The Market Profile value areas and ShadowTrader Pivots for /ESM21 and /NQM21 Futures are posted free every morning in the ShadowTrader Swing Trader newsletter.
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|Opening In/Out Balance||out of balance, true gap|
|Overnight Inventory||100% net long|
|Current Price/Overnight Range||in upper third|
|Shock and Awe||yes|
|Potential for Early Trade||no|
|Short Term Bias||SPY above 20SMA, QQQ below, neutral|
|4181.00||Top of Gap|
|4170.25||Bottom of Gap|
|4156.00||Settlement / ONL|
Ongoing Narrative / Commentary
A close look at the market profile graphic above will show that where we are slated to open should make traders pause a bit before early trades even though we are trading on a true gap higher with overnight inventory 100% net long. This is because after heavy selling yesterday which established value much lower, we are now back in the recent balance area and also trading in the middle of the unfilled gap from yesterday. Traders who are normally aggressive with true gaps should consider the potential for push-pull in this technical area.
My focus today will be on the gap and where prices trade in relation to it’s top and bottom. Above the top of the gap is more bullish while below the gap puts prices back into yesterday’s RTH range and is more confirming of yesterday’s action. The divergence now between the /NQ and the /ES on the daily charts is very large and is also adding to the congestion.
- Although we are in the middle of the gap and also back within balance, start the session by noting whether or not overnight inventory corrects at all and if so how much. Whether or not prices can trade back into yesterday’s range will be important in gauging strength today and figuring out what the trade in the day timeframe might be. Personally, I would avoid this gap and trade later rather than earlier, giving the market some time to show its hand before engaging with it.
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