ES Daily Plan | April 3, 2024
Moving forward, what matters most is whether buyers can re-establish acceptance within the previous week’s range after successfully holding the retest of the FOMC breakout today.
Visual Representation
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.
Contextual Analysis
During the overnight session, trading activity remained confined within Monday’s main distribution. The Smashlevel, our pivot, was located at 5294, which buyers attempted to reclaim during the European session. This attempt was quickly rejected, with an overnight high of 5296, resulting in a downside continuation that sellers aimed for, following yesterday’s look above the inside week and fail. The final downside target of 5263 was not only met but also exceeded before the RTH open, with VIX confirming weakness after breaching its resistance level of 14.18. As mentioned, 5263 was a favorable level for profit-taking, and not an ideal location to initiate new shorts. The confirmation of weakness by VIX made it possible to hold runners, with the potential for further weakness, while simultaneously removing my interest in looking for reversals. The market saw an additional drop of 14 handles before the RTH open, testing the FOMC breakout point.
The RTH session opened with a significant true gap down, which is always challenging to trade because the market has already covered significant ground. I had no interest in longs until 5263 was reclaimed, while I also knew that initiating new shorts was tricky given the location of the FOMC breakout point, and the high volume area where the medium-term value (20D VPOC) is situated. Contextually, this made navigating the RTH session complex. Sellers controlled the auction during the AM session by holding below the opening level and the overnight low, both of which are significant references when the market gaps lower. Today’s LOD was at 5235, formed in the B-period, which is 28 handles below the final downside target, speaking of further weakness. However, throughout the PM session, no 30-minute bar closed below 5247, with buyers managing to close out the session at the highs, forming a spike in the M-period.
Moving forward, what matters most is whether buyers can re-establish acceptance within the previous week’s range after successfully holding the retest of the FOMC breakout today. This has potential for a short-covering rally, with the main targets being the unfilled gap and the high volume node (HVN) at 5290. Conversely, sellers aim to reject the closing move and establish acceptance back within the prior 6-day balance, effectively negating the FOMC breakout. The weekly has returned to balance, and the daily is now one-time framing down.
For tomorrow, the Smashlevel (Pivot) is 5257, representing the M-period spike base. Holding above 5257, accepting the closing move, would target the unfilled daily gap at 5282.25. Note the weekly VWAP situated at 5270. Acceptance above 5282.25, would target the final upside target of 5294. Break and hold below 5257, rejecting the closing move, would target the FOMC breakout point at 5247. Acceptance below 5247, signaling weakness, would target the support area from 5225 to 5215.
Levels of Interest
Going into tomorrow's session, I will observe 5257.
Holding above 5257 would target 5270 / 5282 / 5294
Break and hold below 5257 would target 5247 / 5225 / 5215
Additionally, pay attention to the following VIX levels: 15.20 and 14.02. These levels can provide confirmation of strength or weakness.
Break and hold above 5294 with VIX below 14.02 would confirm strength.
Break and hold below 5215 with VIX above 15.20 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.
5294 was massive! Thank you for the great work!
Nice work smash. Quality as always