ES Daily Plan | May 20, 2024
While the Monthly and Weekly time frames continue one-time framing up, the daily has returned to a state of short-term balance after breaking Thursday’s low.
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
In Friday’s plan, I outlined a couple of scenarios that remain on the chart. Friday’s session saw technical fills of the poor structure from Wednesday’s triple distribution trend day, with buyers emerging at the initial downside target of 5308, leading to a bounce back toward the 5323-5330 area. Note that the poor structure was only partially filled, leaving Wednesday’s C-period single prints unresolved, highlighting how weak the pullback was. Buyers managed to shift the short-term value (5D VPOC) from 5245 to 5324, which is bullish in the context of Wednesday’s gap higher.
While the Monthly and Weekly time frames continue one-time framing up, the daily has returned to a state of short-term balance after breaking Thursday’s low. Currently, the daily is in a 3-day balance, marking the upper distribution from the previous week—our area of interest. The general guideline suggests going with the break of the highlighted 3-day balance area and monitoring for continuation (Acceptance) or lack thereof (Rejection). If there's a lack of continuation following a breakout attempt, it can trigger moves in the opposite direction. As outlined in the Weekly Plan, remaining within the upper distribution from the previous week would signal continued strength.
For tomorrow, the Smashlevel (Pivot) is 5330/5323, representing the spike bases from Wednesdays and Thursday’s session. Break and hold above 5330, signaling strength, would target the upper end of the 3-day balance area at 5345. Acceptance above 5345 would then target the final upside target of 5360, effectively cleaning up Thursday’s poor high. Holding below 5323 would target 5308, as well as the final downside target of 5291. In the case of continued weakness, the unfilled gap is located at 5274.25.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5330/5323.
Break and hold above 5330 would target 5345 / 5360
Holding below 5323 would target 5308 / 5291
Additionally, pay attention to the following VIX levels: 12.52 and 11.48. These levels can provide confirmation of strength or weakness.
Break and hold above 5360 with VIX below 11.48 would confirm strength.
Break and hold below 5291 with VIX above 12.52 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.
Thank you!
Thank you, buddy! Let’s have a great trading week.