ES Daily Plan | March 19, 2024
Despite the initial strength, today’s session concluded with closing weakness, marked by a downward spike as the M-period set a new daily low.
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
In the notably eventful overnight session, buyers successfully reclaimed the 5193 level during the Asian hours. This level was then retested and held firm throughout the European session, resulting in an upside continuation that cleared and exceeded all upside targets before the opening of the RTH session. In other words, Friday’s downside move away from the three closely clustered daily highs was completely negated.
The RTH session opened on a large true gap to the upside, above the final upside target of 5221, following the overnight strength. Regular readers of this newsletter understand well the inherent complexity of such situations—it’s tricky to chase further upside. Additionally, the VIX was showing a divergence by remaining above its support level of 13.74 throughout the entire session, further adding to the complexity. Buyers managed to hold above the overnight high and opening level during the initial balance, both of which are significant references when the market opens with a true gap up, leading to an upside continuation. Note how the market returned to the short-term value (5D VPOC), serving as an upside magnet in the absence of stronger sellers. However, while the initial balance showcased strength, the remainder of the session was characterized by weakness, highlighting the challenges of being a buyer at poor location (above the final upside target of 5221). The afternoon session provided a few short opportunities when the market struggled to reclaim the overnight high and opening level, but the downside traction was limited, except for the last 30-minute period (M-period). The session ultimately closed below 5221.
Sellers failed to sustain a downside continuation following Friday’s move away from the three closely clustered daily highs, resulting in a true gap to the upside, which remains unfilled (5201.75). Despite the initial strength, today’s session concluded with closing weakness, marked by a downward spike as the M-period set a new daily low. I will use the spike base at 5217 as a short-term pivot to assess the market's strength or weakness.
For tomorrow, the Smashlevel (Pivot) is 5217, representing the M-period spike base. Break and hold above 5217, indicating rejection, would target the resistance area from 5233 to 5243, serving as the upper end of the 5-day balance area. Acceptance above 5243, indicating a successful breakout, would target the final upside target of 5260. Holding below 5217, indicating acceptance, would target the support area from 5201 to 5193, effectively filling today’s true gap. Acceptance below 5193 would target a traverse of Friday’s value area toward the low volume node (LVN) at 5173.
Levels of Interest
Going into tomorrow's session, I will observe 5217.
Break and hold above 5217 would target 5233 / 5243 / 5260
Holding below 5217 would target 5201 / 5193 / 5173
Additionally, pay attention to the following VIX levels: 15.02 and 13.68. These levels can provide confirmation of strength or weakness.
Break and hold above 5260 with VIX below 13.68 would confirm strength.
Break and hold below 5173 with VIX above 15.02 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.
Thanks, buddy! I took some quick scalps/profits at the open but then noticed the markets were sluggish, so I decided to stay on the sidelines.
Thank you!