Rotational day …
Today was pretty quiet with a small range and a very prominent POC where all periods but one traded at this level.
Volume was sluggish and weak hands dominated today’s trading.
In this context single and double is the preferred strategy to be used from the toolbox. Meaning smaller targets and stops.
I had two levels to monitor at the open. The pullback low from yesterday at 47.91 and the high of the 3rd distribution from last Friday profile at 48.36. I thought that we still had short term shorts in this area. That area also includes the upper distribution from yesterday’s profile where we had some short term long inventory from yesterday. That area was kind of a balancing zone. Overnight net inventory was neutral.
Acceptance below 47.91 would signal possible change from yesterday positive mood and acceptance above 48.36 would have possibly put pressure on short term short inventory from Friday’s profile. We see all single print there until 48.71.
The market respected these levels all day long. Buying and selling range extreme was the best strategy. This is a strategy that works extremely well in rotating days.
Starting with D period until the end of the session Pro Suite showed the intraday POC as prominent increasing the odds of having a rotational day. I shorted the market in C high when the flow went from up to down. Note the weak buys at the bottom of D and E period from the image on the left just before we traded down 47.99.
Weak hands were accumulating long inventory as denoted by the poor high and weak buys from the profile. It just added some comfort to my short position from C high.
Rotational days like this one require patience and a good understanding of what’s going on. Jim Dalton’s recorded webinar is a great source of learning.
Tomorrow we will focus on today’s extreme levels as we are now facing a balancing day and we will use the balance trading rules. Today’s very prominent POC will also be on our radar screen.
Until then Good Trading !