ES Daily Plan | January 20-21, 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
A brief recap of Friday’s session was published on Substack (link), highlighting how the market saw an upside continuation after reclaiming the intraday pivot at 5990. Friday’s session also illustrated a great example of why I’m cautious about chasing further upside above the final intraday target (6029) when the VIX is diverging and not confirming strength. While the market extended another 20 handles higher, the final upside target at 6029 was revisited to the tick into the close.
A directional move on Wednesday was followed by balance on Thursday and a continuation higher on Friday after another true gap. As discussed in the Weekly Plan, the immediate focus is on monitoring interest in filling Friday’s gap. Failure to fill the gap, or a rejection of the middle distribution after filling it, would signal strength, while last week's VPOC will serve as a downside magnet on pullbacks.
In terms of levels, the Smashlevel is at 6025, marking the HVN from which Friday’s directional move was initiated. Holding above this level would target 6049. Acceptance above 6049 would then target 6066, with a final target at 6083 under sustained buying pressure. Conversely, failure to hold above 6025 would open the door to filling the gap at 6004.25, with a final target at last week’s VPOC at 5986 under sustained selling pressure—an important high volume node to monitor this week.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 6025.
Holding above 6025 would target 6049 / 6066 / 6083
Break and hold below 6025 would target 6004 / 5986
Additionally, pay attention to the following VIX levels: 16.84 and 15.10. These levels can provide confirmation of strength or weakness.
Break and hold above 6083 with VIX below 15.10 would confirm strength.
Break and hold below 5986 with VIX above 16.84 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.
Great stuff!
Thank you!