ES Daily Plan | January 29, 2024
I will use the 4922 level as a short-term reference point to assess which side of the balance extremes holds higher odds of being reached first.
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.
On Friday, a new all-time high was reached at 4934.25; however, buyers failed to maintain the upward momentum, resulting in a downward rotation and leaving behind a non-excess high that we carry forward. The primary objective for buyers was to shift the short-term value higher by consolidating at these higher prices, and they successfully achieved this on Friday with the 5D VPOC shifting to 4917 (4883). This shift is bullish in the context of the recent directional move to the upside, indicating that value continues to follow price.
As mentioned in the weekly plan, the market is one-time framing up across all time frames. However, the value has remained unchanged for the last three sessions, suggesting short-term balance—our immediate focus. I will use the 4922 level as a short-term reference point to assess which side of the balance extremes holds higher odds of being reached first.
The general guideline suggests going with the break of the highlighted 3-day balance area and observing for continuation (Acceptance) or lack thereof (Rejection). If there's a lack of continuation following a breakout attempt, it can trigger moves in the opposite direction. Remaining within the current multi-day balance area increases the odds of sustained responsive activity, emphasizing the importance of staying nimble.
For tomorrow, the Smashlevel (Pivot) is 4922, representing the level at which aggressive buyers were absorbed and trapped during Friday’s PM session. Break and hold above 4922 would target the current non-excess all-time high (ATH) at 4934.25. Acceptance above 4934.25 would target an upside continuation toward 4950, as well as the 100% range expansion level at 4960 (refer to the Weekly Plan). Holding below 4922, indicating that Friday’s afternoon sellers remain in short-term control, would target the lower end of the 3-day balance area at 4900—an inflection point last week. Acceptance below 4900 opens the door for a test of Tuesday’s afternoon pullback low of 4881, which aligns with a high volume node (HVN).
Levels of Interest
Going into tomorrow's session, I will observe 4922.
Break and hold above 4922 would target 4934 / 4950 / 4960
Holding below 4922 would target 4900 / 4881
Additionally, pay attention to the following VIX levels: 13.92 and 12.60. These levels can provide confirmation of strength or weakness.
Break and hold above 4960 with VIX below 12.60 would confirm strength.
Break and hold below 4881 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.
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.