Nq ran through prior day's high and tested last Thursday's VPOC.
Today is my papa day. Can't do any serious trading.
Just follow the market intermittently
.

ES has gone into long liquidation mode again.
Out of the open, we had a open test and drive which auctioned against the overnight first before taking out to the high.
It had one time framing higher for the most of the session up to 2:00 EST. But the investors have no willingness to take overnight risks fearing any unpredictable Trump tweets might completely wipe out their portfolio. As a result, the last two hours of trading were dominated by long liquidation which takes market from the prior day's VAH back down to the VAL completing a wide rotation inside day.


What does it tell me?
It is telling me that the market is dominated by the short term money alone that there is no higher time frame buyer was buying into today's market. The short term traders are usually the weakest hands as they are ready to fold their hands when they see adverse market circumstance and they don't take overnight risks. A market that is dominated by short term money is bounded to be a rotational market not a trending market.

ES once again open within prior day's value. It is likely setting for another wide rotational day.
But I just can't help asking myself is ES setting up for a break to the upside?
Because it just refuse to break down and the bears or the perm bears have exhausted themselves by selling increasingly into a hole without much advancement to the downside.




ES has spent two weeks trading value overlapping to the down side. So long as we are able to keep above last week's value, we are going to have a big short squeeze rally sometime later this week.

An open auction against the overnight inventory which happens 60%+ of the times.
I just can't stop thinking the 6535 liquidity at the prominent high volume node is being targeted by the market maker. I am going to look for Wolfe wave pattern and tick divergence to look for entry to hop on the long side in NQ.

Dow has reacted from yesterday's VPOC.
Missed that entry.

A naked VPOC in YM at the high.
It is very likely the level in the bulls crosshair.

Yesterday was a day of balance. What usually comes after the balance is range expansion.
At this moment, i still cannot say for sure which way it is going to go, but the odds are stacking on the bulls.
The reasons are two folds:
1. US equity has shown sign of strength after breaking out of a down wedge.
2. DAX has fully auctioned the area below 12500 and built a low of value there since Feb (see the yearly profile chart).


However, we should not rule out the possibility that DAX would turn around to fill a couple of the TPO holes left by last week's trading before it takes off.

At this moment, DAX is poised to open within the value with a slight bearish tilt. I am not going to press either scenarios, bullish break out or gap fill, until it trades outside of the prior day's value.

Some key levels:
VAH = 12407.5
VAL = 12371.5
POC = 123991
VPOC = 12383

The long liquidation has targeted the prior day's low and the daily S1.

Before the open, we usually talk about the daily bias which is derived from the placement of open against prior day's value area or full daily range from TPO chart.

However, this higher time frame bias can not be traded directly as the stops would have to be placed above or below the value area in the daily profile which is too big for most people's account. The approach I like is to wait for the formation of the first hour of the trade to seek the confirmation of the daily bias and then execute trades from the intraday levels which are going to require much smaller stops.
As most of you might have already know that the range of the first hour of trading is called the initial balance. The break of the initial balance are usually followed by range expansion. However, I believe that only knowing the range of the first hour is not enough, the profile of the 1st hour is a much more effective tool to help you to formalize the intraday bias. Note that this intraday bias could be a confirmation of the higher time frame bias you have derived from the daily profile or a rejection of that hypothesis. The principle is to let the market speaking to you.

For example in today's London session, DAX has formed a balanced profile in the first hour of trading with a big selling tail telling me that the up move has been rejected. That has confirmed the bias to the down side. Note that out of the open, we can only see that the prior day is a balance day, hence it is likely to have range expansion today. But we have no idea where the market is going to break. Given the first hour's profile, it is pretty much clear to me that today is a long liquidation day and I should trade the setup to the down side. After the open of the second hour of trading, DAX has grinded higher. But see where the move has stopped? The first hour's POC. It was rejected right after the test of the 1 hour's POC.

Bear in mind that the first hour profile in DAX is not always that clean. The profile could be very elongated. But do you remember what is the trading rule for a wide IB day? If the IB is wide, the chance for range expansion later in the session is low. If you translate that into the first hour's profile, then it makes perfect sense. Because if the there is no clear balance, no energy is built and stored. Naturally, the chance of range expansion is small by definition.
I hope you find this idea interesting.

ES is opening below yesterday's value, hence the daily bias is to the down side, until the POC/VPOC of the prior day being taken out.
Once again, there are Trump news in the background. So be mindful that the day type or bias could be flipped very quickly.
I am not going to be hasty in putting down trades. Instead i would practice what I am preaching -- I am going to sit back and watch the Profile of the opening hour taking shape to give me the intraday bias confirming or rejecting the higher time frame bias.

Good luck and trade well!