Market Profile - Daily Updates

[Southpaw 10]

Slightly higher volume today. Attempted direction was up from the open. But there were sellers waiting around the level of the very prominent TPO POC from 7/31 at 2105.5. Traders had last weeks high at 2108.5 in their sights and that's what my mindset was as well since the attempt to fill the gap failed. But sellers were able to drive mkt down for the remainder of the day. One thing I want to point out is regarding the GAP rules. Rule 3 states: "If the gap fills and value cannot get to at least overlapping, there will probably be a late day rally." The gap was filled in F period, but value was no where close to overlapping. I was prepared for a late day rally, waiting patiently. In J period, we started to get that rally as we started to 1T.F. higher, above the I period high. This was one of the trades I was long in. However, once K period opened up, value migrated to overlapping. This alerted me to the fact that the odds of upside continuation had just been lowered substantially. I took the trade off but atleast was able to grab 1handle of profit. The point is, it's a great help to keep these market profile nuances in your mind. They work. Once price got to half back (2098.75), the mkt sold off into the close. Short lived late day rally.

On a daily level we are in a 6 day balance bracket. Even with todays action, we are now 1.T.F higher again on a daily chart.

Long winded recap today, apologies.

Ive included a birds eye view of the daily profiles today. On this figure I have all of my levels marked that Im prepared to monitor price action around these levels.

I also post these recaps on my FB page: https://www.facebook.com/pages/D%C3%B6bler-Derivatives-LLC/294362757431510?ref=hl

[Southpaw 10]

0545am PST. Volume very light: 100K. O/N inventory is balanced. Mkt in balance. Balance rules apply.

1) Remain within balance.

2) Look above or below and fail; on a failure the opposite extreme becomes the destination trade.

3) Look above or below balance and accelerate.

Yesterday's recap pointed out that on a daily basis we are in a 6 day balancing bracket as well. A breakout that accelerates would target these extremes (2108.5; also a weekly high. 2080)

O/N High is 2099.25

O/N Low is 2091

[Southpaw 10]

Higher volume and lower value indicates a very weak market. Quite honestly I am having a hard time deciphering today's profile. At first glance I want to say long liquidation. But we've had several days of balance. This piece of data doesn't support long liquidation. Substantial volume and extended range could be an indication of new selling vs. long liquidation. However, the profile lacks symmetry which is often how the profile appears if longer term participants were in control. Nonetheless, we are out of balance to the downside. A late day rally made an attempt to get back into the 6 day balance bracket but failed to find acceptance. However the mkt settled just below the balance low (balance low is 2080), at 2079.75

I've left the lower balance bracket level drawn on the profile img for reference. Also take a gander at the daily chart posted. Interesting how the low of the day is virtually the uptrend line drawn. Ive looked at the 200 day MA too, it and the trendline are just about the same level.

My trading today started off with a profit on the 1st trade. But trying to catch the low early came back to me in the form of hell in a hand basket. I stepped away at this point. I couldnt get my head around the facts that were right in front of me. Best thing to do when this happens is to sit on hands.

A couple things to keep in mind going into tomorrow;

1) If in fact today was new money selling (institutional), I think we will see more weakness. If the 200 day and the trendline are breached all sorts of participants may pile on.

2) Today's auction has an excess low. This typically marks the end of an auction. Although the next auction may still be to the downside. But the fact that we have an excess low today is something to put in the back of your mind.

3) If today was day and shorterm participants liquidating or not, there are alot of shorts in the market.

Summary, obviously the mkt could go in one of two ways - balance. But if there is a short covering rally, it could be a mirror of today at least in the am session.

Big news events pre-mkt tomorrow. Lots of stuff to be very alert about. You can find news events at Forex Factory website.

I hope this helps with your preparation.

[Southpaw 10]

0545am PST. Moderate volume 177K. As of now the mkt would be opening in balance. O/N inventory is short but not 100%. Balance rules apply today. Review yesterday mornings post for balance rules.

UPDATE: removed the bearish reaction comment about the news release, of course after the post, the mkt turned around and created a new O/N high. Sorry about that.

Edited August 7, 2015 by Southpaw

[Southpaw 10]

Lower volume w overlapping to lower value implies a moderately weak mkt. A late day short covering rally brought the settle (2073.75) almost to the open (2075.50). Which, is virtually the center of the range of the 25 week balance bracket. 3 ticks of excess on the low today. This excess low shows well on the daily chart. The low of the day coincides for all intent, exactly with the intermediate term uptrend on the weekly chart. Last week was an inside week as well. Still 1T.F. lower on a weekly and daily basis, and Friday left a very prominent TPO POC at 2065. There is still a poor low left from the previous week (7/27). These could be targets should the mkt trade to the downside. Last week was an inside week which is another form of balance. This market has very low confidence. Will provide an update pre-mkt.

