Small range, balanced inside day in the ES on Wednesday, following the previous day’s early selloff and later short covering recovery.
Wednesdays low at 2558.25 has only one tick of excess, making it a poor low. It’s also a weaker low because it was at just a single tick below the prior session’s half back level, a common short term reference, and has good odds of price returning to it.
Trade was also very mechanical at the H/I/J bar lows near the session’s opening print, where short term traders were apparently buying as close to the the prior bar’s low as they could, setting up a potential later “firecracker effect” of the probable stops below them. The late M period pullback low was one tick above current session’s half back level, also very mechanical with high odds of price revisiting that level.
Potential trading scenarios in regards to Wednesday’s balance:
– Look above the high at 2469.00 and trade higher, targeting the poor high from Tuesday at 2471.25 and gap fill at 2473.00, with the potential to revisit the very wide POC from 9/1 at 2477.50 and the poor high at 2479.75.
– Look above the high at 2469.00 and fail, immediately return back into the inside day balance, targeting the wide point of control and poor low from Wednesday.
– Look below Wednesday’s poor low at 2458.25 and accelerate lower. Price acceptance below 2458.00 could test the excess single prints from Tuesday’s elongated profile and low at 2445.50.
– Look below/repair Wednesday’s poor low and fail, return back into balance, targeting the wide POC and possibly Wednesday’s high.
– Remain in balance. The odds would be low of remaining inside Wednesday’s small range. A potential more likely scenario would see price balance inside Tuesday’s elongated range.
Ordinarily, back to back poor highs (9/1, 9/5, not including Labor Day) would have very good odds of being repaired in the near future. However, because there is excess at the all time high, combined with the gap above Tuesday (gaps are also a form of excess), the back to back poor highs are probably less significant, lowering the odds of being repaired.
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