Debrief · 15 July 2022 · OPEX Friday: profile and price-action review

FinancialJuice reported:

• US Treasury Secretary Yellen: my talks with India about the proposed cap on the price of Russian oil have been encouraging.
• The BoE's Saunders will step down from the MPC after the vote in August.
• China's June pipeline natural gas imports were 3.9m tons, +11.5% y/y.

Lots of fundamentals and data next week.

Not trading today.

Weekly trade planMonitoring: 3856 (monthly, weekly and daily VPOC), 3884 (weekly high) and 3922 (prior week's non-XS high). If the auction can end the week OTFD, it will potentially draw in HTF demand to repair some of the poor structures left from the last ECB liquidation. Warning to self: we have seen these deep pullbacks higher fail back lower during this bear trend.

I think the move would benefit from an early-week trend; a catalyst in these summer markets would really help. If we can't hold onto Friday's late squeeze higher, we could see a reversal back to retest the weekly lows, which were less than convincing.

Slight bullish bias. The trading thesis is that we rejected the weekly lows at 3723 and now move to test the other side of the weekly balance. I'm looking to see if HTF players can continue the move if we break. A hold above 3856 will be important: the weekly POC and composite HVN at 3856 is an important focal point. Buyers will want to maintain the auction above it and target the prior week's highs to end OTFD. I will update plans into the Monday open.

Into MondayON bid inventory long, open gap out of range. Observe the gap mid at 3888: the ON structure is weak, with a possible PB if we break the mid. Support is boxed below, and the NVPOC sits in the unfilled gap from Friday.

Update: the ON sessionPlenty of good opportunity in the ON session, playing off simple ideas and planned execution zones. Sunday's open went into a low liquidity gap. The ON reopen opened with a gap to the prior settlement at 3865.5, which had looked like an unfinished auction, opening into the middle of a prior gap, 3781 (3784 was marked as a low liquidity area), that had been clearly highlighted in prior research. The Sunday open showed a strong taper and a push lower, an immediate PB that did not manage to close the gap at first; then the gap closed to the prior settlement to the tick.

The subsequent weak PB into settlement gave an opportunity to reload long positions and hold through the open high. This PB to the prior close was weak: note the low pace and low volume, implying supply cutting off into the level. Then the ON trend higher.

My thinkingOn the numbered points:

1. Opportunity to short into the low liquidity zone, tapered FP.
2. PB to execution, trade exit. Decision time: will supply chase through settlement at 3865.5?
3. Another weak PB, low participation: execution zone.
4. Prior low hold, rejection.
5. Another higher low, holding above the open spike high.

Limit your size in any position so that fear does not become the prevailing instinct guiding your judgment.