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ES Daily Plan | August 17, 2023
The highlighted HVN from the weekly plan was tagged as a result of today's downside continuation. Additionally, the break of July's low (4419.50) marked the end of the monthly one-time framing up.
The overnight (ON) session was largely uneventful, as most trading took place below yesterday's value area. There was a brief instance during the European session when buyers tested the highlighted resistance area ranging from 4471 to 4461, yet this effort was met with selling activity that led to rejection (ONH: 4467.25).
The RTH session opened around yesterday’s low, and the market immediately pushed higher for another test of the 4471/4461 area. During the initial four periods, the buyers made several unsuccessful attempts to breach that area, resulting in a rather ugly high on the profile. The crowded buyers who lacked sufficient size to push through the passive limit orders, quickly got in trouble when aggressive sellers entered the market during the E-period. The first downside target of 4438 was reached during H-period, and thereafter, sellers started to have trouble gaining traction below that level during the PM session, which displayed significant volatility in both direction. Ultimately, the more the buyers attempted to drive higher during bounces, the more aggressive the sellers' response became.
Today’s session was similar to that of yesterday, with the L and M-period breaking away from the value area and printing new lows. Consequently, the final downside target of 4419 was achieved (LOD: 4418.50). More importantly, the break of July's low (4419.50) marked the end of the monthly one-time framing up, which is another big achievement by the sellers. Much like yesterday’s plan, I will use today’s breakdown point at 4433 to assess the short-term strength/weakness. The more aggressive level to observe is the July low at 4419.50. The buyers aim to re-establish acceptance within today’s value area for a potential traverse towards today’s most traded price by volume (VPOC), located at the profile's upper end. Obviously, the sellers aim to negate that to target a downside continuation towards the Weekly Extreme Low of 4390.
It's important to highlight that the short-term value (5D VPOC) remains at 4486, and the market is currently trading within the weekly support area after reaching the highlighted HVN from the Weekly Plan. Given this context, should an immediate downward continuation occur tomorrow, it would be wise to approach the idea of entering a late short position with caution. This cautious approach should be maintained regardless, especially as you approach the Weekly Extreme Low.
For tomorrow, the Smashlevel (Pivot) is 4433, representing today’s closing breakdown point. Break and hold above 4433, indicating a failed breakdown, would target today’s halfback at 4443, as well as the final upside target of 4461. Take note of today's VPOC in close proximity. The most bullish response would be a daily close above the resistance area from 4471 to 4461. Holding below 4433, indicating continued weakness, would target the low of July at 4419.50, as well as the support area from 4400 to the final downside target of 4390, representing the Weekly Extreme Low.
Going into tomorrow's session, I will observe 4433.
Break and hold above 4433 would target 4443 / 4461
Holding below 4433 would target 4419 / 4400 / 4390
Additionally, pay attention to the following VIX levels: 17.58 and 15.98. These levels can provide confirmation of strength or weakness.
Break and hold above 4461 with VIX below 15.98 would confirm strength.
Break and hold below 4419 with VIX above 17.58 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.