Debrief · 3 June 2022 · NFP barely an event as longs liquidate into the data

OvernightBefore the RTH open, longs had already begun a long-liquidation move into NFP. This followed Thursday's breakout rally from Wednesday's lower distribution balance; it felt like shorts were frustrated after failing to break below the prior gap twice (on Wednesday and Thursday).

NFPNFP was barely an event. Given the lack of new information and the setup's location in the middle of weekly balance, the auction simply carried on doing what it was doing: re-auctioning Thursday's poor structural profile.

The openLongs had little respite on the open. We opened at the ON lows of 4126, still within the previous day's poorly auctioned range but, interestingly, below Wednesday's lower distribution extreme. The question was whether buyers would try to close the large opening gap to the previous day's close at 4174.

After the openThe prospect of a gap close was limited to a determined pulse to the post-NFP swing high of 42, but the auction quickly reversed, barely holding above the century figure, with a burst to the daily low of 4096.

b distribution, long liquidation, repair of Thursday's poor auction, inside day. 5-day balance.

On the profileThe weekly balance is boxed. The day in five steps:

1. Longs start the liquidation move below the ledge formed post settle.
2. NFP: the whip and continuation.
3. Open 4126, just inside Wednesday's lower distribution and Thursday's mid.
4. Open ST reversal.
5. Low formed before balancing into settlement.

b distribution as longs continue liquidating post NFP.

PA reviewYou need to be well prepared to trade 15-40 point rotations within a very tight time frame. Look at the footprint chart. Compared with other events, Friday's NFP was relatively quiet. If you read my article on how to trade NFP, you'll get a good idea of why it was so quiet. On top of that, going into the data, the overall trading location was in the middle of the weekly balance.

On the footprint: absorption of the initial NFP selling at T+6sec, 4139; the initial NFP high at T+10sec, 4156; the NFP high, 4162, at T+42sec. Then a retest and fail to the downside, and longs exit.

Good morning, everyone. The ON update in the plan below has the latest.

10:30Small trade taken @ the pwkVVAH @54, scaled out of half @4149.5. Risk-free trade back to the mid. See the chart.

13:20This trade is dragging, twice testing the prior stalk zone at 4145 and bouncing. The good news is I'm still in the trade. We're creating a little area of balance up here, and we should get a good uncoiling of positioning into the open either way. S4154. Today's ON move was another breakout trend in a similar style to Thursday's RTH auction, only sellers have come in at a lower point. PA is compressing. Inside day rules.

14.35A small error on small size off the open: I mis-entered my trade. Take it on the chin and accept that mistakes will happen.

Open type: Open Auction Out of Range (OAOR). OAOR range so far in ES as we continue to balance at the top of the ON range. I'm looking for the auction to test the ON singles marker into last week's mid. Balanced markets and low conviction so far mean taking trades on the outside.

15:00Bias is now long as we break out of the HVN on the ON profile. Buyers successfully defended the open gap just below the prior high, at the ON singles break @39. Given the passive buying on the Sunday reopen and the breakout of the NFP closing balance, the auction has upward potential.

15:25A missed opportunity to take a structured long at 58 on the PB into the LVN area.

16.00Long on the PB into the zipper lows, for a break above the IB high. Stopped out pretty quickly. That's surprising given the PA so far, but it looks like longs succumbed very easily. We traded all the way back through the opening price, where I took a second long that also failed. All of a sudden a sleepy Monday is full of life. Looking short to close the gap to the prior close at 4108. Moves may be treasury-driven as yields break above 3-week highs.

16:15I need to be careful: 2 full stops. My mistake was looking for long continuation into weak buying at the upper end of last week's range. Always be aware of the HTF context. I need to accept I made a poor decision, and a worse one re-entering the trade after 5 minutes. I should instead have been asking why this was moving down so fast.

19:00Short into VWAP: volume is increasing as we approach, and this area coincides with the IB low and a nice LVN.

Exited the trade: 31 was my scale and 21 my target, into the prior chop zone.

OK, that's all, folks. Have a great evening. BT