ES Daily Plan | July 26, 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 session offered something for everyone. The main focus was on Wednesday’s highlighted spike area, which was rejected during the initial phase of the overnight session. A rejection could lead to a test of 5509 and 5530; however, the low volume node at 5490, noted prior to these levels, was of particular interest, as discussed in the previous plan. The 5490 level capped the upside, leading to price exploration below the spike area. The RTH session opened within the spike area, rejected the base of the spike during the A-period, and saw a downside continuation in the B-period. This move filled the ESM24 roll gap at 5437.50 and tagged the 5% correction level at 5435. The 5430 level served as both the final intraday and weekly downside target today.
As regular readers of my daily and weekly analyses and preparations know, this is not an optimal level for initiating new shorts. Being aware of this can help prevent emotionally-driven trading decisions based on price action. During the B-period, delta was negative by 8K at one point but ended at +2K after coming within 3 handles of 5430 and then reversing. The key takeaway was not to focus on catching the long but to avoid chasing shorts. The reversal that unfolded was absolutely vicious, reaching the final upside target of 5530, which is the most important high volume node (HVN) right know. Just as 5430 was not an ideal level for shorting, the 5530 level was not a place to chase emotional longs. Given the short-term downtrend, it was a must level to look for short setups. Those who did found the afternoon session quite rewarding. Today was a challenging session due to the emotional price action. However, if you know where to avoid initiating trades before the session even begins, you gain a significant advantage.
After a volatile and emotionally charged session that provided opportunities for all, sellers ultimately managed to close near the lows and below the MA50, after rejecting the test of the high volume node at 5530. Buyers aim to re-enter Wednesday's range, while a very weak market will remain below Wednesday’s spike area, with potential for further downside if 5430 is breached. PCE data tomorrow pre-open.
In terms of levels, the Smashlevel is at 5462, marking Wednesday’s low. Holding below this level signals continued weakness, targeting the final weekly target at 5430. Acceptance below 5430 would target a downside continuation toward 5410 and the unfilled CPI gap at 5385.25 under sustained selling pressure. Failure to hold below 5462 would target the resistance area from 5490 to 5500.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5462.
Break and hold above 5462 would target 5490 / 5500
Holding below 5462 would target 5430 / 5410 / 5385
Additionally, pay attention to the following VIX levels: 19.56 and 17.34. These levels can provide confirmation of strength or weakness.
Break and hold above 5500 with VIX below 17.34 would confirm strength.
Break and hold below 5385 with VIX above 19.56 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 for all you do!
Absorption and orderflow reversal! But I didn't chase the evil C. VIX told me so.