ES Daily Plan | March 13, 2024
A break above 5192 held potential for a directional move, a scenario that unfolded during today's notably emotional session, resulting in the formation of a p-shaped profile.
Visual Representation
For new followers, the yellow levels highlighted at the bottom are the primary levels that I focus on intraday. My strategy for preventing impulsive decisions at unfavorable locations involves following a simple yet effective rule of exercising caution when initiating trades outside of the yellow levels. This implies that I am cautious chasing longs above the final yellow upside target and shorts below the final yellow downside target. It is crucial to understand that refraining from chasing a trade is not an automatic invitation to initiate a trade in the opposite direction.
Contextual Analysis
Just a quick reminder that I have transitioned to the ESM24 (June) contract. Please note that I do not back-adjust my charts. On the chart, I have marked the settlements for both ESH24 (March) (5129) and ESM24 (June) (5192.50) from Friday’s session (+63.50 difference). I suggest marking 5129 on your chart, as roll gaps often tend to get filled. Whether you choose to back-adjust or not, the crucial point is that my intraday targets remain the same.
This week, as outlined in the Weekly Plan, our main focus has been on Friday's ESM24 settlement at 5192.50, which acted as resistance during Monday's session. In the previous daily plan, I highlighted the potential for a phase of imbalance should the 5192 level be breached, given its significance as both our daily and weekly balance high. There is no rocket science behind this, as markets are constantly shifting between balance (consolidation) and imbalance (trending) phases. Understanding these dynamics and adjusting your strategies accordingly is crucial for avoiding trades at unfavorable locations.
During the overnight session, buyers were quick to break and explore prices above 5192. However, the main event was, of course, the CPI data. The market demonstrated its usual volatility after the release, with an initial drop that was picked up, leading to a test of the resistance area from 5220 to 5230, where sellers were active.
The RTH session opened on a true gap up, further accentuating the significance of the 5192 level. The gap was filled immediately, allowing sellers to gain some traction within Monday’s value area. As I always emphasize, if the gap is filled, it's crucial to monitor whether acceptance can be established within the prior day's range, indicating a bearish outcome. Failure to do so always leaves the door open for strength later in the session. That said, when the A-period witnessed the gap-fill, you immediately recognize that for any bearish outcome, the subsequent bounce must encounter sellers within Monday’s range. If the market struggles to regain 5192, you can work on the short side toward downside targets. Conversely, if 5192 is reclaimed, there is no reason to attempt fading it, suggesting that the long side is easier to work. 5192 was quickly reclaimed, with VIX breaking its support level of 14.48 for the second time.
Up until the D-period, the price action was emotional, forming single prints in both the B and C-period. During the G-period, a liquidation break was observed, which buyers had no trouble picking up. With VIX confirming strength, there was potential for further upside if buyers were able to maintain above 5230, which they had more success with during the PM session, resulting in the next level of 5244 getting reached.
A break above 5192 held potential for a directional move, a scenario that unfolded during today's notably emotional session, resulting in the formation of a p-shaped profile. In terms of immediate focus, I’m keeping an eye on the low volume node (LVN) at 5238. Buyers are aiming for an upside continuation, and are not in any trouble as long as the support area from 5202 to 5192 remains intact.
For tomorrow, the Smashlevel (Pivot) is 5238, representing the low volume node (LVN) at the upper end of today’s profile. Holding above 5238 would target the next level of interest situated at 5260. Acceptance above 5260 would target the resistance area from 5280 to the final upside target of 5290, representing the Weekly Extreme High. Break and hold below 5238 would target the CPI high at 5221. Acceptance below 5221 would target the support area from 5202 to the final downside target of 5192—a crucial area for buyers to maintain.
Levels of Interest
Going into tomorrow's session, I will observe 5238.
Holding above 5238 would target 5260 / 5280 / 5290
Break and hold below 5238 would target 5221 / 5202 / 5192
Additionally, pay attention to the following VIX levels: 14.54 and 13.14. These levels can provide confirmation of strength or weakness.
Break and hold above 5290 with VIX below 13.14 would confirm strength.
Break and hold below 5192 with VIX above 14.54 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.
Weekly Plan
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.
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Thank Smash!