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| 3901.25 | RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. High (Poor) |
|---|---|
| 3870.50 | Settlement |
| 3855.25 | RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. Low / ONLOvernight Low. A term mostly used for the futures market as it trades almost around the clock. To be precise, in the /ES this would be the lowest price between 4:30pm EST and 9:30am EST the next day. |
Futures in a tight range overnight until CPI data this morning opened the door to a strong move higher. As of now, even with a +16 gap we are still slated to open within range and thus gap rulesGuidelines to follow on any day that the futures open outside of the prior day's RTH range. Only opening outside of range is a true gap and puts gap rules in play. 1. Go with all gaps that don't fill right away. This means that if early trade doesn't start to correct the imbalance, then prices will probably move in the direction of the gap. 2. Larger gaps can often fail to fill on the first day or may fill only partially. 3. If the gap fills (meaning the prior day's RTH high is touched on a gap up or the prior day's RTH low is touched on a gap down) and value cannot get to at least overlapping, then the odds of a late day rally (on a gap up) or late day selloff (on a gap down) increase. 4. Gaps of larger than $20 in the /ES are difficult to trade and should be avoided early in the day as t... are not in play. Overnight inventoryA way of measuring overnight activity in the futures market by just noting how much of the overnight activity happens to fall above the prior day's settlement value (4:15pm EST close) and how much falls below. If more activity is above the settlement, then overnight inventory is said to be net long. If more is below, then it is said to be net short. If all of the overnight activity is above the settlement, then it is said to be 100% net long. If all of the activity is below the settlement then it is said to be 100% net short. The overnight inventory situation matters most and has the most impact on early trade when it is skewed 100% in either direction because when the imbalance is very large like that then the odds of an early correction increase greatly. This is due to the fact that most... is very balanced and we are currently close to the ONHOvernight High. A term mostly used in describing the futures market which has an overnight session and trades almost around the clock. To be precise, in the /ES this is the high made between 4:30pm EST and 9:30am EST the next day..
Let’s start with structure. Yesterday’s high was poor and is in need of repairA market profile term for "fixing" profile distributions that are missing parts that would make them complete or more symmetrical. This concept is most often applied to poor highs and poor lows which are profile distributions that lack excess on their endpoints and have two or more TPO's across creating tops or bottoms that look flat. Once a new session trades through these levels then it is as though the current activity was "pasted onto" the prior activity to complete the picture. It should be noted that repair can only occur in an RTH session. Overnight activity that trades through areas of poor RTH structure does not repair that structure. . The initial backing away from the poor highA poor high is one which lacks excess and is the opposite of an excess high. A poor high will have less than two TPO's of excess at the top of a daily range with at least 2-3 columns of TPO's lining up to form a flat looking top. It indicates that there are short term or weak handed longs at that high of day area. We know this because every time prices rise to the top, they get sold quickly, thus forming the poor high.
The poor high has two forward looking indications. The first is that prices should back away from the poor high as there are a number of longs trapped at poor location. The second is that if the next day or in some subsequent session, the poor high is revisited, then the odds are strong that it will break and move higher. This is called repair as it repairs the structur... already happened in late day trade yesterday. Carry forward both of these dynamics.
Beyond the nuances of the profile, we are at very important junctures on daily charts of futures, especially the /ES. Let’s look at both /ES and /NQ now to give a wider perspective.
/ESH21 – Daily
/NQH21 – Daily
It’s important to note that the trendline resistance in both the /ES and the /NQ is just ahead and could be tested today. It’s noteworthy that if you look at the same chart in the SPX, the line was actually broken on yesterday’s rally although was not able to close above. Should either of the futures close a daily bar above the trendline, it will put the bear case seriously into question and open the door to a revisit of the all time highs.
Scenarios
- Current prices are trading very close to the volume POCPoint of Control, also known as the "fairest price to do business". It is the price level in the /ES where the greatest amount of volume in the prior RTH session traded. ShadowTrader measures the POC using volume but the traditional way is to mark off the widest point of the day's distribution where the most TPO's printed going across from left to right, indicating that that was the price where the most time was spent. It's important to pay attention to both the volume POC and the TPO POC. which is in the middle of yesterday’s VA. That gives little indication as to how traders will act around the open especially with overnight inventoryA way of measuring overnight activity in the futures market by just noting how much of the overnight activity happens to fall above the prior day's settlement value (4:15pm EST close) and how much falls below. If more activity is above the settlement, then overnight inventory is said to be net long. If more is below, then it is said to be net short. If all of the overnight activity is above the settlement, then it is said to be 100% net long. If all of the activity is below the settlement then it is said to be 100% net short. The overnight inventory situation matters most and has the most impact on early trade when it is skewed 100% in either direction because when the imbalance is very large like that then the odds of an early correction increase greatly. This is due to the fact that most... quite balanced. Higher odds trades will develop later rather than earlier.
- The poor highA poor high is one which lacks excess and is the opposite of an excess high. A poor high will have less than two TPO's of excess at the top of a daily range with at least 2-3 columns of TPO's lining up to form a flat looking top. It indicates that there are short term or weak handed longs at that high of day area. We know this because every time prices rise to the top, they get sold quickly, thus forming the poor high.
The poor high has two forward looking indications. The first is that prices should back away from the poor high as there are a number of longs trapped at poor location. The second is that if the next day or in some subsequent session, the poor high is revisited, then the odds are strong that it will break and move higher. This is called repair as it repairs the structur... is in play and has potential for repairA market profile term for "fixing" profile distributions that are missing parts that would make them complete or more symmetrical. This concept is most often applied to poor highs and poor lows which are profile distributions that lack excess on their endpoints and have two or more TPO's across creating tops or bottoms that look flat. Once a new session trades through these levels then it is as though the current activity was "pasted onto" the prior activity to complete the picture. It should be noted that repair can only occur in an RTH session. Overnight activity that trades through areas of poor RTH structure does not repair that structure. . Target this high on strength and also position for a breakout higher to repairA market profile term for "fixing" profile distributions that are missing parts that would make them complete or more symmetrical. This concept is most often applied to poor highs and poor lows which are profile distributions that lack excess on their endpoints and have two or more TPO's across creating tops or bottoms that look flat. Once a new session trades through these levels then it is as though the current activity was "pasted onto" the prior activity to complete the picture. It should be noted that repair can only occur in an RTH session. Overnight activity that trades through areas of poor RTH structure does not repair that structure. the structure. Monitor for continuation. - The ONLOvernight Low. A term mostly used for the futures market as it trades almost around the clock. To be precise, in the /ES this would be the lowest price between 4:30pm EST and 9:30am EST the next day. is very close to the RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. Low. Consider that a weak lowA weak low should not be confused with a poor low. The latter speaks to a deficiency in structure and the former deals with the location of the low. A weak low is formed when a market falls and reverses right at a specific point which is often a technical or profile nuance. Some examples would be prior intraday lows, the lower extreme of a value area, the prior day's settlement, or the current day's open. In each case, the location is a mechanical and visual reference that is used by short term traders as an entry point. The low is deemed weak because it can be taken easily when retested due to the short term nature of the buyers who initiated their positions at that level. should it be revisited. Only a test there would have potential to change the tone.
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