I'm observing today's spike base to gauge the strength/weakness of today's closing downward move.
Recap & Plan
The ON session traded in a very tight range with the upside capped by Smashlevel 3996 and the downside capped by the first downside target 3980, Friday’s halfback. We talked about how buyers would prefer some consolidation at these higher prices in the plan, which we got in both the ON and RTH session. Note how 3996 was the VPOC of the RTH session, confirming importance.
RTH opened within Friday’s range and value, meaning two-sided activity could be expected initially. The notorious look below the ON low and fail setup unfolded in A-period, which provided a decent upward move, but buyers failed to clean up Friday’s unfinished business during that sequence. C-period was an inside bar that ended up being taken out to the downside which prompted a liquidation break. The liquidation break was picked up by dip buyers, which is often the case when we have an environment where buyers are in control (Daily, Weekly OTFU). The second attempt at Friday’s poor high was successful, meaning we cleaned up that unfinished business, but note how buyers once again left a rather unfinished high in today’s profile. Second consecutive poor high, meaning buyers showing us some signs of exhaustion, which is not surprising after previous week’s strong directional move. Crowded buyers at highs resulted in another liquidation break closing session, cleaning out those weak handed longs. Was this liquidation all sellers will get or is a deeper pullback needed? The last 5 minute bar had positive delta.
Sellers main objective remains the same, to end daily one time framing up, which they are yet to achieve despite today’s closing weakness. Buyers leave another unfinished high, failed to hold the single prints in H-period with value overlapping to higher. Note how over the last few days we have had value cleanly migrating higher. The market is taking a healthy breather, which is what buyers want, as discussed. We close out the session with a spike down with spike base 3975. That will be my level of interest short-term, to gauge the strength/weakness of today’s closing downward move.
Disclaimer: Futures and options trading involve high risks with the potential for substantial losses. The information contained in this communication is for informational purposes only and does not constitute a trade recommendation and should not be construed as such. The reader bears responsibility for any investment decisions and should seek the advice of a qualified securities professional before making any investments. Owners/authors of this newsletter are not certified as registered financial professionals or investment advisers.
Twitter: @smashelito | FAQ: smashelito.com
By "build value" do you mean building inventory?