ES1!, The market is testing everyone patience
The RTH daily range is contracting. The price did not get neither to OVN low or high. No changes to the market structure. There is a composite high value node at 2584. Usually, a high value node is a launching point of a directional move. Something to watch. At this point the buyers continue to dominate. There is no obvious signs of their failure. This week we may see some resolution sparked by banks earnings. Once observation for today: the buyers are running out of steam - there were not able to close the gap left from OVN session.
Comment:
The RTH session started from an open drive from the high value node. This is what I meant when highlighted that a composite high value node often serves as a launching point of a directional conviction. The price came close to a stronger resistance which is a confluence of the previous balance low and 50 daily MA. My expectation is to see some consolidation before an attempt to test 2620-22 level. After retesting of the 2506 level, which was a short term resistance, there was a strong sell response making traders to believe that a false breakout may be in play, However, looking at the market internals (NYSE Advance/Decline, NYSE TICK) there were no indication of that.That downside move was not sustained and offered a long entry for a next leg up.
Comment:
The buyers need to hold 2593-2596 area to keep the breakout intact. The next area of support is 2583-2586.
Comment:
Quite a dull day but the price hit a strong target 2626. The RTH session sold off into the closing leaving only the gain made in the overnight. Could be a sign of a potential pullback. If this is the case we should see more selling overnight with a gap down opening tomorrow.
Comment:
Despite everyone's expectation that the market is about to drop the RTH session had opened from an open drive to upside. For people who watch and understand the Market Profile it was not a surprise. At the open the price tested the 1/15 Point of Control and move up to 1/16 Point of Control. Most of the session the price spent balancing around 2621 which is now a 2 day Point of Control. The dull session was spiced up by a report coming from the WH. The algos went ballistic across the indices. As a day trader I took advantage of the upside move and then quickly shorted. Such moves are not sustainable and the price returns back. At this point the "orchestrated" move helped the price to cross the resistance that was a subject of many discussions from people predicting a significant reversal.
Comment:
The final short term target has been hit on Friday. The projected area has been filled. The longs, who initiated the breakout of 2595 level, got paid. At this point a consolidation phase is expected. In order to attract new buyers the market needs to offer lower prices. We may see some continuation fueled by "weak" hands, the laggers, but the serious investors will be waiting for a pullback. As a day trader I don't really care, but knowing the market big pictures, helps to see the action through its short term noise.
Comment:
Area 2660 is an aggressive support. The question remains to answer is whether the price went over the projected area and sustain that or we see a return back to the bottom edge around 2600. Even if that happen, the intermediate bias Neutral-Bullish will be Neutral, it won't change the sentiment. We may see a consolidation in the wider range, The Neutral bias will be ideal for day trading where both directions will be rewarded. It also going to spike the volatility.