ES Daily Plan | February 19/20, 2024
Buyers missed the opportunity to end the week with an outside week up, closing instead within Thursday’s lower distribution—our immediate focus.
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 Thursday and Friday, buyers defended the spike area that was formed as a result of the closing strength observed on Wednesday. However, the market fell short of challenging the current all-time high at 5066.50 and missed the opportunity to end the week with an outside week up, closing instead within Thursday’s lower distribution—our immediate focus.
The VIX resistance level provided in Friday’s plan, was 14.66. Friday’s HOD was 14.71, occurring during the period of weakness early in the day when the market came within 7 ticks of reaching the final intraday downside target. This was a good location to book profits if short, but more importantly, it signaled a need for caution to be a late seller.
Buyers aim to reclaim 5032, targeting the resistance area from 5045 to 5055, while sellers aim to establish acceptance below 5011, which would open the door for a test of the support area from 4991 to 4981, where the monthly VWAP is also situated.
For tomorrow, the Smashlevel (Pivot) is 5032, representing the upper end of Thursday’s lower distribution. Break and hold above 5032 would target the resistance area from 5045 to the final upside target of 5055. In the case of continued strength, a potential retest of the Monthly and Quarterly Extreme Highs at 5067 and 5071 respectively could come into play. Holding below 5032 would target Thursday’s spike base of 5011, coinciding with the weekly VWAP. Acceptance below 5011 would target the support area from 4991 to the final downside target of 4981, coinciding with the monthly VWAP.
Levels of Interest
Going into tomorrow's session, I will observe 5032.
Break and hold above 5032 would target 5045 / 5055
Holding below 5032 would target 5011 / 4991 / 4981
Additionally, pay attention to the following VIX levels: 14.84 and 13.64. These levels can provide confirmation of strength or weakness.
Break and hold above 5055 with VIX below 13.64 would confirm strength.
Break and hold below 4981 with VIX above 14.84 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 have another tremendous week!
Thanks for another excellent analysis. I don't use order flow, it seems like an excellent addition when reading the auction, can you please explain what you saw on the footprint chart that suggested to you that the failure was above 5048.50. More aggressive sellers?