Two distributions, probable short covering rally

Anomalies in the market profile chart are often repaired, or traded back through, soon after they are created. Wednesdays balance and Thursdays rally traded back through the multiple anomalies in the profile following the April 24th selloff. Thursday’s (4/26) market profile chart also left a poor high at 2675.50, closing just off the high of day.

short covering rally

Depending on where price opens in regards to areas of balance, potential trading scenarios could include:

– Look above or below a balance and accelerate/find acceptance

– Look above or below a balance and fail, targeting the opposite end

– Remain in balance

Prior wide “naked” (not yet revisited) points of control can act as price magnets, often drawing price back to them. There are very prominent points of control both above and below Thursday’s range.

market profile daily charts

Focusing on the two separate distributions in Thursday’s profile, price acceptance within the upper balance would probably have decent odds of repairing the poor high, and potentially re-testing the high from 4/24, and if the market remains strong price could target the upper excess single prints from the 4/20 profile.

Carrying past information forward, the high from 4/19 at 2703.50 was mechanically just a single tick shy of filling the gap from 4/18, and the very wide naked point of control from the 4/18 profile at at 2714.00 has not been revisted. The prior weekly high is at 2718.00.

split view market profile chart
Split view market profile chart 4/26/18

If price opens in or finds acceptance back inside Thursday’s lower distribution, below the pull back low at 2663.75, the lower excess single prints in the profile could be tested, followed by the small gap at Wednesday’s high at 2645.00. Acceptance back into the 4/25 range could target the 10 TPO wide naked point of control at 2629.50.



(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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Double Distribution, Wide POC

market profile double distribution

If price opens within this range early focus could be on acceptance or rejection of the separate distributions.

Price acceptance below Friday’s low could target the prior weekly low, as Friday’s liquidation break could equate to a failed break out of balance to the upside.

If price reenters a prior distribution the potential exists to reach the opposite end of that balance. If price does re-enter the upper distribution the excess single prints could be tested. Acceptance back above 2694.75 could target the 4/19 high at 2703.50, which could be considered a weak reference, as price traded to just a single tick below the 4/18 low following a small gap opening lower.



(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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Balance Within Overnight Range

Large gaps are rarely filled the day after they are created. This held true on Wednesday after price opened near the top of Tuesday’s range, which had gapped open 11+ points above Monday’s range. Price was contained completely inside the overnight range, with the day’s low exactly at the overnight low and the high of the day just two ticks below the overnight session high.

S&P 500 emini overnight range
Overnight range

For the third consecutive day overnight inventory was close to 100% long going into the start of the regular session, setting up the possibility of a larger liquidation break in the near future. The overnight inventory is considered long if the majority of trade had occurred above the prior day session’s settle.

day session contained within overnight range
ES day session contained within overnight range

During the recent rally and breakout above the prior three week range, price rallied often from very visual price references, a sign of shorter timeframe traders in control, who can often easily give up their positions in the event of more serious liquidation.

Thursday’s balanced profile featured a very wide point of control at 2714.00, where all but one 30 minute market profile period had traded through. Depending on where price opens, that level could act as early support or resistance on Thursday.

Wednesday’s settle at 2709.75 was just above at the half-way mark between the January all time high and the February correction low at the 2708.00 level. Acceptance below Wednesday’s close could pressure recent longs and test the weak reference at Wednesday’s low, and potentially target the 2700 level and the top of the unfilled gap at 2692.50.

If the rally continues, visual references within striking distance to the upside include the botttom and top of the unfilled gap from 3/16 at 2745.25 and 2752.75, respectively.



(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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