ES Daily Plan | November 30, 2023
Today’s session formed a triple distribution to the downside, featuring two small sets of single prints in the B and L-periods, following the failure of buyers to sustain the true gap higher.
Visual Representation
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.
Contextual Analysis
In the overnight (ON) session, the market underwent consolidation below the Smashlevel of 4572 until the opening of the European session. As the European session unfolded, the 4572 level was taken out, leading to a fairly quick trip to the 4-day balance high, where the market saw another consolidation phase. When the overnight (or RTH) session is consolidating near the upper or lower end of a balance area, exercise caution as it may signal a potential breakout attempt in progress. Buyers breached last week’s excess high before the opening of the RTH session.
The overnight strength led the RTH session to open on a true gap to the upside, and the opening was a tricky one. With the overnight inventory being 100% net long, a counter auction is to be expected, and the absence of such a move would indicate strength. The A-period saw an open drive higher, with no signs of inventory correction, leading to an immediate break of the ON high, effectively filling the unfilled daily gap at 4591 in the process. In instances when the market gaps higher, the opening level and the ON high are two important references buyers need to maintain. The warning signs for buyers first appeared during the B-period when the market dropped back below the ON high. The B-period saw a negative delta of 14K, as sellers entered aggressively, which resulted in the gap getting filled. While filling the gap isn't the strongest response from buyers, it doesn't turn bearish unless acceptance is reestablished within the previous day’s range.
Buyers attempted a push higher in the C-period, but you may notice that this attempt failed to fill the single prints from the B-period, presenting another cautionary sign. The D-period started gaining traction within the previous day’s range, which is the most bearish outcome when gapping higher. During the PM session, passive sellers where reloading at a very obvious location—the previous day’s high. They managed to absorb the aggressive buyers, leading to a downside continuation into the closing session.
Today’s session formed a triple distribution to the downside, featuring two small sets of single prints in the B and L-periods, following the failure of buyers to sustain the true gap higher. My short-term focus will be on the breakdown single prints in the L-period. Buyers aim to reestablish acceptance within today’s middle distribution, above the high volume node (HVN) at 4565, targeting 4578 and 4591. On the flip side, sellers aim to negate that and target the high volume node within the highlighted 4530-4520 support area. The PCE data is set to be released before the market opens tomorrow.
For tomorrow, the Smashlevel (Pivot) is 4563, which represents the breakdown single prints in the L-period. Break and hold above 4563 would target the afternoon rally high at 4578, as well as the final upside target of 4591, in the case of continued strength. Holding below 4563 would target 4544, as well as the final downside target of 4530. Take note of the high volume node (HVN) within the 4530-4520 support area.
Levels of Interest
Going into tomorrow's session, I will observe 4563.
Break and hold above 4563 would target 4578 / 4591
Holding below 4563 would target 4544 / 4530
Additionally, pay attention to the following VIX levels: 13.54 and 12.42. These levels can provide confirmation of strength or weakness.
Break and hold above 4591 with VIX below 12.42 would confirm strength.
Break and hold below 4530 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.
Thank you, buddy. Another green day! Longs and shorts.
Thank you 🌼