Tonight I am concluding the Market Profile series.

This is a little late because I wanted to show a real-time analysis of the ES. 

Figure 1 sets 5-d (weekly) trend context. We are in a possible sideway market marked by A-B-C?. The A-B-C is taking place in the 18-d Primary Buy Zone, 1396 to 1370, basis cash (now an area of resistance).

 02-29-2008-5-d.jpg

FIGURE 1 5-d

Figure 2 shows the current Market Profile. At the end of the Initial Balance (’C’ period), we know:

  1. The market gapped open below Value.
  2. It failed to cover at least 50% of the gap by the first 90 mins.

Both (1) and (2) suggest a trend day. To fit the trend picture, we needed to see smaller than normal Initial Balance. Instead we have a test opening and an Initial Balance of 80% of  the Normal Day’s range. This suggests a rotational day. In these condtions, the best fit Day Type is a Normal Day featuring a late in the day range extension to complete the Normal Range (about 20 to 25 points).

With the high being 1355, the low of the day can be expected around 1335 to 1330. Figure 2 also shows the possible entry zone at the point of inflection at 1351 to 1352,

 02-29-2008-es-day-type.jpg

FIGURE 2 Day Type

Figure 3 shows the Composite Profile since the low on Jan 23 2008. The last line of support is 1325 to 1330; so for today, we have some confluence of support 1325 to 1335. If I were day trading, and short from 1351, I’d seek to exit at 1331.75.

 02-29-2008-es-composite.jpg

FIGURE 3 Composite Profile from 1270 Low

Remember I’ll use the inflexion point (see Figure 1) at 1351 to 1352 for entry. Now for the stop: Figure 4 helps me identify its location.

 02-29-2008-es-composite-2.jpg

FIGURE 4 Composite Profile from Feb 28

There are two possible resistance areas:

  1. The 50% gap of the open: 1360 and
  2. The 50% of the IPM that started at the ‘L’ Period Feb 28. This comes in at 1358.

I’d place my stops for tonight at 1362.75 for the sales at 1351 to 1352. With an profit exit at around 1332, entry at 1351 and my stop at 1362.75, I have an acceptable reward:risk of around 2:1.

Hope you found the series interesting!

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