Review & Plan Feb 25th
The gap down overnight yesterday saw the market get too short in the day time frame and we saw another aggressive short covering rally after the low was in and prices traded back inside Tuesday's range to fill the overnight range gap and push back above the prior day's value area. As you can see below on the RTH chart, 2 of the gaps below have now been filled after retracing just through the 38.2% level to cover several naked VPOCs.
The structure left in yesterday's market profile shows many anomalies, which was a sign of the forcing action seen during short covering rallies. These areas highlighted below have a high chance of being revisited.
Daily time frame shows acceptance above the 1920 VPOC, with next major target the 1980 composite low volume area:
The 60 min time frame shows acceptance above current value, so either we see responsive sellers push back down through value or continuation of acceptance above value towards measured targets below. There is also confluence with the 161.8% level at 1979.00 and the composite low volume area.
Zones for today are below. I'm using the 1906.75-09.75 as my bull/bear zone, as longs would still be able to maintain control above there. There's a risk of a more serious liquidation below 1898.50. If the market can hold above the 1941.25-42.25 zone, then I'm looking for an attempt to push for the 1955.25-57.25 zone.
Overnight has ranged between 1920.25-38.50 versus settlement at 1930.25. The market moved very fast on short covering yesterday, so I'm prepared to see a push lower into the anomalies shown on the market profile before continuation higher, or if the continuation happens after the open and responsive sellers step in at the resistance zones, then a move lower to fill in the anomalies.