ES Daily Plan | October 2, 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 traded within Monday’s spike area, suggesting a generally bullish development, with the market accepting the strength from September's close. Both the Asian and European sessions found buyers just above the spike base at 5799. However, the RTH session quickly shifted the tone, with selling pressure emerging right from the open.
The market quickly sliced through both the 5799 and 5789 levels in the opening minutes without any significant reactions, serving as an early warning sign. Trading below 5789 was considered intraday bearish, and the final intraday target of 5763 was already reached during the A-period. However, given the pace of the downside move, it was challenging to participate. The VIX breached its resistance level of 17.74 just five minutes into the RTH session, serving as another data point in favor of sellers. With sellers later breaking the 5763 level, there was no rush to look for any major reversals, given the confirmation of weakness from the VIX. Buyers notably struggled to gain traction above the 5763 level for most of the session, providing several short setups for traders who had not participated in the initial weakness, myself included. However, these trades require significant discipline, as you are selling at a poor location on an intraday basis. Therefore, target expectations must be adjusted accordingly. The next level of interest at 5740 capped the downside.
September's closing strength was heavily rejected today, resulting in a b-shaped profile that brought the weekly back to balance. Buyers are aiming to reclaim 5772 to target fills of the upper part of today’s profile, while the most favorable scenario for sellers involves a break and hold below 5740 to complete the imbalanced profile to the downside.
In terms of levels, the Smashlevel is at 5772, marking today’s halfback. Holding below this level signals weakness, targeting the 5740, with a final target at 5721 under sustained selling pressure. Failure to hold below 5772 would target the resistance area between 5799 and 5809.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5772.
Break and hold above 5772 would target 5799 / 5809
Holding below 5772 would target 5740 / 5721
Additionally, pay attention to the following VIX levels: 20.40 and 18.12. These levels can provide confirmation of strength or weakness.
Break and hold above 5809 with VIX below 18.12 would confirm strength.
Break and hold below 5721 with VIX above 20.40 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.
A spicy day for sure. Thanks as always for the clarity of market observation and well planned approach.