We entered Tuesday's auction by first discussing the potential for near-term E-Mini S&P 500 futures (Es) price rotation between the 21-day exponential moving average (EMA) and 2160 (prior support, now resistance), and the year-to-date (YTD) volume weighted average price (VWAP). But to be honest, I wasn't expecting the upper end of that range to be tested so bloody soon.
The quick bout of selling at Tuesday's regular-session open provided day timeframe participants with a fantastic opportunity to get long the Es within the 2333 to 2334.75 support zone detailed in that morning's Trader's Daily Notebook. But even those unwilling to get long in front of Tuesday's 10 a.m. ET consumer confidence report had an opportunity to buy, after the quick spike above Monday's intraday high faded back down toward the session's developing VWAP. Those operating during the day timeframe should not have had too difficult a time holding long toward 2360, as swing highs and lows only continued to ratchet higher (above VWAP) until 2360 was tested and price momentum came to a standstill.
All that needs to be noted on the daily Es chart above is where Tuesday's rally ran out of steam, right at 2360. While I am hesitant to trust that buyers have the energy to sustain an advance above 2360 over an intermediate timeframe, there's no question shorter timeframe traders need to be willing to trade long as, or if, price begins to gain acceptance above 2360.
Moving on to Wednesday's Es auction, we'll look to base our decisions around 2347 to 2348.50, and 2360. As long as any selling attracts responsive buyers in and around 2347, our baseline expectation will be for repeated attempts to auction prices to, and eventually through, 2360. A sustained advance (I tend to use either a five-minute or 15-minute bar close) above 2360 has very little preventing traders from auctioning prices toward the mid-2370s to 2380.
If responsive buyers walk away from the market near 2347, day timeframe scalpers will be expected to begin selling the market, potentially aggressively, down toward 2334.75 to 2332.50. Another wave of responsive buying (by higher timeframe participants) is to be expected near 2332.50, as the contract will once again be testing levels in and around the 50-day EMA. That said, my guess is once 2347 to 2348.50 has failed to support prices, it's only a matter of time before 2317 to 2319.50 is tested.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at parkcityyeti@gmail.com or posted to my Twitter feed @ByrneRWS
