Debrief · 8 July 2022 · NFP: sellers fail twice and value stays put

OvernightFriday's ON session into the NFP data saw the auction balance inside Thursday's continuation rally, which has now seen value shift higher three sessions in a row (the auction is OTFU on the daily).

What was notable into NFP was how balanced the ON profile was, trading inside the prior VA, with strong absorption at the prior VAL leaving a poor low into the NFP data.

The dataThe NFP data beat, and liquidation in treasury assets led to higher yields and a steepening curve, which made ON longs think twice about holding. A choppy auction followed the data, trading into the recently created non-excess lows and resulting in a fast-paced liquidation move through the ON lows at 3782 to backtest the spike base carried forward from Thursday. Only managing to auction as low as 3867, one point from the previous day's low, was an important clue (a lack of conviction by sellers).

The openA bounce off 3867 to open at 3887.5 led to a continuation of the auction to 3901. Sellers lay waiting and attempted once again to break the OTFU, but failed at 3871.5. This showed a lack of conviction, and buyers reversed the auction higher to retest the previous day's high at 3914.25.

Mid-sessionThe break above the high was weak (it held above for less than 2 TPOs), leaving the daily high at 3922: another clue, a lack of conviction to hold trade above the previous day's high. The failed auction led to another rotation lower, to a new higher low at 3881.

The closeA choppy, balanced session, with neither buyers nor sellers accomplishing anything. Value remains at an almost identical level to the prior session, 3906. Normal variation day.

On the profile review: a lack of aggression at the highs, a non-excess high; and a lack of aggression at the lows, a small tail. The previous balance area is boxed.

ON updateON multi-distribution trend lower. The ON has breached the 2-day low and the OTFU has ended: a non-excess low, probability of a retest high. Observe 3863.5. The ON profile exhibits multiple singles break markers, illustrating a large supply-side imbalance. The NVPOC at 3830 is a realistic target for shorts. Longs want to maintain the auction above the ON lows, and buyers will want to regain ground above the ON VPOC.

Monday's planNot trading today, so no plan, but I would be waiting for the ON extremes. I'll want to see a positive response from buyers on the open, given the ON weakness. Should this fail to materialise, I would expect a quick liquidation to 3830, the NVPOC. Good luck everyone.

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