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ES Daily Plan | July 3-5, 2023
Large true gap to the upside on Friday, which remains unfilled.
The question is whether the market will establish acceptance at the higher prices observed on Friday, or will it return back to value.
Due to the holiday, I will keep it brief and concise. The regular, in-depth plans will resume following Wednesday's session. I strongly suggest taking a look at the weekly plan that was published yesterday, which includes a couple of scenarios that I will be observing going forward.
Friday’s session opened with a large true gap to the upside, which remains unfilled. Note that the short and medium-term value is located at 4419, which is 70 handles below Friday's settlement. The question is whether the market will establish acceptance at the higher prices observed on Friday, or will it return back to value, which holds the potential to act as a downside magnet. If acceptance is successfully established at higher prices, it would be a bullish indication. Conversely, returning back to the value, effectively negating Friday's move, would be a preferred outcome for sellers. The daily and the monthly is one-time framing up, while the weekly is in a 3-week balance following the break of the previous week’s low.
For tomorrow, the Smashlevel (Pivot) is 4488, representing both Friday's IB (Initial Balance) high and the settlement. This was essentially where change took place on Friday; however, it was breached after-hours. Break and hold above 4488 would target 4503, which is the start of the excess from the 4/21 session from 2022, as well as the last upside target of 4520. Holding below 4488 would target the weekly level of interest, and prior weekly extreme high of 4470. Break and hold below 4470 would target the last downside target of 4456. In the event of further weakness, there is an unfilled gap at 4437.75.
Going into tomorrow's session, I will observe 4488.
Break and holdabove 4488 would target 4503 / 4520
Holding below 4488 would target 4470 / 4456
Additionally, pay attention to the following VIX levels: 14.24 and 12.96. These levels can provide confirmation of strength or weakness.
Break and hold above 4520 with VIX below 12.96 would confirm strength.
Break and hold below 4456 with VIX above 14.24 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.