Good video, but I do think many do not get why sudden price movements take place like the BOUNCE off the 805's (ES) from Feb the 12th. There is a very major zone of resting inventory in the ES (and S&P Pit contract) at the 800.75 to 797's level. The market had just broke through (on the third attempt) a moderate zone of resting inventory at the 819's to 816's to probe lower. The probe lower to the 805's pretty much cleared out a fair amount of "light" resting inventory in the void between 816's and 800.75 (area between two close support zones).
The bounce off the 805's actually makes perfect sense with price rotations near a major support zone "decision" area. Sellers have made a killing since selling the 870's AGAIN for another very profitable bear rally fade. The sellers have just accomplished a major victory, by driving price all the way back to major support while clearing out their held positions with a very nice profit, JUST ABOVE the next major support test. So what is the next move sellers should do (who want to remain in control of this move)? Well, they need to add back new SELL inventory at HIGHER PRICING levels for the run down to retest 800.75 to 797's zone! To score big for any new leg to lower lows for the year, the sellers need to RELOAD their position levels PRIOR to the punch through attempt (and at higher pricing levels). The sellers then step away from selling NEAR a major support area as they cash out their highly profitable positions entered at much higher pricing levels.
Now the selllers (who are in TOTAL CONTROL) wait for price to rally and achieve the next area of "resting" inventory which was 834's to 836's zone (where the delta showed a small zone of NET SHORT HOLDERS resting inventory). The "stops" for this small zone of held resting short inventory was up to about 838.50, so this exact level and above is where the sellers then start to RESELL again to build up new HELD SHORT INVENTORY for the next run back to the major area of support (key aspects of Auction Market Theory!). Basically, 838's on up was sold as the new area to retake control of price for the SELLERS next move back to retest a known support zone (where there is A LOT of resting NET LONG HOLDERS inventory from the last time price was at the 800.75 to 797's zone). Sellers, by the end of day Friday, have set their SHORT HELD INVENTORY up perfectly for the trade week ahead to restest a major support zone. With held short inventory from the 838's on up, the sellers had their held NEW short positions about 20 points "IN THE MONEY" by Fridays close. The sellers are now set up with decent inventory levels to take advantage of a major support zone test and then potential RUN TO NEW YEARLY LOWS.....
Markets LOVE to trade to SIZE (pockets/zones of resting inventory), so the next significant area of SIZE is at 800.75 to 797's. I think next week we have over an 80% probability of driving price to that zone for the test, so get the popcorn ready.
