Debrief · 22 June 2022 · Another responsive open, an outside day, still in balance

OvernightYesterday's ON session saw a complete reversal of Tuesday's short-covering rally, which had left a large gap to the Friday high of 3711.75 (Monday was a holiday, counted as ON). The ON decline into the EU open was persistent and did not let up until support was found just above 3693, last week's lower distribution VAH at 3691. I think it's really important to review the weekly profile when starting a session and analysing the bigger picture.

Many were calling bottoms, which may be the case, but there is no excuse for chasing short-covering rallies that remain weak. Tuesday's auction never managed to close above the prior week's HVN at 3775.

The openThe auction pushed up into the RTH handover at 3724 (an important look at the weekly HTF sheet), just above the Friday gap. The RTH open above the prior week's pivot area, 3712-3723, was an important area for buyers to hold on to, as any push below 3712 would liquidate more longs accumulated after Friday's close. More importantly, we were opening out of the prior day's range (yLow 3735): an open gap out of range, so gap rules apply. Would buyers attempt to close the gap and trade back inside yesterday's range?

It didn't take long to find out. Another responsive open, much like Tuesday's, but the response temporarily stalled at the previous day's low, 3735, before eventually driving higher again. A responsive open, immediately closing the gap to the prior day's range before zippering @3735: an impulse off the open, then 20 minutes of chop around 3735. What was a little tricky was that, after the initial impulse and gap close, buyers took a long time to find their composure to continue the move. They were waiting to see if sellers would step in.

Mid-session and closeBuyers pushed the auction up to the VAH of the upper distribution of last week's DD, 3798, before a PB to the IB mid. One final late push and a look above the IB created an outside day, with a high at 3805. A peculiarly similar P-distribution to the prior day's RTH session. PA into settlement was weak, trading down to settle at 3760.75.

You need to be looking at your HTF charts to have any chance of building a picture and an understanding. We are inside the monthly lower distribution HVN, which is characterised by last week's upper and lower distribution HVNs acting as the VA low and high. PA in between is fast and fluid, as you would expect in balance.

Day typeP-distribution, short covering, outside day, in balance. Balance rules apply: I need to see volume.

Remember yesterday's anecdote about tennis on top of a hill?