The E-Mini S&P 500 futures (Es) began Thursday's auction six ticks above our 2115 area of interest, but proceeded to test that multisession range low several times over the initial 20 minutes of regular-session trading.
Provided you weren't champing at the bit to flex your trading muscles as an initiative seller, the market provided several opportunities for active and flexible day timeframe scalpers to get long at or very near multisession lows. The odds of a breakdown in my view were increasing, as discussed in Thursday's morning note. But any time the market is auctioning within a well-defined area and offers you the opportunity to take a shot near a pivotal level, why not take a chance?
Without getting too bogged down in the day timeframe trading weeds, I thought I'd share a three-minute chart of Thursday's Es auction since a number of you asked about the value shift above 2129 to 2130.50.
As you review the chart above, begin by noting the tests of 2115. As much as I truly thought the bears were ready to probe lower levels, the repeated rejections of that level told us to either take a gamble long or stay out of the market. Repeated candlestick tails, such as those off 2115, are an indication of excess.
The trade back up to and through 2129 to 2130.50 was a meaningful day timeframe development. The lack of excess, or candlestick tails, within that six-tick zone provided an initial indication that supply wasn't as thick as we previously expected. Regardless of whether or not you opted to get long as price traded through 2130.50 (I did not), the market offered you a second opportunity as price backtested 2130.50. And to those who asked, I am more comfortable responding to price than buying or selling a break. As such, I bought the backtest of the breakout zone. Suffice it to say if price failed to dip, I likely would have missed out on the rally altogether. That's the risk you accept when you adopt a responsive approach.
Conveniently enough, the back test of 2130.50 closely coincided with value migrating above that six-tick zone. And as you know, tracking the progression of value over time (or within our timeframe) is our primary concern.
Day timeframe buyers obviously benefited from a strong midday rally. And despite the late-day decline from the 2144.50 intraday high, the most likely short-term path appears to be a test of 2150.50.
Before we move on to Friday's Es auction, I want to share a daily chart of U.S. Steel (X) since several of you have emailed about the name in recent days.
Moving on to Friday's Es auction, we'll look for responsive buyers to lurk toward 2129.75 to 2130.75, and sellers into and a bit above 2150.50. While buyers obviously controlled the bulk of Thursday's auction, and price is nearing the eight-day exponential moving average (EMA), it's important to remember price is still trending well beneath the 21-day EMA. Put another way, don't get too cocky or aggressive when chasing bullish day timeframe price momentum.
A sustained trade and value shift above 2150.50 would amount to a noteworthy victory for bulls. Secondary price objective would become 2159 and 2163 to 2165. A failed trade from 2129.75 keeps the volatility in full string and shines a light on 2123.25 and 2115.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at email@example.com or posted to my Twitter feed @ByrneRWS