ES Daily Plan | April 18, 2024
With nearly all weekly downside targets achieved, it's not a bad idea to play defense considering the several significant references within the weekly support area.
Visual Representation
For new followers, the yellow levels highlighted at the bottom are the primary levels that I focus on intraday. My strategy for preventing impulsive decisions at unfavorable locations involves following a simple yet effective rule of exercising caution when initiating trades outside of the yellow levels. This implies that I am cautious chasing longs above the final yellow upside target and shorts below the final yellow downside target. It is crucial to understand that refraining from chasing a trade is not an automatic invitation to initiate a trade in the opposite direction.
Contextual Analysis
The overnight session witnessed a recurring trend: for the second consecutive time, price exploration dipped below the previous day's low in Asian trading hours, only to reverse course in the European session. However, both instances failed to see an upside continuation in the subsequent RTH session due to diminishing buying interest after shorts covered. As discussed, a weak market will hold below the 5115-5125 area.
The RTH session opened right within this resistance, encountering selling pressure shortly thereafter, suggesting that nothing has changed in who is controlling this market in the short-term. The price action definitely reflected this during the AM session, as the market was one-time framing down intraday. The main downside target was of course the weekly support area, highlighted as a crucial area for buyers to maintain, given its alignment with several significant references outlined in the Weekly Plan. I also noted that it’s not an optimal area for initiating new shorts. The G-period came within 7 handles from the Weekly Extreme Low of 5040, effectively marking the end of the monthly one-time framing up (5063), and reached the 5% correction level of 5056 before a reversal worth 50 handles unfolded. However, this counter-trend bounce ended up getting sold, with the market closing at the lows. Sellers successfully shifted the short-term value (5D VPOC) lower from 5205 to 5103, suggesting that value is following the price during the recent period of weakness.
The pattern of lower highs on the daily chart remains intact after yet another session characterized by sustained downside pressure from sellers. On April 8th, we discussed about the potential “shift in tone” if sellers managed to break the weekly balance area, indicating a shift to one-time framing down on the weekly chart—an objective realized two days later. Today, they accomplished the next significant task: ending the monthly one-time framing up.
With nearly all weekly downside targets achieved, it's not a bad idea to play defense considering the several significant references within the weekly support area. A weak market will hold below the 5085-5095 resistance area, and acceptance below 5056 unlocks a continuation of this phase of imbalance. Meanwhile, buyers' main objective remains unchanged: to end the daily one-time framing down by breaking the pattern of lower highs.
For tomorrow, the Smashlevel (Pivot) is 5056, representing the 5% correction level. Holding above 5056 would target the resistance area from 5085 to 5095. Acceptance above 5095 would target the Monthly Extreme Low of 5115. Break and hold below 5056, indicating continued weakness, would target the Weekly Extreme Low of 5040, as well as the 2/14 spike base at 5011.
Levels of Interest
Going into tomorrow's session, I will observe 5056.
Holding above 5056 would target 5085 / 5095 / 5115
Break and hold below 5056 would target 5040 / 5011
Additionally, pay attention to the following VIX levels: 19.22 and 17.22. These levels can provide confirmation of strength or weakness.
Break and hold above 5115 with VIX below 17.22 would confirm strength.
Break and hold below 5011 with VIX above 19.22 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.
Weekly Plan
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.
Thank you Smash! Great bounce off the weekly support area!
Thanks Smash. At what point do you consider long term control in terms of selling pressure. I understand short-term, but I've learned structural reference help my setups. Don't want to count on a freefall without reference. Thanks.