A mix of concerns over China loans and Fed rate concerns are being cited as ‘the why’ behind this morning’s sharp selling of index markets. As we head into US trade there is little on the economic calendar.
Aiding in the movement was the volume pocket formation we fell into yesterday. When prices entered this thin region yesterday I noted that we were likely to test through to the other side, down to 4242 with perhaps a few pivot points along the way represented as low volume nodes. Sellers are not wasting much time it seems.
The definitive break of balance yesterday put the market into intermediate-term discovery mode down. Sellers took control of this timeframe. They continued to press their control overnight and we are now trading on the other edge of the volume pocket.
The market is now exploring lower in an attempt to find buyers. After overshooting the 4242 HVN my expectation is to test through down to 4227.75. This is ‘pro gap’ territory, meaning, fading the move is requires very deep pockets and the gap has a low probability of filling during today’s session.
The risk of an opening drive is also elevated given how out of balance we are.
In summary, I am expecting other time frame participants to be active in this out of balance market with a low likelihood of filling the gap. I have noted the price levels I will be observing on the following volume profile chart:
What is the typical time frame of an “opening drive” — do you mean first print or sustained through first hour?
not time based but behavior based, opening drive opens and auctions in a straight direction. In this case a drive down would be downward movement without a push higher or any resistance from buyers on the way down. It typically carries about 8500 contract volume in the Nasdaq and a big negative cumulative delta
Thanks -am AHWOA participant and have been working through your vids there, very helpful
good to hear, mate