ES Daily Plan | August 22, 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 mostly traded within Tuesday’s value area, with sellers defending the 5631 level, marking Monday’s high. However, sellers continue to struggle to gain downside traction, a recurring theme recently. The RTH session offered some intraday swings but ultimately settled into a balanced profile with excess on both extremes, leaving little of note to analyze. Tuesday’s poor high was cleaned up in the process.
The pattern of higher lows and higher highs remains intact, signaling continued strength in the market. Notably, today was the second consecutive session with a higher high and a negative delta. However, this delta divergence needs a trigger, which could potentially be a cessation of the daily one-time framing up, aligning with a break of the highlighted area on the included 3-day composite profile. It’s worth noting that both the weekly VWAP and the 5D VPOC are within this area. Buyers remain in very good control above.
ICYMI: 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 market has been one-time framing up for 12 consecutive sessions, while sellers continue to struggle to gain any meaningful downside traction. On the chart, I've merged the profiles from this week’s trading (RTH) to highlight the main distribution of interest. The strongest market response would involve acceptance above 5643, while failure to do so will likely make the HVN at 5620 act as a downside magnet.
In terms of levels, the Smashlevel is at 5643, marking the 3-day composite value area high. Holding below this level would target the current weekly VPOC at 5620, with a final target at Monday’s VPOC at 5602 under sustained selling pressure. Failure to hold below 5643 signals strength, targeting the resistance area from 5666 to 5676, with a final target at the unfilled gap at 5690.25 under sustained buying pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5643.
Break and hold above 5643 would target 5666 / 5676 / 5690
Holding below 5643 would target 5620 / 5602
Additionally, pay attention to the following VIX levels: 17.14 and 15.38. These levels can provide confirmation of strength or weakness.
Break and hold above 5690 with VIX below 15.38 would confirm strength.
Break and hold below 5602 with VIX above 17.14 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.
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