution.

The market had sold off significantly the prior two trading sessions, increasing the odds of a possible short covering rally. The market could have gotten too short in the short term.

Opening within the spike could suggest price has found a level where two sided trade can take place, and keep the break intact. Potential targets are the prior close and session low. The top of the spike is resistance.

Opening below the downward spike infers price had not auctioned low enough to cut off the selling and allow for two-sided trade.

Further liquidation could target the 2535.25 correction low from 2/9.



(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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Gap Lower, Selloff Following China Trade Tariffs

market profile spike

Opening within the late spike could confirm the short term down trend with good odds of retesting Thursday’s low. Opening below the spike and Thursday’s low is a sign of weakness confirming price did not travel far enough on Thursday to cut off the selling. Further liquidation could eventually lead to a retest of the February 9th correction low.

Opening above the spike would be more positive, targeting Thursday’s value and possibly the POC. If short covering occurs price could target the value area high and the B period excess single prints from Thursday’s profile. However, large gaps are not usually filled the day after they are created, so the odds would probably favor more of a rotational balancing day.



(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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