ES Daily Plan | March 17, 2023
Today’s session resulted in a triple distribution trend day to the upside, and we ultimately reached 3990, which has been an upside magnet.
To maintain their directional conviction, buyers want to hold 3972.
Contextual Analysis
During the overnight (ON) session, the market dropped down and promptly tested the Smashlevel of 3920. The buyers picked up the drop at 3920.25 and a decent upward move followed, which cleaned up the poor structure from the prior emotional ON session. I posted a visual of this on Twitter.
The main distribution from that prior ON session held as resistance during the Asian session. The European session was much weaker as sellers managed to break 3920, leading to a test of the next marked level of interest at 3900 before the opening of the RTH session. 3900 ended up being a level that attracted buying activity in today’s session.
The upside during the initial balance (first hour of RTH) was capped by 3920, while the downside was capped by 3900. The change in today’s session took place when buyers were able to break 3920 in C-period after the B-period failed to take out the low of the A-period. The C-period formed single prints and had a positive delta of 11878. During this impulsive upside move, the VIX level of 24.52 was breached, indicating the possibility of the level of 3982 being in play, which was the last upside target for today’s session. Traders were presented with an opportunity to enter the market during the D-period's pullback, which coincided almost precisely with the VIX retesting the level of 24.52 from below. I will provide a separate recap of today's session on Substack to highlight this point further.
In the E-period, the last upside target of 3982 was almost reached (3978.75), and it was certainly reached in the G-period. The highlighted resistance area from previous plan was between the level of 3995-3982, and note the distribution that was established in that area on the profile. The buyers have been targeting the 3990 upside magnet for the entire week, and they successfully reached it during today's session. This is the medium-term value (20-day VPOC). In previous plan, we discussed about the poor structure that persisted above, and the session today effectively addressed and resolved a lot of those structural deficiencies.
Today’s session resulted in a triple distribution trend day to the upside, and we ultimately reached 3990, which is the 20-day VPOC. The daily is one time framing up as buyers successfully breached the 3-day balance to the upside. The level of interest in the short term is 3972, which serves as both the prior 3-day balance high and the afternoon pullback low of today. To maintain their directional conviction, buyers want to hold that level. Sellers want to see acceptance back within the prior 3-day balance to target fills of today’s poor structure. The buyers are not in any huge trouble as long as the support area from 3951 to 3941 holds (CPI high 3940). Trouble would kick in if the lower distribution of today is revisited, which would put today’s rally into question.
Going into tomorrow's session, I will observe 3972.
Holding above 3972 would target 3995 / 4018 / 4040
Break and hold below 3972 would target 3951 / 3941
Additionally, pay attention to the following VIX levels: 24.26 and 21.70. These levels can provide confirmation of strength or weakness.
Break and hold above 4040 with VIX below 21.70 would confirm strength.
Break and hold below 3941 with VIX above 24.26 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. Twitter: @smashelito | FAQ: smashelito.com
Any suggestions on learning renko?
How do find the exact VIX level for a specific price line?