ES Daily Plan | December 27, 2023
The key question is whether a “look above and fail" scenario is in play after poking above the previous week's high, or if buyers will demonstrate sustained momentum tomorrow.
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.
During the overnight session, buyers instantly reclaimed the Smashlevel of 4808.25, making it difficult for sellers who were active in the late stages of Friday's session. The ON session as a whole was quiet, staying confined within a narrow 15 handle range, largely affected by European markets being closed for holidays.
During the RTH session, the market tested 4808.25 at the opening, marked a low of 4808, and never saw the opening level thereafter. Buyers managed to break the ON high of 4815 in the A-period, and sellers failed to see a 30-minute close below this level despite their efforts to push lower during the B, C, and D-periods. As outlined in the previous daily plan, the aim for buyers was to achieve acceptance above 4808, targeting the upper end of the multi-day balance area, and a potential breakout—an objective successfully realized. Despite the market achieving this, the session closed back within the multi-day balance range following a lack of initiative from buyers in the closing session. The key question is whether a “look above and fail" scenario is in play after poking above the previous week's high, or if buyers will demonstrate sustained momentum tomorrow.
My short-term focus will be on the previous week’s high at 4830.75. A successful breakout would target 4840 and 4855, while a lack of initiative buyers would trigger responsive activity back towards the middle of the multi-day balance area at 4788.
For tomorrow, the Smashlevel (Pivot) is 4830, representing the previous week’s high. Break and hold above 4830, indicating a successful breakout, would target 4840, as well as the final upside target of 4855, which was the prior Weekly Extreme High. Holding below 4830 would target the value area high (VAH) of the previous week at 4820. Break and hold below 4820 would target the prior ATH at 4808. In the case of continued weakness, the final downside target is at 4788, representing the primary target in a look above the multi-day balance area and fail.
Levels of Interest
Going into tomorrow's session, I will observe 4830.
Break and hold above 4830 would target 4840 / 4855
Holding below 4830 would target 4820 / 4808 / 4788
Additionally, pay attention to the following VIX levels: 13.62 and 12.36. These levels can provide confirmation of strength or weakness.
Break and hold above 4855 with VIX below 12.36 would confirm strength.
Break and hold below 4788 with VIX above 13.62 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.