Debrief · 16 June 2022 · A weak response at the year lows, then OPEX chop
The BoE hike accelerated the ON sell-off, and we opened a point below Tuesday's year lows. The response was weak: sellers absorbed buyers at the ON LVN into 3711.75, and after the impulse down the auction chopped to a base at 3642. Into OPEX Friday I'm not trading, just monitoring the key levels.
H 3711.75 | L 3642 | VPOC 3670 | VWAP 3673.75 | SETTLE 3773..52
The session
OvernightBoE hikes 25bps; a V reversal in bonds. Yesterday's ON buyers attempted to penetrate Wednesday's spike but failed, creating a high at 3833.25. Sellers in the Asia session then drove the auction lower, ignoring all the previous day's references, into the EU session, which saw an acceleration after the BoE rate hike. The handover to RTH left the auction with a gap to the prior open, 1 point below Tuesday's year lows at 3708.5, and below the 3-day balance.
ON inventory was short into the open at 3707.5. A failure to see a response at the year lows could see a further drop in price to advertise for buyers.
The openIndeed, the response was weak, with sellers absorbing buyers into 3711.75 before a sharp impulse let everyone know the auction's intentions. The absorption took place at the ON LVN. Can you spot it? Then came the impulse down to the ON low, a tight hold and continuation.
After the impulse, the auction chopped lower until it found a base at 3642, then found a bid into the settlement at 3673.5.
See yesterday's tweet for a full footprint breakdown. The LTF charts combine to excellent effect. Also, just look at the HTF chart on the left and just trade. Can anyone tell me the areas they should be looking to trade? Trading is about simplicity, not staring at your monitor all day.
What nextBuyers will be looking to end the OTFD above 3711 and establish acceptance inside the prior three-day balance. Sellers will be looking to break below yesterday's lows, but may find buyers at the previous close, the 3773/yVPOC area, and the JDAPBH.
Day typeNeutral day, liquidation continuation, OTFD daily, weekly and monthly.
Levels into the next session
Monitoring 3711 (yHI), 3723 (gap), 3740 and 3670 (yVPOC). The rest are marked on the profile review, above and below.
Data and news
FinancialJuice reported:
- The EU Commission recommends Ukraine be granted candidacy status.
- ECB's Knot: if inflation worsens, several 50 bps hikes are possible.
- France's finance minister Le Maire: we hope to unblock the tax issue today.
- BoJ: it is critical to pay close attention to developments in the financial and forex markets, as well as their impact on Japanese economic activity and prices.
The plan
ON inventory is extended. I will be watching for an adjustment down to 3693, yesterday's close, before a potential continuation of the ON trend. This is my second-case scenario, and the most obvious.
I favour a scenario where we see a reversal of the ON move and a continued liquidation lower. This is just from experience with OPEX events, and I will leave it at that.
I will be looking for buyers to attempt and fail to auction higher on the open, and I will be monitoring the ON high at 3713 and the gap at 3723. Footprint and PA will be my guide. OPEX events can be really tricky, but the moves can be monstrous. Given yesterday's moves, there is a possibility that not much happens. It's all very vague, so I will mainly be monitoring the auction at key levels and looking for a change.
BTW, I'm not trading until at least next week, so I only did this write-up for you guys. Much love.
Opening bell, 0830 CTLooks like we will be in for a period of chop, given the open so far. The open was quite balanced following the large drop into the close (surprising), but then the push back on the open failed to materially breach yesterday's highs.
I always think chop if we see a big upswing and then a reversal. It may chop in a single direction, but it chops until one side gives up.
OPEX flows seem to be in full flow. BoE talking in 2 min.
Tier 1 Alpha have a go at explaining what goes on: big shout to you guys.
None of this constitutes financial advice; it's just my personal journal that I share! All opinions are my own, as yours should be.
Have a great weekend. Trade well and prosper.
Key tweets
LTF combine to excellent effect. Also just look at the HTF chart on the left just trade. Can anyone tell me the areas they should be looking to trade? Trading is about simplicity and not staring at your monitor all day. Please Love and retweet.
View on X →Key lessons
Trade well and prosper.
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