ES Daily Plan | February 2, 2024
Today’s RTH session formed an inside day; however, the market has obviously already made a significant move after-hours, reaching the multi-day balance high in the process—a crucial area to monitor.
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.
The market quickly started to fill yesterday’s breakdown structure in the overnight session. The Smashlevel of 4876 saw a test during the initial pullback, which buyers effectively defended. An early rejection of the lower prices of the spike was not the most favorable outcome for sellers, especially after closing Wednesday's session below the previous week's low. The initial upside target was the breakdown single prints at 4896, which was tagged and provided a decent 15-handle drop before the RTH opened.
The RTH session opened outside of yesterday’s value area, and during the initial periods, sellers effectively defended the highlighted resistance area from 4906 to 4896 (now support). A poor high was formed in the B/C-period, signaling crowded buyers and triggering a subsequent reaction that resulted in buyers being stopped out as the market moved away from that area. This prompted another test of the Smashlevel of 4876, which once again saw buyers successfully defending it. Today’s LOD was at 4874.50. From that point on, buyers took control of the auction, negating Wednesday’s afternoon weakness by re-establishing acceptance back within Wednesday's value area. The final upside target of 4906 was reached in the F-period, leading to a phase of rotational activity in the market for a few subsequent periods (TPOC: 4909). This presented a favorable opportunity to book profits, especially considering the VIX's failure to breach its support level of 13.72. Additionally, both the F and G-periods experienced significant aggressive selling pressure. The buyers emerged victorious from that battle, as sellers failed to get back within the initial balance range. Consequently, this led to an upside continuation, not something I was personally interested in chasing.
Today’s RTH session formed an inside day; however, the market has obviously already made a significant move after-hours, reaching the multi-day balance high in the process—a crucial area to monitor in the short-term. I will keep things very uncomplicated for tomorrow’s session. I have highlighted two distributions of interest on the composite profile to the far right, number #1 and #2. Maintaining within distribution #1 would serve as the more bullish outcome, while reestablished acceptance within distribution #2 would be the less bullish outcome. The most bearish outcome would be acceptance below the highlighted support area from 4906 to 4896.
The final upside target has already been reached after-hours, making tomorrow’s session quite tricky, as this also is the 9-day balance high. It's important to monitor the market's ability to maintain above 4960. Additionally, monitor NQ 17600. A market above 4960 and 17600 is not something I would want to fade on a Friday. Stay nimble. NFP tomorrow.
For tomorrow, the Smashlevel (Pivot) is 4927, representing the upper end of today’s inside day. Holding above 4927 would target the unfilled daily gap at 4941.50, as well as the final upside target of 4960, essentially the 9-day balance high. Break and hold below 4927 would target the support area from 4906 to the final downside target of 4896, where today’s afternoon pullback low is also located.
Levels of Interest
Going into tomorrow's session, I will observe 4927.
Holding above 4927 would target 4941 / 4960
Break and hold below 4927 would target 4906 / 4896
Additionally, pay attention to the following VIX levels: 14.50 and 13.24. These levels can provide confirmation of strength or weakness.
Break and hold above 4960 with VIX below 13.24 would confirm strength.
Break and hold below 4896 with VIX above 14.50 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.