Gap down and balance breakout. . .
That was the situation at the open this morning. Overnight inventory was fully short and short term longs from the previous balance were in an uncomfortable position.
The first move was down with the gap and balance breakout but volume was light in A period warning that the market was not accepting lower prices. “A” period was also showing long liquidation from the volume profile
Corrective B and C showed increased volume and D period printed four TPO across at the POC lowering the odds of a trending day.
After seeing 4 TPOs across I drew my trading range level. It was 50.67 on the high side which was the level that overnight latest inventory could be in danger, and 50.11 on the low side which was September 21 weak low.
I was also closely monitoring the POC migration for possible directional clue.
When we opened in E a short could have been considered. Why ?
Because the POC was migrating down. If we trade 50.37 or more the migration would be nullified. So the stop was 5 ticks with a good potential down move, going with value, gap and balance breakout. Target at 50.11 because of the prominent nature of the POC.
The rejection of E low confirmed by F period offered an opportunity to get long in G period low with 50.67 the high of my trading range as a possible target.
I think that the market went too short at the bottom as G period showed a P formation from the volume profile for that period.
So at the end it was a rotating day after a big gap down and we left a poor high. Volume for the day was good and POC is prominent.
Good trading !