ES Daily Plan | March 21, 2024
Today’s session saw a breakout from the multi-day balance area, effectively cleaning up the unfinished business and ultimately resulting in the attainment of all weekly upside targets (5290).
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
Today’s session remained relatively uneventful until the FOMC meeting. Trading activity was confined within the upper end of yesterday’s session. Sellers were unable to gain traction below yesterday’s spike area, while buyers' attempt to explore prices above the 6-day balance area in the C-period failed, resulting in a return within the range. The highlighted poor structure from yesterday consisted of 4 sets of single prints, which the market showed no interest in filling, signaling that a breakout attempt was in the air. As usual, the market experienced volatility during the FOMC, ultimately resulting in a breakout from the 6-day balance area, which formed a double distribution profile and effectively resolved the unfinished business that we have carried forward. Today’s upside target in the event of a breakout was the Weekly Extreme High of 5290, our weekly target outlined in the Weekly Plan published last Saturday. This level capped today’s upside momentum, with the HOD reaching 5289.50.
Today’s session saw a breakout from the multi-day balance area, effectively cleaning up the unfinished business and ultimately resulting in the attainment of all weekly upside targets (5290). As is typical with any breakout scenario, the primary focus is to closely monitor for continuation (Acceptance) or lack thereof (Rejection). We formed a double distribution profile with one set of single prints. The strongest response from the market would involve maintaining within or above today’s upper distribution, indicating a potential continuation of this imbalance. A more moderate response would see acceptance back within the lower distribution, while the weakest response would be acceptance back within the multi-day balance area, casting doubt on today’s breakout.
Monitoring the Weekly Extreme High of 5290 remains crucial. Sellers don’t want value to be established above, as it could potentially trigger further squeezing. Keep a close eye on buyers' ability to shift the short-term value (5D VPOC) higher, currently at 5215, indicating acceptance. Shorts are not of interest unless a failed breakout scenario unfolds (below 5247), implying that downside targets are levels buyers aim to defend. Reminder that 5323 holds significance according to my models, making it worth monitoring closely moving forward. There's an interesting confluence with 5327 (100% range extension).
For tomorrow, the Smashlevel (Pivot) is 5273, representing the lower end of today’s upper distribution, where notable aggressive selling was absorbed by passive buyers. Holding above 5273, signaling strength, would target the Weekly Extreme High of 5290. Acceptance above 5290, has the potential to trigger further squeezing, targeting 5308, as well as the final upside target of 5323. Note the confluence with the 100% range extension from the recent 6-day balance at 5327. Break and hold below 5273 would target 5260, where notable order flow activity was observed, aligning with today’s halfback. Failure to hold 5260 would open the door for a test of the prior 6-day balance high at 5247—a crucial area for buyers to maintain.
Levels of Interest
Going into tomorrow's session, I will observe 5273.
Holding above 5273 would target 5290 / 5308 / 5323
Break and hold below 5273 would target 5260 / 5247
Additionally, pay attention to the following VIX levels: 13.64 and 12.46. These levels can provide confirmation of strength or weakness.
Break and hold above 5323 with VIX below 12.46 would confirm strength.
Break and hold below 5247 with VIX above 13.64 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.
Brilliant!
Thanks, buddy! Another fantastic day in trading! It started off ranging for hours, but post-2 PM, we finally found our direction.