Balance, Balance, Balance …
Context at open :
- 8-Day Balance ( 52.64 – 50.94 )
- 2-Day Balance inside the 8-Day Balance ( 52.55 – 51.78 )
- Monthly and Weekly Balance
- Prominent POC from yesterday ( 52.14 )
- Overnight inventory neutral
- Short term inventory slightly long
- Two poor highs from 18/10 and 24/10
- Opening inside yesterday’s inside day
We opened inside yesterday’s inside day. We are in balance and my initial focus was yesterday’s range 52.41 – 51.89.
In “A” period we were shown initial low conviction as we traded above and below open four times. Keep that in mind because it increases the odds that the market could be rotating.
In “C” period we traded down to yesterday’s low offering an opportunity to buy at good price specially because of the balance condition and the initial low market conviction. Target should be the other extreme of yesterday’s range.
In “D” period we confirmed the prominency of the intraday POC and value was developing inside yesterday’s value confirming once more the rotating behavior of the market.
In “E” period we traded at yesterday’s high which was the target for the long. I stayed away from selling there because of the following reasons :
- Developing value was higher than yesterday.
- POC migration was up.
- Two poor highs from 18/10 and 24/10.
I turned positive on the market as the 8-Day balance high at 52.64 was in reach. The breakout of the inside “F” period high or the breakout of “H” period high or the “H” period correction were good opportunities to profit from this analysis.
We reached the target in “J” period.
Today’s lesson was the ability to read the market conviction at the open so that it gave the courage to buy yesterday’s low.
How do we read conviction at the open ?
A market with conviction will open and go right away from the open in one direction. This is the highest level of conviction and it increases the odds of a trending market.
A market that opens and trades up stops and trades back down through the open doing it multiple times tells us that the market lacks conviction and increases the odds of a rotating market.
Remember that we are always dealing with ODDS not certainty !
Good Trading !