Debrief · 6 June 2022 · The out-of-range open fails back into the six-day balance

OvernightON price action reversed Friday's long liquidation move, which had closed very close to the prior week's settlement, a key HTF reference point. The stubborn ON lows frustrated sellers, who eventually liquidated their positions, driving prices higher, taking out the NFP day's high and breaking above the prior week's VAH. The handover into RTH meant we were opening out of range. Spike rules.

The openOpen auction out of range (OAOR) at 4149, above Friday's inside-day high at 4142.25 and a large gap to the prior close at 4107.25. The auction quickly tested back to close the gap to the prior high at 4142 and briefly broke into the prior range, where the ON singles marker drew in support. From there the auction rotated steadily higher, took out the ON high at 4159 and settled into a holding pattern.

The flushB and C periods looked to be consolidating for a higher push, but D period flushed out any hope: a quick and punishing move lower for longs, into the belly of the prior day's distribution.

The holding pattern was an important piece of information. That block was key to the day: a failure of buyers to make any ground at the upper edge of last week's balance. Once price was below the open, all ideas for longs should have been on pause. The failure of longs to defend key references, and the lack of aggression from buyers to break above the prior week's references, such as the spike left behind from 6/2, are all clues. Delta also moved aggressively lower before the holding pattern broke, and turned for the worse as we broke out of the block. This is worth looking over for future moves.

Price action, step by stepON reversal of Friday's long liquidation day.

1. Last Thursday's spike and spike base at the upper edge of the 6-day balance.
2. Out-of-range open auction, as neither side shows strong initiative. The gap to the previous day's high closed early.
3. A slow push to test below Friday's highs and down to the ON singles marker, which acted as a good reference point, highlighted earlier in the day.
4. Buyers attempt to take control and test the upper edge of last week's balance, only to be held just below last Thursday's spike base reference.
5. D period begins, and longs fail to hold the tight consolidation zone from B and C periods.
6. Sellers take control of the auction to test the obvious targets at Friday's NVPOC, 4119.

Another day of balance. Trade balance rules until we see change.

The profileA multimodal profile, created by the initial opening balance above the prior day's high (the green distribution) and the long liquidating move once that balance broke, creating a b profile. The initial move out of the inside-day high failed to draw in a larger crowd: volume was low and lacking conviction. Sellers observed above-average value at the extremities of the 5-day balance and auctioned price lower to the range mid and the prior day's VPOC.

A nice PB to VWAP in the afternoon, and notice the volume increasing into liquidity: the afternoon PB swing high was to VWAP at 4140. Monday sellers traded into the prior day's VPOC at 4120. The low of the day was 4107.25, just below the prior day's close, and the pWkSettle!

BalanceWe are seeing weak blows exchanged between buyers and sellers while we remain in balance. Weak, non-excess highs and lows show a lack of conviction and absorption by opposing forces. Given the holding pattern, we are looking for signs of change, such as a change in PA or a breach of the extremes. Remember that false breaks out of balance are common, and failure back into prior acceptance is a setup that needs attention.

6-day balance: balance rules apply. We are monitoring for change, and if not, we look to fade the extremes. 2-way. We are closely monitoring the week's non-excess lows at the extremities of balance: stops may lurk here. The 26/5 auction high remains a key reference.

Day typeMultimodal distribution, failure of inside-day breakout, 6-day balance.

The live journal from today's session.

08:40 CTWe get the response off the open we were looking for as ON inventory adjusts, but we hold below the prior week's settle at 4107. Buyers will want to clear this key hurdle quickly, or else shorts may re-attempt the prior week's lows.

The response from the open above the ON low was a key piece of info. Had there been no response, a test and break of the prior week's lows was likely. This was an inventory adjustment from an overly short book ON. The open failed to take out the ON low, and buyers were in control early.

09:20A tight hold in PA at the top of the prior double top / chop zone leads to a rush for shorts to cover, targeting the prior close. The 4120 target is hit, and next in line is 4140.

09:40D period again, and we are seeing resistance at the pre-emptive level, 4140, which I will call the Jim Dalton afternoon swing high from yesterday's auction. Please, please refer back to today's plan, and do the same in your own trading: all the areas we focused on in our prep have been key areas of PA in today's auction.

10:40Buyers will want to keep the auction above the IB high at 4117 and the volume ledge that has formed there. A possible area for a long, with a clear line in the sand.

11:00A nice pull-back to the VWAP at 4111 and a bounce, but no entry for me, as I can't find confluence markers to support the trade. The mid is at 4109.5, and delta is moving higher. Maybe worth another look as we approach last week's settle in this important area. Very unconvincing from buyers so far today: another short-covering session. I'm thinking P profile as long as we hold above the mid.

A potential barrier: we are trading on the wrong side of today's VPOC, and that will be a barrier for short-term longs to overcome.

14:00A nice structured trade into the close. Long on the pull-back: structure, then the impulse up, then a PB entry against structure. Scaled out for 10 points, and running the rest as far as the auction tells me to. Yesterday's poor highs look like a nice area for a flush and an exit of the trade. Be aware of your key levels.

VWAP again provided opportunity today, especially when traded against the prior day's lows at 4107. That was a missed opportunity in my case.

OK, that's all folks from me. I need to go and find some balance.