ES Daily Plan | July 1, 2024
The highlighted spike area from Friday’s session is of interest in the short term, as it is located below the multi-day value area.
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.
Visual Representation
Contextual Analysis
Price can have three relationships to value: it can be above, below, or within it. "Responsive" behavior aligns with expectations, while "Initiating" behavior deviates from expectations.
• Buying below value is expected and thus considered responsive activity.
• Buying above value is unexpected and thus considered initiating activity.
• Selling above value is expected and thus considered responsive activity.
• Selling below value is unexpected and thus considered initiating activity.
For a more comprehensive understanding of these principles within the framework of Auction Market Theory (AMT), consider exploring 'CBOT - A Six-Part Study Guide to Market Profile'.
On Friday, a new ATH was printed at 5585 in RTH; however, it fell short of taking out the overnight ATH at 5588, which remains a reference to carry forward. The lack of initiating buyers after the opening squeeze resulted in a return back to value and the formation of another outside day down.
The highlighted spike area from Friday’s session is of interest in the short term, as it is located below the multi-day value area. Acceptance of Friday’s closing weakness will target a cleanup of the structure from the trend day on the 17th, while a rejection would target a multi-day value traverse toward 5548 and 5558.
For tomorrow, the Smashlevel (Pivot) is 5528, representing Friday’s M-period spike base, coinciding with the multi-day value area low (VAL). Break and hold above 5528, indicating a lack of initiating sellers, would target a value traverse toward the resistance area from 5548 to 5558. Holding below 5528, indicating acceptance of Friday’s closing weakness, would target Friday’s low of 5511. Acceptance below 5511 signals intraday bearish momentum, targeting the 5490, effectively filling the remaining single prints from 6/17.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5528.
Break and hold above 5528 would target 5548 / 5558
Holding below 5528 would target 5511 / 5490
Additionally, pay attention to the following VIX levels: 12.96 and 11.92. These levels can provide confirmation of strength or weakness.
Break and hold above 5558 with VIX below 11.92 would confirm strength.
Break and hold below 5490 with VIX above 12.96 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
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.
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