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ES Daily Plan | August 31, 2023
With no interest in cleaning up yesterday's poor structure and limited interest in trading within its range, the buyers maintain short-term control.
Yesterday's immediate resistance at 4515-4507 now serves as support.
During the overnight (ON) session, trading took place within yesterday’s upper distribution, including some price exploration above the high of the previous day. In other words, no interest in any fills of the poor breakout structure, which is bullish in the context of yesterday’s multi-distribution trend day to the upside. The Weekly Extreme High of 4515 was tested, providing a decent reversal. It's worth keeping in mind that poor structure within a balanced market and poor structure during breakout scenarios are two different situations. The former is more likely to result in fills compared to the latter. The fact that there is no desire to fill yesterday's structure provides valuable market-generated information. This indicates that the imbalance phase remains intact, generally creating a more favorable situation for traders who are working in the prevailing direction.
The RTH session exhibited volatility during the initial balance (first hour of RTH), while the remainder of the session remained notably calm. This type of price action following an emotional day prior is not uncommon, as the market processes the breakout. After the liquidation break in B-period, there was minimal activity observed below the Smashlevel of 4507. Interestingly, the liquidation break stopped precisely at the value area low (VAL) from the ON session, and aggressive buyers entered. Furthermore, notable exhaustion prints at the lows. Buyers aimed to establish value above the Weekly Extreme High of 4515, and they managed to achieve this throughout today’s session. Patient buyers were presented with an opportunity during the afternoon pullback against 4515; however, new daily highs failed to materialize.
While the daily one-time framing up remains intact, sellers are faced with limited opportunities, emphasizing their primary objective of bringing it to an end. The primary objective for buyers is to shift the short-term value (5D VPOC) higher, currently at 4442. The HVN at 4525 is likely to be a strong contender. I’ve added a 2D volume profile to highlight the unfinished business at the highs, which is a target if buyers hold above the immediate support area from 4515 to 4507.
For tomorrow, the Smashlevel (Pivot) is 4515, representing the Weekly Extreme High. Holding above 4515, indicating continued strength, would target 4539, as well as the final upside target of 4555. Break and hold below 4515, would target 4507, as well as the final downside target of 4489, representing the lower end of the main distribution from the 2D volume profile. The highlighted poor structure below is the target, in the case of continued weakness.
Going into tomorrow's session, I will observe 4515.
Holding above 4515 would target 4539 / 4555
Break and hold below 4515 would target 4507 / 4489
Additionally, pay attention to the following VIX levels: 14.54 and 13.22. These levels can provide confirmation of strength or weakness.
Break and hold above 4555 with VIX below 13.22 would confirm strength.
Break and hold below 4489 with VIX above 14.54 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.