ES Daily Plan | May 21, 2024
The overall context remains unchanged, with the market staying within the multi-day balance area, coiling for a directional move, while awaiting further market-generated information.
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 tested the daily balance high after holding above the 5330/5323 area overnight. However, aggressive buyers were unable to push through the passive limit orders during the morning session, ultimately resulting in a liquidation break in the afternoon session. The overall context remains unchanged, with the market staying within the multi-day balance area, coiling for a directional move, while awaiting further market-generated information. We have carried forward Thursday’s high as poor, and today’s high is weak against it, adding an additional layer of unfinished business.
Note from the previous daily plan that remains active:
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 (now 4-day), 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 (now 4-day) 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 4-day balance area at 5345. Acceptance above 5345 signals intraday bullish momentum, targeting the final upside goal of 5360. Holding below 5323 would target 5308. Acceptance below 5308 signals intraday bearish momentum, targeting the final downside target of 5291. In the case of sustained 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: 12.68 and 11.62. These levels can provide confirmation of strength or weakness.
Break and hold above 5360 with VIX below 11.62 would confirm strength.
Break and hold below 5291 with VIX above 12.68 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.
Hi Smash. Thank you for the work!
How do you add the vix on the bottom? What chart platform do you use? Thank you!
Clear and concise as always. Thanks. Question on your chartbook - what does ML and MH stand for on your footprint?