Debrief · 18 July 2022 · Trapped buyers under the monthly high, then a long liquidation

OvernightSunday reopened at 3881, leaving a solid gap to Friday's high (6866.75) and settlement. That gap was quickly closed, but no attempt was made to auction below it. That gave buyers the green light to grind out a solid gap in thin liquidity into the RTH open at 3898, having seen an ON high of 3908. The RTH session would open with a true gap, so gap rules apply.

The openWe opened out of range, but if buyers were looking for a continuation they were quickly left wondering whether the cavalry was coming. An initial weak push to take out the ON highs at 3909 only made it as high as 3905, and the auction was left hanging inside a tight IB range (textbook MP trend day): an open auction in a tight range, inside the IB for 3 hours, on very low volume.

The IB low was resting above the ON VAL. Given the lack of enthusiasm to take out the monthly highs at 3922, having come so close, that meant only one thing: trapped buyers.

The breakThe break below the IB was deliberate and without response, with just enough of a pull-back to give you a very tight and precise entry at the IB low. Break and hold below the IB low: notice RVOL and delta at that point. Then the perfect PB entry, with an RVOL spike higher; location, the prior week's high. The groundwork for a long liquidation had been laid by the Sunday opening gap, and the slice through the ON and Friday ranges that followed was persistent and unrelenting. Friday's, weekly and monthly POC at 3856 was tested and provided brief support before the auction broke back through. A weak reversal in this area illustrates buyers' lack of appetite to defend a key level.

Into the closeThe drive down ran into the last 30 minutes of trade, with RVOL well above the 5-day average and delta collapsing. There was no pull-back until the auction was within a point of Friday's low (the post retail sales and Michigan low at 3819.75, the swing low following the retail sales data and a key reference), where buyers were found.

Day typeP profile distribution, mid 3863.

ON sessionDouble distribution. The ON back-tested some of Monday's liquidation higher, with sellers defending Monday's singles mid area, to reach a high of 3872.75 from an opening low of 3832. ON H 3871, ON L 3832, ON POC 3837.

Monitoring3879 ON high | 3852 singles/mid | 3920-3800 gap.

PlanON inventory is long. We will be looking to see a PB into the 3860-53 area, near the ON mid. Above it I am looking to be long, and below it I am looking to be short, back to test the prior close at 3834.

If we quickly test and reject yesterday's IB low, I will be looking to get short. Above the 3893 VPOC I am looking for a long to take out the monthly high.

Notable tweetHere's a quick look at WTI (CL); I am trading Sep 2022. This market is largely driven by fundamentals, but it's good to be aware of the set-ups.