ES Daily Plan | June 23, 2023
After an underwhelming performance by the sellers, the buyers demonstrated strength by closing above today's (and yesterday's) value area.
My immediate focus is on whether buyers can sustain above it.
Contextual Analysis
The downside momentum from yesterday's PM-session carried over into today’s overnight (ON) session, as prices immediately began exploring levels below the previous day's low. The downside pressure stalled at our next level of interest 4396, leading to the formation of a distribution. I’ve added the volume and delta profile from the ON session on the right. Take note of the significant aggressive selling (passive buying) occurring below the overnight VPOC.
The RTH session opened with a true gap to the downside. The inability of the sellers to challenge the ON low and their quick loss of control over the opening level prompted a counter move. The sellers were not able to follow through to the downside following the heavy selling effort from the overnight session, ultimately fueling the counter move. As always, if the gap is filled, it's crucial to monitor whether acceptance can be established within the prior day's range, as this would be the most bullish outcome in today’s case. The buyers faced no significant obstacles in this scenario, with only the C-period closing below the low of the previous day. Today's price action was similar to that of yesterday's, as the market primarily traded within the initial balance range throughout the session. However, the notable difference today was that buyers successfully maintained a range extension to the upside during the PM-session to close above today’s value area (and yesterday’s). Notable orderflow activity was observed at 4410, which is the Monthly Extreme High (June). This is a level that I will continue to monitor going forward.
The daily one-time framing down remains intact. The buyers managed to establish an excess low and concluded the session at the highs. However, today’s low was very close to the ON low (3 ticks), making it potentially weak. This outcome proves to be quite disappointing for the sellers, who failed to take advantage of today's true downside gap. The question at hand is whether today's low marks the end of this short-term downward auction and the beginning of another one.
For tomorrow, the short-term pivot (Smashlevel) is 4420-4418, which essentially is where today’s change took place, coinciding with the Weekly VWAP. The primary objective for buyers is to end the daily one-time framing down (in RTH) and target the resistance area from 4441 to 4451 by taking out the highlighted stops. There is potential for a short-covering rally with acceptance within box #1. The sellers aim to return within today’s value area to negate the range extension in the PM-session. Such a scenario would target the 4410 level and today’s excess low. The most bearish outcome would involve a break and hold below 4396, which would target the highlighted support area.
Going into tomorrow's session, I will observe 4420.
Holding above 4420 would target 4441 / 4451
Break and hold below 4420 would target 4410 / 4396
Additionally, pay attention to the following VIX levels: 13.58 and 12.24. These levels can provide confirmation of strength or weakness.
Break and hold above 4451 with VIX below 12.24 would confirm strength.
Break and hold below 4396 with VIX above 13.58 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 failed to mention the VIX, which underwent a testing phase of its resistance level at 13.88 (with a high of day at 13.98) during the overnight consolidation. However, it was unable to break through decisively. Subsequently, a crush occurred, giving sellers a hard time.
Thank you as always!