After a large 10+ gap open higher and small rally, price sold off sharply from a no-excess B/C period high at 2831.25.
An early market profile trading reference could be at the 2822.00 late rally high at the close. Acceptance above that level has good odds of at least targeting the poor high. Failure to find acceptance back above the late rally high could test the session low at 2812.00, which was just one single tick above the prior day’s close, a potentially weak day time frame reference.
The prior recovery high at 2818.25 had been traded through, probably reducing the significance of that level as potential support.
A gap open higher to begin the week left an early poor, no excess low in the Market Profile chart.
Mechanical buying exactly at half back level in H period (2779.25) suggests that shorter term buyers were in control, and that level could have good odds of being retested.
The point of control is only somewhat prominent at 8 TPO’s wide, but could be an early trading reference on Tuesday. Acceptance above the POC could target Monday’s high at 2787.75, above that level is the prior monthly (June) high at 2796.00. (Price had already traded to 2797.75 at the time of this posting. The overnight high and low are always valid short term trading references going into the regular day trading session).
Price acceptance below 2779.00 could target the no excess low at 2772.75, and potentially the unfilled gap from 7/6. Friday’s breakout was on low volume, if liquidation occurs price could target the bottom of the upper distribution from Friday’s profile and late pullback low at 2756.75, and potentially try to test of the top of the prior short term trading range at 2748.00.
Large gaps are seldom filled the day after they are created. However, there exists the possibility of an island reversal if Friday’s breakout of balance fails.
Therefore, looking at Monday’s range as a one day balance, potential balance trading scenarios could be: look above or below the balance and either trade (with acceptance) higher or lower, look above or below the one day balance and fail – returning back into the range and possibly retesting the opposite end, or remain in balance (which could include a slight extension of the range).
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