ES Daily Plan | April 25, 2023

The market remains in balance, awaiting more market-generated information. When the market lacks a clear directional conviction, it’s crucial to not overstay your welcome in any trade.

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Contextual Analysis

The overnight (ON) session was in a clear downtrend during the Asian hours, as sellers explored prices below Friday's low of 4135.50, which was also previous week’s low. In the previous plan, I mentioned that observing a lack of continuation after breaching either of Friday’s extremes is also valuable market-generated information. Despite expectations that breaching Friday's low would lead to further weakness, it did not. Instead, the market experienced a reversal during the European session, resulting in a full traverse of Friday’s range before the opening of the regular trading hours (RTH). Keep in mind that I only track one-time framing in RTH, which means that the weekly OTFU is still intact. The VIX opened above its resistance level of 17.72, but fell back below it when buyers regained 4146 during the overnight session.

The RTH session opened a few ticks above 4153, which is the most traded price by volume in the recent 20 days. The buyers were able to quickly take out both the ON high and Friday’s high in A-period. Similar to the overnight session, the market experienced a reversal as there was no follow-through after breaching Friday's extreme. Despite a significant buying effort above the Smashlevel of 4161, passive sellers were able to absorb it, ultimately leading to a liquidation break. A poor high was formed during that sequence, signaling crowded buyers. Over several periods, the market experienced a slow downward grind, and the VIX started to climb back towards the resistance level of 17.72. Today’s low of 4139 was established in F-period, and the VIX reached a high of 17.65 during RTH. In other words, the sellers were unable to repeat the break of previous week’s low during the regular trading hours. The remainder of the session was devoted to cleaning up the poor structure from the AM session, leading to another day with minimal progress made.

Lack of continuation after breaching both of Friday’s extremes.

The buyers were able to end the daily one time framing down after breaching Friday’s high, which means that the daily has returned to a 3-day balance. I have merged the last three sessions. The market remains in balance, awaiting more market-generated information. When the market lacks a clear directional conviction, it’s crucial to not overstay your welcome in any trade. Lately, traders are constantly being reminded of this by the market. All levels remain the same.

The 5-day and 20-day VPOC, representing the short and medium-term value, are both located at 4153, making it an area of interest as directional moves are often initiated from high volume nodes (HVN). While the market may be gearing up for a directional move, it is unwise to attempt to forecast it. It's best to take things day by day and remain flexible enough to adapt to any change in the market's dynamics.” It’s worth noting that the 90-day VPOC, representing the long-term value, has shifted from 3990 to 4150.

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Going into tomorrow's session, I will observe 4161.

• Break and hold above 4161 would target 4180 / 4194

• Holding below 4161 would target 4146 / 4130 / 4114

Additionally, pay attention to the following VIX levels: 17.86 and 15.90. These levels can provide confirmation of strength or weakness.

• Break and hold above 4194 with VIX below 15.90 would confirm strength.

• Break and hold below 4114 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.

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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.

ES Weekly Plan | April 24-28, 2023

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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.