ES Daily Plan | January 2, 2024
I will use the upper end of Friday’s lower distribution at 4823, as a short-term reference point to assess which side of the balance extremes holds higher odds of being reached first.
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
On Friday, a double distribution trend day unfolded to the downside, effectively breaching three daily lows. Consequently, the daily has returned to a state of balance. As mentioned in the weekly plan, it is crucial to monitor the extremes of this highlighted 4-day balance area, as its upper end has unfinished business, while its lower end represents the previous week's low—a reference of particular significance for sellers to break. Why? Because the weekly has established 9 consecutive higher lows.
I will use the upper end of Friday’s lower distribution at 4823, as a short-term reference point to assess which side of the balance extremes holds higher odds of being reached first.
For tomorrow, the Smashlevel (Pivot) is 4823, representing the upper end of Friday’s lower distribution. Break and hold above 4823 would target the current all-time high (ATH) from the regular trading hours and overnight session at 4839.75 and 4841.50, respectively. In the event of a breakout from the current balance, the final upside target is at 4855. Holding below 4823 would target the prior ATH at 4808.25, as well as the previous week’s low at 4796.75. In the case of continued weakness, the final downside target is at 4788. A balance breakdown must remain below 4788, as there is potential for a false breakdown scenario otherwise.
Levels of Interest
Going into tomorrow's session, I will observe 4823.
Break and hold above 4823 would target 4841 / 4855
Holding below 4823 would target 4808 / 4796 / 4788
Additionally, pay attention to the following VIX levels: 13.04 and 11.86. These levels can provide confirmation of strength or weakness.
Break and hold above 4855 with VIX below 11.86 would confirm strength.
Break and hold below 4788 with VIX above 13.04 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.
Thank you! It seems we're going to put that 4823 to the test right away!
Thanks, buddy! Ready to dive into trading in 2024!