I call Mr. Dalton Uncle Jimmy out of affection. I will not call todays price action as market getting too short. If it had reversed with some visible FORCE from 93 area and ran 160 to 250 ticks to the upside- then it will be a sign of market getting too short.
To me it's just a regular every day rotation/balancing under way.
My posts are not meant to give financial advice neither do they imply that my method is special. "THIS IS WHAT I COULD BE IF I HAD A TOTALLY CARE FREE STATE OF MIND DURING TRADING" Mark Douglas.
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Not from Dalton, but If the market is too short, the price should move aggressively to the upside or at the very least, have some disruptive volatility to clear the short bias, hit the stops, hit the pending orders, throw things off balance and press the reset button. This is assuming the smart money and big players still want to take the price down. We see this all the time on days when retail thinks "the price came down so much, it has to go up from here".
Although today in my view was just a normal day for oil. Double top or head and shoulders off the London High, weekly pivot point and previous week VAH...ALL with a momentum diverged to the downside. LOD was into last week's VAL and Friday's VAL, also diverged and then back up to the opening price.
Whether the low is a poor, rich, too sort, too long, etc really doesn't make a difference on my end, although I did not see the market as acting one sided at all today!
If you can keep your wits about you while all others are losing theirs, and blaming you....The world will be yours and everything in it, what's more, you'll be a man, my son. - Kipling
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In regards to this "poor low" or simply a "balanced day" I interject this:
We have two main reasons that a market will form a low:
A) More commonly, we have a completed auction. This would be where buyers see such an attractive price that they believe to be below "value" that they bid it up quickly from the area. This leaves behind what we call excess.
B) We have what happened today, which is a low made with no excess, but rather all signs point to an incomplete auction that simply ran out of aggressive sellers. Price went back up due to a drying up of these aggressive sellers.
Each of these two ways of forming a fractal low have different implications for context going forward into the next session. Today the low was formed from (B) type, from all my analysis.
BTW, I have spoken with Jimmie on this specific situation. He's traveling tonight, but will be back with me in the morning. I look forward to passing along his insight.
Also, we have to be careful that we are not talking about DIFFERENT auctions/timeframes here. This could lead to us not even talking about the same issue/area.
Last edited by indextrader7; August 25th, 2014 at 10:18 PM.
Reason: additional thought
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