ES Daily Plan | January 22, 2024
In the short-term, I will use Friday’s afternoon pullback low of 4860 as a reference point to assess the market's strength or weakness.
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
Friday witnessed a breakout from the 4-week balance area, effectively establishing a new all-time high and resolving the unfinished business we have carried forward. As is typical with any breakout scenario, the structure left behind is poor and the primary focus is to closely monitor for continuation (Acceptance) or lack thereof (Rejection). The market is one-time framing up across all time frames, indicating that buyers maintain full control of the auction.
In the short-term, I will use Friday’s afternoon pullback low of 4860 as a reference point to assess the market's strength or weakness. Holding and consolidating above it, without any interest in filling Friday’s poor structure, would be considered the most bullish outcome. Keep a close eye on the buyers' ability to shift the short-term value (5D VPOC) higher, indicating acceptance. The most bearish outcome would involve filling Friday’s three sets of single prints and returning back within the 4-week balance area, signaling a failed breakout. I’m cautious about initiating shorts until that happens, as pullbacks into the poor structure are potentially technical fills before proceeding higher.
For tomorrow, the Smashlevel (Pivot) is 4860, representing Friday’s afternoon pullback low after printing a new ATH (4874.25). Holding above 4860, indicating acceptance, would target an upside continuation towards 4886, as well as the final upside target of 4900, representing the prior Weekly Extreme High. Break and hold below 4860 would target fills of Friday’s poor structure towards the support area from 4845 to 4835—a crucial area for buyers to hold.
Levels of Interest
Going into tomorrow's session, I will observe 4860.
Holding above 4860 would target 4886 / 4900
Break and hold below 4860 would target 4845 / 4835
Additionally, pay attention to the following VIX levels: 13.92 and 12.68. These levels can provide confirmation of strength or weakness.
Break and hold above 4900 with VIX below 12.68 would confirm strength.
Break and hold below 4835 with VIX above 13.92 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 Smash. Great stuff as usual. 4849 where one of the Fridays singles started is also a good area to monitor
Thanks to you buddy! Here's to another successful week of trading. Friday's session was straightforward once the long positions took off. Your insights and levels continue to be spot-on.