NASDAQ futures are coming into Wednesday gap up after an overnight session featuring extreme range and volume. Price worked higher overnight, trading up into the 10/4 range (a liquidation day) before forming a p-shaped balance profile. This profile shape is often indicative of a short squeeze. As we approach cash open, price is hovering near the overnight high, around the midpoint of the 10/4 liquidation day.
On the economic calendar today we have ISM non-manufacturing at 10am followed by crude oil inventories at 10:30am.
Yesterday we printed a normal variation up. The day began with a slight gap up that was resolved during opening trade. Sellers were unable to break down through the upper quad of Monday’s range before buyers stepped in. From then onward, it was a slow ascent higher until the very end of the session when some responsive selling stepped in.
Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to tag 7600 before two way trade ensues.
Hypo 2 stronger buyers sustain trade above 7600 setting up a move to close the open gap at 7665.50 before two way trade ensues.
Hypo 3 sellers work into the overnight inventory and close the gap down to 7518.75. Sellers continue lower from here, working down through overnight low 7513.25. Look for buyers down at 7509 and two way trade to ensue.
Volume profiles, gaps, and measured moves:
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