ES Daily Plan | January 10, 2024
I will continue to interpret the daily as balance following today’s brief peak above Monday’s high. The context and levels remain unchanged.
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
An upside continuation failed to materialize as the higher prices from the spike were immediately rejected during the overnight session. Consequently, the market started to clean up yesterday's poor structure, successfully clearing three out of the four sets of single prints. This led to a test of the highlighted support area ranging from 4773 to 4763—a crucial area for buyers to hold, as discussed.
The RTH session opened within the support area, precisely at 4773. Following a look below the ON low and fail, buyers took control of the auction. Today’s LOD, occurring during that false breakdown, was 4767—just 4 handles shy of the final downside target of 4763. This suggests that it was not an ideal location to initiate shorts, as evidenced by the price action that followed during the AM session when we experienced a squeeze and the formation of two sets of single prints. The upside momentum stalled within yesterday's spike area, which is not a huge surprise given the trapped inventory following the weak overnight session. Both sets of single prints were filled during the PM session as the market was balancing at the upper end of yesterday’s range.
The context remains unchanged after today’s session, as the downside pressure stalled within the highlighted support area from 4773 to 4763, and the upside momentum fell short of breaking through yesterday's spike area, forming a weak high. The market has essentially formed a P-shape profile this week, with buyers aiming to break the main distribution to the upside, targeting 4808 and 4825. Conversely, the most favorable scenario for sellers would involve acceptance below 4763, effectively negating Monday’s trend day. I will continue to interpret the daily as balance following today’s brief peak above Monday’s high. CPI data, along with Jobless claims, is scheduled for release on Thursday, followed by PPI on Friday. Hence, it's plausible that the market will remain in a consolidation phase until these data are revealed—stay nimble.
For tomorrow, the Smashlevel (Pivot) is 4796, representing Monday’s M-period spike base. Break and hold above 4796, would target the prior ATH at 4808, as well as the Weekly Extreme High of 4825. In the case of continued strength, the current ATH is situated at 4839/4841. Holding below 4796, would target 4786, where buyers stepped in during the PM session. Break and hold below 4786 would target the support area from 4773 to the final downside target of 4763.
Levels of Interest
Going into tomorrow's session, I will observe 4796.
Break and hold above 4796 would target 4808 / 4825
Holding below 4796 would target 4786 / 4773 / 4763
Additionally, pay attention to the following VIX levels: 13.34 and 12.22. These levels can provide confirmation of strength or weakness.
Break and hold above 4825 with VIX below 12.22 would confirm strength.
Break and hold below 4763 with VIX above 13.34 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.
Simple and to the point. Let's bank
Thank you! Caught a long from support, but exited a little too soon!