The Market Profile value areas and ShadowTrader Pivots for /ESM21 and /NQM21 Futures are posted free every morning

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  Key Levels for Today
3896.75Top of Single Prints / ONH
3882.25Settlement
3877.50RTH Low
3859.00ONL

 

Solid gap lower and well outside of yesterday’s RTH range. Overnight inventory is surprisingly net long as the majority of the Globex distribution was above the settlement. As of now we are trading very close to the ONL. All of this points to potential to trade early rather than later today.

It’s important before looking at the more nuanced M.G.I. of the market profile to start with simple technicals on a daily chart of the /ES. In the 24 hour snap below, current prices are wedged between the 20 and 50 SMA’s. Today’s trade will be all about whether or not the 50SMA holds or if we are able to close a daily bar below it.

Caught between a rock and a hard place

The gap is currently about 19 in the /ES. Gap rules are in play and special attention should be given to #2 and #4.

  Scenarios

    • Given the true gap there is potential for a fade. Traders should note that overnight inventory is more long than short which could put a damper on any counter trend activity. The usual strategies apply. Look for early trade to fail to take out the ONL. Buy the high of the first one minute bar or the cross back through the opening price should the initial drive be lower. Monitor for continuation and target the gap fill first, followed by settlement, then the top of the single prints.
    • If the scenario is gap and go, resulting in a trending day lower then it more than likely will be accompanied by a distinct lack of early fade or only a small partial fade that fails to get anywhere near the RTH Low. If so, short any crosses back down through the open or the breach of the ONL. For this to work look for extremely bearish readings on the internals such as breadth more than 4:1 negative and A/D lines pegged at -2,000. Monitor for continuation and keep gap rules #2 and #4 firmly in mind and know that this is the hardest move to pull off as the moves are often not very clean even if they trend lower over the course of the session.

 

 

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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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