The ES is in a two day balance following six consecutive days one timeframing lower, which stopped on Friday. The intermediate term uptrend is weakening as price has stopped one timeframing higher on the weekly chart. Trends rarely turn from bull market to bear, there will often be a balancing period before a trend reversal, if there is going to be one.
With volume still split between the March and June contracts, Monday’s pit session opened inside the previous day’s range with price mechanically bouncing and reversing off obvious levels – the previous close, half-back, open print, point of control, overnight half-back – all very visual references signifying short term traders in control early.
No momentum and a very sluggish pace, Monday closed as an inside day, leaving both a poor high and a poor low in the profile along with a very wide point of control at 2368.25 (June contract).
The inside day could be key to whether or not the ES will resume its short term down trend on Tuesday. Depending on where price opens balance rules could apply – look either above or below the balance and accelerate higher or lower, look above or below and fail and trade back into the range targeting the opposite end and potentially beyond, or continue to balance ahead of Wednesday’s FOMC Meeting Announcement and Forecasts.
Monday’s wide point of control could have a gravitational pull if price trades too far away from it without first checking in. One scenario could see price repair either the poor high or poor low, fail, and return to the balance and target the opposite end’s poor structure.
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