ES Daily Plan | January 15, 2025
My preparations and expectations for the upcoming session.
For new followers: The yellow levels highlighted at the bottom left of the chart 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.
Visual Representation
Contextual Analysis
Overnight sessions continue to offer solid opportunities, and today’s session was no exception. The overnight session gapped above the Smashlevel at 5884, which successfully held on a retest, leading to a continuation higher. The initial upside target of 5902 was tagged and exceeded before sellers stepped in within Friday’s A-period excess, which we had targeted for fills if the market managed to reclaim 5884. Following the PPI data release, the market saw an impulsive move higher, with the high of that move falling just 2 handles short of the final upside target at 5921.
The RTH session opened with a true gap up, which narrowly avoided being filled during the inventory correction in the A-period. As mentioned in the previous plan, the opening level is an important reference point when there is a true gap opening in either direction. After the initial inventory correction, the key focus during the B-period was whether buyers could reclaim the opening level. Despite a significant effort, with a positive delta of 6K at one point during the B-period, buyers struggled to gain traction above the opening level, which opened the door for weakness in the subsequent periods. The gap was filled in the C-period, and the pace to the downside increased during the D-period. The highlighted support area for the session was between 5856 and 5847, which sellers needed to break for continued downside pressure. However, buyers managed to hold it, leading to a strong ~45-handle rally with barely any pullbacks. The last three periods (K, L, and M) were intense, as the rally was sharply retraced, followed by buyers re-entering at support, ultimately reversing the drop.
The market is in a 3-day balance after breaking the pattern of lower highs on the daily, ahead of tomorrow's CPI data release. The general guideline suggests going with the break of balance and monitoring for either continuation (acceptance) or lack thereof (rejection). If there is a lack of continuation following a breakout attempt, it can often trigger a sharp move in the opposite direction.
In terms of levels, the Smashlevel is at 5878. Holding above this level would target 5900. Acceptance above 5900 signals strength, targeting the upper end of the balance at 5921, with a final target at 5935 under sustained buying pressure. Conversely, failure to hold above 5878 would target 5856, with a final target at the lower end of the balance at 5819 under sustained selling pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5878.
Holding above 5878 would target 5900 / 5921 / 5935
Break and hold below 5878 would target 5856 / 5819
Additionally, pay attention to the following VIX levels: 19.86 and 17.54. These levels can provide confirmation of strength or weakness.
Break and hold above 5935 with VIX below 17.54 would confirm strength.
Break and hold below 5819 with VIX above 19.86 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
Make sure to review the Weekly Plan, which provides a broader perspective and highlights key levels of interest to observe in the upcoming week.
Thank you, Smash! I was trying to post an email I received about taking my express account to a live account. It’s all thanks to you! You got me to think in a way I never have and really simplify my trading. I was always in a trade. Now I wait. I also love your chartbooks. I know I said it before but I truly do. It allows me to see all of this in a way I never did before. Thank you!
Thank you!