ES Daily Plan | February 12, 2024
The upward price discovery process continues following Friday's double distribution trend day, breaking out of Wednesday's upper distribution.
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
The upward price discovery process continues following Friday's double distribution trend day, breaking out of Wednesday's upper distribution. This double distribution profile is of interest in the short-term, specifically the one set of single prints in the G-period, which divide them. Buyers aim to maintain within the upper distribution, signaling a bullish outcome and setting the stage for an upside continuation, targeting 5067/5071. Conversely, sellers aim to break and hold below 5034, opening the door for a traverse of the lower distribution, with 5012 acting as a downside magnet.
As mentioned in the Weekly Plan, we are nearing both the Monthly and Quarterly Extreme Highs, an area worth monitoring closely, especially given the early stage of the month and quarter. I’m interested to observe how the market will respond IF it gets tested, specifically whether it can establish value above this level or not. Generally, it’s not the most optimal location to chase long-term longs, regardless of whether the market continues its upward trajectory or not. If the market has taught us anything over the last few months, it's to not fight momentum, which often lasts longer than anticipated.
For tomorrow, the Smashlevel (Pivot) is 5034, representing Friday’s breakout single prints, forming a double distribution profile. Holding above 5034, indicating continued directional conviction, would target both the Monthly and Quarterly Extreme Highs at 5067 and 5071, respectively. Break and hold below 5034 would open the door for a traverse of the lower distribution, targeting the support area from 5022 to the final downside target of 5012, acting as a downside magnet.
Levels of Interest
Going into tomorrow's session, I will observe 5034.
Holding above 5034 would target 5047 / 5067 / 5071
Break and hold below 5034 would target 5022 / 5012
Additionally, pay attention to the following VIX levels: 13.46 and 12.40. These levels can provide confirmation of strength or weakness.
Break and hold above 5071 with VIX below 12.40 would confirm strength.
Break and hold below 5012 with VIX above 13.46 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.
Thanks you so much. 🙏🏻
Thank you, buddy! Let's have an amazing week!