Large gaps are very rarely filled on the day they are formed, that statement holding true on Monday as price rallied higher following a 13.5 point gap opening from above the prior settle. The rally off the open repaired the remaining poor highs in the profiles from 9/5 (2469.00) and 9/1 (2477.50), and led to another new contract adjusted record high (December) at 2487.00.

Early focus Tuesday could be on the late (M period) pullback low at 2483.75. Acceptance above that level could maintain Monday’s bullish tone and easily test Monday’s point of control (migrated higher during the session) and close at 2485.25/.00 (the actual CME’s settle was 2485.75), and probably challenge the new contract adjusted record high at 2487.00. Anything above 2487.00 will be another new all time ES high.

Often, large gaps higher that begin a new week can be the start of a new short term balance. If this occurs, a new balance area could begin to form from above or around the 2474.00 low, assuming Monday’s gap holds beyond one day, to the 2487.00 high or higher – including any new Globex high if one is made during the overnight session. Overnight highs and lows are always short term references.

But the 2500 psychological level is now in the sights of the bulls, and that could be what they’re shooting for. Monday’s NYSE daily volume at 3.06 billion was somewhat low for the price move higher, and the profile structure in the ES was relatively weak, with a few anomalies in need of repair, suggesting Monday’s action was predominantly controlled by short term and day time frame trades.

Depending on where price is at open, monitoring developing value could give a clue as to which way the market wants to go: continuation higher (monitoring price for potential one timeframing) and targeting the psychological 2500.00 number, acceptance back into Monday’s range and into a possible short term balance, or even a possible reversal off the new all time highs.

Late Pullback Low
Price acceptance or opening below the 2483.75 pullback low on Tuesday could imply a change in regards to Monday’s rally, and would probably have decent odds of at least testing the excess single prints below 2478.75, possibly Monday’s low. Acceptance below 2474.00 brings the three day balance high, and the unfilled gap at 2467.00, into play. If price can find acceptance back into the three day balance, obvious potential targets are the very prominent, back to back matching points of control at 2461.25, and possibly the three day balance low at 2456.00, which is also was a poor low.

Monday’s gap and go higher did not allow price to first test the back to back wide points of control, or “fairest price” from last Thursday/Friday. That could be negative for price continuation higher until revisited. However, Monday’s gap and go higher removed the significant excess that was at the all time high on all time frames. There is now just three ticks of excess, lessening the odds of it being a lasting all time high.

(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)