So Far, So Good
Construction or detour
Image 1. Curiosity hasn’t killed the buyers yet. The cat’s fine, too
Day Review
A refresher of today’s plan thesis:
“…however going into month’s end there is still some juice left to squeeze potentially. The IB relative to 4500 will give potent clues for the remainder of the session.”
We did see higher today in fact as 4500 held and we consolidated after the large move on Tuesday. Meanwhile the ETH session stayed above pivot, selling down into the early part of the European session only to be picked up by patient longs. This saw a reversal of selling delta ahead of the open and through the data release (which suggests a slowing economy, but we’ll save that for the macro note) - a bullish lean. We opened at PDH.
Buyers perceived an opportunity after the retest of open from above failed to see further downside. We quickly traded through 4517 just above the ONH and into the first buyer target 4530. As anticipated, sellers were interested above 4517 - note the buying delta tapering as we neared 4530, which then turned into responsive selling. A low on the day was made in B period just above 4500 - the ETH VAL.
Buying returned, but failing to break out materially in E-G periods we concluded with rotational trade around 451: a balance day. This addressed some of the poor structure from August 10, as we expected, but with no interest to address poor structure from the prior day. This in itself reveals buyer strength - until the structure is addressed. Value moved higher: the most traded price by volume in the five-day period is 4524 (while TPOC at 4427). Into tomorrow, 4520 will play an important role as initial resistance following IB and then closing support.
Image 3. ETH, RTH profiles.
Image 4. 5-day; balance; and daily profiles
Tomorrow’s Missal
We could see movement tomorrow on pre-market data. Buyers now need to hold above 4510 in the short term, and hold progress above 4490 into the weekend. Sellers will need to break OTFU below 4501 to regain some control. Pivot 4520.
Watch oil again over 81 for further upside to the indices. Importantly, VIX falling below 13.96 could mean more pain for sellers.
Buyer scenario. Defense of 4511 can retest PDH at 4530.75, a break then targets 8/10 highs at 4545. Further above levels are 4558 and 4570.
Seller scenario. Sellers seek to end OTFU. A defense of 4530 will target an hourly close below 451. They would then target poor structure below 4490 to 4458. Buyers may step in at 4470 or Tuesday halfback.
Notes. PCE and unemployment at 8h30EST may introduce volatility.
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