ES Daily Plan | December 14, 2023
ES Daily Plan | December 14, 2023
Today’s session formed a double distribution following a notable move to the upside post FOMC. My short-term focus will be on the upper end of today’s session at 4762.
Visual Representation
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.
Contextual Analysis
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.
No in-depth analysis is required for today's session, given the day's unfolding events. Pre-FOMC trading activity was largely uneventful, followed by a notable move to the upside post FOMC. Not only were the intraday targets met and exceeded, but the weekly targets were also attained, resulting in buyers achieving a daily close above the Weekly Extreme High of 4745. As a result, I’m calling it a week after today’s session. I am adopting a defensive approach mainly because the conditions for chasing are not appealing after tagging all the weekly targets, combined with the obvious lack of interest in fighting this freight train on the short side. Even if sellers were to achieve all downside targets tomorrow, we would still be trading within today’s upper distribution, which speaks to the challenging environment in which sellers find themselves.
Today’s session formed a double distribution following a notable move to the upside post FOMC. This move was significant as not only were the intraday targets met and exceeded, but also our weekly targets. Buyers aim to accept today’s upside move by establishing value within the upper distribution. This would indicate that the upward auction is not yet complete, highlighting the ongoing strength in the market. Conversely, sellers most favorable scenario would involve re-establishing acceptance within today’s lower distribution. Such scenario would put today’s rally into question.
My short-term focus will be on the upper end of today’s session at 4762. In the event of immediate acceptance above 4762, my primary targets would be 4780 and 4792. Failure to observe an immediate upside continuation would target a traverse of today’s upper distribution towards 4725. I’ve highlighted the distributions of interest on the chart.
For tomorrow, the Smashlevel (Pivot) is 4762, which represents the upper end of today’s session. Break and hold above 4762, indicating continued strength, would target the HVN at 4780, as well as the final upside target of 4792. Holding below 4762 would target a traverse of today’s upper distribution, targeting 4745, 4735 and 4725.
Levels of Interest
Going into tomorrow's session, I will observe 4762.
Break and hold above 4762 would target 4780 / 4792
Holding below 4762 would target 4745 / 4735 / 4725
Additionally, pay attention to the following VIX levels: 12.74 and 11.64. These levels can provide confirmation of strength or weakness.
Break and hold above 4792 with VIX below 11.64 would confirm strength.
Break and hold below 4725 with VIX above 12.74 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
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.
It feels like I learn something with each daily plan you share. Thank you Smashelito!
Great analysis as always. Keep up the good work brother.