Today was a rotating day as all periods traded at the POC ( 49.19 ). Thus we had a very prominent POC today.
All short term and overnight inventories were quite long at the open but very comfortable as the market opened not far from the overnight high.
We opened with a gap above yesterday’s high and traded immediately higher.
Gap rules in play.
What are the gap rules :
- Go with all gaps that are not filled immediately.
- if the gap is filled and value cannot become at least unchanged, the odds are higher that we will see a later move in the direction of the gap
I think that the move down we saw until D period low was mainly related to very hands caught long at the top of the last 5 consecutive up days. The bulk of the long overnight inventory was never challenged neither the short term inventory from yesterday and the odds of seeing unchanged value was quite minimal.
As we started trading back above 48.98 ( the gap price level ) odds flipped on the buy side as noted in rule 2 above but it was clear that the odds of trending were quite low as the POC started being prominent from D period on.
Today’s profile will be considered as a balance day to start tomorrow trading. We left a poor high which is a possible clue for a ” too long ” inventory condition from the short term traders and the prominent POC level will be on my radar too.
I will update overnight inventory tomorrow morning.
Good trading to all !