ES Daily Plan | July 18, 2024
My preparations and expectations for the upcoming session.
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
Today's main focus was whether the market would accept or reject yesterday’s closing strength. The overnight session saw a sharp rejection, leading to a significant move lower that cleared all downside targets. As a result, the RTH session opened with a notable true gap down. In the pre-open post on X, I mentioned that a weak market would hold below this spike area, targeting the 5643 HVN. The market saw an inventory correction during the A-period, testing the spike area from below, where sellers were active against the full session VWAP—a reliable reference to lean against when the market is directional. Traders tracking the VIX levels had additional confluence during this sequence, as it was retesting its broken resistance level. I will provide a visual on Substack for reference.
As always, I'm not in a hurry to find reversals when the market is trading below its final intraday target (5666), with the VIX confirming weakness by holding above its resistance (13.74). Sellers managed to tag the HVN at 5643, test the Monthly VWAP, and shift the 5D VPOC back to 5643, forming a b-shaped profile. It's notable how the Monthly Extreme High of 5715 remains a significant hurdle for buyers. However, another test might not be as pleasant for sellers.
Tuesday’s closing strength was sharply rejected today, resulting in a true gap down followed by a downside continuation, tagging the high volume node (HVN) at 5643, and testing the Monthly VWAP. The key question now is whether sellers can follow through tomorrow, or if buyers will replicate last week's squeeze when a b-shaped profile was established.
In terms of levels, the Smashlevel (Pivot) is at 5652, marking the afternoon rally high. Holding below this level, signaling sustained weakness, targets the poor low at 5630, with a final target at the support area between 5615 and 5605 under sustained selling pressure. Failure to hold below 5652 below would open the door for a retest of the spike area from 5666 to 5676.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5652.
Break and hold above 5652 would target 5666 / 5676
Holding below 5652 would target 5630 / 5615 / 5605
Additionally, pay attention to the following VIX levels: 15.08 and 13.88. These levels can provide confirmation of strength or weakness.
Break and hold above 5676 with VIX below 13.88 would confirm strength.
Break and hold below 5605 with VIX above 15.08 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.
Thanks Smash! Hope you feel better!