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ES Daily Plan | October 12, 2023
Today’s session resulted in an inside day, characterized by its price range being contained within the previous day’s range.
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.
Given the uneventful nature of today's session and the unchanged context, there's no need for an extensive analysis. The highlighted resistance area from 4403 to 4413 encountered selling activity in both the ON and RTH sessions, providing several solid opportunities. It was interesting to observe how the market failed to achieve a 30-minute bar close above the Smashlevel of 4403, except for the final 30-minute period, known as the M-period. This initial struggle translated into a period of weakness, prompting technical fills of Tuesday’s poor structure towards the Weekly VWAP, which was outlined as a potential downside target in the previous plan. The technical fills were all sellers got before the market executed a V-shape reversal and reached new intraday highs.
Today’s session resulted in an inside day, characterized by its price range being contained within the previous day’s range. While the daily technically maintains its one-time framing up, the market is currently taking a breather, following its breakout from the double inside day that occurred last Friday. The general guideline suggests going with the break of the inside day and observing for continuation (Acceptance) or lack thereof (Rejection). If there's a lack of continuation following a breakout attempt, it can trigger moves in the opposite direction. Looking at the intraday targets for tomorrow, an upside break is more appealing to go with, as a downside break would immediately encounter the support area from 4368 to 4358. The primary objective for buyers was to shift the short-term value higher by consolidating at these higher prices, and they successfully achieved this with the 5D VPOC shifting to 4395 (4275). This shift is bullish in the context of the recent directional move to the upside.
I will maintain the use of the 4403 level as a short-term pivot, a level that sellers defended throughout the session, but buyers managed to reclaim during the closing session. The CPI data is scheduled for release tomorrow, and as usual, it is expected to bring volatility to the market. Therefore, the potential for moves outside of the intraday targets increases. Stay nimble.
For tomorrow, the Smashlevel (Pivot) is 4403, which represents yesterday’s pivot. Holding above 4403 would target a clean up of Tuesday’s poor high at 4418. Break and hold above 4418 would target an upside continuation towards the weekly resistance area from 4435 to the final upside target of 4455, which represents the Weekly Extreme High. Additionally, take note of the unfilled daily gap at 4446. Break and hold below 4403 would target 4382, as well as the final downside target of 4368. The support area from 4368 to 4358 is crucial for buyers to hold, as they don’t want acceptance established back within the previous week’s range.
Going into tomorrow's session, I will observe 4403.
Holding above 4403 would target 4418 / 4435 / 4446 / 4455
Break and hold below 4403 would target 4382 / 4368
Additionally, pay attention to the following VIX levels: 16.92 and 15.26. These levels can provide confirmation of strength or weakness.
Break and hold above 4455 with VIX below 15.26 would confirm strength.
Break and hold below 4368 with VIX above 16.92 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.