ES Daily Plan | November 6, 2023
The market has reached an area of prior balance. The primary focus now is to closely monitor how the market will act within this area.
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
On Friday, the market continued its daily upside imbalance phase, following Tuesday's breakout from the 3-day balance area. This directional move has resulted in a very poor structure, characterized by three consecutive upside gaps, forming a triple distribution on the weekly profile (highlighted in blue).
As I mentioned in the Weekly Plan published yesterday, the market has reached an area of prior balance. I have merged the profiles from that area to highlight both the time and volume spent there. The primary focus now is to closely monitor how the market will act within this area. Sellers main objective is to end the daily one-time framing up by breaching the previous day’s low, which would target fills of the poor structure. In contrast, buyers aim to confirm this directional move by spending time and volume (value) at these higher prices. The previous week’s most traded price by volume (VPOC) is located at 4190, which is 186 handles below Friday's settlement. In the short-term, the 4383 level is of interest.
For tomorrow, the Smashlevel (Pivot) is 4383, which represents Friday’s initial balance high, which the market dropped below during the closing session. Break and hold above 4383 would target the resistance area from 4400 to 4410, where the medium-term value (20D VPOC) is located. In the case of continued strength, the final upside target is located at 4418, which represents the Monthly Extreme High. Holding below 4383 would target 4363, where Friday’s pullback was picked up during the AM session. Break and hold below 4363 would target the support area from 4347 to the unfilled daily gap at 4337.25, effectively ending the daily one-time framing up.
Levels of Interest
Going into tomorrow's session, I will observe 4383.
Break and hold above 4383 would target 4400 / 4410 / 4418
Holding below 4383 would target 4363 / 4347 / 4337
Additionally, pay attention to the following VIX levels: 15.60 and 14.24. These levels can provide confirmation of strength or weakness.
Break and hold above 4418 with VIX below 14.24 would confirm strength.
Break and hold below 4337 with VIX above 15.60 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, my friend. I can't wait for a great trading week!
Hi, I have been reading your thesis for a few months. Thank you. Still trying to grasp order flow but your explanations are really helping me. Many thanks