ES Daily Plan | April 18, 2023

Today’s session resulted in an inside day and an upward spike after M-period achieved a new daily high.

The base of the spike, located at the familiar level of 4173, is my short-term level of interest.

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Contextual Analysis

Trading during the overnight (ON) session today was primarily between 4173 and 4163, mirroring the uneventful nature of the previous session. As highlighted in previous plan, the 4173-4163 area is the resistance area that buyers must break and establish acceptance above to enable a potential directional move.

The RTH session opened below the Smashlevel of 4163, and during the initial balance (first hour of RTH), trading occurred within a tight range within the resistance area. Low conviction, which means it’s crucial to stay nimble. The offers were lining up in the 4170s, creating downward pressure, leading to a range extenstion to the downside in the C-period. Sellers were able to defend 4163 in D-period, where we could observe how offers started lining up around 4165, leading to another drop. I shared a visual of the heatmap from today’s session on Twitter, which is worth checking out.

Liquidity heatmap from today’s session.

As the market was approaching the next downside reference of 4146, the sellers got too crowded, forming a poor low in E/F-period. During this sequence, there was a notable passive buyer sitting at 4150, which the market sellers were unable to push through. This caused a reversal, but it was a very shallow one. Downward pressure resumed as offers began to accumulate once again. The most noteworthy sequence of the session occurred during J-period when the market experienced another drop. This drop cleaned up the poor low, grabbed the liquidity below, and then reversed sharply, constituting a classic headfake. It is worth noting how the heavy offers were pulled after that sequence, which allowed the market to rally into the closing session.

Today’s session resulted in an inside day and the market closed the session with an upward spike after M-period made a new daily high. The base of the spike is the familiar level of 4173, which is the top of the resistance level and will be of interest in the short-term. I will primarily focus on whether the higher prices resulting from the spike will be accepted or rejected. If the higher prices resulting from the spike are accepted, the buyers will aim for Friday's poor high and a potential continuation to the upside. On the other hand, if they are rejected, the primary target will be today's low, which would bring an end to the daily one time framing up. In the event of further weakness, the medium-term value of 4130 will serve as a downside magnet.

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Going into tomorrow's session, I will observe 4173.

• Holding above 4173 would target 4187 / 4208 / 4220

• Break and hold below 4173 would target 4163 / 4146 / 4130

Additionally, pay attention to the following VIX levels: 17.78 and 16.12. These levels can provide confirmation of strength or weakness.

• Break and hold above 4220 with VIX below 16.12 would confirm strength.

• Break and hold below 4130 with VIX above 17.78 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.

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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.

ES Weekly Plan | April 17-21, 2023

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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.