Here is the interesting market profile tutorial on how stealth auctions happen in the market and how intraday traders get trapped by completely trading against the trend for the day. In this example, we look into how stealth short covering happens.
[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”3″ ihc_mb_template=”1″]Look into the ES-Mini December Futures. On 15th December ES-Mini Breaks the previous day low at “C” Period (1st low) but then immediately back into previous days range which is a low confidence buying as at that point price spent more than 3 TPOs above prev day low and the letter “D” period low went on breaking Initial Balance high. Followed by sellers again attempting at “H” period low and “L” period low.
As the day continued, the shorts were constantly hoping for another break; but as they became more nervous, they began buying every break. As we got nearer and nearer to the close, the shorts anxiety levels continued to increase, until they began aggressive buying into the close.
However, throughout the day all the selling activity are absorbed by the buyers who went on trapping those day timeframe traders. However, it is a poor way of buying from short-term perspective as it leaves lots of anomalies more than 5-6 anomalies i.e poor structure.
update as on 20th Nov 2018
All the weaker anomalies created on 15th Nov 2018 got cleared.
