Peter’s Premarket Perspective | Tuesday, February 2, 2021

Peter Reznicek

The Market Profile value areas and ShadowTrader Pivots for /ESH21 and /NQH21 Futures are posted free every morning

in the ShadowTrader Swing Trader newsletter.

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  Key Levels for Today
3804.25 ONH
3777.00 RTH High
3727.75 Halfback
3757.25 Settlement / ONL

 

True gap higher this morning adding to yesterday’s short covering rally. Overnight inventory is 100% net long and we are currently trading in the upper third of the overnight range. Gap rules are in play.

As the overnight activity is piling on to the RTH activity and inventory is heavily skewed long, there is opportunity to trade early this morning should prices remain close to the ONH into the opening bell. When overnight activity is strongly in the direction of the previous trending day, there is always potential for early correction.

**The market profile graphic may be slightly compressed and lack sharpness. I am working remotely this morning and as such do not have direct access to a better image. Still snowed in!**

  Scenarios

    • Assume potential for an early fade using the usual techniques. An early failure to take out the ONH can be a signal as can an early rally through the ONH that then comes back into the overnight range. Short the low of the first one minute bar or any cross back down through the open on an opening drive higher that fails. Keep gap rules #2 and #4 firmly in mind.
    • A gap and go scenario will fill very little of the gap and even then probably on slow tempo and internals that stay bullish. Once the ONH is taken out, monitor for continuation.
    • Balancing outside of range with value higher is also a potential scenario as there was a good deal of trend to yesterday’s RTH activity. With any of the potential outcomes, your main job is to not come into the market expecting any one over any other but rather let the market tell you which it is and act accordingly.

 

 

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Peter Reznicek

Peter Reznicek is the founder of ShadowTrader.net and writer of Peter's Premarket Perspective, a morning market profile blog to help people plan their trading day and organize their thoughts before the market opens. He can be reached at asktheshadow@shadowtrader.net.

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