The ES set another new all time record high at 2479.75 in the Globex session before the opening ell on Wednesday. The market then traded in just a 5 point range, and inside of the prior day’s small 6.25 point range, until a minor liquidation break in the final 30 minute period extended the range to the downside by one point,but failed to fill the 1st of three lower gaps in July at 2470.50.

Sometimes the market has to break before it can trade higher. Wednesday’s profile closed with another poor, mechanical high with no excess, and also as a weak high because it was just a single tick beneath the previous day’s high, which also had no excess. But with three gaps now in July, it appears that laggard momentum longs could be buying the market at the top but not getting any follow through.

If price opens within this range on Thursday, potential scenarios could either see price break out and accelerate above or below the two day balance, developing value and finding acceptance higher or lower, or look above or below the two day balance and fail, and at least initially targeting the opposite end of the balance. Because of the very small range, there are probably low odds of the market remaining within the current two day balance.

If price breaks out of the balance to the downside, probable destinations are the nearest lower gap fill at 2470.50 and previous two day balance from 7/21 and 7/24, potentially testing the top of the next lower gap and prior all time high at 2461.25. The gap fill from 7/18 would be at 2458.50.

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