ES Daily Plan | March 7, 2024
Today's profile shares similarities with Monday's, marked by a failed range extension to the upside, ultimately resulting in a close back within the initial balance, and leaving a poor 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
During the Asian hours of the overnight session, the market remained quiet, staying within Tuesday’s lower distribution. However, upon the opening of the European session, market activity accelerated, with buyers successfully exploring prices within yesterday’s B-period single prints. While the initial upside target of 5107 encountered selling activity on the first test (to the tick), buyers were later able to reclaim it, resulting in a full traverse of Tuesday’s upper distribution, reaching the final upside target of 4123 (ONH: 4121.75).
The RTH session opened at 5119, with the overnight inventory being 100% net long. The market looked above the ONH, coming within 3 ticks of 4123, and failed—resulting in a counter-move. Did you notice how the VIX was testing its support level of 13.88 during this sequence? Today’s LOD was 13.89. This fade setup was particularly interesting today because we opened so close to the final upside target of 4123, suggesting that it’s not an optimal location to initiate longs.
When comparing today's session with yesterday’s, we observe both similarities and notable differences. Yesterday, we opened near the final downside target with VIX at resistance, complicating the initiation of shorts initially. The initial reaction yesterday was to the upside followed by a downside move (breaking 5106), while today we observed a downside move followed by an upside move (breaking 5123). The notable difference today was that VIX failed to confirm the break of 5123, making today’s range extension above the initial balance tricky to chase. The obvious target for momentum buyers was the unfilled gap at 5135.25, which they missed filling by 3 ticks (HOD: 5134.50). Given the poor location for buyers to chase and the poor structure (D/E lows and F/G/H lows), the I-period liquidation break was not a huge surprise.
Today's profile shares similarities with Monday's, marked by a failed range extension to the upside, ultimately resulting in a close back within the initial balance, and leaving a poor low. The gap at 5135.25 remains unfilled. Currently, the market is in a state of balance, awaiting further market-generated information. Upon analyzing the composite volume profile, located on the far right, we observe a high volume area with two notable areas of low volume. Responsive two-sided activity is expected within the high volume area, while a more decisive directional move would require acceptance beyond the low volume areas.
For tomorrow, the Smashlevel (Pivot) is 5123, representing the previous month's high. Break and hold above 5123 would target the unfilled gap at 5135.25, as well as the previous week’s high at 5149. Holding below 5123 would target today’s poor low at 5099, coinciding with the upper end of Tuesday’s lower distribution. Acceptance below 5099 would target a full traverse of that lower distribution toward the Quarterly Extreme High at 5071, coinciding with the previous 2-week balance high.
Levels of Interest
Going into tomorrow's session, I will observe 5123.
Break and hold above 5123 would target 5135 / 5149
Holding below 5123 would target 5099 / 5071
Additionally, pay attention to the following VIX levels: 15.16 and 13.84. These levels can provide confirmation of strength or weakness.
Break and hold above 5149 with VIX below 13.84 would confirm strength.
Break and hold below 5071 with VIX above 15.16 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.
Great write up, as always! I must say, having the days split profile next to the merged one is a nice touch. The added context is very helpful.
Thank you, buddy! Another amazing day, scalped longs and shorts.