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.

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