ES Daily Plan | December 19, 2023
Buyers aim to reclaim 4792, setting the stage for another attempt at the non back-adjusted all-time high at 4808.25, while sellers are aiming to defend 4792, a potential trigger for weakness.
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
Throughout the overnight session, the market repeatedly explored prices above the inside day, yet each attempt fell short of sustained momentum, resulting in responsive selling. However, every pullback was picked up by the buyers, ultimately enabling them to open the RTH session with a true gap to the upside.
The RTH session opened 10 ticks above Friday's inside day, and despite the relatively modest size of the gap, sellers could only partially fill it, indicating a lack of strength among sellers. Buyers successfully retained control over both the ON high and the opening level—two crucial references in the context of a higher gap, paving the way for an upside continuation. The most favorable setup occurred during the pullback to the ON high in the C-period, with passive buyers successfully absorbing the aggressive selling pressure, aligning with the full session VWAP. It's noteworthy how aggressive buyers swiftly entered the market following this absorption. I will provide a visual of this pullback on Substack. The upside momentum resulted in a breach of the previous week's high; however, buyers fell short of attaining the ultimate upside target—the non back-adjusted all-time high at 4808.25 (HOD: 4802.25). It’s worth noting that the market returned within the range of the previous week during after-hours trading.
In today's session, a true gap above Friday's inside day triggered an upside continuation, breaching the previous week’s high in the process, but falling short of reaching the non back-adjusted all-time high at 4808.25. It's noteworthy that the market returned within the range of the previous week during after-hours trading, making 4792 a crucial reference to observe in the short term.
Buyers aim to reclaim 4792, setting the stage for another attempt at the non back-adjusted all-time high at 4808.25, while sellers are aiming to defend 4792, a potential trigger for weakness.
For tomorrow, the Smashlevel (Pivot) is 4792, representing the high from the previous week. Break and hold above 4792 would set the stage for another attack on the non back-adjusted all time high at 4808.25. The final upside target is located at 4828, in the case of continued strength. Holding below 4792, potentially triggering weakness, would target the unfilled daily gap at 4779.50. Break and hold below 4779.50, indicating acceptance within the range of the inside day, would target a traverse towards the final downside target of 4760.
Levels of Interest
Going into tomorrow's session, I will observe 4792.
Break and hold above 4792 would target 4808 / 4828
Holding below 4792 would target 4779 / 4760
Additionally, pay attention to the following VIX levels: 13.16 and 11.96. These levels can provide confirmation of strength or weakness.
Break and hold above 4828 with VIX below 11.96 would confirm strength.
Break and hold below 4760 with VIX above 13.16 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.
Very informative commentary today. Gives a very good picture of the forces which are moving ES_F levels.
We can trade better by having all that information.
Thank you for sharing valuable information and insights on a daily basis.
Thank you! Great trade breakdown!