ES Daily Plan | March 18, 2024
On Friday, we saw a downside move away from the three closely clustered daily highs, which we carry forward as unfinished business. Can sellers follow through?
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
During the previous week, I transitioned to the ESM24 (June) contract. As I refrain from back-adjusting my charts and keep historical prices unchanged, the presentation of my charts will diverge from those that undergo back-adjustment. This choice is rooted in personal preference, as there is no definitive right or wrong approach in this matter; both methods have their respective pros and cons. As short-term traders, the impact is minimal as we navigate this market day by day, and our intraday targets remain the same, irrespective of the chosen method.
On Friday, we saw a downside move away from the three closely clustered daily highs, which we carry forward as unfinished business. The question now is whether sellers can follow through to the downside and attack the previous week’s low at 5157, or will buyers negate Friday’s weakness by returning within the highlighted 3-day value area.
The immediate resistance area ranges from 5211 to 5221, while the immediate support area of interest ranges from 5165 to 5155. I will use the 5193 level as my short-term pivot to assess which area—resistance or support—has a higher likelihood of being reached first.
For tomorrow, the Smashlevel (Pivot) is 5193, representing the prior 2-week balance high. Break and hold above 5193 would target the resistance area from 5211 to the final upside target of 5221, potentially serving as a reload area for sellers. Holding below 5193 would target the support area from 5165 to the final downside target of 5155. Both the Monthly VWAP (5164) and the previous week’s low (5157) are situated within the support area, making it crucial for buyers to maintain.
Levels of Interest
Going into tomorrow's session, I will observe 5193.
Break and hold above 5193 would target 5211 / 5221
Holding below 5193 would target 5165 / 5155
Additionally, pay attention to the following VIX levels: 15.08 and 13.74. These levels can provide confirmation of strength or weakness.
Break and hold above 5221 with VIX below 13.74 would confirm strength.
Break and hold below 5155 with VIX above 15.08 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.
Thank you, buddy! Here's to another fantastic week of trading ahead.