ES Daily Plan | July 2, 2024
There isn’t much to add. The market continues to attempt moves away from value, only to fail and return. Powell is scheduled to speak tomorrow at the market open.
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'.
Friday’s spike area was rejected, attracting responsive buyers in the overnight session, leading to the RTH session opening within Friday’s value area. The initial balance showed weakness as sellers not only traversed the spike area but also explored prices below last week’s low, effectively ending the weekly one-time framing up. Despite the initial weakness in RTH, sellers only managed to fill one of the two remaining single prints from 6/17 (the last one at 5503.25). Stronger sellers would have completed both fills and tested the multi-day balance low. Instead, as we have seen for the past 10 days, the price returned to value.
There isn’t much to add. The market continues to attempt moves away from value, only to fail and return, a pattern typically seen in balanced conditions like we are experiencing now. The weekly has also returned to balance after the break of last week’s low. It’s crucial to not overstay your welcome in any trade and remain nimble. Powell is scheduled to speak tomorrow at the market open.
For tomorrow, the Smashlevel (Pivot) is 5523, representing the multi-day value area low (VAL). Holding above 5523 would target a value traverse toward the resistance area from 5548 to 5558. In the case of continued strength, the target would be the multi-day balance high. Break and hold below 5523 would target the multi-day balance low from 5500 to 5490, effectively filling the remaining set of single prints from 6/17.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5523.
Holding above 5523 would target 5548 / 5558
Break and hold below 5523 would target 5500 / 5490
Additionally, pay attention to the following VIX levels: 12.74 and 11.68. These levels can provide confirmation of strength or weakness.
Break and hold above 5558 with VIX below 11.68 would confirm strength.
Break and hold below 5490 with VIX above 12.74 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! I wouldn't be surprised to see continued balance for the rest of the week. Let's see what Powell brings!
I've noticed heavier marks on the same heatmap settings recently, is something changing in the market?