Crude Oil Market Update

The WTI Crude Oil September contract opened inside of the previous balanced regular trading hours range. In this particular case with the expectation of a rotational trading session it made sense to trade the range's extrems. This means to focus on the excess lows or highs for a potential trade to the other side of extreme.

In today's session the market moved in the initial balance phase (first 30 mins of RTH session) to the VAL level and gave us the opportunity to take a long trade as soon the market came back to test the lower extreme, the previous RTH low area. For the rest of the day the market one time framed higher to reach the mentioned target and left us with a nice excess high at the close.

However, with looking at the Yearly and Quarterly VWAP, we can see a one time lower bearish picture. The market is trading in both charts below the developing value and the previous value close areas. With a closer look we can actually observe that the market trading around the -2nd SD level of this year's developiong VWAP and seems to be supportive for the moment as Monday's session was an inside day.

Moving forward to the 240 minutes chart, we marked some potential areas that could supported the long trade for today.

Please note: The volume rolled over to the October contract. It could maybe make sense to roll-over our charts to the next contract.

We hope you done well today! Have a great day.

All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.

Buying tail - Trading Glossary

A Buying tail is formed by single prints (single TPOs) at the bottom of a profile. It shows buyers’ reactions to lower advertised prices. The more single TPOs that form the buying tail the more aggressive the buyers’ reaction.

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Bid/Ask - Trading Glossary

Bid/Ask is the spread the market is trading at between buyers and sellers. A buy limit order will be executed at the Bid while a Sell Limit order will be executed at the Ask. Market orders are executed at the spread. For example, a Buy Market order will be executed at the Ask and a Sell Market order will be executed at the Bid.

This is a trading glossary term series of blog posts. Check out all the terms we post with the Trading Glossary label.

E-Mini S&P 500 Futures Market Update

The E-Mini S&P 500 September Futures contract opened inside of the previous regular trading hours (RTH) range and value today. The market rejected the POC, broke the previous low and got selling imbalanced for the rest of the day.

To better understand this selling behavior let's take a look at the higher time frames. With looking at the Yearly VWAP with daily bars, we can see that the previous session found resistance at Yearly developing value high (DVAH) for a down move to the developing VWAP. Also, with a closer look, we can observe the confluent levels with two marked balance areas:

A potential scenario could be a destination move to the Yearly developing value low.

Also, to mention is the Quarterly VWAP, with resistance at the DVAH and the down move to the previous Quarterly value area low close level. The globex market has been opened directly at the previous VWAP close level. Here is a potential destination move to the Quarterly developing value low possible as well.

Moving forward to the 240 minutes volume profile chart, we can identify the resistance level with the low volume areas:

Take a look at the monthly volume profiles and the areas we marked on this figure:

An intra-day short position at the open or as soon as the market broke below the previous RTH-low (in next 30 min TPO period) with a stop inside of the previous value made somewhat sense.

The market seems to be balanced with possible support at the mentioned levels (Yearly DVWAP, Quarterly VAL close level, Low Volume Areas). However, a destination move to the other side of the developing value (Quarterly and Yearly) is possible as well. Stay open minded for several potential scenarios.

All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.

Balance - Trading Glossary

This refers to trading ranges, brackets, balance areas, congestion areas, and consolidation ranges—all synonymous terms. They define price ranges in the market that are containing trade. Within these containment ranges reversion to the mean trades are the favorite of short-term traders. We often refer to these containment ranges as “paradise” for short-term traders. Bigger opportunities occur as price auctions outside of these containment ranges. Balance occurs in all timeframes. For shorter term or day traders balance may be an inside bar or multiple periods of price containment. Balance and excess are the two most important concepts you will be introduced to because they signify change or the potential for change to take place.

Balance area rules starting with inside days:

1.Market may slightly extend the range in either direction, stays in balance. Patience is in order.
2.Market explores upside breakout and is met by aggressive sellers; prices fail to be accepted above the breakout. Fade the price probe failure—the potential target is for rotation to the opposite end of balance.
3.Market explores to the upside; higher prices receive the unexpected response and attract even more buyers. Higher prices are accepted, breakout is successful. Go with price acceptance in the direction of breakout.
4.Market explores downside breakout and is met by aggressive buyers; prices fail to be accepted below the breakout. Fade the price probe failure—the potential target is for rotation to the opposite end of balance.
5.Market explores to the downside; lower prices receive the unexpected response and attract even more sellers. Lower prices are accepted, breakout is successful. Go with price acceptance in the direction of breakout.

This is a trading glossary term series of blog posts. Check out all the terms we post with the Trading Glossary label.

Auction process (Two Way) - Trading Glossary

The purpose of an auction is to facilitate trade. Prices constantly auction from low to high and from high to low to fairly distribute the bids and offers presented by the market participants of all timeframes. This is the fairest way to allocate prices and contracts among competing bids and offers; the byproduct of the two-way auction process is market-generated information.

This is a trading glossary term series of blog posts. Check out all the terms we post with the Trading Glossary label.