Debrief · 4 July 2022 · Opening inside range, no conviction trades

July 4th profile reviewA little rushed and late, apologies.

4th July session debriefAnd this is why I don't overly prep into holiday sessions: the price action can be seemingly harmless but move quite a lot! Once again many were calling for holiday rallies and market bottoms, as July historically is a strong month. Although many fail to notice that the index has dropped every July bar one under a bearish environment for the last 25 years. See last week's tweets.

OvernightSunday's session into Monday was subdued, but notably it opened below the prior close and auctioned down to test and find buyers at Friday's VVAH at 3805 and the previous double top from the 22-23 June auctions.

After the reopenAfter the reopen on Monday, the auction drove higher in thin liquidity, through the Friday high, to test 3857. It failed to hold above 3840, a key area of support, and longs liquidated into the RTH to trade below Friday's VPOC at 3783.

The numbersH 3857.75, L 3773, mid 3816, VWAP 3814, pSettle 3828.

We're opening inside the prior range, SO no real conviction trades for this open. I will be monitoring 3763 and 3741, last week's lows.

Trade planExpected to open inside range: expect chop. I will be patient. I will be paying particular attention to the 3763 area and 3641.

The holiday session inventory is short. We'll probably open inside the prior RTH range, with a gap to the prior close. I'm looking for a positive response on the open, or else sellers will be looking to target shorts through 3763 and 3741.

Long ideasI will be looking carefully at 3763 and 3641.

From TwitterOn average, yes, but look at these numbers during a bear cycle. July is historically a great month, and so is the 4th July trade, but maybe we still need to keep an open mind and trade the auction. I have to say I was surprised when I filtered for bear cycles.

Opening bell0830CT. Friday's vPOC, opening test: a clear tapering at the high, not revisited. Selling weakens into the 3741 area, and support is found just above last week's lows at 3741. It holds above the footprint node from the prior bar, and delta turns positive aggressively. Aggressive selling below the open level, then a higher low, with sellers getting trapped.

Live journal: price action for the dayA large gap from the prior close, 3823-3774. No attempt to close the gap on the open, and the move continues lower.

1. The open test rejects Friday's POC at 3783, to auction lower aggressively.
2. Support/demand was found just above the prior week's low, to set the IB low at 3743.75.
3. The auction higher fails below the IB high and the opening test... BALANCE RULES!!! Early VWAP criss-crossing: balancing.
4. The auction goes to the other side of the opening range and fails to trade below the IB low. Buyers take control of the auction, initially absorbing selling pressure. Key tip: look at the successive lower highs AND DELTA. Buyers are accumulating.
5. Another failure to take the IB high, but notice that this time the auction holds ABOVE the IB mid. That's a critical clue!
6. Another absorption zipper, noticeably above the prior lows at 3763.5.
7. A strong trend into the close, settling above Friday's settlement, incredibly coming back from 2% down! The way the auction broke above 3804, an essential reference from Friday, was another bullish clue.

High RVolume, and delta aggression positive. Value never shifted higher with price.