I am not posting a comprehensive blog entry this weekend because of other commitments. For Monday my observations regarding market structure are as follows:
- All references below refer to the March contract.
- Thursday and Friday was a tight 2 day balance with back to back poor lows on both days. As I write this blog, the overnight trade has taken out these lows and we are now trading in the lower balance area as referenced numerous times in my blog posts last week. Our next major reference for tomorrow to the downside is the 1748-1750 area. I will be watching the single prints at 1744.25 as well for a possible bounce.
- Both Thursday's and Friday's POC is very prominent. Carry that information forward.
- Treat tomorrow's trade as a breakout from balance. Acceptance back within the lower balance targets the low of the balance at 1728-30 area.
The longer term trend is still UP. So far December's range is contained within November. While the weekly bar made a lower low, Friday's gap up has left an excess low for the week. This leads me to believe that the auction may not be over to the upside. We have twice tested the top of the lower weekly balance -1774 area, and seen a swift rejection of the lows.
Wednesday's profile below shows an excess low. Thursday was an inside day with a profile that shows traders getting short in the hole as the POC did not migrate lower with price and we closed at the lows. Friday's unemployment report provided fuel to the short covering rally as the market broke to the upside from a 2 day balance and gapped up almost 10 points. Thursday's inside day is considered "Balance within Balance" - a great setup to trade in the direction of the breakout. Notice that Friday was also a neutral extreme day i.e. we traded on both sides of the Initial Balance but closed on the highs at 1805. Friday's auction left a poor high and Monday's (12/2) profile also shows a poor high that needs repair. Odds are that we test these poor highs on Monday or early next week, which then brings the leg hi at 1812.50 back into play. Taking out the leg hi would turn the weekly trend back up. Some information to carry forward is the 6 point Gap below (Gaps are another form of Excess) and the prominent POC (1787) from Thursday.
