11/12/2019 ES Daily Recap
Overnight we have been balancing above the previous session's vpoc and we had sellers active at 3092-94. As long as we held above the 3086-84 support will keep us bias to the upside. Since we were close to the highs you had to be very conservative and selective any short trades. I was personally looking for a 15-20 pt squeeze above the 3100 for the exhaustion to short. A break below initial support will show short term weakness and we would have to been cautious long side. If we did flush below initial support, I would have wanted to go short if we were to attempt to reclaim higher and fail.
Going into real time, we observed strength internally and buyers showing initiative from open. The idea was that as long as we hold above 3085 initial support, any dip would have been bought for the breakout. We did observe a ~1600 offer that failed to give any decent pull and we squeezed above this signaling strength. Another nuance was a POC migration which showed that buyers were finding value higher and any early shorts would be very risky. We ended up taking out the ATH but failed to gain any momentum above 3100 and price began to stall. With offers stacking and internals signally weakness, it was acceptable to take any long trades off and look for the next trade if it came.
From the example above, we can see on the profile that we stopped time framing up in the D session. What time framing up means is that on the tpo, we will see each consecutive tpo session make new highs after each letter sequence. Timeframing shows that buyers were being aggressive (in this case because of fomo) in the market.
Another valid trade was when we failed at the highs and sold off, a push up into high 3080s and low 3090s could have been shorted. The reasoning for this short is that there were late buyers who were trapped at the highs when we sold off and trapped them. As soon as we were able to reach a price that was near breakeven you can observe the nervous longs taking their positions off. (also can see with footprint offers stacking, sellers showing initiative with imbalances).
Another nuance is that we had left unfinished auctions at the 3097.5 price level. Typical market behavior is to fill these areas and complete the auction but in this case we left the unfinished auctions without any repair which shows sellers being aggressive.