ES Daily Plan | April 23, 2024
The closing session saw a pullback, which now holds our interest for observation. I will use the 5056/5063 area to gauge the market's strength or weakness.
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
The overnight session kicked off with a gap above Friday’s after-hours activity, opening above our immediate level of interest, the Smashlevel of 5008. Pullbacks towards 5008 saw buying activity during the Asian hours, eventually leading to a test of the initial upside target of 5035 during the European session (ONL: 5009.25). The 5035 level saw significant order flow activity during Friday’s session, as noted, and its importance persisted into today's trading as well.
The RTH session opened right below 5035, and throughout the initial balance (first 60 minutes of RTH), sellers effectively maintained their defense of the 5035 level. The C-period saw a range extension to the downside, with the D-period marking a lower low testing the Smashlevel of 5008, and subsequently filling the overnight gap. The test of 5008 resulted in a vicious reversal as passive buyers absorbed the heavy aggressive selling pressure, followed by aggressive buyers entering the market, resulting in a significant reversal candle in terms of order flow. I will provide a visual representation of my footprint chart from this sequence on Substack for reference.
This sharp reversal with pace quickly re-tested the 5035 level, with VIX breaking its support level of 17.68, where sellers were once again found. The interesting part of this pullback from 5035 in the F-period was VIX remaining below its support—a nuance prompting me to watch closely for signs of buyer presence and not fight a potential break above 5035 as the final upside target of 5056 can act as a magnet. Ultimately, the 5056 level was not only reached but exceeded by 20 handles in this massive run from 5008 to 5078. The closing session saw weakness, but the double distribution remained intact. The short-term value (5D) VPOC shifted lower from 5103 to 5050.
The 5008 level saw buying activity, resulting in a 70-handle squeeze and forming a double distribution profile, effectively ending the daily one-time framing down in the process. The closing session saw a pullback, which now holds our interest for observation. I will use the 5056/5063 area to gauge the market's strength or weakness. Upon acceptance above, the target is the upper end of the 3-day balance area, while holding below opens the door for a test of the 5036 level, where change took place today. Additionally, acceptance within today’s lower distribution <5036, unlocks the potential for a test of the lower end of the 3-day balance area.
For tomorrow, the Smashlevel (Pivot) is 5056/5063, representing the 5% correction level and the previous month’s low, respectively. Break and hold above 5056/5063 would target the upper end of the 3-day balance area from 5085 to 5095. Holding below 5056 would target the upper end of today’s lower distribution at 5036, where change took place. Acceptance below 5036, negating today’s trend day, would target the lower end of the 3-day balance area from 5008 to 4998.
Levels of Interest
Going into tomorrow's session, I will observe 5056/5063.
Break and hold above 5056/5063 would target 5085 / 5095
Holding below 5056/5063 would target 5036 / 5008 / 4998
Additionally, pay attention to the following VIX levels: 17.86 and 16.02. These levels can provide confirmation of strength or weakness.
Break and hold above 5095 with VIX below 16.02 would confirm strength.
Break and hold below 4998 with VIX above 17.86 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.
5008 was a home run! Thank you as always!
Thank you Smash ! 💪🎯