This is the third day I have woken up to assess sell flow in the overnight markets. The S&P rejected the large distribution we built into last week’s close which had a value area low at 1686.25. It came in the form of a rally that failed to take out the intraday high. Instead price fizzled out into the bell and eventually sold off hard after hours.
As aggressive at the evening sellers were, their order flow did not take out yesterday’s RTH low at 1673.25. Instead it stopped and turned on a dime one tick above the low. Since then we have snapped back and are trading sideways and the globex volume profile shows balance.
Early on the important manner is who pushes first. We have a low volume node at 1682 (o/n high) which looks vulnerable if some buyers come in early on.
My overall analysis is that if no aggressive selling comes in and we hold yesterday’s low, the stage is setting up for a rally.
I have highlighted some upside targets and a few scenarios on the following market profile charts:
