ES Daily Plan | February 13, 2025
My preparations and expectations for the upcoming session.
For new followers: The yellow levels highlighted at the bottom left of the chart 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.
Visual Representation
Contextual Analysis
During the overnight session, sellers initially defended the 6093 level, leading to a test of the pivotal 6075 level during European hours, where buyers stepped in for a trip back to 6093 ahead of the CPI data release. After the CPI numbers dropped, the market experienced a sharp liquidation, tagging and exceeding the final downside target at 6045. The downside momentum stalled at the next level of interest, 6025, which marks the long-term value (90D VPOC). During this drop, the VIX briefly breached its resistance level of 16.92; however, it fell back below prior to the opening of the RTH session.
The RTH session obviously opened with a significant true gap down, and the immediate focus is always on whether an inventory correction will take place early on, which is used to gauge the strength and weakness of the market. The weakest market response would involve a lack of an inventory correction, with sellers gaining control of the opening level and the overnight low, suggesting a gap-and-go scenario. Today, we saw an inventory correction after the early failure to sustain below the opening level, leaving the overnight low intact. The final downside target at 6045 was the first line of defense for sellers. The thought process was that a weak market would hold below this level, while failure to do so would open the door for a gap-fill and potentially lead to the next level of interest at 6075. The VIX held below its resistance, so the pullback in the D-period toward 6045 presented a good opportunity to look for long setups, as it was a poor location to chase shorts and a key level for buyers to defend. The market eventually tested the 6075 level, where the upside momentum stalled, and we closed within Tuesday’s range.
Sellers' attempt to move away from balance after opening with a true gap down ultimately failed, resulting in a return to value. The question now is whether it's buyers' turn to make an attempt in the opposite direction. The weekly profile has formed a P-shape, with 6093 serving as a key level for buyers to reclaim. PPI is on deck tomorrow!
In terms of levels, the Smashlevel is at 6066. Holding above this level would target 6093, with a final target at 6107 (and potentially 6121) under sustained buying pressure. Conversely, failure to hold above 6066 would target 6045, with a final target at 6025 under sustained selling pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 6066.
Holding above 6066 would target 6093 | 6107 / (6121)
Break and hold below 6066 would target 6045 / 6025
Additionally, pay attention to the following VIX levels: 16.78 and 14.98. These levels can provide confirmation of strength or weakness.
Break and hold above 6107 with VIX below 14.98 would confirm strength.
Break and hold below 6025 with VIX above 16.78 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
Make sure to review the Weekly Plan, which provides a broader perspective and highlights key levels of interest to observe in the upcoming week.
Thank you Sir Smash-a-lot! :)
Thank you very much!