ES Daily Plan | April 24, 2024
Today’s session formed a P-shaped double distribution profile, following an early short-covering rally. In terms of immediate focus, I’m keeping an eye on the afternoon pullback low of 5098.
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 saw an immediate pullback, stopping just one tick short of filling yesterday’s H-period single prints, before a bounce unfolded. The rest of the overnight session remained within yesterday’s upper distribution. Of particular interest to us was the 5056-5063 area, where two-sided activity prevailed during European hours.
The RTH session opened above 5063, driven by pre-market strength. Subsequently, the immediate pullback found support at 5063.75, opening the door for a potential test of the upper end of the 3-day balance area from 5085 to 5095. Notably, this target was quickly achieved during the initial balance (first hour of RTH) following a squeeze. This was a good area for profit-taking, as it was quickly achieved with the VIX not confirming strength. Despite VIX not confirming strength, the market was able to break and hold above 5095 for the rest of the session; however, the upside momentum noticeably stalled, causing late buyers above 5095 to get stopped out on multiple occasions. I didn’t participate in the price action above 5095, as I wanted to see a failure of 5095 with price returning within its initial balance range for a potential fade, playing against late longs. Unfortunately, that thesis failed to materialize as the B-period single prints held throughout the session. The VIX eventually breached its support level of 16.02 in the PM session, yet the two-sided price action above 5095 persisted.
Today’s session formed a P-shaped double distribution profile, following an early short-covering rally. The upper extreme is poor. Buyers will argue that the low is in, and if so, they are likely to face minimal trouble pushing for an upside continuation by reclaiming the immediate resistance area from 5115 to 5125, targeting fills of the poor structure from 4/15 toward the 5145-5155 area. Conversely, sellers will argue that the recent upward move was driven solely by short-covering, providing stronger sellers an opportunity to reload at higher prices for a potential downside continuation. In terms of immediate focus, I’m keeping an eye on the afternoon pullback low of 5098. Additionally, take note of the Low Volume Area from 5125 to 5155, which is a crucial inflection point in the short-term.
For tomorrow, the Smashlevel (Pivot) is 5098, representing today’s afternoon pullback low. Holding above 5098, favoring an upside continuation, would target the resistance area from 5115 to 5125. Acceptance above 5125 would then target the resistance area from 5145 to 5155—a potential reload area for sellers. Break and hold below 5098 would target today’s halfback at 5088. Acceptance below 5088, would put today’s price action into question, targeting the 5063-5056 area—which is crucial for buyers to maintain.
Levels of Interest
Going into tomorrow's session, I will observe 5098.
Holding above 5098 would target 5115 / 5125 / 5145 / 5155
Break and hold below 5098 would target 5088 / 5063 / 5056
Additionally, pay attention to the following VIX levels: 16.42 and 14.96. These levels can provide confirmation of strength or weakness.
Break and hold above 5155 with VIX below 14.96 would confirm strength.
Break and hold below 5056 with VIX above 16.42 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.
Thanks Smash. Buyers taking advantage of no Fed week.