Week review · w/c 6 June 2022 · A very balanced week, with the ECB and US CPI ahead

A week in balance. A very balanced week, as auction participants take a breather and some time to digest new information before the next move. Trading is taking place mostly inside last month's HVN, with a slight lean back towards last month's VPOC, which is lower at 4015.

Week and month: normal distribution. RTH high 4187, full-session high 4202, RTH low 4071.5, VPOC 4117, VWAP 4122.

A look at the daily rotations and pivots: a very balanced week.

1. Holiday session: bullish momentum carries over into thin liquidity. Buyers eventually succumb to passive sellers, and weak longs exit their positions. The auction rotates back lower.
2. Sellers fill the open gap left from the 26th-27th May, but passive buyers exhaust the shorts, and they retreat back to the prior day's VPOC.
3. An early attempt to break below the prior gap, but passive buyers absorb liquidity at the lows, frustrating shorts, and they cover. A short-covering trend into Friday's NFP.
4. The short-covering rally lacks strength into NFP and trends lower (back to the weekly mid and VPOC) into NFP. A whipsaw NFP before the prior direction resumes.

On the rotation chart: Memorial Monday and buyers' regret off the 4202 high; the OTFU ended as Monday's lows were breached; absorption at 4171, where buyers defended the 26-27 May gap; absorption again at 4172, then the trend; the gap retested at 4173-4179 and failing to the upside; the pre-NFP high. The NFP mid-week range provides no new meaningful information: 4126 was the NFP open, 4132 the mid and weekly pivot, and a slow end to the week.

NFP Friday, 3rd June 2022Longs had already begun a long-liquidation move into NFP before the RTH open. This followed on from Thursday's breakout rally from Wednesday's lower distribution balance; it felt like shorts' frustration after failing twice (Wednesday and Thursday) to break below the prior gap. NFP was barely an event: given the lack of new information, and the location of the setup in the middle of weekly balance, the auction merely carried on doing what it was doing, which was to re-auction Thursday's poor structural profile.

The open provided little respite for longs, opening at the ON lows (4126) but inside the prior day's poorly auctioned range, and interestingly below Wednesday's lower distribution extreme. The question was whether buyers would look to close the large opening gap from the prior day's close at 4174. The prospect was limited to a determined pulse to the post-NFP swing high at 42, but the auction then easily reversed, barely holding above the century figure, with a bust to the daily low at 4096.

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

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

Also marked on the NFP chart: Wednesday's ON distribution inside the RTH session; shorts capitulate and break out from the prior day's lows; absorption; liquidation below the ledge, with longs liquidating into NFP; the NFP whip and continuation; a P distribution; and a b distribution as longs continue liquidating post NFP.

The monthMonth in balance. The auction was contained in the HVN from the prior month. Having rallied into the month-end and found a temporary high @4202 in the holiday session, sellers then took control of the auction, attempting and failing to break through the prior week's open gap at 4173-4179. The auction then reversed back to a lower high into the NFP data on Friday. Longs liquidated into NFP, which in the end gave little or no reason for a change in economic consensus. The auction closed in balance @4108.75, just below the WVPOC @4117. The first week of the month closed near the weekly RTH pivot and VPOC 4117.

Buyers will want to keep the auction above this week's session lows, and sellers will be looking to end the weekly OTFU below 4171.

The weekThe weekly auction is trading inside the prior balance: 4220 represents the balance area high and 4071.5 is the balance low. 2-way trade inside it, with the prior balance and the yearly lows below.

Monitor the non-excess highs and lows next week. Balance rules apply.