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.
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.
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