ES Daily Plan | April 19, 2024
The market continues its phase of imbalance to the downside after another lower high and lower low—keeping sellers in short-term control.
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.
Visual Representation
Contextual Analysis
Yesterday after-hours, the market tested and held the 5% correction level at 5056, to the very tick. Subsequently, the overnight session saw an upside continuation during the Asian trading hours. The upside momentum stalled 3 ticks below the highlighted resistance area from 5085 to 5095, and the inability to regain this area was indicative of a weak market, as discussed.
With the overnight trading activity confined within Wednesday’s value area, and the RTH session opening right within it, we could expect the RTH open to be "choppy". Consequently, we are not in a rush to initiate any trades; instead, we'll allow the market to make its move first. We had the 5085-5095 area and the Smashlevel of 5056 as short-term references. The A-period saw an immediate sell-off, testing the 5056 level, which provided a solid long setup as the aggressive sellers below 5056 were absorbed, with price immediately reclaiming 5056. I will provide a visual representation of this sequence on Substack.
This “look below and fail” triggered a short-covering rally with pace, breaking the overnight high of 5084.25, but ultimately stalling within the 5085-5095 area. Did you monitor VIX during this sequence? I will provide a visual of this as well on Substack.
VIX printed a low of 17.21, with 17.22 outlined as support in the previous plan, adding further confluence to avoid chasing resistance or signaling to exit potential longs. This sequence marked the high of today’s session as sellers took over the auction. The 5056 level was eventually breached; however, the Weekly Extreme Low of 5040 capped the downside, making the PM session quite difficult to navigate.
The market continues its phase of imbalance to the downside after another lower high and lower low—keeping sellers in short-term control. With all weekly downside targets achieved, the next target is the unfilled daily gap at 4998.25 should the downside pressure continue. Meanwhile, buyers' main objective remains unchanged: to end the daily one-time framing down by breaking today’s high of 5095.25—potentially triggering a short-covering rally. As for myself, I'll wrap up the week and leave the price discovery process to other traders. Have a great weekend!
For tomorrow, the Smashlevel (Pivot) is 5056, representing the 5% correction level. Break and hold above 5056 would target the resistance area from 5085 to 5095. Acceptance above 5095 has potential to trigger a short-covering rally. Holding below 5056, indicating continued weakness, would target the Weekly Extreme Low of 5040. Break and hold below 5040 would target unfilled gap at 4998.25.
Levels of Interest
Going into tomorrow's session, I will observe 5056.
Break and hold above 5056 would target 5085 / 5095
Holding below 5056 would target 5040 / 5011 / 4998
Additionally, pay attention to the following VIX levels: 18.96 and 17.04. These levels can provide confirmation of strength or weakness.
Break and hold above 5095 with VIX below 17.04 would confirm strength.
Break and hold below 4998 with VIX above 18.96 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 and have a great weekend, Smash!
Thank you, buddy! The levels are great as always, and ended up green after the downturn mid-morning.