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ES Daily Plan | April 12, 2023
CPI and FOMC minutes tomorrow. The medium and short-term value (20 and 5-day VPOC) are located at 4130, which is of interest as directional moves are often initiated from high volume nodes (HVN).
Trading during the Asian hours of the overnight (ON) session was confined to a very tight range, primarily above the previous day's high and spike area. The upside was capped by the first upside target of 4143. The volatility slightly increased during the European session as buyers broke out from the multi-hour consolidation. However, this buying effort was absorbed by passive sellers and resulted in a reversal, leading to a test of the Smashlevel of 4133 almost to the tick (ONL: 4132.75).
The RTH session opened with a small true gap to the upside, which was filled immediately. The initial balance (first hour of RTH) was trading between the levels of 4143 and 4133. During the C-period, sellers attempted a range extension to the downside, testing the interest below yesterday’s spike area. Participants were made aware that there was no interest in trading below the spike base of 4133 as the market stayed below it for roughly five minutes before price was swiftly rejected. After the rejection, the market spent most of the remaining session grinding higher at a very slow pace. The last hour of the RTH session saw a particularly interesting sequence, with significant buying activity occurring above the ON high of 4149. The buyers were not able to follow-through, resulting in a liquidation break into the closing session, ultimately falling back to the Smashlevel of 4133.
Today’s rotational session closed flat, and this price action is not surprising since the market is in short-term balance, awaiting more market-generated information. We have several catalysts lined up for this week, including CPI and FOMC minutes tomorrow, followed by PPI on Thursday. As mentioned in previous plan, the medium and short-term value (20 and 5-day VPOC) are located at 4130, which is of interest as directional moves are often initiated from high volume nodes (HVN). In the Weekly Plan, I highlighted the range extension targets for a break of this multi-day balance area, with an upside target of 4230 and a downside target of 4030. These two levels should be closely monitored for the remainder of the week as they are in close connection to the weekly extremes.
Going into tomorrow's session, I will observe 4133.
Holding above 4133 would target 4145 / 4158 / 4175
Break and hold below 4133 would target 4117 / 4100 / 4083
Additionally, pay attention to the following VIX levels: 20.04 and 18.14. These levels can provide confirmation of strength or weakness.
Break and hold above 4175 with VIX below 18.14 would confirm strength.
Break and hold below 4083 with VIX above 20.04 would confirm weakness.
Overall, it's important to exercise caution when trading outside of the highlighted yellow levels. A non-cooperative VIX may suggest possible reversals i.e trade setups.
Be sure to check out the Weekly Plan, which provides a broader perspective and highlights significant levels of interest to watch in the coming week.
Disclaimer: Futures and options trading involves a high level of risk, with the potential for substantial losses. The information provided in this newsletter is for informational purposes only and is not intended to be a trade recommendation. It is the responsibility of the reader to make their own investment decisions and they should seek the advice of a qualified securities professional before making any investments. The owners/authors of this newsletter are not certified as registered financial professionals or investment advisers.