Tag Archives: POC

A Very Mechanical Day Trading in the ES

The market opened at the lower end of the previous day’s range on Thursday, looking briefly below Wednesday’s low then rallying back into its range, trading to and pulling back from very visual references and suggesting early that this day was being controlled by short and day time frame traders:

mechanical-trading-ES

– In A period, price traded higher exactly to the combined, visual references of the overnight session half back/single print from Wednesday at 2172.75, and pulled back exactly to the opening price before rallying again.

– In B period, price traded higher exactly to the wide point of control from the overnight session at 2174.75 (2 ticks shy of unchanged), then pulled back to just one tick above the current session’s half back level at 2171.50.

D period rallied higher but failed to gain acceptance above Wednesday’s late rally high and overnight high at 2176.00.

– E and F periods sold lower, but F bounced exactly off the floating half back level at 2172.50, more mechanical trading.

There are often good odds that very visual, mechanically traded levels like the F and earlier B period lows could be revisited, either during the same trading session or soon after. After balancing in G and H periods and forming an 8 wide point of control at 2173.75 the market broke lower, trading through the B & F references in I period but bounced from just one tick above the opening print. The mechanical trading continued.

The wide developing point of control at 2173.75 lowered the odds of price trading too far away from it. J,K and L periods all traded within just one tick of the A period low, making it a poor low on Thursday’s market profile chart, but could not get continuation below the earlier low.

For any meaningful continuation lower a second, lower distribution would probably have to develop and the developing point of control should migrate lower. Neither happened. Price balanced through M period, and the point of control failed to migrate lower. The market apparently short covered back to its POC at the end of the regular session.

Thursday ended as a balanced day, with a poor low and lower value. The market is now one timeframing lower for three consecutive days. Trading with acceptance above Thursday’s unchanged/POC level could target Thursday’s high. Failure to trade above 2177.25 keeps the one timeframing lower on the daily chart intact.

Acceptance below Thursday’s poor low could easily target the previous weekly low at 2165.25 and the bottom of the unfilled gap on the daily chart at 2163.50. There is also a very prominent naked point of control left from Aug. 4 at 2159.00.

(the above post and every post 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. Please read our disclaimer)

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Pre FOMC Day Market Profile Recap

With neutral overnight inventory coming into the session, the ES opened within the previous day’s range on Tuesday. After looking above Monday’s high in A period, B opened slightly below it, looked a tick above, and returned back into Monday’s range. After forming an inside in B period, C busted through it to the downside (5 minute drop in one minute) with no apparent news to cause the sudden spike lower other than being the day before FOMC.

C accelerated lower through Monday’s range repairing the poor low, D created a weak low at just one tick from matching the July 21st low at 2153.75

pre-FOMC-Day-volatility-ES-July-27-2016

D reentered the previous range – with E accelerating higher, initially pausing at just one tick below the previous close, once again defining that short term, emotional traders were controlling the market. The E period closed the lower distribution.

Volatility calmed down, forming a small inside bar in G period with a widening POC developing at 2161.50

A delayed breakout lower in H stayed within value and range from the previous day’s regular session, and the market traded within balance the remainder of the session.

Although price traded outside of the previous day’s range in C/D period it did not get the outside day, as price traded back into and closed within the previous day’s range.

The near matching lows from 7/21 and 7/26 can be considered weak because of the mechanical bounce from a visual level, and has good odds of being revisited in coming trading sessions.

There is still no resolution to the poor all time high at 2169.75 from 7/20.

You can probably expect heavy volatility Wednesday around the release of the FOMC Meeting Announcement 2:00 PM ET.

The ES is now in a nine day trading range after rocketing higher nearly 200 points off the June Brexit lows.

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