Tag Archives: short covering

Short Covering, Double Distribution

Short Covering, Double Distribution
Short Covering, Double Distribution

The market profile chart formed a second, higher distribution above the earlier 5th (E) period high, after an upward spike in J period, rallying to just two ticks shy of the upper distribution low from Wednesday’s profile.

Focus for Friday could be on acceptance or rejection of the upper distribution from Thursday. Price acceptance back into the lower distribution could target the session low at 2693.50, which was also very mechanical at just a single tick above the overnight low.

If price opens within the upper distribution, potential balance scenarios could include:

– Look above the upper distribution high at 2726.25 and find acceptance back into the upper distribution from Wednesday, potentially targeting the excess single prints or the opposite end of that balance. The unfilled gap remains at 2755.25 from June 22nd.

– Probe above the upper distribution high and fail, returning back into the balance with the potential to trade lower to the opposite side and test Wednesday’s lower distribution.

– Look below the upper distribution low at 2715.75, testing the single print at 2714.00, and find acceptance back into Thursday’s lower distribution with good odds of targeting the point of control, and potentially the weak low.

– Look below the upper distribution low and fail to find acceptance back below 2714.00, returning back into the upper balance and potentially targeting Thursday’s high, and the upper distribution from Wednesday.

– Remain in balance.

Whenever price re-enters a previous balance the same rules could apply – look either above or below the balance and accelerate or fail, or remain in balance. So the same trading scenarios exist if price opens within the lower distribution after the overnight trading session.

The overnight high and low are always valid trading references.



(the above, post and all posts 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. DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS WEBSITE. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Please read our disclaimer)

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Probable short covering leaves three distributions and poor low in the profile chart

short covering
Probable short covering following the prior day’s selloff left multiple anomalies in the profile chart. Anomalies are often partially repaired soon after they are created, and often the next day (at least partially) . Wednesday’s chart was a triple distribution profile, and has another poor low at 2701.75.
poor low in market profile chart
poor low in market profile chart
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Two distributions, probable short covering rally

Anomalies in the market profile chart are often repaired, or traded back through, soon after they are created. Wednesdays balance and Thursdays rally traded back through the multiple anomalies in the profile following the April 24th selloff. Thursday’s (4/26) market profile chart also left a poor high at 2675.50, closing just off the high of day.

short covering rally

Depending on where price opens in regards to areas of balance, potential trading scenarios could include:

– Look above or below a balance and accelerate/find acceptance

– Look above or below a balance and fail, targeting the opposite end

– Remain in balance

Prior wide “naked” (not yet revisited) points of control can act as price magnets, often drawing price back to them. There are very prominent points of control both above and below Thursday’s range.

market profile daily charts

Focusing on the two separate distributions in Thursday’s profile, price acceptance within the upper balance would probably have decent odds of repairing the poor high, and potentially re-testing the high from 4/24, and if the market remains strong price could target the upper excess single prints from the 4/20 profile.

Carrying past information forward, the high from 4/19 at 2703.50 was mechanically just a single tick shy of filling the gap from 4/18, and the very wide naked point of control from the 4/18 profile at at 2714.00 has not been revisted. The prior weekly high is at 2718.00.

split view market profile chart
Split view market profile chart 4/26/18

If price opens in or finds acceptance back inside Thursday’s lower distribution, below the pull back low at 2663.75, the lower excess single prints in the profile could be tested, followed by the small gap at Wednesday’s high at 2645.00. Acceptance back into the 4/25 range could target the 10 TPO wide naked point of control at 2629.50.



(the above, post and all posts 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. DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS WEBSITE. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Please read our disclaimer)

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