Debrief · 7 October 2022 · NFP liquidation back inside the 7-day balance

Friday's NFP liquidation saw the auction react aggressively to the downside and trend back inside a prior 7-day balance zone. It was an emotional close that erased the earlier week's aggressive gains. Those gains were driven by short covering after overly short inventory from the prior FOMC week, fuelled further by worries about institutional margin calls.

The auction opened at 3714 and closed at 3651, after touching a low of 3732, the prior week's VAL.

Into NFPA 3-day balance island: no overlapping value with the prior balance. NFP and income data @7.30 CT. The initial spike was not really tradable, especially with home trading tools: no liquidity. After the 1st bounce, liquidity came back and the market was tradable.

The openAn open auction out of range, then a drive lower through the NFP lows at 3700: a new low, with max volume at the century figure and delta temporarily increasing.

Mid-sessionThree PBs to the mid-ish. The pullbacks were short-lived and very fractal in nature, pulling back 50% of the prior drop on most occasions. A new low at 3670, the prior HVN and a key HTF target, then consolidation. Delta reversed following the data in the hour after the open, but price was not following: sellers went from reactive to passive.

The closeBuyers getting desperate into the close: a ledge forming, and a small inventory adjustment into the close. We are back in the 7-day RTH balance range: poor structure.

OvernightON from Sunday into Monday shows a similar pattern to last Monday: a further push below Friday's lows has retraced into the RTH open.

I'm mindful of a similar set-up to last week's Monday reversal rally, and I'll be looking to see if buyers can maintain the gap to the close.

The auction is looking to open in the lower distribution of Friday's double distribution, and sellers will want to contain activity below 3670. We're opening in the upper range of the lower distribution, above the close, where we saw an inventory adjustment into the close off Friday's lows.

PlanLooking to initiate shorts on signs of weakness at the double distribution singles, 3666-3670. Expect OA inside the range.

A test back to the Friday auction spike base and the ON POC, 3637, would be a good area to look for longs. Below, I'm looking for trend continuation.

Opening bell0830CT. A PB into Friday's settlement: a taper, and high absorption. Delta declining, and stops triggered above the zipper to retest the settlement.