ES Daily Plan | January 22, 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
The overnight session experienced a nasty, news-related liquidation break that tested last week’s middle distribution, highlighted on the chart where the high volume node of interest is located. The market failed to hold within this distribution, ultimately retracing the entire drop, which was fully completed during the European session. Testing and rejecting the middle distribution would signal strength, as outlined in the previous plan.
The RTH session was fairly straightforward, with another true gap to the upside after opening above last week’s range. The gap was filled during the B-period, with limited interest in trading within Friday’s range, maintaining an intraday bullish state by holding above the 6049 level. If holding within last week’s upper distribution was considered a bullish response, an immediate breakout was even stronger. The final upside target at 6083 was reached during the H-period, following the F-period's successful extension of the initial balance. Upside momentum stalled thereafter, and the market established a distribution, shifting the volume point of control (VPOC) higher. Did you notice how the VIX held its support level of 15.10 to the tick after the market reached 6083, followed by an afternoon pullback? However, buyers quickly picked up this dip, ultimately leading to new intraday highs after the VIX broke its support. Key takeaway: there was potential for a counter-trend trade while the VIX remained above 15.10, offering a few handles. Once it dropped below that level, the trade became significantly riskier.
Since breaking out of the 3-day balance area on Wednesday of last week, the market has been one-time framing up and cleaning up poor structure from the recent weakness. The poor structure from the FOMC on December 18th, highlighted on the chart, is the next main target if strength continues. The primary objective for sellers is to end the pattern of higher lows, preferably with acceptance back within the previous week’s range.
In terms of levels, the Smashlevel is at 6075, marking today’s afternoon pullback low. Holding above this level signals strength, targeting 6096/6100 (in process), with a final target at 6119 under sustained buying pressure, effectively cleaning up the poor structure from the FOMC on December 18th. Conversely, failure to hold above 6075 would target 6061, with a final target at 6049 under sustained selling pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 6075.
Holding above 6075 would target 6100 / 6119
Break and hold below 6075 would target 6061 / 6049
Additionally, pay attention to the following VIX levels: 15.88 and 14.24. These levels can provide confirmation of strength or weakness.
Break and hold above 6119 with VIX below 14.24 would confirm strength.
Break and hold below 6049 with VIX above 15.88 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.
Thanks Smash!
Thank you!