Tag Archives: distribution

September Trade Begins

ES Globex gap lower in the US Labor Day shortened  electronic trading session following North Korea's alleged hydrogen bomb test
ES Globex gap lower in the US Labor Day shortened electronic trading session following North Korea’s reported hydrogen bomb test

At the time of this posting on Monday evening, 9/4/17, the ES had already gapped open lower for the shortened U.S. Labor Day electronic trading session following weekend news that North Korea had successfully tested a hydrogen bomb, and is reportedly working towards fitting it onto a long range ballistic missile.

If the ES futures market gaps open below the Friday, 9/1/17 range on Tuesday, the wide point of control from 8/31 at 2468.50 is the first obvious potential target, followed by the top of the lower gap at 2462.50, and the gap fill from 8/30 at 2459.75.

 split view profile with late day spike lower.
Split view profile with late day spike lower.

Trading below 2459.75 would put price back into the 8/30 breakout of balance profile, where the market profile chart was structurally poor with multiple distributions. Looking at each of those distributions as a separate auction, balance trading scenarios could apply in regards to each distribution – look above or below a balance and either accelerate or fail (if fail then potentially targeting the opposite side), or remain in balance.

If there is more severe liquidation and price is accepted below the prior five day balance high and 8/30 upper distribution (2454.00/2453.00), the odds would probably favor a retest of the low from 8/30 at 2442.75 and potentially the 8/29 upper distribution high at 2436.600.

The longer term, monthly time frame is still trending higher as evident by the monthly one timeframing higher since November 2016. However, the intermediate & weekly timeframe has been, arguably, balancing for fourteen weeks. The daily chart as of last Friday has been in a short term uptrend.

If the market shrugs off the North Korea news and price is accepted back into Friday’s range, look for a probable test of the spike base at 2477.25. Acceptance back above the late spike targets the poor high at 2479.75, and would probably have good odds of retesting the latest all time high at 2488.50 sometime during the week.

If the market sells off, the prior weekly low at 2426.25 and August low of 2415.75 are within reach. Trading below 2415.75 would end the monthly one timeframing higher and could be a catalyst to potentiallyy more severe change in the market.

(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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Balanced, Inside Day – Price Fills in Excess Between Distributions

market profile chart 04212017

With overnight inventory nearly 100% long, the ES opened a tick above unchanged on Friday but could not trade above the prior day’s point of control. The prior day late pullback low at 2351.50 offered no early support as price sold through the low of the upper distribution.

The low confidence, choppy opening continued in B period, with price testing the 2351.50 pullback low from below, to the tick, before printing a poor A/B low and closing as a small, three point inside, balanced bar.

split view market profile chart

Price couldn’t find any real acceptance back inside either distribution from the prior day, with Friday’s C and E period highs failing at the upper distribution low and the D period low bouncing from exactly at the high of Thursday’s lower distribution.

Friday’s regular session closed as another inside day, filling in the excess single prints between Thursday’s upper and lower distribution.

Entering the last trading week of the month, March is still printing as an inside month

ES-monthly-chart

The weekly chart is balancing, and was also an inside week

ES Weekly Chart

The daily chart is balancing, although one timefaming higher for five consecutive days

ES Daily Chart

Balance trading rules could apply in regards to the inside day, and also the inside week – look above or below the high/low and find acceptance, look above or below and fail – returning back into the balance targeting the opposite end (at minimum), or remain balanced (probably the lowest of odds). The longer a market remains within a balance the greater the odds are that a significant breakout will occur.

A potentially important early reference for Monday could be the very prominent point of control at 2347.00 from Friday’s inside day. Not finding acceptance back above the point of control and session close at 2347.25 could easily see price test Friday’s low at 2340.50, stopping the ontimeframing higher on the daily chart.

To the downside, acceleration below 2340.50 could easily see sellers test the April 20th low at 2337.25, finding acceptance below that level would bring the group of three daily lows at 2331.00, 2330.25 and 2328.75 (weekly low) into play, setting up another potential “firecracker effect” (a popular term coined by James Dalton), where hitting one set of stops triggers the stops below nearby price levels.

Taking out the prior weekly low (inside, balanced week) at 2328.75 could trigger further selling as there are now three weekly lows closely grouped together – 2328.75, 2324.00, and 2318.00 (also the March low). Trading below 2318.000 would stop the onetimeframing higher on the monthly chart and could result in a more serious change. More serious selling could bring the unfilled gap at 2312.75 from February into focus.

Although the odds for a downside breakout appear to be good, the market is in a tight balance nearing the end of the month. To the upside, if price finds acceptance above 2347.00 and can break out with continuation above Friday’s high, buyers could target the April 20th weekly high at 2358.25. A breakout of either side of the inside week (balance) could see either price acceleration higher/lower, or a look above/below and fail.

(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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