Peter’s Premarket Perspective | Wednesday, May 5, 2021

Peter Reznicek

The Market Profile value areas and ShadowTrader Pivots for /ESM21 and /NQM21 Futures are posted free every morning in the ShadowTrader Swing Trader newsletter.

premarket

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  Pre market indications
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
  Key Levels for Today
4189.50 VPOC 5.3
4181.00 Top of Gap
4170.25 Bottom of Gap
4156.00 Settlement / ONL
4141.00 POC

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.

  Scenarios

  • 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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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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