Debrief · 2 June 2022 · Passive buyers absorb at the gap, then a squeeze to the highs

OvernightThe ON auction was slow and balanced, staying within the lower distribution of yesterday's auction. Coming after the previous afternoon's balance, this gave the area added significance. A break of this consolidation zone could lead to a significant uncoiling of positioning, so it was important to look for continued balance or change. The ON high was 4128 and the low was 4083.5.

The openThe handover into the RTH session came a few points below the previous close @4099, which was immediately tested, only for sellers to aggressively attack the ON lows. Importantly, the auction quickly reversed back to just below the open. This was a critical early clue: both buyers and sellers had shown a weak hand by failing to penetrate LTF references such as the prior close and the ON low. Potential chop, given the prior afternoon's chop.

Mid-sessionSure enough, the choppy PA continued while we were below yesterday's VPOC @4103 and the lower quartile, before shorts folded as passive buyers were found again at the prior gap from 27/5.

The closeThe final straw for shorts was a high-volume failure to trade through yesterday's lows. That attracted buyers, who impressively squeezed the auction from low to closing high @4176, ending the OTFD. The auction is now trading on the edge of the 4-day balance area high.

Absorption-breakout, multiple singles. 4-day balance, OTFD daily (4175.75) and weekly OTFU (3872), new month balance.

Was today a trend day?

Price action review

1. Open IR, reject prior close.
2. Failure to penetrate prior lows.
3. Tight consolidation above IB hi.
4. PB above ON highs and yesterday's upper extreme of the lower distribution.
5. Tight PA.
6. PB entry, trend continuation.