ES Daily Plan | August 10, 2023
The sellers maintain short-term control as the daily one-time framing down remains intact.
The CPI data is scheduled for release tomorrow, and as usual, it is expected to bring volatility - stay nimble.
Contextual Analysis
There are days when a significant portion of market activity is addressed during the overnight (ON) session, leading to the attainment of targets before the RTH session. Conversely, on other days, the most favorable market opportunities emerge during RTH. Today, opportunities emerged during both sessions. The buyers managed to uphold the momentum carried over from yesterday's closing session, leading to a test of the first upside target of 4536. Their efforts peaked at this level, with an ON high of 4536.25. The market returned within the prior day’s range before the opening of RTH.
The RTH session opened 10 ticks below yesterday’s high, and despite the relatively strong ON session, the buyers failed to end the daily one-time framing down, and breached the ON low fairly quickly, signaling weakness. We talked about how the market has retraced the closing strength or weakness on the following day over the recent days. The initial balance held above the Smashlevel of 4508, forming a poor low at 4509.25. This poor low was taken out by the C-period, forming single prints. As a result, heavy aggressive selling emerged in the C and notably the D-period. Today's most interesting phase within the session was the E-period, with the sellers driving the market to a lower low on a delta divergence. The last downside target, as outlined in the previous plan, was 4478.50, representing the unfilled gap. Additionally, the resistance level for VIX was at 16.86. The low of the E-period was exceptionally accurate, tagging 4478.25 (LOD), while the VIX reached a high of 16.87 (HOD). Furthermore, it was noticeable that larger market sell orders were being initiated in that area. If you are a seller, do you really want to short 4478, with the VIX not confirming weakness, especially with CPI data due tomorrow? Personally, I didn't find this attractive, which is why I found reversals to be of interest. Much like the levels, my executions were flawless, and I'll provide a separate recap on Substack to highlight the thought process, especially focusing on the target areas.
Contextually, as the daily one-time framing down stays intact, the sellers remain in short-term control. A break and hold above the resistance area from 4536 to 4525 could change that. The CPI data is scheduled for release tomorrow, and as usual, it is expected to bring volatility to the market. Therefore, the potential for moves outside of the intraday targets increases. Stay nimble, especially if you had a good day today.
For tomorrow, the Smashlevel (Pivot) is 4495, representing today’s LVN. Break and hold above 4495 would target 4508, coinciding with the Weekly VWAP, as well as the last upside target of 4525, representing the 5D VPOC. Holding below 4495 would target 4480. Break and hold below 4480 would target the spike base of 7/11 at 4465, as well as the last downside target of 4451, representing the afternoon pullback low from 7/11.
Going into tomorrow's session, I will observe 4495.
Break and hold above 4495 would target 4508 / 4525
Holding below 4495 would target 4480 / 4465 / 4451
Additionally, pay attention to the following VIX levels: 16.84 and 15.08. These levels can provide confirmation of strength or weakness.
Break and hold above 4525 with VIX below 15.08 would confirm strength.
Break and hold below 4451 with VIX above 16.84 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.
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.
Intelligent analysis. Thank you once again!
Fantastic post, very insightful! I managed to nail the first reversal!