ES Daily Plan | July 3/4/5, 2024
Today's session ended with closing strength. Monitor for continuation or lack thereof.
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'.
During Monday's RTH session, the market dipped to fill one of the two remaining single prints from June 17th before rebounding back to value. In today's overnight session, the gains from the previous day were erased, with the market dropping to fill the last set of single prints at 5503.25, printing an overnight low of 5502.75. We carry forward this last set of single prints as it remains unfilled in RTH. The RTH session opened below the multi-day value but quickly showed no interest in staying there, instead beginning to consolidate back within the value area above the 5523 level. Simply the lack of initiating sellers triggered a value traverse, hitting all upside targets.
Friday’s session ended with closing weakness, resulting in a downward spike below the highlighted multi-day value area. The inability to maintain downside momentum led to a return to value. Today's session did the exact opposite, closing with strength and an upward spike above the multi-day value area. The strongest response would involve establishing value within or above the spike area, targeting 5588+, while failure to do so would open the door for another multi-day value traverse toward the 5531/5521 area.
Despite the shortened session tomorrow, there's plenty of key data including ADP, Jobless Claims, ISM Services PMI, and FOMC minutes. As for myself, I'll wrap up the week and be back over the weekend to prepare for the next week. Happy 4th of July!
For tomorrow, the Smashlevel (Pivot) is 5560, representing today’s M-period spike base. Holding above 5560, indicating accepting of today’s closing strength, would target the resistance area from 5578 to the overnight ATH at 5588. Acceptance above 5588 would then target 5600. In the case of continued strength, the target would be the Weekly Extreme High of 5615. Break and hold below 5560 would target today’s breakout singles at 5549. Acceptance within today’s lower distribution would then target a traverse of the multi-day value toward the support area from 5531 to 5521.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5560.
Holding above 5560 would target 5578 / 5588 / 5600
Break and hold below 5560 would target 5549 / 5531 / 5521
Additionally, pay attention to the following VIX levels: 12.54 and 11.52. These levels can provide confirmation of strength or weakness.
Break and hold above 5600 with VIX below 11.52 would confirm strength.
Break and hold below 5521 with VIX above 12.54 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.
5560 to the tick!
Thanks Happy 4th of July Smash!
Incredible day Smash- Hope you're well