ES Daily Plan | December 26, 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
On Wednesday, a liquidation break unfolded, ending the daily one-time framing up and resulting in the formation of a double distribution profile with a large set of single prints, commonly referred to as poor structure. The session concluded with a close at the lows, marked by a downward spike. Initiative sellers were nowhere to be found for the rest of the week, resulting in the poor structure being completely filled on Friday.
Having said that, the market remains in a short-term state of balance—currently forming a 7-day balance area, ranging from 4746.25 to the current all-time high (ATH) at 4830.75. The general guideline suggests going with the break of the daily balance area and monitoring for continuation (Acceptance) or lack thereof (Rejection). If there's a lack of continuation following a breakout attempt, it can trigger moves in the opposite direction. Remaining within the multi-day balance area increases the odds of sustained responsive activity, emphasizing the importance of staying nimble.
My short-term focus will be on the prior ATH at 4808.25. Buyers aim to reclaim this level, targeting the upper end of the multi-day balance area and a potential breakout. Failure to do so, and the high volume node (HVN) at 4767 could potentially act as a downside magnet.
For tomorrow, the Smashlevel (Pivot) is 4808, representing the previous all-time high (ATH). Break and hold above 4808 would target the value area high (VAH) of the previous week at 4820, as well as the upper end of the multi-day balance area at 4830, where the current ATH is located. In the case of continued strength (breakout), the final upside target is at 4840. Holding below 4808 would target fills of Friday’s structure towards 4788, as well as the final downside target of 4767, in the case of continued weakness—the most traded price by volume (VPOC) in this multi-day balance area.
Levels of Interest
Going into tomorrow's session, I will observe 4808.
Break and hold above 4808 would target 4820 / 4830 / 4840
Holding below 4808 would target 4788 / 4767
Additionally, pay attention to the following VIX levels: 13.68 and 12.40. These levels can provide confirmation of strength or weakness.
Break and hold above 4840 with VIX below 12.40 would confirm strength.
Break and hold below 4767 with VIX above 13.68 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! Let's end 2023 on a high note with an awesome week ahead.
Thank you!