Wednesday 4th September ES_F Review

Morning Traders,

Really nice trading day yesterday, with 2-3 really good opportunities to go long & short during what was a balancing day following the Labor Day weekend. On the weekly profile, the range traded yesterday filled out some volume which was missing from previous weeks, and was mostly un-tested for any significant length of time. On a few occasions price tried to break lower, but there were no sellers below 2890 willing to take it further so we rebounded back into value.

Overnight, the inventory is almost 100% net long which is the context we should pay attention to prior to the open. Some other MGI is worth noting, we’ve had a good look above 2932 and managed to gain a degree of acceptance above it which means we may get some acceptance during the cash session today.

At the time of writing this, 30 minutes prior to the open, we have a gap of over 25 handles to upside from last night’s close. As always we need to consider our gap rules – the market should try to correct itself during the initial balance which may bring in some selling and may lead to a gap close. If we don’t close the gap, or we fail in the attempt to close the gap, we should trade only in the direction of the gap (in this case to the upside). Be wary of market makers who may spend time soaking up bids above 2930 and making the market look like it’s going higher by stacking the bid, we’ve seen this happen a few times during the last couple of weeks on gaps so keep that in mind if taking on trades during the opening 60 minutes.

Friday’s trade settles today, so some of Friday’s levels will be relevant.

Key levels of interest today are:

Overnight High – 2936.25

T+2 Half-Back – 2927.50

T+2 Close – 2921.25

Overnight Half-Back – 2919.25

Yesterday’s High – 2914.50

Balance Zone High – 2947.25

Be wary of taking any shorts above 2947.25 as there is a serious over-hang on the profile and the air might be a bit thin above. I expect if we break into that range then the profile structure will be very hard to read as stops go off.

Good luck & happy trading.