Discover more from Smashelito's ES/SPX Newsletter
ES Daily Plan | July 18, 2023
While the daily one-time framing up remains intact, sellers are faced with limited opportunities, emphasizing their primary objective of bringing it to an end.
Value overlapping to higher for a change.
During the overnight (ON) session, sellers made several attempts to break and establish acceptance below Friday's low of 4531. However, they encountered persistent difficulties in gaining downside traction. The lack of success during the Asian trading hours resulted in a notable reversal, leading to a test of the Smashlevel at 4540 (4539.25), where selling activity emerged. The next attack below 4531 was observed during the European session, but the aggressive sellers once again struggled to gain momentum as their efforts were absorbed by passive buyers. This dynamic was clearly visible on the footprint chart below. Consequently, a poor low was established, trapping sellers at poor location and indicating their limited strength. It’s worth noting that the VIX printed a high of 14.00, with 14.02 being the resistance level mentioned in the previous plan.
The RTH session opened below Friday's value area, and following a lack of activity below the opening level, the market promptly tested the 4540 level, resulting in the auction momentary stalling. In situations where the market encounters a battle around a pivot level, it is often preferable to observe and let the other participants engage in the battle before getting involved. The B-period started to establish value above 4540 (better location to get involved), while simultaneously displaying limited trading interest within the range of the preceding A-period. This observation suggested that sellers were finding it difficult to prevent buyers from accessing Friday's value area, thereby signaling the potential for a traverse of the value area towards the next target of 4555 on the upside. The E/F-period established a poor high, falling just 6 ticks short of reaching 4555, which led to an inventory adjustment. This afternoon pullback was picked up by buyers in G-period, resulting in a clean up of the poor high. The closing session was fairly interesting, as buyers managed to print another higher high on the daily, falling only 4 handles short of reaching the previous upside target of 4570 (4565.50). However, the session closed back within the value area, leaving another excess high.
Speaking of value, today‘s value is slightly overlapping to higher, suggesting that the upward auction is at least taking a breather. This comes after four consecutive sessions with value developing cleanly higher. However, while the daily one-time framing up remains intact, sellers are faced with limited opportunities, emphasizing their primary objective of bringing it to an end. Buyers managed to migrate the short short-term value (5-day VPOC) higher, shifting it from 4438 to 4544, which was their primary objective. Overall, the buyers are not facing significant trouble as long as the weekly breakout is maintained - trouble starts to kick in below. I will use today’s afternoon pullback low of 4546 as a short-term reference point.
For tomorrow, the Smashlevel (Pivot) is 4546, representing today’s afternoon pullback low. Holding above 4546 would target the resistance area ranging from 4561 to 4570, as well as the last upside target of 4586, in the case of continued strength. Break and hold below 4546 would target the support area ranging from 4525 to the last downside target of 4516.
Going into tomorrow's session, I will observe 4546.
Holding above 4546 would target 4561 / 4570 / 4586
Break and hold below 4546 would target 4525 / 4516
Additionally, pay attention to the following VIX levels: 14.16 and 12.76. These levels can provide confirmation of strength or weakness.
Break and hold above 4586 with VIX below 12.76 would confirm strength.
Break and hold below 4516 with VIX above 14.16 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.