The Market Profile value areas and ShadowTrader Pivots for /ESZ21 and /NQZ21 Futures are posted free every morning in the ShadowTrader Swing Trader newsletter.
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|Opening In/Out Balance||out of balance|
|Overnight Inventory||100% net short|
|Current Price/Overnight Range||lower third|
|Shock and Awe||yes|
|Potential for Early Trade||yes|
|Short Term Bias||bearish, /ES now well below daily 20/50 sma’s|
Ongoing Narrative / Commentary
Purposely picked something unhealthy and sugary for the breakfast image this morning, thinking that some out there might need the comfort food given the implied open of -81 and still falling as I got to press. Rest assured that the picture will be the only thing sugar coated in this commentary.
Enormous true gap lower on overnight inventory that is 100% net short puts gap rules firmly in play. For those who lean more to the day timeframe as their modus operandi, remember that the size of the gap is commensurate with the difficulty of pulling off an early trade. The opportunity is there but it’s not easy.
Everything in the morning session will be about the gap fill or lack thereof. With anything this large, we would expect at least some counter balancing of the overnight move. The usual strategies outlined in the Scenarios below can be executed.
From a purely technical standpoint, the open will have us well below the 50sma daily which the SPX barely held on Friday and also well below trend. Proximate technical support is minimal. I’ve listed one that could be noteworthy today which is the swing low from August 19th on the /ES daily. For now, this level has held as the ONL is almost dead on it.
- Gap rules apply. Get familiar with them if you are not. They are important and they work.
- Assume that there is potential for early fade. Buy the high of the first one minute bar, or if the opening drive is lower, buy the cross back up through the open. Monitor for continuation with an ultimate target of the Overnight Halfback.
- An early short entry assuming a gap and go is usually difficult to pull off. The better move would be to short the cross back down through the open if there is an initial fade or strike an up trend line from the LOD to any higher low that forms and short the break of that line. Target the LOD first and monitor for continuation lower.
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