ES Daily Plan | April 22, 2024
On Friday, the market continued its downward price discovery (imbalance), characterized by lower highs and lower lows. In terms of immediate focus, I’m keeping an eye on the 5008 level.
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
On Friday, the market continued its downward price discovery (imbalance), characterized by lower highs and lower lows, effectively filling the daily gap at 4998.25 in the process. The primary objective for buyers is to end this pattern and bring the daily back to balance. Failure to do so maintains the prevailing downside pressure.
As mentioned in the Weekly Plan, maintain a cautious approach towards chasing early weakness that fails to hold below Friday’s low, considering that Friday’s settlement is situated 100 handles below the previous week’s most traded price by volume (VPOC) at 5103. In terms of immediate focus, I’m keeping an eye on the 5008 level.
For tomorrow, the Smashlevel (Pivot) is 5008, representing Friday’s M-period high. Break and hold above 5008 would target Friday’s afternoon rally high at 5035, where notable order flow activity was observed. Acceptance above 5035 would target the 5% correction level of 5056. Holding below 5008, signaling continued weakness, would target the weekly and monthly NVPOC’s at 4977 and 4967, respectively. Acceptance below 4967 would target the final downside target of 4945.
Levels of Interest
Going into tomorrow's session, I will observe 5008.
Break and hold above 5008 would target 5035 / 5056
Holding below 5008 would target 4977 / 4967 / 4945
Additionally, pay attention to the following VIX levels: 19.72 and 17.68. These levels can provide confirmation of strength or weakness.
Break and hold above 5056 with VIX below 17.68 would confirm strength.
Break and hold below 4945 with VIX above 19.72 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.
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