ES review & plan
One of the main questions I've been taught to ask myself before the open is who's in control. Obviously this is done on a best guess basis but the action and volume gives tells to help make an assessment.
The action on Friday showed a market getting too short and covering back into the POC for the close.
The overnight move yesterday pushed through the pullback highs from Friday leaving shorts trapped. Yesterday's open briefly dropped to one tick above Friday's open and reversed, fuelling a short covering rally and indicating that again short timeframe were dominating the action. The overnight high once broken became support after the range gap was filled. The early high matched Thursday's initial balance high but fell just short of the VPOC and cHVN at 2098.25.
There was aggressive selling as seen in a steady drop in the cumulative delta all day after the high was in and it was clear there was a lot of buyer absorption holding prices in a narrow range, likely shorts covering. Volume was just 1.1m contracts and 3bn shares on NYSE.
Short covering can weaken the market as prices move rapidly away from where longs want to enter. The profile between 2089.75-80.00 is vulnerable and would benefit from filling in for a stronger rally to hold.
Overnight the market has continued higher with a range currently of 2089.25-2105.25. The nearest resistance and support zones have been tested already and today I'm looking at response at these zones to confirm who's in control still.