ES Daily Plan | July 7, 2023

Despite a strong finish in today’s session, the daily is one-time framing down and today's gap at 4471 remained unfilled.

The very shallow afternoon pullback low of 4440 is of interest in the short-term.

ES Daily Plan | July 7, 2023

Contextual Analysis

Today, the overnight traders had a blast as they formed another multi-distribution profile, resembling the one from the previous session. The lower end of the 3-day balance area was swiftly reached during the Asian hours, where the downward pressure temporarily stalled. After reaching the balance low, the market remained in consolidation mode for approximately 8 hours, indicating a possible attempt to break down. This was accompanied by the VIX successfully breaching and maintaining its resistance level of 14.84, basically to the tick, during the European session. The downward break eventually materialized, indicating potential difficulties for buyers, as discussed in the previous plan. As a result, the last downside target of 4456 was met and exceeded already in the ON session.

As a result of the overnight weakness, the RTH session opened with a true gap to the downside. In contrast to the previous day, the ON low was swiftly taken out, accompanied by a continued rise in the VIX, confirming weakness. Holding below the last downside target of 4456 with the VIX confirming weakness, it is usually challenging to seek counter-trend positions due to the potential for further downside pressure. The market experienced a drop of an additional 37 handles, leading to a test of the medium-term value of 4419. Contextual awareness is the most important part of trading. The market's test of 4419, positioned just 9 handles away from the Weekly Extreme Low of 4410 and within the highlighted weekly support area from the weekly plan, indicates that it may be a solid area to book profits if one was short. Was it possible to seek reversals as the market approached the Weekly Extreme Low of 4410? Certainly, but considering the VIX surpassed 17 at one point, it personally held less appeal, resulting in today's RTH session being somewhat uneventful for me.

Despite buyers impressive V-shape reversal, the daily is now one-time framing down, and today’s gap remains unfilled (4471), forming a 3-day island above. However, the short-term value (5-day) remains at 4485 following yesterday’s shift from 4419. The consolidation+breakout scenario failed to materialize, but was today's session an opportunity for stronger buyers to join at lower prices, with the intention of resolving the unfinished business at the weekly balance highs? Gauging weakness/strength at 4440.

For tomorrow, the Smashlevel (Pivot) is 4440, representing today’s very shallow afternoon pullback low. Holding above 4440 would target the resistance area from 4461 to the unfilled gap at 4471. Break and hold above 4471 would target a return to the short-term value of 4485. Break and hold below 4440 would target today’s HVN from the AM session at 4425, as well as the last downside target of 4410.

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Going into tomorrow's session, I will observe 4440.

• Holding above 4440 would target 4461 / 4471 / 4485

• Break and hold below 4440 would target 4425 / 4410

Additionally, pay attention to the following VIX levels: 16.16 and 14.72. These levels can provide confirmation of strength or weakness.

• Break and hold above 4485 with VIX below 14.72 would confirm strength.

• Break and hold below 4410 with VIX above 16.16 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.

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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.

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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.