ES Daily Plan | January 7, 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 kicked off with a rejection of the 5993 level, finding sellers within Friday’s K-period excess high. The initial downside target was to traverse Friday's upper distribution and test the 5965 level; however, buyers stepped in at Friday's M-period low to the tick before making another attempt to regain 5993. The successful break of 5993 triggered a notable overnight rally, tagging all upside targets, including the final target at 6034. Notably, the VIX remained neutral throughout the session, staying between its support and resistance levels.
The RTH session opened near the 6034 target, with the market holding above the opening level, showing no interest in an inventory correction—an important signal early in the session. The initial test of the overnight high during the A-period resulted in a pullback, a typical fade setup when gapping higher. However, the opening level held firm, negating the potential for a larger inventory correction. Shortly after, the overnight high was regained, which I personally found less favorable. All upside targets had already been met, and the VIX did not confirm strength. While this isn’t a signal to short, chasing further upside becomes less appealing the higher we grind because of the liquidation risk of late longs. A slow upward grind unfolded during the initial five periods, ultimately filling the old gap at 6063.25, the obvious target.
Following the gap fill, the market gradually started to punish late buyers, eventually retracing below the 6034 level and closing the session with a double distribution trend day to the downside. The true gap higher, which remained unfilled, immediately ended the weekly one-time framing down and shifted the daily to one-time framing up—outlined as the market's strongest response.
Today’s session was characterized by morning strength after a true gap higher, followed by afternoon weakness upon filling the old gap at 6063.25. A double distribution to the downside formed, but today’s gap remained unfilled. Buyers remain in short-term control as long as today's gap holds—trouble would start to kick in with acceptance back within last week’s range.
In terms of levels, the Smashlevel is at 6009. Holding above this level would target the initial balance low at 6029, with a final target at the resistance area between 6056 and 6066 under sustained buying pressure. Conversely, failure to hold above 6009 would open the door to filling the gap at 5996.75, with a final target at 5965 under sustained selling pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 6009.
Break and hold above 6009 would target 6029 / 6055 / 6065
Holding below 6009 would target 5996 / 5965
Additionally, pay attention to the following VIX levels: 16.94 and 15.14. These levels can provide confirmation of strength or weakness.
Break and hold above 6065 with VIX below 15.14 would confirm strength.
Break and hold below 5965 with VIX above 16.94 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.
The evil B-period!
Smash level 6009 tagged for the win 😉