ES Daily Plan | June 21, 2023
Although the buyers made an impressive comeback after hitting the last downside target, today's gap remained unfilled (4451).
Will sellers be able to capitalize on it or was today's flush all they got?
Contextual Analysis
The immediate area of interest ahead of today’s session was 4455-4447, which we used to gauge the strength/weakness. Throughout the overnight (ON) session, sellers consistently defended the level of 4447 during both the Asian and European trading hours. The VIX contributed to this effort as it traded above its resistance level of 14.22.
As a result of the overnight weakness, the regular trading hours (RTH) session opened with a true gap to the downside. After a very quick look below and fail of the ON low, an minor inventory correction took place. However, despite a solid buying effort from an order flow perspective, this correction failed to fill the gap at 4451, nor did it test the level of 4447. The A-period experienced a Max Delta of +3118 but ultimately closed at +799, indicating the active participation of aggressive buyers followed by aggressive sellers subsequent to the absorption. The last downside target of 4418 was met and exceeded in B-period. Despite the confirmation of weakness from the VIX, the sellers missed an opportunity to capitalize on it by failing to sustain below 4418, which could have resulted in further downside potential. Despite a V-shaped reversal, the market once again fell short of closing the gap and testing the afternoon pullback low from 6/15 (4447), resulting in some weakness towards the end of the session.
The daily has returned to a 3-day balance following the break of the previous day’s low. Although the buyers made an intraday comeback, the unfilled gap is viewed positively from the sellers' perspective. In the previous plan, we discussed the highlighted gray boxes and the market ultimately closed between them after rejecting both. The short-term outcome will be significantly influenced by which box the market establishes acceptance within. Note how Thursday’s trend day, which exceeded the prior Weekly Extreme High of 4430, has now been completely reversed after just two sessions. Contextual awareness will help you avoid emotional impulses and the tendency to chase after trades at poor location. The main purpose of these plans is to provide you ideas on where you should consider engaging in trades and, more importantly, where you should avoid getting involved. Speaking of Extreme levels, today's low (poor low) coincides with the Monthly Extreme High (June) of 4410, which is important for buyers to maintain to prevent additional weakness.
Note the high volume nodes (HVN) located within each box. Today, the lower HVN was tested and found buying activity. The buyers aim to get back within box #1, and close today’s gap in the process. In contrast, sellers are aiming to take advantage of the market's inability to fill the gap and Friday’s excess high. They seek to establish acceptance within box #2, to challenge today’s poor low and potentially triggering a downside break. Using today’s LVN of 4428 as short-term pivot.
Going into tomorrow's session, I will observe 4428.
Holding above 4428 would target 4451 / 4467
Break and hold below 4428 would target 4411 / 4396
Additionally, pay attention to the following VIX levels: 14.58 and 13.18. These levels can provide confirmation of strength or weakness.
Break and hold above 4467 with VIX below 13.18 would confirm strength.
Break and hold below 4396 with VIX above 14.58 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.
ES Weekly Plan | June 19-23, 2023
🟩 Daily: OTFU | Ends: 4451 🟩 Weekly: OTFU | Ends: 4351.25 🟩 Monthly: OTFU | Ends: 4062.25 Weekly Extreme High: 4540 Weekly Extreme Low: 4370 As usual, a detailed daily plan will be published tomorrow.
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.
I feel like I’m the only one excited for Fridays excess and todays balance. Then again I primarily trade NQ and this has been the most balanced trading in 8 weeks or so.
Smashy, Ive wondered this for ages, how do you calculate your weekly & monthly extremes? I know its not reasonable to explain this expertise in 3-4 lines.. Is there a youtube edu or book you recommened to learn about this skill set?