ES Daily Plan | May 2, 2024
The market demonstrated its usual volatility during the FOMC meeting, reminding us why it's wise to step aside and let other traders handle the price discovery process. 5065 of short-term interest.
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
Today’s session, which was largely uneventful until the FOMC meeting, served as a great example of why it's advisable to go flat prior to such events and let other traders handle the price discovery process. This way, you can preserve your financial and mental capital for the rest of the week, which generally offers better days to focus on. If you avoided trading during the last four periods, you likely had a better session than the majority of traders out there. However, if you did trade, you would know that the upside target area (outlined in the previous plan) between 5115 and 5125 is not optimal for initiating new long positions—a valuable piece of information that could have helped prevent emotional trading decisions during today’s impulsive drive higher.
The market demonstrated its usual volatility during the FOMC meeting, reminding us why it's wise to step aside and let other traders handle the price discovery process. The impulsive upside move cleaned up yesterday’s D-period single prints but then completely reversed course, resulting in a close at the session lows.
I will use Tuesday’s low of 5065 as my short-term reference point. Upon acceptance above, the target will be a return to the high volume node (HVN) at 5104. Failure to do so will maintain the downside pressure, with sellers targeting a full traverse of the previous week’s range. Reminder: The market is in balance across all time frames, highlighting the importance of staying nimble. This means being cautious about holding positions for too long in either direction.
For tomorrow, the Smashlevel (Pivot) is 5065, representing the bottom of Tuesday’s M-period spike. Break and hold above 5065 would target the resistance area from 5094 to the final upside target of 5104. Holding below 5065, signaling continued weakness, would target the previous week’s opening level at 5030, as well as the Weekly Extreme Low of 5010, which would complete a full traverse of the previous week’s range.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5065.
Break and hold above 5065 would target 5094 / 5104
Holding below 5065 would target 5030 / 5010
Additionally, pay attention to the following VIX levels: 16.06 and 14.72. These levels can provide confirmation of strength or weakness.
Break and hold above 5104 with VIX below 14.72 would confirm strength.
Break and hold below 5010 with VIX above 16.06 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.
65：held, break, back test, fail, back test again, fail again, breakthrough, held for now.
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