ES Daily Plan | October 10, 2024
My preparations and expectations for the upcoming session.
For new followers: The yellow levels highlighted at the bottom left of the chart 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
The overnight session initially failed to hold above the 5800 Smashlevel, leading to a pullback during the Asian hours. However, sellers couldn't test Tuesday’s afternoon pullback low of 5775, as buyers emerged around 5781 following the European open, driving the price back to the spike base at 5800.
The RTH session opened right at 5800, and after briefly dipping below this level for ten minutes, during which the full session VWAP was tested, the market failed to hold below, signaling strength. This strength, or lack of weakness, was further reflected in the price action during the initial five periods (A to E), where the market formed three sets of single prints, effectively breaking out from the daily and weekly balance areas and printing new all-time highs. The overnight ATH at 5830 was cleaned up in the process. Much like Tuesday’s session, following the strong opening periods, the market established a distribution as it digested the move. In the afternoon, similar to Tuesday, a liquidation break occurred, which buyers picked up after filling one of the three sets of single prints.
The M-period, the final period of RTH, broke out of the intraday distribution, establishing a new daily high referred to as a spike (highlighted). The base of this spike serves as a short-term reference point to monitor tomorrow, helping to gauge today's closing strength. It’s notable how mechanical today’s breakout was, with the low of the day attracting buyers at the prior day’s VAH (TPO), while the liquidation break in the I-period saw buyers stepping in at the C-period high to the tick. This behavior indicates the presence of weak-handed short-term traders, who are likely to exit quickly in the absence of continuation. The afternoon pullback low of 5820 will be crucial to hold for buyers in order to maintain directional conviction.
Today’s session saw a breakout from the multi-day balance area, shifting both the daily and weekly to one-time framing up while cleaning up the overnight ATH at 5830 in the process. As is typical with any breakout scenario, the main focus is to closely monitor for continuation or lack thereof. A strong market would hold above 5840, a scenario that is unwise to fight against given the size of the recent balance area. A move back below 5820 would put today’s breakout into question. CPI on deck tomorrow!
In terms of levels, the Smashlevel is at 5840. Holding above this level signals strength and targets a continuation of the imbalance phase toward 5863, with a final target at 5878 under sustained buying pressure, marking the 50% range extension. Failure to hold above 5840 would target the afternoon pullback low at 5820. Acceptance below 5820 would put today’s breakout into question, targeting 5800, with a final target at 5785 under sustained selling pressure, marking the value.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5840.
Holding above 5840 would target 5863 / 5878
Break and hold below 5840 would target 5820 / 5800 / 5785
Additionally, pay attention to the following VIX levels: 22.34 and 19.36. These levels can provide confirmation of strength or weakness.
Break and hold above 5878 with VIX below 19.36 would confirm strength.
Break and hold below 5785 with VIX above 22.34 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
Make sure to review the Weekly Plan, which provides a broader perspective and highlights key levels of interest to observe in the upcoming week.
Life-changing work, Smash. Blessings to you!
Thanks Smash! CPI tomorrow will spice things up!