It’s been a slow week or two in the markets with volume on the light side and afternoon activity much flatter than normal. That doesn’t mean any one day can’t give you a surprise, and fortunately, Mark Likos spotted a classic ES setup today and called it for our subscribers.
The market gapped down in the morning and was mostly flat over lunch. It rallied up after lunch to fill the gap, hitting the Pivot (dark blue line); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES which was just above and inside of our Value Area Low:
What does this set up for us? When a market fills a gap, it is the resolution of a necessary technical move (80% of gaps fill the same day). When they stall out at the Pivot, they are identifying that level (the “Balance of Play” from the prior session) as important. Those two items basically set a very specific wall and complete the energy move of the gap fill. This means that the market is now free to head either direction, but in this case, a move to new highs gives you a break above the Pivot now that the gap is filled, and it gives an entry into the open part of the Value Area. So, Mark called the long above that level, and the move worked perfectly to the other light blue line, which marks the high of the Value Area:
These are the types of high-probability setups that we like to keep our subscribers focused on, even though they haven’t been happening as much in August. Don’t forget, wait for the market to do what you need, because it isn’t going to move how you want. Clean setup, one of the best of the week, and thus, a clean winner.
