The ES opened one tick above the prominent back to back points of control from the previous two regular hours trading sessions at 3454.00, then traded to just three ticks below it before accelerating higher, leaving a long string of single prints in the opening 30 minute (A) trading period.

With first half NYSE volume hour extremely light at just 244,000, the pace of the market slowed considerably by the second period, which traded in just a 2 1/4 point range. The high of B period was just a single tick above the recent two day balance high at 2361.25, a sign of weaker hands day and short term traders selling exactly at an obvious trading reference level. Price looked above that level in C period, but without finding acceptance above it, returned back into the two day balance, a classic “look above ad fail” market profile trading scenario.

The point of control began to develop 4 and 5 TPO’s wide at 2359.25 before a sharp liquidation break in E period accelerated price lower, back down through the excess A period single prints and the previous close. The selling took out the overnight low by two points in F period, but stopped two ticks short of repairing Friday’s poor low at 2347.00, a level which should be carried forward as it is now part of a string of daily lows grouped closely together.

Failing to take out the prior day’s low, and with the wide POC above price, traders apparently found themselves getting short in the hole and short covered back into the initial balance and back through the point of control. Another trading session dominated by short term and day time frame traders.

There are now multiple daily lows tightly grouped together, setting up the possibility of what James Dalton calls the “firecracker effect”, where setting off one set of stops below a reference could trigger multiple stops from nearby price levels below it.

Value at the end of Monday’s session was overlapping to higher from the previous session, and Monday’s point of control ended up at 2358.50, just two ticks below its earlier high at 2359.25. It really didn’t migrate lower with late selling.

If price fails to break out of the multi day balance to the downside, and can successfully break out of the now three day balance above 2363.25 to the upside, potential targets (initially) are the point of control from April 5th at 2370.75 and the poor high from that session at 2375.00.

(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. Please read our disclaimer

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