Aug 07 Plan

Last night, during the ETH session, sellers auctioned prices all the way down to Tuesday’s RTH high. Technically, gaps are only considered filled if it happens during the RTH session. If you recall, Tuesday’s RTH high was part of the late day “spike”. These ETH buyers defended the spike and consequently we opened inside yesterday’s range. 

I mentioned on yesterday’s plan that for the One Time Framing higher to come to an end, sellers had to offer prices below 3311.25. Today’s low was 3 ticks below 3311.25. Personally, I will say that we are still one time framing higher, and  today’s action at the lows showed that there was zero interest by the sellers below yesterday’s low. This is a very clear example of a “look below and fail”. Once that was resolved it continued One Time Framing higher for the rest of day. 

Once buyers were able to bid above the Overnight High (3329.25) we saw a rally that took prices all the way up to 3344. Since most of the day was spent inside the Initial Balance Area (4 hours), we saw late day buyers auction prices aggressively outside of value. This left single prints on the profile. This type of action tells us that something changed and prices were perceived to be unfair and the “other timeframe” stepped in to move prices higher. Even though prices closed at the highs of the session, since we only spent 2 hours on the upper distribution, and time regulates all opportunities, value wasn’t able to migrate higher. 

Going forward I would like to see the single prints (3325.75-3335.25) defended by the buyers. This would confirm that prices are being accepted at the upper distribution. Failure to find acceptance would mean that the rally was driven by sellers covering their shorts. As I said yesterday, buyers are still in control. If we see the profile repaired, and find acceptance around the single prints and above 3331 we should see 3352. Once above 3352 target should be 3372. 

If buyers aren’t able to hold the single prints and sellers are able to offer prices below 3313, follow the guidance from yesterday’s plan.

NQ_F was very strong today. As you can see, once buyers found footing above 11,120.00 they managed to rally around 150 points. I would like to see it above 11,260.00 by tomorrow’s RTH open. If buyers mange to stay above this level next targets should be 11,320.00 followed by 11,500.00

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I’m going to leave you with a quote about Double Distribution Days by the great Jim Dalton: 

“During the first few hours of the trading session, market participants possess a low level of conviction, resulting in a narrow base (small Initial Balance Range). Later in the session, a change in events causes the other timeframe to perceive price to be unfair at current price level, enters the market aggressively, and substantially extend the range. This later entry by the other timeframe drives price to a new level, where a second balance area develops. The Double-Distribution Trend day does not possess the steady confidence of a typical Trend and must stop and reassure itself after a substantial move”.