ES Daily Plan | March 22, 2024
ES Daily Plan | March 22, 2024
After yesterday’s breakout, buyers saw an upside continuation today with a true gap to the upside, which remained unfilled (5289.50). The initial balance low of 5308 is of interest in the short-term.
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
After yesterday's breakout, the strongest response from buyers was to either maintain within or above yesterday's upper distribution, as outlined in the previous plan. Notably, they broke out from the upper distribution already yesterday after-hours, and saw an immediate upside continuation in the overnight session. Always keep in mind that the longer a consolidation lasts, the more significant the move out of it tends to be.
Following the overnight strength, the RTH session opened on a large true gap to the upside. A true gap occurs when the RTH session opens completely outside of the previous day’s range. Large gaps are generally difficult to navigate, and in a situation like today, where we are gapping above the Weekly Extreme High of 5290, and opening very near the final intraday upside target of 5323, it becomes even more complex to navigate. Speaking of 5323, this level was highlighted as significant and worth monitoring in both the previous plan and the Weekly Plan published on Saturday. It was interesting to observe how the market established a poor high just below 5323 after the initial three periods. The poor high was cleaned up during the F and G-period; however, the range extension above the initial balance resulted in a failure, marking the HOD at 5322.75. During the afternoon session, the market traversed the initial balance range, and sellers managed to break and close out the session below the initial balance low. This highlights the challenge with large gaps and the unique context of today’s session and its levels.
After yesterday’s breakout, buyers saw an upside continuation today with a true gap to the upside, which remained unfilled (5289.50). However, a failed range extension to the upside resulted in a close at the session lows. Buyers aim to continue their primary objective of establishing value at higher prices, which is a bullish response in the context of yesterday’s breakout from balance. Conversely, sellers' main objective is to end the daily one-time framing up and close today’s gap, potentially opening the door for some structural fills. The short-term value (5D VPOC) remains within the prior balance area at 5230.
As for myself, I'll wrap up the week and leave the price discovery process for tomorrow to other traders, as we've not only met but also exceeded our weekly targets. HAGW!
For tomorrow, the Smashlevel (Pivot) is 5308, representing the initial balance low. Break and hold above 5308 would target a traverse of today’s value area toward the significant level of 5323. Note the confluence with the 100% range extension from the recent 6-day balance at 5327. Acceptance above 5323 would target 5337. Holding below 5308 would target the Weekly Extreme High of 5290, coinciding with the unfilled gap. Acceptance within Wednesday’s range would target fills of its structure toward 5273 and potentially 5260, where notable order flow activity was observed, aligning with the halfback.
Levels of Interest
Going into tomorrow's session, I will observe 5308.
Break and hold above 5308 would target 5323 / 5337
Holding below 5308 would target 5290 / 5273 / 5260
Additionally, pay attention to the following VIX levels: 13.48 and 12.36. These levels can provide confirmation of strength or weakness.
Break and hold above 5337 with VIX below 12.36 would confirm strength.
Break and hold below 5260 with VIX above 13.48 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.
5323 was a wall! Great work!
Thank you for your great work I think it's great when you say that you don't trade on a day like this. this helps to assess things better