ES Daily Plan | June 26, 2023
The daily remains in one-time framing down mode, characterized by the formation of lower highs.
A break of Friday's high ends the daily OTFD, while a break of the low ends the Weekly OTFU. Which event occurs first?
Contextual Analysis
The immediate focus ahead of Friday’s session was on buyers’ ability to hold above 4420 following Thursday’s close above the value area of both Wednesday and Thursday. In the overnight (ON) session, the buyers quickly lost control of 4420, resulting in the formation of single prints during the Asian hours, indicating that stops were being triggered. Both downside targets of 4410 and 4396 were not only met but also exceeded prior to the opening of the regular trading hours (RTH). VIX breached its resistance level of 13.58 shortly after the break of 4396, enabling sellers to extract a few more handles.
The RTH session opened with a true gap to the downside, and you know the drill. If there is an early inability to break and sustain a move below the ON low, it can create opportunities to fade the market, targeting an inventory correction, as the market was 100% net short going into the RTH session. A very quick headfake below the ON low provided a counter-move, but with VIX above its resistance, the buyers struggled to gain traction. Consequently, the A-period proved to be quite tricky. However, during the B-period, the VIX dropped back below its resistance, enabling buyers to gain upside traction and making it more challenging to be a seller below the last downside target of 4396. During the PM-session, a range extension to the upside was observed, but it ultimately failed, leading to a new daily low in the last hour of RTH.
While the monthly and weekly are one-time framing up, the daily remains in one-time framing down mode, forming lower highs and lower lows. The previous week was an inside week, characterized by its price range being contained within the previous week’s range. Refer to the Weekly Plan published yesterday for the general guidelines regarding inside weeks. Obviously, the low of Friday, which represents the low of the inside week, is of significant interest in the short-term. If breached, the weekly OTFU ends.
For tomorrow, the Smashlevel (pivot) is 4397, which essentially is where Friday’s closing bounce found selling activity. Break and hold above 4397 would target the resistance area from 4410 to the last upside target of 4420, where the 5-day VPOC and the Monthly Extreme High is located. There is potential for a short-covering rally with acceptance above 4420 targeting several daily highs. Holding below 4397 would target Friday’s low and a potential break to the downside of the inside week targeting the poor structure from 6/12 and the last downside target of 4355. The roll gap is below 4355 in the event of further weakness.
Going into tomorrow's session, I will observe 4397.
Break and hold above 4397 would target 4410 / 4420
Holding below 4397 would target 4384 / 4370 / 4355
Additionally, pay attention to the following VIX levels: 14.14 and 12.74. These levels can provide confirmation of strength or weakness.
Break and hold above 4420 with VIX below 12.74 would confirm strength.
Break and hold below 4355 with VIX above 14.14 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 26-30, 2023
🟥 Daily: OTFD | Ends: 4408 🟩 Weekly: OTFU | Ends: 4381.50 🟩 Monthly: OTFU | Ends: 4062.25 Weekly Extreme High: 4470 Weekly Extreme Low: 4305 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.
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