ES Daily Plan | January 23, 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 upside momentum established since last Wednesday’s 3-day balance breakout remains intact. The overnight session saw an immediate continuation higher, testing the 6096/6100 area marked by the December VPOC and a daily NVPOC. The market initially stalled there before resuming its upward move during the European session. The final upside target at 6119 was tagged almost the tick (ONH: 6119.25) before the RTH session opened, providing a shallow pullback.
Today's RTH session closely resembled Friday’s, with an opening near the final upside target (6119) following a true gap up, and the VIX holding above its support. You can find the recap of Friday’s session here. The market managed to reclaim the 6119 level after a shallow pullback, meaning chasing further upside was unfavorable given the lack of confirmation from the VIX, which remained above its support of 14.24. In these situations, I tend to step aside, as neither shorting nor longing is particularly appealing. Shorts become relevant only if the market fails to hold above 6119, while longs are not interesting, given that we opened 130+ handles above the short-term value (5D VPOC) of 5986. The market continued higher without me, tagging the next level of interest on the chart at 6136, before weakness unfolded into the close. Note how the market returned to our final intraday target at 6119 in the M-period, highlighting how tricky it can be to chase at an unfavorable location.
As discussed, the short-term value (5D VPOC) remains at 5986, and shifting it higher is the primary objective for buyers. Needless to say, the structure left below during this imbalance phase is extremely poor, with three true gaps and four daily naked (untested) volume point of controls (NVPOC). A market that shows no inclination to clean up poor structure is not one you'd want to fight against. Let sellers show us something first, such as breaking the pattern of higher lows.
Today's session marked the third true gap up since the swing low established last week, effectively cleaning up the remaining poor structure from the FOMC on December 18th—the main upside target. To keep things simple for tomorrow, I will monitor today’s value area. The ATH at 6163.75 (non-back-adjusted) serves as the upside magnet, while today’s gap is the downside magnet. Only a gap-fill and acceptance back within Tuesday’s range would introduce the potential for change.
In terms of levels, the Smashlevel is at 6122. Holding below would target 6100, with a final target at the unfilled gap at 6087.25 under sustained selling pressure. Conversely, failure to hold below 6122 would target a value traverse toward 6133, with a final target at 6163.75 under sustained buying pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 6122.
Break and hold above 6122 would target 6133 / 6144 / 6160-63
Holding below 6122 would target 6100 / 6087
Additionally, pay attention to the following VIX levels: 15.86 and 14.32. These levels can provide confirmation of strength or weakness.
Break and hold above 6163 with VIX below 14.32 would confirm strength.
Break and hold below 6087 with VIX above 15.86 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 very much for sharing your analysis!
Thank you!