Debrief · 31 May 2022 · The holiday drift reverses at 4202, then a choppy balance day

OvernightThe long weekend and holiday ON session (Monday's session is added to Tuesday's ON) gave a predictable continuation of the momentum higher that carried over from Friday's close at the weekly highs. This comes off the back of a 2-week rally from the year's lows. The holiday drift reversed at a notable HTF target at 4202, where passive selling absorbed weak buying, and the auction then trended persistently lower into the Tuesday reopening. What stood out in the reversal was the ease with which price moved through key references, such as Friday's close @4157.25 and then Friday's VPOC at 4128. ON inventory into the open was balanced.

The openThe open on Tuesday at 4138 was muted. Buyers attempted to move towards the large gap to the prior close, but sellers resumed the pre-open trend and auctioned all the way back to Friday's spike base @4106. Whenever we see a spike, we apply the spike rules. These lows held into positive Chicago PMI data, when buyers attempted to take control of the auction, only to fail back down. Sellers then unconvincingly broke the lows by a margin of 2 points.

Mid-sessionA push back through the mid and the VWAP (holding above VWAP) only tested and failed at the FS VWAP. Signs of chop: two-way action, trading balance probable. A key piece of information was the time the auction spent holding above or below Friday's TPO ledge @4120, the VWAP and the prior month's low @4119. This area was now acting as a clear OU area.

Late session and closeA late-morning push broke the IB high @4142 and quickly reached the prior close at 4158, where shorts were quickly rewarded. This area was revisited 3 more times before price broke above it to the SZ @4168 (Sunday's open), then fell back into balance and closed at VWAP.

This was a very choppy session, but the signs were there to avoid getting stuck in a directional mindset. Reversals from key MGI were quick and allowed scales to carry trades through, even if residuals never made HTF targets.

Day typeNormal variation day, balanced, OTFU daily (4102) and weekly (3872), new month.

Multiple NVPOCs below @4062, 3945, 3885 and 3830.

Realistic targetsBased on the expected daily range extremes, above and below.

The gapThe unfilled gap below is a big OU area: buyers will want to maintain the gap. Singles run into the spike base.