Tuesday 10th September – ES_F Review

Good morning Traders,

Really interesting day yesterday, where buyers simply got too long and we sold off during E & F period – what happened here, is what we discussed yesterday. Since we’ve broken out of a long term balancing range, we have a vacuum in this new price range – almost all time-frames of traders have been flushed out over the last 8 weeks, and we’re trying to build a house on what it pretty weak foundations given all of the gaps we’ve experienced in the last week or so. For us to go higher on proper structure the market needs to start filling these gaps during cash sessions. Recently the buying has been weak hands – i.e. short term traders – and they were all forced to liquidate yesterday. The MGI we need to carry forward is that both buyers & sellers are weak and it can cause liquidation breaks like the one we saw yesterday.

Overnight we’ve had mixed inventory with a weighting towards 70% net short. Today it looks like we’re opening inside of yesterday’s range with a small gap to the downside – the gap rules tell us to either wait for the market to fill the gap, and if it fails, to go with the gap (i.e. the direction of the gap). We have a single print at 2980.50 from yesterday to get filled in, alongside the T+2 close a tick above, which may be a good area to initiate a short position in the event of us filling the gap. To the downside, we have yesterday’s low at 2969.50 and Thursday’s low 2964.50. Breaking below 2964.50 will begin the gap fill, with targets of 2939 (which is also a poor high) – naked VPOC at 2937.50 could be somewhere to go long from if the internals support it.

If we fail to get below 2964.50 after a test, then we target the highs of the range (2990.25)

Key levels are on the chart posted above.

Good luck and happy trading