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The Market Profile value areas and ShadowTrader Pivots for /ESH20 and /NQH20 Futures are posted free every morning
in the ShadowTrader Swing Trader newsletter.
Key Levels for Today
| 3249.50 | RTH High |
|---|---|
| 3234.00 | POC |
| 3228.25 | Start of Single Prints |
| 3227.50 | End of Single Prints |
Divergence is the name of the game this morning as the /NQ’s are solidly green while the /ES is just slightly underwater. That divergence is important to carry forward into the RTH session because it usually sets the tone for a more choppy (read: responsive trade so go for smaller moves against inflection points) day that can be rangebound.
Yesterday’s all out reversal from lows that drove through the single print area like a hot knife through butter (Earth Balance vegan only) is bullish in the short term in that it seems to have negated any news driven weakness of late. One of the most important things that you can carry forward is the fact that liquidation breaks or whatever variety strengthen rather than weaken a market because they take potential sellers out. It’s common for these moves to be taken out quickly and then have the market continue much higher later.
Yesterday’s RTH distribution didn’t have the greatest structure to it, leaving a short trunk of single prints in the middle of the session which I’ve identified in the Key Levels above. The endpoints of single prints are always potential supports or resistances.
The Key Levels listed are few this morning because as always I do my best to only put forth what I feel is relevant for the coming session. Anyone could list them all but that honestly doesn’t provide any edge. So for instance, I know that the ONH is higher than the RTH but I believe that has little import. The huge divergence between the two futures right now is going to be more of a driver of action and tone today than any minor nuances that I could point out. Keep focused on the bigger picture that way and you’ll always be fine. Speaking of, the current activity (Iraq/Iran news notwithstanding) is more than likely balancing off the recent rally that started on 12/3/19. Keep that in mind as well.
Odds favor more responsive trade today given the divergence. Use FAANG’s as another internal today if you are looking at /ES.
Lastly, I want to point something out since I know that we have a lot of newer traders joining us for this free week. Take a close look at the market profile picture above and note where the RTH high of yesterday was. Just two ticks above the POC (which was virgin until yesterday) from 1/2/20. These levels are real and they work. Very few people see them which is what makes them even more powerful for those in the know. Markets move from excess to balance and back to excess, pulling away from low volume areas to higher volume areas along the way. If you can continually just trade from that framework as your starting point, you’ll be in great shape.
Scenarios
- My focus today will be on yesterday’s range and where value develops. As there was range expansion yesterday, ideally bullish traders should want to see value developing in the upper part of yesterday’s distribution. The fact that the overnight session is very balanced and contained almost fully in the upper part of the distribution is a short term bullish sign and indicative of further balance in this area.
- Anything more meaningful (read: directional) would only develop with a drive above the RTH high or a move below that single print section in the Key Levels above. I believe the reversal that characterized yesterday has sellers (shorts) a bit on edge coming into today’s session which may temper downside moves.
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