There was a lot of volatility in the market yesterday, as buyers couldn’t hold the $82.5K area. As I wrote in my previous day’s article, there was a lot of initiative selling yesterday, as short and longer term participants pushed price down toward the $80K area.
Today marks 2/2 of my dominant concern days, as noted in my weekly article published earlier this week. Market participants reacted negatively to yesterday’s CPI news, which led to a global market selloff.
The previous day’s profile showed a double distribution day. However, as the market one timeframed lower, the POC didn’t migrate with price. This made the day a low confidence day.
Today’s Opening
The market opened below the previous day’s value area low. Price rejected the previous day’s value area low as short term sellers pushed price down toward the $80K area, leaving excess at the low, which brought in short term buyers.
As a result of the short term sellers’ activity during the early Asian session, the previous day’s poor low was repaired, while the 8/10 excess low was extended.
However, the current low is weak because it is currently one tick above the 20/09 poor low. This makes the current low weak, even though it has excess. An excess low is generally stronger when the rejection is clearly developed and the auction is not sitting directly above unfinished business.
Profile Structure
The current developing profile structure looks truncated and balanced, as the market has found acceptance below the 21/09 profile low.
The current high is a poor high, while the low is a weak low, regardless of the excess it has. Poor extremes lack clear excess and can represent unfinished auction business.
Market Generated Information
since the beginning of the week:
12/10: Poor high that needs to be revisited.
13/10: Poor high that needs to be revisited.
14/10: Weak high that needs to be revisited.
:single print area: Needs to be repaired and is currently acting as resistance.
This brings me back to the 20/09 and 21/09 MGI that I've discussed before, which had not been revisited until last week and this week.
20/09: The poor low has not been repaired, although the POC area has been revisited.
21/09: The profile MGI has been fully repaired.
Possible Scenarios
Since the market has found an area to trade around, showing acceptance, and we are waiting for the current PPI news, these are the scenarios I’m expecting.
scenario one
If the current weak low holds, I expect a partial upward move toward $82K. However, there is a single print area from the previous day that is currently acting as resistance.
If price breaks through that area and finds acceptance above it, that would create a different scenario. The current poor high could also act as a barrier because of the nature of the structure.
scenario two
If the current low fails, I’m expecting a quick move lower to repair the September 20 low.
under this scenario, there are two possible outcomes:
Price pushes below the 20/09 low but fails to find acceptance.
Price pushes below the 20/09 low and finds acceptance below the profile.