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FuturesTrader's Journal - Trading ES with Market Profile
Big Mike's July Journal contest has motivated me to start a journal again. I have learned a lot from Jim Dalton and Julia over last year+ and I am looking forward to apply the teachings to my live trading.
Everyday Jim writes S&P Morning Report and S&P Recap and Preparation Report and I will attempt to the the same here in this journal.
Overnight Inventory is 100% long after reaction to Greece news. Expected behavior is correction of overnight inventory.
As of 8:21 am ES will Gap up above yesterday's high. Gap rules are in play
- Go with any gap that is not filled quickly
- If Gap is filled but value is unchanged there is possibility for late rally
- Strongest negative response will be outside day to the downside
I took 1 trade today. Below is the reasoning behind this trade.
Market left several clues that only trading money was involved. Every dip was bought. When yday high was bought once again I waited for the buying to dry up and sold it at 2069.00. I mismanaged the 1st lot and closed it at breakeven.
Trade was closed at 2064.00 when C period flushed down. Trading money dominated the market so I expected liquidation only.
Recap:
ES gapped up today, gap rules were in play. early on failure to fill the gap presented a quick trading opportunity but I was not sharp enough. Trading money dominated the market and every dip was bought in the first 3 periods.
Later on every bounce was sold - (E sold off at D high, I period high was close to yday high, L high was 1t below yday high). Several anomalies were left behind.
Value was higher and it was my guide to stay away from shorting in later periods.
Gap rules mentioned in premart prep came into play and late rally triggered which cleaned up the anomalies.
Outlook for tomorrow -
Tomorrow is NFP and Friday is holiday. I expect the markets to be thin and volatile.
We have Gap on Weekly and Daily bar charts. Even thought there is no Excess on the high's this Gap is an form of excess. My longer term bias is to the downside as long as the gap is not filled.
Both yesterday and today have left behind prominent POC's. These can come into play tomorrow.
There were no trades, I returned to my desk in the evening.
Monthly - We are in a 5 month balance. Month;y high is 2126.25, Monthly low is 2023.00. There is NO excess at the highs.We are one timeframing lower on Monthly basis - this is a big negative
Weekly - We are in a large several week balance. We are one timeframing lower for 3 weeks. There is no excess at the high's. Normally the upside auction to be considered incomplete due to lack of excess, but there is a Gap on Weekly chart. Gap is a form of excess, hence upside auction can be considered to be complete till there is acceptance above the gap. .
On the down side there is no excess at 2046 area, acceptance below this targets 5 month low.
Daily:
As of today we has a 5 day balance below the gap which indicates acceptance of lower prices.
Profile:
ES gapped down today and lower prices were rejected quickly. It entered prior 2 day balance in B period and short covering rally continued till C period.
Selling in C period started Exactly from M period high which is a rally high - this is a sogn of weak/mechanical sellers - I expect this level to be taken out in next few days
After forming 7 wide POC near yesterday's low market sold off in H period however the wide POC pulled the price back up in N period. Settle was inside yesterdays range - after all the emotional Greece news, nothing has changed
Expectation for tomorrow:
We have a good high on daily profile, and a good low - market is in balance. I am neutral coming into tomorrow.
Opening above today's range targets the gap.
Opening below today's range targets the weak low at 2046.
Opening inside today's range indicates further balance.
ON Inventory is long but ES is trading at the lower end of Overnight range and it has been selling off since last 8 periods. In my opinion the long inventory is negated/adjusted.
Overnight high was at 2078 - few ticks above thurday's high . Traders needed a mechanical reference before selling = sign of weak sellers
Value -
Yesterday value was overlapping to lower. As of 8:24 am ES will open at the upper end of value and will need to selloff quickly to create lower value. Odds are we have higher or overlapping value.
Coming into today the market was off five day balance. Today the market tested the low of the balance and was quickly rejected and is now setting up for a test of the upper extreme. There was a lot of emotional trading and the market was dominated by Greece news. The upper gap between 2083.25 and 2086.25 comes back into focus. Acceptance above this targets all time highs. Entering the gap also Stops the One Timeframing on Weekly Basis.
Recap:
Today was a very clean tradable day, I took some trades but I failed to monitor for continuation. My market read is better but learning to monitor for continuation is a skill I have to develop quickly.
Overnight inventory was long although I felt overnight inventory was neutral and I had a upside bias. Market opened slightly below yesterday settle looked up two ticks,sold off, tested the POC, bounced to one tick below open and then sold off again. Selling off from so close to settle and open were the first things that caught my attention. The selloff in the first period was particularly strong. My thinking was that since market was opening at the top end of value a lot needed to be done before value would be overlapping to lower. The 12th handle selloff in A showed that sellers were strong in my focus shifted to the downside. At start of B I realized that value can develop lower.
B sold off below yesterday's low and came back inside the range. B low was 46.25which match the balance low, this was a poor low and I was looking to sell the rally. I sold 50.50 although the better entry was nearly A period low 52.
This is where I failed to monitor for continuation. I could sense the selling was strong but B came back inside yesterday's range twice by a few ticks. I should have noted this and carried the information forward instead I closed the trade. Traders do what works until it doesn't. The play today was to sell on rallies.
Anyway I carried the information forward that the selloff in B was close to yesterday low.
C high was 2046 which matched the poor low another information to carry forward about the peak selling it references.
D sold off again exactly at the double distribution level – another piece of information to carry forward.
Profile became three wide in E period. A lot of accumulated evidence was pointing towards the mechanical selling. I was now alert to look for a buying opportunity. In E I noticed a smack up in price, which was followed by further selling. It took a long at 36.50, the market rallied and once again I did not monitor for continuation instead I just closed the trade with four points. I under estimated how short the market had become. EFGHI one timeframe higher. Inventory was balanced in J period.
I took a long again in E when market reentered yesterday's range, this was a classic JD trade. But there I realized that the market could turn rotational.that trade triggered in G. But I was not at my desk.
I attempted a long in K period when it came back inside the overnight range but I did not get a fill.
We have an outside day this is a strong indication that the selling could be over.
Outlook for tomorrow: 7/6 high is now support I will be looking for a test of the Gap zone tomorrow. we have a Spike in K base of Spike is support change occurs below the base of Spike.
