Yesterday's regular trading hours (RTH) saw the lowest volume and range of the year, with the majority of the up move happening during the European morning session. The rally from the February lows has left very weak structure in it's wake with three RTH range gaps on the way up. If there is going to be strength in this rally, then the market would have a stronger footing by filling these areas and see initiative buying step in.
As you can see on the RTH chart below, the market could pullback 61.8% of the move from the low to yesterday's high and fill all gaps, as well as cover 6 naked VPOCs on the way down. This could still potentially set up for a stronger rally to move back up towards the 1980 area, where the market broke down in December. This isn't a prediction but just a potential scenario to consider if the market sells off and looks really negative. However, if the market starts to accept and hold below the 1855-60 area then the chances are that higher time frame longs have failed possibly.
Looking at the daily Globex chart, which has a customised volume profile drawn from the August 24th '15 low to date, we can see that the market is currently trading above the 1920 daily VPOC of this range and is aggressively trying to break above the Jan 13th swing high at 1946.50. If this succeeds in the short term then we are likely to see a continuation of the short covering type action seen in the past week or so. The more shorts that cover will leave less potential buying power, weakening the rally and setting up for sharp drops.
Overnight the range is currently 1924.50-1936.75 versus settlement at 1936.25.
So far this month the mean averages are:
Initial Balance: 17.25
RTH Range: 28.00
Globex Range: 38.25
Overnight Volume: 462,000
Total Volume: 2,245,000
The zones that I'm using today are below. If the market fails to break through the 1937-39 zone then I would expect sellers to attempt to push down into the zones below. If buyers still have strong control then I would expect the 1921.25-23.25 zone to be defended aggressively.