Debrief · 5 July 2022 · Charts only, as recession fears hit oil

OvernightThe Monday holiday ON session saw the auction drive higher in thin liquidity, through the Friday high, to test 3857. The auction failed to hold above 3840, a key area of support, and longs liquidated into the RTH to trade below Friday's vPOC, 3783.

The openThe RTH handover was in the middle of the prior range. Opening in daily balance makes for a tricky open (expect chop). The open, 3774.5, mustered a brief test of Friday's vPOC @3783 and failed. Sellers aggressively pushed the auction to 3743, just above the prior week's lows.

IBAt this low point the delta was ascending, and aggressive selling failed to break the prior week's low, 3741 (top clue: a sign of selling weakness). The well-auctioned low would remain intact from the opening swing. The key here was that short positioning was getting trapped, and a break of the IB could yield a directional move.

Mid-sessionA choppy few hours followed, failing to trade above the IB high but eventually managing to hold on to a consolidation zone above the IB mid and just below the IB high. The foundations were being set for an attempt to break above the IB. See the PA review for clarity.

The closeOnce the IB was breached to the upside, the auction trended into the close, finishing very strong to leave us with an outside day to the prior RTH session. Also note that value never migrated higher from the late breakout from the IB.

Day typeTrend outside day. H 3859, L 3743, VPOC 3759, mid 3790, VWAP 3780, settle 3835. Tuesday's outside day failed to trade below 3741, but traded above Friday's high.

PA review

1. The open test rejects Friday's POC, 3783, to auction lower aggressively.
2. Support and demand were 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!
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, 3753.5.
7. A strong trend into the close, settling above Friday's settlement, incredibly coming back from 2% down! The way the auction broke above 3824, an essential reference from Friday, was another bullish clue.

Early VWAP: criss-crossing, balancing. High relative volume, and delta aggression positive. Value never shifted higher with price.

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

OvernightON session: double distribution. The ON auction back-tested Friday's spike base, 3824, to then trade through the RTH highs: prior highs broken, and the auction imbalance continues ON. The auction then rotated lower to find support above the upper singles marker, 3807, from yesterday's late rally. I will be observing these lows very carefully, as well as yesterday's close, 3835, and the ON high, 3848.75. ON H 3849, ON L 3808.75, ON POC 3831.

Trade planNo real conviction ideas today into FOMC minutes. Trading inside a big composite node. 2-way!

If we open inside yesterday's range, I will be monitoring the singles marker and the ON low, 3807, for support. A break below 3807 and I will be looking to trade to the downside, targeting yesterday's open and POC.

If we open with a gap above the prior close, 3835, I will be looking for buyers to show initiative to repair the auction from 28/6. Or, possibly, the open tests the prior close.

Opening bell0830CT.