ES Daily Plan | January 8, 2024
I will use Friday’s afternoon rally high at 4746 as a short-term reference point to assess the market's strength or weakness.
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, sellers continued the pattern of lower highs and lower lows on the daily chart, even after a 60-handle reversal following the retest of the FOMC breakout point during the overnight session. Notably, Friday's RTH session only partially filled the FOMC single prints. Monitoring this low volume node (LVN) will be crucial in the short-term.
As mentioned in the weekly plan, the key question at present is whether sellers can sustain the downward pressure and attempt to negate the FOMC breakout, or if stronger buyers will enter to defend it. I will use Friday’s afternoon rally high at 4746 as a short-term reference point to assess the market's strength or weakness.
For tomorrow, the Smashlevel (Pivot) is 4746, representing Friday’s afternoon rally high. Break and hold above 4746, would target the 5D VPOC at 4756, as well as the final upside target 4767—the 20D VPOC. There is potential for short-covering above 4767. Holding below 4746, indicating continued weakness, would target Friday’s opening level at 4730. Break and hold below 4730 would open the door to a cleanup of the FOMC breakout structure, targeting 4710. In the case of continued weakness, the final downside target is at 4694.
Levels of Interest
Going into tomorrow's session, I will observe 4746.
Break and hold above 4746 would target 4756 / 4767
Holding below 4746 would target 4730 / 4710 / 4694
Additionally, pay attention to the following VIX levels: 13.94 and 12.74. These levels can provide confirmation of strength or weakness.
Break and hold above 4767 with VIX below 12.74 would confirm strength.
Break and hold below 4694 with VIX above 13.94 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.
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.