ES Daily Plan | July 24, 2023
Friday's session resulted in an inside day, indicating short-term balance.
The general guideline suggests going with the break of the inside day and observing for continuation (Acceptance) or lack thereof (Rejection).
Contextual Analysis
Ahead of Friday's session, the main question was whether the market would witness two-sided activity following the successful end of the daily one-time framing up by the sellers, achieved through breaching Wednesday's low. Both Friday’s overnight (ON) and the regular trading hours (RTH) sessions remained within Thursday’s range, resulting in the formation of an inside day and a 4-day balance. The medium-term value (20-day VPOC) has shifted from 4419 to 4485. As always, be sure to check out the Weekly Plan, published yesterday, which provides a broader perspective and highlights significant levels of interest to watch in the coming week.
After Thursday's session, the daily returned to balance, and Friday's inside day served as confirmation of the market taking a short-term breather, engaging in two-sided activity. The general guideline suggests going with the break of the inside day and observing for continuation (Acceptance) or lack thereof (Rejection). In case of continuation, the extremes of the 4-day balance become the targets. If there's a lack of continuation, the middle and opposite side of the inside day are targeted. Remember that these guidelines also apply to the 4-day balance. The inside day serves as a "mini-balance" within a larger balance area. Considering the yellow intraday targets, a downward break from the 4-day balance area seems more attractive for tomorrow, as the last downside target is at 4525, contrasting with the last upside target situated at 4606. However, it's important to note that the prevailing trend is to the upside, which often makes it more difficult for breakdowns to succeed. Therefore, a break and hold below 4545 would indicate a shift in tone.
For tomorrow, the Smashlevel (Pivot) is 4572, representing the low volume node (LVN), separating Thursday’s distributions. Break and hold above 4572 would target the high of Friday’s inside day at 4584. Break and hold above 4584, indicating a successful breakout, would target the resistance area from 4597 to the last upside target of 4606. Holding below 4572 would target 4558, as well as the 4-day balance low at 4545. Break and hold below 4545, would shift the daily to one-time framing down, and target the last downside target of 4525.
Going into tomorrow's session, I will observe 4572.
Break and hold above 4572 would target 4584 / 4597 / 4606
Holding below 4572 would target 4558 / 4545 / 4525
Additionally, pay attention to the following VIX levels: 14.72 and 13.26. These levels can provide confirmation of strength or weakness.
Break and hold above 4606 with VIX below 12.88 would confirm strength.
Break and hold below 4525 with VIX above 14.32 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.
A huge selling wall is blocking them.
Fantastic analysis as usual, especially in conjunction with the weekly 4480-4650 extremes. FOMC week could provide some more fuel or do significant damage.