ES Daily Plan | July 19, 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
The overnight session stayed within yesterday’s range, with sellers unable to push prices below Wednesday’s RTH session low, and buyers struggling to gain meaningful traction above the Smashlevel of 5652. Heading into the RTH session, the focus was on whether sellers could maintain the downside momentum following yesterday’s true gap lower. The primary nuance to monitor, as mentioned in the pre-open post on X, was buyers' ability to establish value above yesterday’s value area. Despite a decent effort during the initial balance, buyers were unable to absorb the heavy aggressive selling activity that entered the market in the C-period, which ultimately set the tone for today’s session. The C-period quickly sliced through the initial balance low, the prior day's low, and cleaned up the poor low at 5630, which was the initial downside target. The D-period saw a continuation lower, tagging the final downside target at 5605. Meanwhile, the VIX broke through its resistance level of 15.08, indicating the potential for further weakness if sellers could maintain pressure below 5605.
The PM session saw a bounce after the G-period ended the intraday one-time framing down. However, sellers quickly re-entered within the D-period single prints during the H-period, taking prices back below 5605. It was noteworthy how the market, after breaking through the FS VWAP during the C-period, failed to retest it throughout the remainder of the session—an indication of a strong trend day. For those paying close attention, I had highlighted 5585 as a potential downside target on yesterday's chart for a strong trend day, tagged later in the session. Note that we tested the weekly support area today, coming within 10 handles of the Weekly Extreme Low at 5560.
The market saw a downside continuation today, forming a double distribution and effectively ending the weekly one-time framing up. This move also led to a retest of the breakout point from July 3rd. The upper end of the highlighted lower distribution, which aligns with the previous week’s low, is of interest in the short-term.
In terms of levels, the Smashlevel (Pivot) is at 5615. Holding below this level, signaling weakness, targets a retest of the prior breakout point at 5585, with a final target at the support area between 5560 and 5550 under sustained selling pressure. Failure to hold below 5615 would open the door for a cleanup of today’s poor structure toward the resistance area from 5633 to 5643—a crucial area for sellers to defend.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5615.
Break and hold above 5615 would target 5633 / 5643
Holding below 5615 would target 5585 / 5560 / 5550
Additionally, pay attention to the following VIX levels: 16.64 and 15.22. These levels can provide confirmation of strength or weakness.
Break and hold above 5643 with VIX below 15.22 would confirm strength.
Break and hold below 5550 with VIX above 16.64 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.
Thank you for the excellent analysis and preparation for today. Honestly, I couldn't imagine starting the day without reading your newsletter....Thanks once again for everything you do, it's much easier when you have such detailed preparation.
Thanks! The monthly extreme is the big winner!