ES Daily Plan | June 6, 2023
The trend of forming higher highs and higher lows remains intact following today's session. However, the sellers managed to get a close below 4285.
Holding below targets a traverse of Friday's lower distribution, while a break above would target today's unfinished business at highs.
Today’s ON session was largely uneventful. The profile was perfectly balanced, with trading taking place within Friday’s upper distribution. In both the Asia and Europe session, buying activity was observed within the highlighted key area ranging from 4285 to 4275, as discussed in the previous daily plan. Interest in this area persists.
The RTH session was pretty tricky, but it did offer several worthwhile opportunities. During the initial balance (first hour of RTH), the market tested and found buyers at the Smashlevel of 4285 (IB Low: 4285.75), resulting in a decent bounce considering the narrow range observed today. In the previous plan, I mentioned that the area from 4320 to 4327 was an interesting area to observe if responsive sellers would be active, especially if the market experiences an immediate upward move without a pullback. The primary reason for this was that the short-term value was located all the way down at 4190, which has remained unchanged after today's session. Unfortunately, the market fell short of reaching that area before buyers got themselves too long, forming a poor high just above the initial balance range. To see late buyers getting trapped following two consecutive trend day’s was not surprising, although I preferred it a little bit higher. Nonetheless, the trap was excellent as aggressive buyers above the IB high were absorbed by passive sellers, followed by aggressive sellers confirming the reversal.
Ultimately, this led to a clean up of the poor structure from Friday's session. The sellers failed to gain meaningful traction within Friday’s lower distribution following the test of 4275, which is the weekly level of interest from the Weekly Plan. I shared a tweet with a visual of the order flow activity at 4275, which confirmed interest.
It's important to keep in mind that levels alone are not meaningful unless they are confirmed by order flow. The VIX resistance level provided in the previous plan, was 15.32. Today’s HOD was 15.29.
The trend of forming higher highs and higher lows remains intact following today's session. It is worth noting that the short-term value remains at 4190. However, it is interesting to observe how the buyers are building value within the distribution above the unfilled gap (compare it to the previous plan). As the market is one-time framing up across all time frames, the buyers remain in full control of the auction. The primary objective for sellers is to put an end to the daily one-time framing up by breaking 4273. Note that today’s profile has unfinished business at both extremes, which means that I will basically play this as an inside day and go with the break and monitor for continuation, or lack thereof. All levels remain basically the same. An upside break of today’s range will target 4320 and the August high at 4327.50. Conversely, a downside break will target a traverse of Friday’s lower distribution.
Going into tomorrow's session, I will observe 4285.
Break and hold above 4285 would target 4304 / 4320 / 4327
Holding below 4285 would target 4275 / 4255
Additionally, pay attention to the following VIX levels: 15.48 and 13.96. These levels can provide confirmation of strength or weakness.
Break and hold above 4327 with VIX below 13.96 would confirm strength.
Break and hold below 4255 with VIX above 15.48 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.
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.