I had said early in the room that given the narrow range after the gap there weren’t going to be too many potential ops for either side. First the gap low broke down into the Friday high 50-51’s but on that one there was really no continuation play and relative volume and price action were unremarkable. When we rotated back up I mentioned that bears might wait and see whether sellers ever stepped up hard back in the zone formed between the key Globex support line 56’s and the Thursday high 58’s. As it turned out there finally were some clues of interest there with the VWAP congruent shown here.
First note in pink the stark hard rejection of highs as well was the majority of size leading out short in the stats. I have to say I’d be luke warm at best on this but only because its a first push. In a perfect world if you are a swinger I still think the ideal is to see big volume from absorption on the first push into a level and that followed by thin volume on the second push due to exhaustion of whatever side was getting absorbed on the first push. So given that was not the situation in pink and the case price was not being tested I’d have to pass on swing shorting there if I were stalking there. The subsequent push in red though showed pretty much the biggest relative volume we were seeing at the time – buyers trying to lift and being absorbed passively as well as short aggressors led by size leading out in the stats. Bingo. Regardless of the fact that it happened to work out, you can’t think that way. Either your criteria are met or they aren’t and from there if you enter you see what unfolds. Nuf said.
So if you did get short from there as I also discussed in chat the structures below to stalk scales should have been pretty clear. First was the same gap low 54’s we had already visited several times. Perhaps that’s why this time it wasn’t respected when we sold off. Note in yellow as the then interim rotation low was breached and the prior buyers knew they were cooked the MM’s took advantage and pulled bids creating the momentum that propelled the market through the 54’s this time around. Good news for those who were paying attention as hopefully they were able to avoid scaling there and squeeze out more to your first scale. I have to say though I can’t imagine holding through the volume in blue which occurred in no mans land between the 54’s and 50-51’s structures. Regardless, the next structure below at the YH wasn’t far from there. But even if you held through the blue area note both pushes into the case 50.75 below hard rejected on paper thin volume in green from seller exhaustion. Point being if you waited for the case price to test and show you something before scaling you wouldn’t have gotten much more than if you scaled in the blue area. For those who made that their first scale ignoring the 54’s for the reasons above and were still holding for a second, the selloff continued on into Friday’s closing range structure. It’s off the image obviously but for those who did sell it turned out to be quite a nice score. I highlighted the stats in purple to show how convicted the sellers were which gave a clue of coming energy to propel price down into the 45’s and beyond. Just no divergences or for that matter any interest from aggressive or passive buyers for that matter. I think its generally a good idea to look out for general clues like this as they can help you with your contextual TM choices on the fly which are always evolving…
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