Trade Plan For 5/13/2026
How the price respect market behaviors.
Sometime, we are just amaze at how the price of a financial instrument reacts or drawn to a particular price level. Look at today’s price action of the ES. It opened with a gap down below a level that has acted as resistance and support in the last two trading sessions. After the open, the price proceeded down toward the HVN at 7393.75 and found willing buyers. When the price was auctioned back up to the LVN at 7407.50, the willing buyers were exhausted and the sellers have to lower their price to attract buyers. The sellers have to lower their price down to the HVN at 7368.00 in order to find willing buyers to absorb their selling.
Now look at the volume profile near the LOD. It does not show a tapering of volume to indicate there was a seller cutoff. Instead, the volume is thick and flat. This might be indicating some anxious buyers or some nervous short covering. But no matter what caused the price to reverse from this level, look closely where the LOD landed. On the chart, I have placed an initial balance with various IB extension levels onto today’s price action. Notice the LOD at 7363.25 is one tick below the -2xIB extension at 7363.50. Coincident? If you have been using or monitoring the initial balance, which is the price range from the first 60 minutes of trading, you would have noticed there is a tendency for the price to tag the 1.25, 1.5 and 2.0 time of the IB range. For the price to tag the 2X IB then reverse is no coincident. Since this level also in confluent with a HVN, that makes it more probably some sort of price reaction would take place. In this instances, the anxious buying caused a short covering rally and took the price back up to fill the opening gap. Finally, look where the HOD landed, just slightly above +1.5x IB. These levels are not guesswork, they are market generated information (MGI).
Looking for confluent is just one application of the IB. When the price is at new high level, one can also use the IB extension levels to project potential upside trade targets.
Let’s go look at the market profile then we will look at the levels to monitor for tomorrow.