[Southpaw 10]

Moderate volume as of 0545am PST; 168K. O/N inventory is 100% long, and at this time there is an 11 handle gap up. Gap rules apply:

1. Go with all gaps that don’t fill right away. That means if it doesn’t back off early it’s probably not going to and is going higher.

2. Large gaps may not fill or may fill only partially on the first day. Pay attention to halfback of the gap distance (2080)

3. If the gap fills and value cannot get to at least overlapping, there will probably be a late day rally.

O/N high is 2088.5 - but with the mkt being bid all night this likely will not hold long.

O/N low is 2071.75

Gaps are measured from the prior pit session high or low, not the settle.

[Southpaw 10]

Lower volume with a substantial gap that held, and higher value - translates to a confident day. The mkt didnt look back all day except in the pm session in 'M' period. This I thought was going to be a nice liquidation. Because, most of the day was grinding and slow; add in the gap, and I formed the opinion that there were many longs accumulated. Wrong opinion. Thankfully I didnt risk much on this short trade I took.

 

In preparing this recap I have noticed something that would've been nice to be aware of during the day. From an article written by Jim Dalton: 'The most potent combination is excess followed by a gap.' Friday had excess (low) that is very visible on the daily chart. Price action today accelerated off of the 200 day MA as well, another data point to carry fwd.

 

If there's more upside tomorrow, the destination will be the top of the weekly balance bracket (2126.25)

 

If we trade to the downside, the first dest would be the pit low today (2086), if there is no rejection at this level, the mkt could accelerate filling the gap. Gaps are considered single prints, and are a form of excess too. When price retraces single prints, it has a tendency to accelerate due to poor structure.

 

***** Conflicting Info *****

Positive********************

1) Gap held

2) Open-Drive today. The definition is way too long to post here. But here's a small def.: "Strongest. Generally caused by other timeframe participants who have made their market decisions before the opening bell"

3) 1 T.F. higher on Daily level

Negative:*******************

1) The profile today is classic short covering shape (poor high with a 'p' pattern and the open was basically the low of the day)

2) Mkt intermediate term has very low confidence.

3) 25 week balance bracket

4) The week ending 8/1 left a weekly poor low (on 7/27@2056.5)

[Southpaw 10]

High volume over night, 257K at 0545am PST. Double distribution and as of now we have a small gap down of about a handle. China has devalued their currency, this has contributed to the O/N volatility. Also, O/N activity confirms yesterday as being dominated by short covering. On the daily chart, there is a definite wedge forming for some days now. The mkt is getting wound tighter and tighter.

O/N inventory is almost 100% short.

O/N High is 2101.75

O/N Low is 2083.25

[Southpaw 10]

Higher volume and lower value imply a very weak market. However there are some data points that are contrary (at least in the short term). They are:

> The ES is holding above its 200 day MA. In fact bounced off of it today.

> Circled on the daily chart are three daily bars that show excess on the lows. Each of these auctions have completion (to the downside)

> The ES is remaining above the daily trendline. It's looked below on two occasions and did not find acceptance.

 

Sellers were present at every rally today. However, once they couldn't press the mkt any lower, in 'J' period the short covering rally took control into the close to settle exactly at halfback.

 

Once the gap from overnight was filled the market did accelerate to the downside closing the gap from yesterday. We are just above the center of the 25 week balance bracket. I really have no bias to hold going into tomorrow. With the way mkt has been trading recently, there would be no surprise in either direction. That's how Im preparing my mindset.

[Southpaw 10]

High volume overnight, 392K as of 0540am PST. China's nonsense has railed our mkt's overnight. Range is 31.5 handles, the high is 2085.25 and the low is 2053.75

Currently, a gap of 6 handles to the downside. So, gap rules apply once again. They are listed in 8/10's Morning Update for reference.

O/N Inventory is very short. Since yesterdays pit low is 2070.75 and is about 3 handles (2073.5) away from the center of the 25 week balance bracket, I'm using the pit low as a go no/go level. If the gap doesnt fill, the bottom of the bracket could be a destination trade at 2023. If we can find acceptance back in yesterdays range, all auctions remain to the upside.

[Southpaw 10]

Substantial volume and range today. Beautiful buying tail in 'B' period with only 18 contracts on the low. Today's auction to the downside off the open repaired the poor low from 7/28 (also a weekly low). There are no more anomalies to the downside as far as the profile is concerned. This is positive for upside continuation.

Put another way, the short term auction to the downside is complete. This in no way doesnt mean there couldnt be a new auction to the downside.

The exception is today's profile, stretched out like it is, there are a few anomalies left behind (flat spots on the profile). Unless the mkt trades to the downside in the near future, these are not important.

