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ES Daily Plan | November 2, 2023
The daily imbalance phase that started yesterday has now reached a significant resistance area, characterized by a high volume node (HVN) and MA200.
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.
The overnight (ON) session resembled yesterday's, as it involved cleaning up poor structure from yesterday's RTH session before an upside continuation. After attacking the prior Smashlevel of 4200 several times during the Asian hours, sellers managed to break it during the European session. However, the break was short-lived, leading to a pre-RTH open squeeze.
The RTH session opened with a true gap to the upside, and the immediate pullback fell short of filling the gap by two ticks, which is a sign of strength. Following the failure to fill the gap, buyers regained the opening level and breached the ON high fairly quickly, which is the most bullish outcome when opening with a true gap up. Buyers sustained the upside momentum throughout the first three periods, forming a large set of single prints in the B-period, and coming just 5 handles shy of reaching the final upside target of 4254. With the VIX testing its support level of 17.14 (Low 17.06) during this sequence, it was not a bad idea to book profits if one was long, especially with the upcoming FOMC meeting. As usual, the market underwent volatility during the FOMC; however, the opening level remained intact, signaling no real trouble for buyers. Change took place in the L-period as buyers breached the C-period high, leading to a double distribution forming. At the same time, the VIX breached its support level of 17.14, and buyers were able to squeeze an additional 10 handles. Today’s HOD was 4264.75, and the Weekly Extreme High from the Weekly Plan is located at 4265.
Today's session resulted in another double distribution, with one set of single prints following a true gap up, which sellers failed to fill. The daily imbalance phase that started yesterday has now reached a significant resistance area, characterized by a high volume node (HVN) and MA200. This area also serves as the final upside target for the week, adding complexity for the remainder of the week. It’s worth noting that a VIX below 17.80 confirms a move above 4265, offering an opportunity for buyers. Buyers aim to establish value above the HVN at 4265, with a weekly close above it being preferred. Their main objective is to end the weekly one-time framing down by breaching 4283.50. Currently, this week is an inside week. Sellers aim to negate today’s trend day by returning within today’s lower distribution and attempting to fill today’s gap.
For tomorrow, the Smashlevel (Pivot) is 4248, which represents today’s breakout single prints in the L-period. Holding above 4248 would target the Weekly Extreme High of 4265. Break and hold above 4265 would target 4283, as well as the final upside target of 4301. Break and hold below 4248 would target 4238, as well as the final downside target of 4215, which represents the unfilled daily gap.
Levels of Interest
Going into tomorrow's session, I will observe 4248.
Break and hold above 4248 would target 4265 / 4283 / 4301
Holding below 4248 would target 4238 / 4215
Additionally, pay attention to the following VIX levels: 17.74 and 16.02. These levels can provide confirmation of strength or weakness.
Break and hold above 4301 with VIX below 16.02 would confirm strength.
Break and hold below 4215 with VIX above 17.74 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.
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.