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|3288.25||TPO POC (prominent)|
|3276.50||RTH Low / Top of Gap|
|3267.00||Bottom of Gap|
August came out of the gate with more of a whimper than a bang as yesterday’s gap and hold failed to get any expansion of range and is being followed by an overnight gap down of about 13.50 currently. All this leaves the market threatening to return back to the “safe space” of the large balance area.
As of now the gap is outside of yesterday’s range by only a couple points. Thus it is a true gap but not one that would be large enough to create any shock and awe at the open. Overnight inventory is also very balanced with about an equal distribution on either side of the settlement. That also points to a potential later rather than earlier trade.
Yesterday’s TPO POC was prominent which makes it a Key Level for today. Prominent POC’s have better odds of being revisited than less prominent ones. Carry that forward into your narrative for today as it may set up a long trade targeting that POC. POC’s are places to end trades, not start them.
Pay attention to where value is developing today. Bulls need the market to get in gear here and stay higher than the recent larger balance area. Lower value does not help them achieve that and increases the odds that we return to balance and potentially rotate to the lower end of it.
- With the market currently about halfway between the top of the gap and the bottom of the gap, the early trade will be dominated by which extreme future decide to touch first. Betting on that via an early fade or continuation trade is probably a fool’s errand. The better trade is probably the responsive one against either extreme, given proper context.
- Acceptance back within yesterday’s RTH range potentially puts the TPO POC into play as it is prominent. Monitor for continuation to that point. Not testing that POC today is a tell of market weakness.
- Finding acceptance below the Bottom of the Gap increases potential for further downside as it would further confirm yesterday’s RTH session as a look above and fail. If so, retracements may be shortable with an ultimate target of the 7.31 VPOC.