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Peter’s Premarket Perspective | Friday, February 26, 2021

Peter Reznicek
Peter Reznicek
Co-founder/Head Trader, Peter's Premarket Perspective, Weekly Options advisory Email Peter Reznicek
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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
3866.00 Halfback
3849.00 ONH
3831.50 Settlement
3801.50 ONL
3799.00 Top of Gap
3777.00 Bottom of Gap

 

Small gap higher, obviously well inside range. Gap rules are not in play. Overnight inventory is balanced to net short. As of now we are trading in the upper third of the overnight range.

After a large trending day lower, I like to note if the ONL is lower than the RTH session and by how much? Was there a lot of acceptance overnight below the RTH range or not? In last night’s case, not much. This doesn’t necessarily mean the selling is over, but rather tells us that the market is balancing at these lower prices for now. It also tells me that there is not outright panic out there right now or else we would be trading definitively lower.

Use the Key Levels wisely in today’s trade. Note that the highest one is Halfback. 50% midpoints of any expanded range are important. They can often be turning points and are important lines in the same to tell us how strong or weak the short covering may be. Finding acceptance today above halfback puts the bear case just a little bit into question.

On the downside, the large gap continue to yawn below us from roughly 3800 to 3777. On further weakness a full fill of this gap should be targeted.

Those of you who are fans of James Dalton (and I count myself in that camp) know that one of the bedrocks of the market profile theory that he teaches is excess and balance. Keep that firmly in mind as you navigate today’s session. For now, futures markets are balancing at lower levels. As the day unfolds, constantly ask yourself the three questions and note how the answers relate to the concepts of excess and balance.

  Scenarios

    • Use the ONH as a potential go/no-go level for further short covering keeping firmly in mind that taking out an ONH that is inside of value in the context of an expanded range lower is not the same as buying an ONH that is a true gap higher.
    • Note that the settlement and volume POC are close to each other in yesterday’s RTH distribution. Short plays can target this area as settlements and POC’s are often revisited.
    • If you are a daily grind futures trader, then I’d be happy if you just take one thing from today’s report and that is simply that given where we are opening, the better futures trades will not present themselves close to the open but rather once things shake out a bit. The overnight range is compressed compared to the RTH and we slated to open close to where the most value in that RTH was.

 

 

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