ES Daily Plan | February 27, 2024
The conditions are straightforward: Maintaining within Thursday’s lower distribution leaves the door open for further weakness.
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 overnight session started off weak, as sellers attempted to gain traction below Friday’s low for several hours, but without significant downside momentum materializing. Buyers were quick to punish them in the European session, almost completing a traverse of Friday’s lower distribution.
As outlined in the previous plan, our main focus was on Friday’s lower distribution, and the RTH session opened right in the middle of that distribution, signaling an anticipation of two-sided activity. Despite the upside momentum demonstrated in the overnight session starting from the European session onwards, buyers were unable to sustain it, following a look above the ON high and fail early on. This created another opportunity for sellers to achieve their primary objective of breaking Friday’s low and thereby ending the daily one-time framing up, which they accomplished in the D-period. Once again, Friday’s low provided a bounce; however, it was met with selling pressure at the full session VWAP, leading to a downside continuation. Sellers managed to defend the Smashlevel of 5093 throughout the PM session, resulting in a weak closing session. However, the short-term value (5D VPOC) successfully shifted higher from 4977 to 5102, as previously discussed, now serving as an upside magnet in the absence of a downside continuation.
Buyers failed to reject Friday’s double distribution trend day, leaving the excess high intact. On the flip side, sellers managed to achieve their primary objective of breaking Friday’s low and thereby ending the daily one-time framing up, bringing the daily back to balance. They also achieved a close within Thursday’s lower distribution.
The conditions are straightforward: Maintaining within Thursday’s lower distribution leaves the door open for further weakness, targeting a retest of Thursday’s breakout point and potential fills of its A-period excess—where buyers want to be responsive. Buyers aim to re-establish acceptance back within the two highlighted distributions, their primary goal being to negate Friday’s excess high.
For tomorrow, the Smashlevel (Pivot) is 5093, representing Friday’s low, and aligning with the lower end of the two highlighted distributions. Break and hold above 5093 would target the resistance area from 5111 to 5121, marking the upper end of the current 3-day balance area. Holding below 5093, signaling continued weakness, would target the Quarterly and Monthly Extreme Highs at 5071 and 5067, which also represent the breakout point. In the case of continued weakness, the target is a full traverse of Thursday’s lower distribution toward the support area from 5055 to 5045.
Levels of Interest
Going into tomorrow's session, I will observe 5093.
Break and hold above 5093 would target 5111 / 5121
Holding below 5093 would target 5071 / 5067 / 5055 / 5045
Additionally, pay attention to the following VIX levels: 14.32 and 13.18. These levels can provide confirmation of strength or weakness.
Break and hold above 5121 with VIX below 13.18 would confirm strength.
Break and hold below 5045 with VIX above 14.32 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.
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Thank you Smash!