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11/10/2019 ES Weekly Recap

     Going into Sunday night, we can see that the market is still pretty bullish but there are a few things to consider regarding unfilled gaps and VPOC's. Observing the market's historical action we recognize the tendency to go back to these spots in the future if they are not filled immediately. It may be a few days to many months but the market will almost always fill these areas. These areas can generally be downside targets if you are holding a runner and there is decent seller initiative. It is very important to observe these nuances because they show structural deficiencies that may affect the behavior of price in the market.  I am not necessarily saying that I am bearish, but if we were to get the ball rolling and sellers begin selling aggressively it is possible to see these areas get taken out pretty hard and quickly.

     There are many gaps currently on the ES but we dont count any overnight action as repair if we do fill these areas.  If there is a VPOC or gap that is filled overnight it would be ignored and is common to see overnight gap fills end up being filled in the day session. A VPOC for those who are not familiar with it can be defined as the highest amount of volume or time in an area (in a session) that has not been tested. It is important to note that we have a significant amount of VPOC(s) lower. When these VPOC(s), especially prominent VPOC(s) which are POC(s) that are very wide in tpo form and have not been filled. A formation of a prominent VPOC makes it much higher odds that we potentially test these areas on a liquidation break. 
 

        With the example above, we can see from the image above that we have had 5 weeks of trending up without any decent pullback.  With this in mind, we should be more wary in regards to the bigger picture as it is possible a pullback may be imminent. Without any initiative from buyers, it may collapse on itself when we have sellers being aggressive  Going into Monday morning and the week ahead of us, we will have to observe the behavior of the market real time for us to make any conclusions.

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