Smash ES Plan | December 2, 2022

Acceptance of the higher prices today as we found responsive buyers already in yesterday's upper set of single prints, which only got partially filled. Will this breakout hold post NFP?

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Recap & Plan

The ON session immediately did some price exploration above prior day's high and the more aggressive level to observe 4084, held up during Asia session for a level to level trade targeting 4095. We did a bit more fills of yesterday's M-period spike during the Europe session, but failed to test the spike base, Smashlevel 4063, which really tells you everything you need to know about the state of the sellers.

RTH opened on a true gap up, actually a monthly gap up. True gap means we opened completely outside of previous day's range. We finally closed the 4103.50 daily gap in A-period and buyers didn’t get much more upward price exploration once that gap was filled. A common setup to fade true gaps to the upside is failure above the ON high, which I’ve mentioned a couple of times before. Note how we spiked above the ON high and triggered a bunch of stops, only to come back within the overnight range. This exhaustive move prompted a liquidation break, which adjusted the long inventory. For traders that had a rough day yesterday, these liquidation breaks can be mentally tough to trade, “finally we are getting the big sell”, but in fact it’s just an inventory correction, a liquidation break that partially filled the upper set (of three) of yesterday’s single prints. We were specifically looking for responsive buyers inside, eager sellers getting out of their positions. We basically traded within 4084 and 4063 for the majority of the RTH session, meaning we are in the process of accepting these higher price, which obviously is more bullish than bearish. Take a look at the yesterday’s profile and note how much poor structure we had and zero interest of filling it today, meaning we have a lot of trapped sellers below.

Daily is back to one time framing up mode and as long as we keep accepting these higher prices, sellers should be cautious. You want MGI to confirm weakness before making any big bets to the downside, meaning you want support areas to be taken out. Buyers are fully aware of the situation of trapped sellers below and will obviously not give them an easy time. Sellers main objective is to end the daily one time framing up. Note the low volume node we have around MA200. Buyers very comfortable here above it and sellers want establish acceptance below and back within previous month’s value, which would put this breakout into question. The upside and downside targets are pretty clear. To the upside we have the resistance area from 4140 to the Weekly Extreme High 4160. To the downside we have yesterday’s middle distribution as magnet. where we have previous week’s VPOC. That middle distribution will decide a lot short-term, if tested. My short-term area of interest is the resistance area 4093-4084, which buyers need to clear for continued upward pressure.

NFP tomorrow. Will this breakout hold after NFP, or are we going back to the blue distribution?

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