Debrief · 8 June 2022 · Sellers soak up buyers, then the eight-day balance breaks

OvernightThe ON profile was balanced and sat above yesterday's VPOC, but we opened with a large gap lower from the prior close at 4158.75. What stood out was the ON low: a single tick above the prior VPOC. To me that shows a lack of resolve from sellers. A clue!

ON inventory was short, and with sellers showing so little conviction overnight we could look for an early adjustment on the open.

The openThere was no follow-through to the downside after a breach of the ON low (4133) by 5 points. Buyers took their turn to respond and closed the gap to the prior close at 4158.75, breaking above it by a single point to make the day's high at 4160.

Mid-sessionThe auction then spent a long time making no ground to the upside. One clue was the price action at the prior high: the buying switched off, and it happened more than once. It's worth looking at yesterday's live journal.

The break and the closeThe IB was still intact three hours into the auction, but buyers were losing the battle. Sellers eventually took full control, broke the IB low and tested the small ledges from yesterday's auction at 4125 and 4115. They pushed down to cover yesterday's singles marker at 4105 before being pushed back above the all-important pwkSettle (4108). Close 4114.25.

The 8-day balanceOn the profile review: Monday, sellers traded into the prior day's VPOC 4120, and the low of the day was 4107.25, just below the prior day's close and the pWkSettle! Tuesday saw yesterday's lows rejected by 7 ticks: an open test drive. Crucially, this was at the lower extreme of balance and last week's lows, and the response from buyers was clear from the open, failing to break the ON low. Wednesday, the auction spent a lot of time making no ground above the yVPOC and failed to break above yesterday's high (and low), leaving us with an inside day, closing just below the wkVPOC and in the middle of the 8-day balance. The late spike failed to take out Monday's non-excess high. Big moves are coming!

Day typeDouble distribution, liquidation, 8-day balance, inside day.

Yesterday's shortI took a short at the time at 56.75, and held it through the IB low to my primary targets: 4125, 4115 and 4108. My balance trading rules are why I held; check the spike rules too, as we failed to take out yesterday's highs.

Delayed update, 15.22On the open I took a few early losers shorting below yesterday's spike base at 97, looking for a hold below 4100, then tried again at 4108. I then took a decent trade at my second scheduled area that covered the losses and then some.

• Short 4117 and 4114, scaled out at 4104 and 94; the residual pulled back through 4100 and the scale-outs saved me.
• The pull-back to the prior week's settle, to just above 4111, was nasty for anyone short.

1500 CTThe eight-day balance was finally broken, and in the least obvious way. My plan from the open was clear, but I took multiple stops before the real opportunity came, well after everyone had given up. Short 4105, had dinner, paid 4085 for two-thirds of the position, and then paid 4045 for the remainder. Sometimes you get lucky, but that is part of trading. My trade plan from the start came to fruition, but not in the way I expected.

The price action of the open was choppy; the last tweet shows an even better entry into this trade, which I missed. The thinking behind the final attempt was the market's failure to exit from the IB high, a key reference point. Sellers were patient, as they had been all week, soaking up buyers. The prior week's settle was the key OU once again.

The outcome was an outlier: a massive trade. I never knew that at the start. All I knew was that I had a fixed stop on one side and unlimited upside. All I had to do was let it play out. You can watch me take multiple losses and recover them, with full live commentary, in today's live YouTube video.

ON updateStay alert: major balance building, high potential. 2-way inside balance, between the upper edge at 4168 and the lower edge. Balance rules apply: we are monitoring for change, and if not we look to fade the extremes. We are closely monitoring the week's non-excess lows at the extremities of balance. Stops may lurk here.

Opening bellAll eyes on the ECB. I'll be in full concentration mode: prep done, mental prep done, technical prep done. Be ready! I'm concentrating on EU land, so I won't be present into the open; I'll try to update.

8 am CTI'm wondering if today is the day ES breaks out. The narrative is inflation out of control, with slower growth and rising rates on top. Watch the lows in ES: we're already below last week's settle. I'm watching for a test into 4108 for a short on the open, as discussed on today's stream. Big ON volume is coming in into the open.

Looking for a weak pull-back into the 4108/4115 area for shorts. Equity risk off!

After the openTwo-way price action gives me less conviction in a trade idea. The clear reaction from shorts on the open, and the two-way trade after it, is not the best sign for a bigger trend move, so I'll wait for more information. This market isn't ready for the move I have in mind yet, and maybe it was too obvious. Stay ready, stay alert: balance rules apply in the meantime.

I'm calling it a day. The ECB gave us some low-hanging fruit in bonds and later equities into the open. After the open it was a chop fest: stay away unless you love to scalp.