1/ I think it's worth revisiting the past few days of price action to see if we can uncover what's going on.

2/ We started the week in a downtrend, but ended onetime framing yesterday by trading above the Tuesday's RTH high (3380). This meant that the downtrend was technically over on a daily timeframe.

Longs & shorts both had appropriate R/R at this point.

3/ After breaking 3380, yesterday became an "up-trend day" that left a "P" shaped profile. Normally, you'd like to see an up-trend day continue with 2-4 prints, not making a bulge at the top.

4/ A P shaped profile can be indicative of a "short-covering rally" - meaning shorts who were wrong, or late to the party, were trapped in a bad location and had to close their positions. That drove a lot of the buying on Wednesday - but new buyers could not sustain the momentum.

5/ The 'P' shape occurred because initiative buyers (new buyers) didn't step in to continue driving price higher, but there weren't enough sellers to bring the price down either. The rally DID leave behind singles/doubles below 3380, which are vulnerable once breached.

6/ So today, there were no initiative buyers that were interested in bringing the price above 3420. There were sellers who found advantageous price up there, and once they sold a little bit, longs were forced to cover and new sellers joined the party.

7/ Technically, a "short covering rally" can indicate weakness in the market -- despite a 3% or so gain on the day. This is because the shorts have to cover their positions by selling (buying) to somebody else, which actually eliminates new buyers on the way up.

8/ #ES_F is now 3359, after bouncing almost 20 points from the daily lows. It's likely that the liquidity break that just occurred was a bit too extreme, and that "fair value" is somewhere in between today's extremes.

9/ All this is characteristic of a market that is trying to find a place to bracket -- we're no longer in a clear up or down trend. It's looking for a place to consolidate, and it's probably close.

If it decides to go down, there is still 3300 and 3276 below (gaps to be filled).

10/ In this environment, structural trading using market profile and volume profile can work quite well. Also, in the absence of a clear trend, you want to trade #ES_F using a "reversion to the mean" strategy by fading the extremes (lower volume) to the POCs (higher volume).

11/ If you try to catch every apparent "breakout" -- you will probably get chopped up and stopped out. Make a plan and let the trades come to you. You will know when a trend day (2% or more) has arrived.