ES Daily Plan | December 22, 2023
Tomorrow, I will closely monitor the behavior around 4792. Holding above it sets the target at the multi-day balance high, while a failure to maintain this level would aim for the balance low.
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
Today’s session offered great opportunities in both directions. Sellers were unable to maintain a downside continuation despite the observed weakness on Wednesday afternoon. The absence of initiative sellers after the liquidation break witnessed in Wednesday's session was enough to attract responsive buyers, especially when the prevailing trend is to the upside. Buyers immediately started traversing Wednesday’s lower distribution in the overnight session, leading to a test the highlighted resistance area from 4782 to the final upside target of 4792—an important inflection point, as discussed. The VIX did not confirm weakness and held above its support level of 13.02. This suggests that reaching 4792 was a favorable point to book profits for long positions and to refrain from chasing further upside, especially if not in a position. Conversely, for sellers, 4792 offered several good opportunities, both in the ON and RTH session.
Sellers showed early activity at 4792 in the RTH session, resulting in weakness and a double distribution to the downside at one point. This occurred when the F-period formed single prints, breaking the initial balance low. Subsequently, this weakness led to a test of the Smashlevel at 4761, where the downside momentum stalled. The lower prices of Wednesday’s spike were rejected, which was not a huge surprise given the considerable presence of trapped sellers from that session. Simultaneously, the VIX was flirting with its resistance level of 14.34, but buyers successfully held the line at 4761. In the afternoon session, buyers managed to fill the F-period single prints, negating the trend day and ultimately leading to a v-shaped reversal, printing new intraday highs.
Sellers failed to maintain a downside continuation after yesterday’s selling activity, leaving the daily in a state of balance following today's inside day—currently a 6-day balance area. Yesterday, I mentioned that the most favorable scenario for buyers would involve acceptance back above the last week’s high at 4792. Today, the market found sellers at 4792 in both the ON and RTH sessions; however, buyers managed to break it in the closing session. Tomorrow, I will closely monitor the behavior around 4792. Holding above it sets the target at the multi-day balance high, while a failure to maintain this level would aim for the balance low.
For tomorrow, the Smashlevel (Pivot) is 4792, representing the high of the previous week, coinciding with today’s closing spike. Holding above 4792 would target fills of the poor structure towards the prior ATH at 4808. Break and hold above 4808 would target the upper end of the multi-day balance area at 4830, where the current ATH is located. Break and hold below 4792 would target this week’s opening level at 4782, coinciding with the weekly value area low (VAL). Break and hold below 4782 would target the final downside target of 4761, Wednesday’s spike base.
Levels of Interest
Going into tomorrow's session, I will observe 4792.
Holding above 4792 would target 4808 / 4825 / 4830
Break and hold below 4792 would target 4782 / 4761
Additionally, pay attention to the following VIX levels: 14.36 and 12.94. These levels can provide confirmation of strength or weakness.
Break and hold above 4792 with VIX below 13.02 would confirm strength.
Break and hold below 4709 with VIX above 14.34 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.
Thank you buddy. Caught shorts and longs. Great day!