Day Balance breakout and gap…
The open this morning was quite bullish with a gap above yesterday’s balance day high. All inventories were net long including overnight but yesterday’s balance probable left some shorts.
Above 48.64 no long inventory was in real danger. The problem today was that the oil inventory news was scheduled to be released at 10:30 EST.
So it was difficult to take a trade in front of that release. Usually I am not trading before 10:30 on Wednesdays !
The move up before the release was probably due to some short covering.
When the number came out we had an intraday prominent POC at 48.71 and value was accepted above yesterday’s high. The first and really the only good opportunity came when we traded near yesterday’s high at D low.
Factors putting the odds with the long were :
- Gap accepted with value developing at 48.71
- Intraday POC was prominent as shown by the Pro Suite For NinjaTrader 8 software.
- Day chart one time framing ( inside the 3 day balance ) with higher developing value.
The odds were definitively in favor of long position unless the market developed into a double distribution down day which did not happen. A buy near the gap level with stop inside yesterday’s range offered a good risk reward potential
The day chart was also showing one time framing up confirmed by today’s gap above yesterday’s high. Going against value in this situation needs to be backed up by strong inverse contextual factors which were definitively not there.
Starting with D period we started one time framing up that lasted the whole session. This move brought the market above the 3 day balance high at 49.11.
Today’s profile left a lot of anomalies as well as a poor high and was characterized by weak buys which are not signs of a strong market.
Short term inventory is getting long. Nevertheless we broke a 3 day balance. Tomorrow’s market will confirm this 3 day breakout or expand this 3 day balance into a 5 day balance if we close below 49.11.
Good Trading !