ES Daily Plan | October 11, 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 was relatively quiet, remaining within Wednesday's range, with sellers defending the spike base at 5840. Even after the CPI data release triggered some expected volatility, the market stayed within the prior day's range.
The key levels for today’s session, as outlined in the previous plan, were 5840 and Wednesday’s afternoon pullback low at 5820. A strong market would require an immediate continuation higher above 5840, while defending 5820 was crucial for buyers to maintain directional conviction. The session ended up being neutral, with buyers unable to gain meaningful traction above 5840 and sellers failing to generate significant downside momentum below 5820.
I received several questions regarding why Wednesday’s price action was dominated by weak-handed short-term traders. This behavior becomes apparent when the market reacts in a highly mechanical manner, responding to clear visual reference points. For example, Wednesday’s low occurred exactly at Tuesday’s VAH, the C-period low aligned perfectly with the B-period halfback, and the I-period low matched the C-period high to the tick. This observation raises potential questions about the strength of the breakout. So far, the breakout has not demonstrated conviction, especially considering the size of the prior balance area it’s breaking out from. However, as long as sellers are unable to gain traction within Wednesday’s lower distribution and end the daily one-time framing up, buyers are not in trouble. Additionally, the 5D VPOC (short-term value) has shifted higher from 5783 to 5830, which is a positive development. The downside is the presence of two consecutive excess highs.
Today’s session formed an inside day, trading entirely within the previous day’s range. Sellers were active in yesterday’s highlighted spike area, while buyers emerged at the upper end of yesterday’s lower distribution, establishing value between the key levels of 5840 and 5820. Buyers maintain short-term control as long as sellers cannot sustain an inside day breakdown. PPI on deck tomorrow!
In terms of levels, the Smashlevel is at 5840. Holding below this level would target today’s VAL at 5820. Acceptance below 5820 would then target 5800, with a final target at 5785 under sustained selling pressure, marking the value. Failure to hold below 5840 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.
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: 22.28 and 19.56. These levels can provide confirmation of strength or weakness.
Break and hold above 5878 with VIX below 19.56 would confirm strength.
Break and hold below 5785 with VIX above 22.28 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.
Lazy breakout so far! Thanks!
Volume was faily low so probably one aspect to explain this drifting up behaviour.