ES Daily Plan | August 16, 2024
My preparations and expectations for the upcoming session.
For new followers: The yellow levels highlighted at the bottom left of the chart 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 daily upside imbalance remains in full effect. Coming into this week, the main focus was on the weekly double distribution profile established two weeks ago, as outlined in the Weekly Plan. “The strongest response from the market would involve a return to and acceptance within the upper distribution, filling the 5444.75 gap in the process.” Tuesday’s session filled this gap and the market closed within the upper distribution, signaling strength.
The overnight session remained relatively calm until the data releases triggered a continuation higher, tagging both the final daily and weekly target at 5530, which marks the high volume node on the composite profile. A distribution was built around 5530 pre-open. The RTH session opened with a significant true gap up, and similar to Tuesday’s gap higher, the market showed limited interest in corrective activity and also formed a poor low. As always, this is indicative of strength and serves as a cautionary signal against fading. The challenging part of the session was the fact that all weekly targets were achieved. As regular readers know, these days are not my favorite, as it is tricky to chase further upside, while there are zero arguments for fading and going against the trend. This typically leads me to adopt a more defensive approach. After the poor low was formed, the VIX breached its support level of 15.14, which opened the door to potentially look for aggressive longs on an initial balance breakout. However, the VIX later regained its support, making the rest of the session less interesting for me. We saw a few liquidation breaks, but buyers demonstrated remarkable resilience in holding the market up. I will wrap up the week and leave the price discovery process to other traders, as I typically do when there is a significant break of a weekly extreme level.
The weakness observed in the first three sessions of August, which saw a 450-handle range, has been largely retraced as the market continues its upside price exploration following today’s significant gap higher. A very strong market will maintain directional conviction by holding above the afternoon pullback low of 5552. Failure to do so would make 5530 a downside magnet.
In terms of levels, the Smashlevel is at 5552, marking the afternoon pullback low. Holding above this level signals strength, targeting the last set of single prints from August 1st at 5576, with a final target at the resistance area between 5601 and 5611 under sustained buying pressure. Failure to hold above 5552 would open the door for a test of the support area between 5530 and 5520, where the high volume node is located.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5552.
Holding above 5552 would target 5576 / 5601 / 5611
Break and hold below 5552 would target 5530 / 5520
Additionally, pay attention to the following VIX levels: 16.12 and 14.34. These levels can provide confirmation of strength or weakness.
Break and hold above 5611 with VIX below 14.34 would confirm strength.
Break and hold below 5520 with VIX above 16.12 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
Make sure to review the Weekly Plan, which provides a broader perspective and highlights key levels of interest to observe in the upcoming week.
Thanks for taking the time to publish a plan, even if you’re not trading. It’s always appreciated. Enjoy the weekend!
Awesome 👍 thanks again