ES Daily Plan | May 10, 2024
The market continues to grind toward our weekly target, the high volume node around 5255, after buyers successfully broke out from the 3-day balance area. The plan is straightforward.
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.
Visual Representation
Contextual Analysis
The overnight session saw a slow downward grind, leading to a test of Monday’s spike base at 5200, which served as our pivot for the session. However, the subsequent break below this level, effectively filling some of Wednesday’s excess low, proved to be short-lived. As noted, holding above 5200 was signaling strength.
The RTH session opened right at the short-term value (5D VPOC), and the market started to push higher after picking up the initial dip. As discussed in the previous plan, the market's consolidation at higher prices, especially following two consecutive upside gaps, was a bullish indication. Therefore, today's break of the 3-day balance to the upside did not come as a huge surprise. Traders who remained on the sidelines during the initial four periods (A to D), which formed two sets of single prints, got an opportunity during the pullback in the E-period against the initial balance high and the RTH VWAP. This area was crucial for buyers to hold to prevent a potential “look above and fail” scenario. Big aggressive selling activity was absorbed by passive buyers, after which aggressive buyers stepped in. I will share a replay of this pullback on Substack for educational purposes, highlighting the order flow activity. Another pullback occurred during the J-period, stopping precisely at the 3-day balance high before an upside continuation ensued. Unfortunately, we did not reach the final upside target of 5250, mainly because we ran out of time. Take note of today’s profile shape, showing an imbalance to the upside that buyers will aim to resolve moving forward.
Take note of the Delta Finish in the reversal bar, which illustrates how aggressive buyers entered after the absorption. The Minimum Delta reached -1178 at one point.
The market continues to grind toward our weekly target, the high volume node around 5255, after buyers successfully broke out from the 3-day balance area. The plan is straightforward: Buyers aim to hold above the afternoon pullback low of 5227, which aligns with the prior 3-day balance high, to maintain their directional conviction and resolve today’s imbalanced profile to the upside. Failure to do so would target the downside magnet at 5213, and potentially the 5200 level.
For tomorrow, the Smashlevel (Pivot) is 5227, representing today’s afternoon pullback low in the J-period, aligning with the high of the prior 3-day balance. Holding above 5227, signaling strength, would target the resistance area from 5250 to the Weekly Extreme High of 5260. In the case of continued strength, the final upside target is situated at 5272. Break and hold below 5227 would target the short-term value (5D VPOC) at 5213. Acceptance below 5213 would then target Monday’s spike base at 5200.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5227.
Holding above 5227 would target 5250 / 5260 / 5272
Break and hold below 5227 would target 5213 / 5200
Additionally, pay attention to the following VIX levels: 13.18 and 12.20. These levels can provide confirmation of strength or weakness.
Break and hold above 5272 with VIX below 12.20 would confirm strength.
Break and hold below 5200 with VIX above 13.18 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.
Absolutely appreciate delta finish. I wish there were more resources to learn about its application and usage. There is very little out there about it. Incredible that absorption like that happens at the highs. Thanks Smash.
Thank you