ES Daily Plan | May 9, 2024
The daily has returned to a 3-day balance following the break of the previous day’s low. Buyers continue to maintain firm control as the market consolidates at higher prices.
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
Trading activity during the overnight session was uneventful, remaining within Tuesday’s range. However, a liquidation break occurred pre-open, breaching Monday's spike base of 5200. As a result, the RTH session opened with a true gap to the downside, putting an end to the daily one-time framing up. It's safe to say that sellers failed to capitalize on the pre-open weakness, as the overnight low remained untested, with only a couple of hundred contracts trading below the opening level. The market not only filled the gap, but also established acceptance back within Tuesday’s range, which is the most bullish outcome when gapping lower. The afternoon pullback to 5200 during the H-period provided a potential long setup, but other than that, it was a rather quiet session. It’s worth noting that the short-term value (5D VPOC) continues to shift higher.
The daily has returned to a 3-day balance following the break of the previous day’s low. Buyers continue to maintain firm control as the market consolidates at higher prices, which is bullish in the context of the two consecutive gaps higher. A downside break of this balance area, along with filling and accepting below the gap at 5166.75, has the potential to shift the market tone, which is the objective sellers are aiming to achieve. Buyers upside target remains the high volume node around 5255. Remaining within the current 3-day balance area increases the odds of sustained responsive activity, highlighting the importance of staying nimble.
For tomorrow, the Smashlevel (Pivot) is 5200, representing Monday’s M-period spike base. Holding above 5200, signaling strength, would target the poor high at 5217. Break and hold above 5217 would target 5232, as well as the final upside target of 5250, with the Weekly Extreme High slightly above at 5260. Break and hold below 5200 would target the support area from 5185 to Monday’s afternoon pullback low of 5179. Acceptance below 5179 would then target the unfilled daily gap at 5166.75.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5200.
Holding above 5200 would target 5217 / 5232 / 5250
Break and hold below 5200 would target 5185 / 5179 / 5166
Additionally, pay attention to the following VIX levels: 13.54 and 12.46. These levels can provide confirmation of strength or weakness.
Break and hold above 5250 with VIX below 12.46 would confirm strength.
Break and hold below 5166 with VIX above 13.54 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.
Thanks Smash! Weak showing from sellers today.
Thank you, buddy! Patience was needed prior to the market opening. Thereafter it was smooth sailing all the way green.