We are still 1 T.F. lower on a daily and weekly basis. Today's action settled right on the highs. Another positive data point to carry forward.

*********** Conflicting Info **************

Positive:

> All auctions to the downside are complete (short term)

> Excess low on todays profile.

> It was obvious today there was new money buying as opposed to the rally we saw just consisting of short covering.

> 2 poor highs above (attracts mkt to repair)

Negative:

> Intermediate time frame - very low confidence

> 25 week balance bracket

> World events; e.g., China

> 1 T.F. lower on Daily and Weekly timeframes

[Southpaw 10]

O/N inventory is long but not quite 100%. As of 0540am PST, we have a gap up of 3 handles. The mkt is out of balance to the upside. Gap rules apply. They are posted in 8/10's morning update for reference.

Volume moderate: 185K

O/N high 2093

O/N low 2076

Prior pit session high 2084.75

Prior pit session low 2046.5

[Southpaw 10]

Lower volume and higher value today. Yet, the attempted direction was: no direction. The mkt sold off shortly after the open and found balance around the O/N low and when sellers could not press it beyond that area, buyers prevailed. Similar reaction when buyers dried up around the pit session high of 2088.25 from 8/11, classic late day long liquidation. Technically, 1 T.F. lower has ceased on a daily level. The settle is 2 ticks below halfback (2080.5). So, no winners today. This is real obvious on the daily chart.

We do have a poor high left today. Something Ive noticed in this week's of profiles;

Every low has had excess, and 3 days of the 4 have had poor highs. Im still a student, but to me, this feels like buyers really want to push the market higher. Poor highs are an indication of traders getting the market too long for the probe to continue higher. Does this translate to anything meaningful? I dont know, but if the mkt makes a move higher tomorrow, Im going to be ready for it. I'll change my bias on a dime if it goes lower simply because of the low confidence we've been in for 25 weeks now.

[Southpaw 10]

Volume if moderate, 155K at 0545am PST. O/N inventory is balanced and the mkt is in balance (inside yesterday's range). Balance rules apply.

1) Remain within balance. Rotational and limited opportunities, so adjust expectations.)

2) Look below or above balance and fail. A failure targets the opposite extreme.

3) Look below or above and accelerate.

Yesterday's pit session low (2073.25) is my go no/go level as this is a tick away from what has been the center of the 25week balance. It is also very close to the 200 day MA. So should the mkt find acceptance below this level, the target becomes the lower extreme of the balance (2023).

O/N high 2085.25

O/N low 2073.75

Prior pit session high 2089

Prior [it session low 2073.25

[Southpaw 10]

For most of Friday's session the mkt was in balance spending a lot of time around the TPO POC at 2083. This POC is a very prominent one. We had a late spike, a small one but still technically a spike with only 2 ticks of excess separating the two distributions. For Monday finding acceptance in the upper portion of the spike is positive. A target would be the poor high from 8/10 (2100.75). Finding acceptance below the spike will target the very prominent TPO POC, and possibly Friday's pit session low (2076).

1 T.F. higher on a daily basis.

1 T.F. lower on a weekly basis.

There's an obvious wedge forming on the daily chart.

Still holding above the 200 day MA, positive.

[Southpaw 10]

. O/N Volume is moderate; 186K as of 0555am PST. Most of the activity O/N has been on the edge of being out of balance to the upside. But, is now making new lows. The expanded profile shows 3 attempts overnight testing the single prints from Friday's profile, driving lower on the 3rd. Looks like now we may be opening within Friday's range, around the TPO POC area.

O/N Inventory appears balanced.

O/N high 2094.5

O/N low 2079.5

Prior Pit high 2089.75

Prior Pit low 2076

[Southpaw 10]

Higher volume and overlapping to higher value implies a moderately strong mkt. Looking at strictly price one would come to the same conclusion. But, for the profile, looking through its lens, we have a very poor structure. Technically 5 distributions. Ive never seen 5, maybe 4 once. A distribution is separated by single print TPO's. The number of distributions combined with anomalies (flat spots on the profile) indicates day and short term traders controlling today's action, very emotional.

We also now have a weak high. A weak reference is when price comes within 1 tick of a previous reference. Today's high is 1 tick below last week's poor high on Monday.

 

I would like to see continuation Tuesday as we have broke through the short term down trendline on the daily chart.

***** Conflicting Info *****

 

Positive******

1) Outside day (to friday); bullish

2) 1 T.F. higher on daily

3) Value and TPO POC migrated w price

4) Excess low on today's profile

 

Negative*****

1) Very poor profile structure

2) Low confidence mkt over all

3) 26wks of zero direction; balance.

