ES Daily Plan | December 12, 2023
The market is currently one-time framing up across all time frames, indicating an overall state of imbalance as all time frames search for value.
For new followers, the yellow levels highlighted at the bottom 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.
Just a quick reminder that I have transitioned to the ESH24 (March) contract. Please note that I do not back-adjust my charts, hence the roll gap. I suggest marking 4607.50 (ESZ23 Settlement) on your chart, as roll gaps often tend to get filled. Whether you choose to back-adjust or not, the crucial point is that tomorrow's intraday targets remain the same.
The overnight session remained relatively uneventful after an initial price exploration above the Smashlevel of 4660, which proved to be short-lived. Throughout the remainder of the overnight session, the market established a distribution below 4660, without testing the support area ranging from 4643 to 4633 (ONL: 4652). This was fairly weak from sellers, given that the VIX opened above its resistance level of 12.88.
The sellers' weakness persisted into the RTH session, as evidenced by their inability to achieve a 30-minute close below the 4660 pivot and their failure to mount an attack on the ONL. Simultaneously, the VIX dipped below its resistance level of 12.88, adding further challenges for sellers and providing buyers a reason to work longs against the upside targets of 4676 and 4690, as outlined in the previous plan. It's worth noting that working longs involves a patient approach, emphasizing the importance of waiting for favorable dips rather than chasing the market. Sellers initiated an attack on the A-period excess during the European close in the E-period, but faced a strong rejection, coinciding with the VIX re-testing its resistance from below. Take note of the wick on that 30-minute candle. The upside momentum gained from that failure ultimately resulted in the upside target of 4676 getting reached, which essentially capped today’s upside.
The price exploration to the upside continues following sellers' inability to stay below 4660, despite numerous attempts. The market is currently one-time framing up across all time frames, indicating an overall state of imbalance as all time frames search for value. The primary objective for sellers is to end the daily one-time framing up by taking out the low of the previous day, bringing the daily back to balance. The CPI data is scheduled for release tomorrow, and as usual, it is expected to bring volatility to the market. The low volume node (LVN) at 4671 separating today’s double distribution is of short-term interest.
For tomorrow, the Smashlevel (Pivot) is 4671, which represents today’s low volume node, separating the double distribution. Holding above 4671 would target an upside continuation towards the high volume node (HVN) at 4690, as well as the final upside target of 4706. Break and hold below 4671 would target today’s VPOC and prior Smashlevel of 4660. In the case of continued weakness, the final downside target is situated at 4643, the upper end of the highlighted support area.
Levels of Interest
Going into tomorrow's session, I will observe 4671.
Holding above 4671 would target 4690 / 4706
Break and hold below 4671 would target 4660 / 4643
Additionally, pay attention to the following VIX levels: 13.20 and 12.08. These levels can provide confirmation of strength or weakness.
Break and hold above 4706 with VIX below 12.08 would confirm strength.
Break and hold below 4643 with VIX above 13.20 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.