ES Daily Plan | October 16, 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
While the overnight session was relatively uneventful, trading at the upper end of Monday’s range, the RTH session proved to be much more dynamic. A common theme in both sessions was the selling activity within Monday’s spike area, as sellers successfully defended the excess high. The market's inability to continue finding initiating buyers above value opened the door for weakness. The initial balance (first hour of RTH) had a negative delta of 14K, but the significant flush occurred in the C-period once the market broke the initial downside target at 5896 without any reaction. By the time the D-period opened, the delta for the day stood at a negative 31K, indicating significant aggressive selling. Additionally, the market had formed single prints during both the B and C periods.
The highlighted support area between 5878 and 5868 held firm for several periods; however, buyers struggled to gain momentum to the upside, ultimately failing to fill the single prints from the C-period. The primary downside target was the weekly gap at 5868.25, which was filled in the K-period and exceeded in the L-period, with the market closing at the 5D VPOC of 5860.
Today saw a triple distribution trend day to the downside, forming 4 sets of single prints, as sellers effectively defended Monday's spike area. Monday’s gap was filled in the process, and we closed within the previous week’s range. As discussed yesterday, filling the gap and re-establishing acceptance within the prior week’s range has the potential to shift the market tone, making 5868 a key level to observe in the short-term.
In terms of levels, the Smashlevel is at 5868, marking the high of the previous week. Holding below this level could lead to further weakness, targeting 5846 and 5827, with a final target of 5800 under sustained selling pressure. Failure to hold below 5868 would open the door for a cleanup of today’s structure, targeting 5891, with a final target of 5912 under sustained buying pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5868.
Break and hold above 5868 would target 5891 / 5912
Holding below 5868 would target 5846 / 5827 / 5800
Additionally, pay attention to the following VIX levels: 22.18 and 19.08. These levels can provide confirmation of strength or weakness.
Break and hold above 5912 with VIX below 19.08 would confirm strength.
Break and hold below 5800 with VIX above 22.18 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.
Sellers awake! Thanks as always!
Back to Sunday night low 5850 to the tick LOL