Here was my contextual analysis of the market at the open.
- Yesterday’s breakout of week and day balance.
- Yesterday’s weak buying.
- Overnight inventory short but at a comfortable level.
- Short term inventory long. Traders that bought anything above 51.80 were not comfortable.
- We opened inside yesterday’s range.
At the open the Overnight inventory was short and short term traders inventory was long. Late short term inventory was more at risk than the overnight inventory and that’s why I was more bearish than bullish at the opening bell.
Overnight extremes was my initial focus. As we traded and accepted prices below the Overnight low yesterday’s early POC at 51.30 became my new target low
Why 51.30 was my target low ?
- Yesterday’s balance breakout could start a new up auction. ( Bullish Trend )
- Short term inventory around 51.30 was supportive as weak hands at yesterday’s high were out of the market.
- Day Traders and overnight inventory was getting short against the trend.
If you were short in A period, B low was close enough to my target low at 51.30 to at least take partial profit. As we traded back to the POC in C and D the intraday POC was now being considered as prominent lowering the odds of the down trending market. We also left a big buying tail in B low. Now the odds switched to the long side and pressure was now on the day traders short inventory.
Another good buying opportunity came in F period low. Market was now displaying rotational behavior and profit target should have been placed accordingly.
In short that was a rotational day that started as a down trend caused by short term weak hands liquidation and became rotational starting in D period after day traders inventory went probably too short. That was an inside day with low volume and dominated by weak hands.
Pro Suite Market Profile chart is displaying lots of weak buying throughout the day and that is going to be part of our overall analysis for tomorrow’s market.
Good Trading !