ES Daily Plan | August 28, 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
Price can have three relationships to value: it can be above, below, or within it. "Responsive" behavior aligns with expectations, while "Initiating" behavior deviates from expectations.
• Buying below value is expected and thus considered responsive activity.
• Buying above value is unexpected and thus considered initiating activity.
• Selling above value is expected and thus considered responsive activity.
• Selling below value is unexpected and thus considered initiating activity.
For a more comprehensive understanding of these principles within the framework of Auction Market Theory (AMT), consider exploring 'CBOT - A Six-Part Study Guide to Market Profile'.
The overnight session provided a great opportunity as sellers defended the Smashlevel of 5646 (ON High: 5645.75). This rejection led to a reversal that tagged the initial downside target of 5613, completing the traverse of the multi-day value area (ON Low: 5612.50). As we moved into the RTH session, the focus shifted to the 5613 level, which sellers needed to break and hold below to open the door for a potential move toward 5586. The A-period looked below 5613 and failed, triggering a sharp move back to the 5646 level—setting up another opportunity. On this second test of 5646, sellers entered again, resulting in a decent move, though not as significant as the one overnight. The rest of the session remained relatively quiet, with buyers attempting to break through 5646 for several hours without success. Notably, Monday’s poor structure remains unfilled and should be carried forward.
While today’s session offered some great setups around key levels, the overall context remains unchanged, with the market still in a state of balance—now forming a 7-day balance area. One thing is certain: the longer a consolidation phase lasts, the more significant the subsequent breakout tends to be. This highlights the importance of being ready to adjust your strategy when the market shifts from balance to imbalance. NVDA earnings tomorrow after hours.
In terms of levels, the Smashlevel is at 5646, marking Monday’s afternoon rally high. Holding below this level would target the multi-day value support at 5613, with a final target at 5586 under sustained selling pressure. Failure to hold below 5646 would open the door for filling Monday’s poor structure, targeting 5661, with a final target at 5676 under sustained buying pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5646.
Break and hold above 5646 would target 5661 / 5676
Holding below 5646 would target 5613 / 5586
Additionally, pay attention to the following VIX levels: 16.32 and 14.52. These levels can provide confirmation of strength or weakness.
Break and hold above 5676 with VIX below 14.52 would confirm strength.
Break and hold below 5586 with VIX above 16.32 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
Amazing insight, thank you bro