Road Repair
Addressing structure.
Image 1. Poor structure fixed, at a cost
Day Review
We described some of the ETH action in our premarket note today:
"Globex (ETH) [traded] in a tight range evenly split with buyers and sellers either side of POC. Buyers are initiating to the upside into weekly major target 4430/3 on net buying inventory. If the open is above 4435 there is a 65% chance of correction at the open, I will mainly be observing the Friday intraday resistance and area of breakout 4411 as day pivot. This happens to coincide with our weekly pivot which can give us some early clues today on possible initial weekly direction…”
Image 2. ETH, RTH profiles.
We opened two points above our observed level 4435, leading into a quick thrust into our buyer target 4447, nearly to the tick. An initial sell from this level saw some inventory correction into weekly LVN 4430/33, where buyers stepped in. For the record this is not the ‘65%’ chance of inventory correction I typically like to see, which is a faster rejection from the open. However it was not until the retest of 4447 in C period saw more committed sellers, beginning a OTFD into F period. Buyers came in at last week’s 4424 level (Friday’s buyside liquidity), rotating on short covering into a NHOD of one point.
A second rotation led to a NLOD, also only two ticks lower before rotating toward the highs once again into close - this time leaving behind a weak high just shy of two points. Again, sellers stepped in, closing the session near VAH. Overall an indecisive day leaving a weak high and poor low, but filling in Thursday’s poor structure noted in the Weekly Outlook. Given rotation around 4436 today this will be our level of interest heading into the next session.
Image 3. 5-day; balance; and daily profiles
Tomorrow’s Missal
Indecision around 4436 resulted in both a weak high and poor low - we would expect to go with strength on a break of either.
Watch for TSLA and AAPL as buyer proxies over 240 and 181 respectively. Oil above 80.5 may also lend support to the indices, while sellers would prefer to see VIX >17.2.
Buyer scenario. Closing above 4445 in IB targets 4457/8 where sellers may step in, with 4469 above. A break of PWH , will aim for magnet 4490, prior balance HVN. Buyers look to defend from an hourly close sub 4425.
Seller scenario. Sellers look to defend the ONH. A break of 4425 on momentum targets weekly pivot 4411, with 4395 Friday POC below.
Notes. JOLTS and consumer confidence at 10EST, this will likely introduce increased volatility. Longs may be supported by positive consumer sentiment and a cooling job market.
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