[Southpaw 10]

Volume is light; 154K as of 0535am PST. I'm calling O/N inventory short since when looking at the expanded profile, most of the trading has been to the downside. Collapsed would give one a balanced inventory. However, I'm going to apply balance rules today in my trading. They are:

1) Look above or below balance and fail. Which would target the opposite end of the range

2) Remain in balance.

3) Look above or below balance and accelerate.

Keep in mind that yesterday was dominated by day timeframe traders (left the very poor structure). So there are alot of longs from yesterday. Possibly a liquidating break should the mkt open with confidence to the downside.

[Southpaw 10]

Fitting in a short recap, as I was unable to post one after mkt close yesterday. Yesterday was a balancing day. The profile has left a poor low and a combination of a poor and weak high. These are also combined with two other days of poor highs covered in a previous post. Now, these three days are exponentially potent to be repaired (repaired is being revisited by the mkt- only during pit session hours). Carry this fwd.

O/N Volume is moderate at 179K as of 0545am PST.

O/N inventory is short but not 100%.

As of now there is a 3 handle gap (gaps for profile concerns are measured from the previous pit high or low, not the settle). Gap rules apply.

1) Go with all gaps that dont fill right away.

2) If the gap fills and value cannot get to at least overlapping there will probably be a late day rally in the direction of the gap.

O/N high 2098

O/N low 2084

Prior pit high 2100.25

Prior pit low 2090.25

[Southpaw 10]

Hello - Have had some family in town the past couple of days. So havent been able to post a recap. Will resume this evening.

[Southpaw 10]

Highest daily and weekly volume of the year, and largest range day of the year. Broke through several technical levels Friday, and out of the 25 week balance bracket.

 

Analyzing this on the profile I will admit, it a little difficult. It is this year that I've really incorporated it into my trading. This whole year has been range bound making analysis rather easy.

 

I do see that there is only two ticks of excess on the lows so this auction to the downside may not be over. On such a volatile day like Friday, several ticks of excess would be more re-assuring that the downward auction may be complete.

I have placed fibb retracements on the weekly and daily chart. Oddly, they both have a level at 1959 area to the downside.

 

The 1980 level has two single prints, if the mkt finds acceptance above this level I'll be looking for the POCs and halfback as potential targets to the upside at 1995.25

Lastly, on the daily chart the mkt has dug fairly deep below the 200 day MA. All of the above supports solid confirmation of a reordering of the markets thinking.

[Southpaw 10]

Vertical out of balance, and still probing for two sided trade. The nearest destination is to the downside. Which may be the Oct 2014 monthly low around the 1800 price level. I say level because different data feeds may have the low of Oct '14 different than others. However, the lock level down for the es is 1831 as of now.

The gap is not even worth mentioning nor the gap rules.

Volume is incredible for this time (0545am PST); 1,106,000.

O/N high is 1964.75

O/N low is 1892

 

0625 - es lock limit down 1870 hit.

Edited August 24, 2015 by Southpaw

[Southpaw 10]

Incredible day goes without saying. 5.3M contracts in the ES alone. The profile is much too stretched out (120pts) to try and post.

 

Price made it all the way to test the Dec '14 monthly low at the 1947 level and did not find acceptance. Which was reached in F period. The rest of the afternoon session gave back all of the am session gains.

 

Not exactly sure what to make of the fact that the settle is exactly today's open; 1868.75

 

The 1800 level is still a possibility for the mkt to probe to. This level was made back in Oct '14.

[Southpaw 10]

O/N Volume is high; 685K as of 0545am PST. Wide range overnight, 76 handles. Inside of yesterdays range; in balance. O/N inventory is 100% long.

 

Should we remain in balance today, there are several levels that may be targets. They are:

TPO POC 1917.25

Vol POC 1907

O/N halfback 1910

Monday's halfback 1890.75

CME Settle 1871.25

 

If we look above balance and accelerate the weekly low (from 2/06/15) 1958.50 is a level to pay attention to. Beyond that would be the gap close at 1968.

 

If we look below and accelerate, there is 30 handles of single prints to contend with.

 

O/N high 1948.5

O/N low 1871.75

Pit high 1950.75

Pit low 1831

[Southpaw 10]

Lower volume today w attempted direction being down usually implies a moderately strong mkt. But it's obvious there is still weakness across all the majors. All rallies were met with selling. However, value remained overlapping to higher.

Overall today was technically in balance to yesterday. That is the ruling reason for today's session.

Late afternoon saw a huge liquidation and left several ticks of excess on the lows. Jim Dalton always says, sometimes a market has to break before it can rally. The late day auction as far as the profile is concerned is complete. Doesn't mean the next one can't be another to the downside. I'll be keeping this in mind should tomorrow show some strength.

Still as of now, we are in balance on a daily basis, and out of balance to the downside on the intermediate timeframe.