ES Daily Plan | February 7, 2024

The market continues to establish value at higher prices following the break from the prior 9-day balance area—keeping buyers in control.

Visual Representation

ES Daily Plan | February 7, 2024

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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.

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Contextual Analysis

Another uneventful overnight session unfolded today, with the market yet again confined within the previous day’s value area. During the European session, a poor low formed at the initial downside target of 4955, triggering a quick 15-handle squeeze before the RTH session opened.

The RTH session saw an immediate push higher, which looked above Monday’s inside day, and failed. This setup likely represented the best opportunity of the session, with the target being the support area ranging from 4955 to 4945. Remember the general guidelines regarding balance, which apply to inside days—a form of short-term balance. If there's a lack of continuation following a breakout attempt, it can trigger moves in the opposite direction. The remainder of the session was characterized by responsive activity below the opening level, resulting in the formation of a b-shaped profile. However, during the last period, the market saw a squeeze that effectively filled the A-period excess. Aggressive sellers continue to struggle to gain traction within the prior 9-day balance area.

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The market continues to establish value at higher prices following the break from the prior 9-day balance area—keeping buyers in control. The short-term value (5D VPOC) has shifted higher from 4950 to 4967. I have merged the profiles from both the 9-day balance area and the last three sessions to simplify the interpretation of the locations of the main distributions. The upper distribution is of course of interest in the short-term, while attention shifts to the lower distribution if weakness emerges. Buyers aim to establish acceptance above 4978, targeting new all-time highs, while sellers are focused on gaining traction within January’s range, a task they have thus far struggled with.

For tomorrow, the Smashlevel (Pivot) is 4978, representing the upper end of the 3-day composite value area. Break and hold above 4978 would target the current all-time high (ATH) at 4997.75. Acceptance above 4997.75 would shift the weekly to one-time framing up once again, targeting the final upside target of 5013. Holding below 4978, indicating continued responsive activity, would target the support area from 4955 to 4945, coinciding with the Monthly VWAP. The notable downside magnet is the medium-term value (20D VPOC) at 4917, should the support area break.

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Levels of Interest

Going into tomorrow's session, I will observe 4978.

• Break and hold above 4978 would target 4997 / 5013

• Holding below 4978 would target 4955 / 4945

Additionally, pay attention to the following VIX levels: 13.62 and 12.52. These levels can provide confirmation of strength or weakness.

• Break and hold above 5013 with VIX below 12.52 would confirm strength.

• Break and hold below 4945 with VIX above 13.62 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.

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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.

ES Weekly Plan | February 5-9, 2024

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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.