ES Daily Plan | July 25, 2023
ES Daily Plan | July 25, 2023
The market remains in a consolidation phase, where two-sided activity is the main theme, while awaiting further MGI.
The longer a consolidation lasts, the more significant the move out of it tends to be.
Contextual Analysis
Another fairly quiet session today. During the overnight (ON) session, the sellers were able to breach Friday's low (inside day), but ultimately lacked downside continuation. The aggressive selling pressure was absorbed by passive buyers, resulting in the formation of a poor low, followed by a subsequent reversal. I will provide a brief recap of today’s full session on Substack. It’s worth noting that the VIX printed a high of 14.30, with 14.32 being the resistance level mentioned in the previous plan.
The RTH session kicked off with a strong upward move, as the buyers tried to break out of Friday's inside day. This breakout attempt exhibited similarities with the sellers' attempt during the overnight session, as aggressive traders were absorbed by passive traders, resulting in a lack of continuation and ultimately failing to sustain the move. This particular sequence offered the most favorable fade setup during the entire session. After rejecting Friday's high, there was a test of the Smashlevel at 4572, leading to a decent bounce. These two scenarios unfolded within the initial balance (first hour of RTH), and the remainder of the session was characterized by choppy price action. In the J-period, the buyers made another attempt to push higher, but their efforts proved unsuccessful, resulting in a move back to value.
After Thursday's session, the main theme has been responsive activity as the daily returned to a state of balance. As always, it’s crucial to pay attention to the state of the market and adjust your strategy accordingly. The daily is now in a 5-day balance, awaiting more market generated information. Remember that the longer a consolidation lasts, the more significant the move out of it tends to be. Obviously, Wednesday's FOMC meeting has the potential to serve as a catalyst. Stay nimble.
For tomorrow, the Smashlevel (Pivot) is 4589, representing the level that put an end to the daily one-time framing up, and where buyers faced rejected during today’s PM session. Break and hold above 4589 would target the upper end of the 5-day balance at 4606, as well as the last upside target of 4620, in the case of continued strength. Holding below 4589 would target the prior Smashlevel at 4572, as well as the last downside target of 4558.
Going into tomorrow's session, I will observe 4589.
Break and hold above 4589 would target 4606 / 4620
Holding below 4589 would target 4572 / 4558
Additionally, pay attention to the following VIX levels: 14.66 and 13.18. These levels can provide confirmation of strength or weakness.
Break and hold above 4620 with VIX below 13.18 would confirm strength.
Break and hold below 4558 with VIX above 14.66 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.
Thank you Smash. You write ups are always appreciated.
Nice daily plan and analysis. Thank you. Which software are you using?