ES Daily Plan | August 21, 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
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Contextual Analysis
The overnight session has consistently explored prices above the previous day's high throughout this daily phase of imbalance, and today's session was no exception. The price exploration above Monday’s high came within 2 handles of the initial upside target at 5643 (ONH: 5641.25) before reversing back within Monday’s range. Recently, I’ve started marking certain levels as “intraday bullish/bearish”. Holding within these levels suggests the potential for two-sided trading activity, while a break outside this range could indicate the start of a more directional session. As I’ve often emphasized, levels serve as crucial reference points for assessing market strength and weakness. The market's behavior at these key areas provides valuable insights into its overall condition.
The most notable aspect of the overnight session was the excessive negative delta just before the RTH open, which I'll illustrate on Substack. Given the prevailing uptrend, the opening bounce at the start of the RTH session was not surprising. This initial squeeze tagged the 5643 level, where a poor high was formed, leading to a subsequent pullback from that area. Sellers made their first attempt at breaking the initial balance low since last Wednesday but were unable to sustain the C-period single prints. This led to two-sided activity, with buyers active within Monday’s value area and sellers active within the spike area.
The session formed a poor high and closed within the previous day’s range, which may indicate that buyers are showing signs of exhaustion. However, despite a negative delta of 40k today, the market was unable to test Monday’s VPOC at 5602. The daily one-time framing up remains intact, and the short-term value (5D VPOC) shifted higher from 5565 to 5620. Even if the market drops 100 handles (5530), it would still be within the upper distribution from the previous week, highlighting the short-term control in favor of the buyers.
The daily one-time framing up remains intact; however, the formation of a poor high and the close within the previous day’s range may signal buyer exhaustion. Maintaining within Monday’s range favors a cleanup of Monday’s poor structure, effectively bringing the daily back to balance, while a continued directional market would negate this by regaining 5631.
In terms of levels, the Smashlevel is at 5631, marking Monday’s high. Holding below this level would target Monday’s VPOC at 5602, with a final target at 5586 under sustained selling pressure. Failure to hold below 5631 signals strength, targeting the poor high at 5644, with a final target at the resistance area from 5666 to 5676 under sustained buying pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5631.
Break and hold above 5631 would target 5644 / 5666 / 5676
Holding below 5631 would target 5602 / 5586
Additionally, pay attention to the following VIX levels: 16.72 and 15.04. These levels can provide confirmation of strength or weakness.
Break and hold above 5676 with VIX below 15.04 would confirm strength.
Break and hold below 5586 with VIX above 16.72 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.
I was just about to ask that if the significant negative deltas indicating a change of tone until I read "Even if the market drops 100 handles" D:
The opening squeeze was a beauty! Thanks!