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ES Daily Plan | October 13, 2023
Today’s session resulted in an double distribution with one set of single prints in H-period. The daily has developed a 3-day balance, where responsive two-sided activity has been the main theme.
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.
During the overnight (ON) session, there was an immediate price exploration above both the high of the inside day and Tuesday's session. Buyers were active around Tuesday's high during the European session, leading to a bounce before the release of CPI data. After the release of the CPI data, the market demonstrated its typical volatility, resulting in the market falling back within Tuesday's range.
The RTH session opened with a small true gap to the upside, above the inside day, but this gap was quickly filled during the A-period. The immediate fail above the inside day triggered a swift move that tested yesterday’s halfback and the most traded price by volume (VPOC), where buyers emerged. Buyers made another attempt to break above the inside day during the F and G-periods but once more were unsuccessful in gaining upside traction, resulting in the formation of poor high. Given the precise alignment with Tuesday's high, I will carry forward today's high as unfinished business.
Similar to the situation in Tuesday's session, the H-period experienced a substantial liquidation break, marked by a negative delta of 14K. Nevertheless, sellers in today's session were able to further establish downside traction. As a result, the final downside target of 4368 was met and exceeded, with VIX confirming weakness by breaching its resistance level of 16.92. The market quickly dropped another 13 handles, partially cleaning up the poor structure from Monday’s session and testing the highlighted support area. This area was outlined as a crucial area for buyers to hold in the previous plan. Buyers entered aggressively on the test of the previous week’s high at 4358.50, leading to bounce and an excess low forming. The trade location for a reversal was solid, but, of course, the VIX confirming weakness was a downside.
Today’s session resulted in an double distribution with one set of single prints in H-period. The session closed within yesterday's inside day range following the failure to gain traction both above and below it. The daily has developed a 3-day balance, where responsive two-sided activity has been the main theme. My short-term pivot will be the breakdown single prints in H-period at 4393. Buyers aim to regain acceptance within today's upper distribution, potentially leading to a traverse that targets a cleanup of the unfinished business at the high of the 3-day balance. On the flip side, sellers aim to negate this and target a retest of today's excess low, with their most favorable scenario involving a return to the previous week's range and a weekly close within it. Such an outcome would ultimately raise questions about this week's price action.
For tomorrow, the Smashlevel (Pivot) is 4393, which represents today’s breakdown single prints in the H-period. Break and hold above 4393 would target a traverse of today’s upper distribution towards the resistance area from 4408 to the final upside target of 4418, where we have unfinished business. In the case of continued strength, there is potential for a trend day with a break and hold above 4418, along with VIX confirmation. Holding below 4393 would target the crucial support area from 4368 to 4358, which represents today’s excess low. Break and hold below 4358 would target a cleanup of Mondays poor structure towards the final downside target of 4346.
Going into tomorrow's session, I will observe 4393.
Break and hold above 4393 would target 4408 / 4418
Holding below 4393 would target 4368 / 4358 / 4346
Additionally, pay attention to the following VIX levels: 17.52 and 15.86. These levels can provide confirmation of strength or weakness.
Break and hold above 4418 with VIX below 15.86 would confirm strength.
Break and hold below 4346 with VIX above 17.52 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.