ES Daily Plan | May 1, 2023
Friday’s RTH session ended with an upward spike, as the market was finally able to break the level of 4186 in M-period to establish a new daily high.
This will be a level to observe in the short-term.
Contextual Analysis
Thursday’s session resulted in a multi-distribution trend day with six sets of single prints, indicating very poor structure. On Friday, the expectation was to see fills of that structure, and the absence of it would be considered as a bullish sign, as discussed. Friday's overnight (ON) session filled three sets of single prints before buyers entered the market. The most traded price by volume in the overnight session was 4140, confirming the interest of Friday’s Smashlevel of 4141. To new followers, the Smashlevel is my personal short-term pivot for the session, which is based on various contextual factors. It is important to note that this is not an automatic buy/sell level, but rather a reference point. Levels alone are not meaningful unless they are confirmed by order flow.
Friday's RTH session was very similar to Thursday's session, as the market started to rally right out of the gate. Keep an eye on the level of 4155, which experienced notable order flow activity during the initial upward move. The level of 4155 is also a significant weekly level of interest from the Weekly Plan, and the last downside target for tomorrow’s session. As regular readers of this newsletter are aware, 4153 is the medium and long-term value (20-day and 90-day VPOC). As such, this high volume area (HVN) is of importance. Similar to Thursday, the B/C-period developed a poor high, indicating crowded buyers. This often leads to a reaction where prices move away from that area to shake out those weak longs. This pullback was picked up right around that 4155 level in D-period, leading to an upward continuation. During the PM session, another poor high developed as the market had trouble gaining traction above 4186. As a result, an afternoon pullback low (APBL) was observed in K-period. It was noteworthy that the VIX maintained its support level of 16.06 during the struggle of buyers around 4186.
Friday’s RTH session ended with an upward spike, as the market was finally able to break the level of 4186 in M-period to establish a new daily high. This will be a more aggressive level to observe in the short-term. Trading within and above the spike (Acceptance) is a more favorable outcome for buyers, while trading below the spike (Rejection) is a more favorable outcome for sellers since that negates the higher prices of the spike.
Acceptance primarily targets the 4-week and 3-month balance high and a potential breakout attempt. Take note of 4198.25, which was traded in the 4/18 ON session and was not retested during RTH. Rejection primarily targets the afternoon pullback low of 4171. which the buyers want to hold to maintain their directional conviction. Below that, we have the important 4155.
Going into tomorrow's session, I will observe 4186.
Holding above 4186 would target 4208 / 4220
Break and hold below 4186 would target 4171 / 4155
Additionally, pay attention to the following VIX levels: 16.56 and 14.96. These levels can provide confirmation of strength or weakness.
Break and hold above 4220 with VIX below 14.96 would confirm strength.
Break and hold below 4155 with VIX above 16.56 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.
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.
ES Weekly Plan | May 1-5, 2023
🟩 Daily: OTFU | Ends: 4143.75 🟨 Weekly: BALANCE | 4-Week | H: 4194.75 L: 4068.75 🟨 Monthly: BALANCE | 3-Month | H: 4208.50 L: 3814.50 Weekly Extreme High: 4280 Weekly Extreme Low: 4095 As usual, a detailed daily plan will be published tomorrow.
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 again. Great read!
I'm curious as to why you define pullback lows and rally highs as shorthand for the afternoon only. Is it because they are more important than the AM session?