ES Daily Plan | October 20, 2023
Today’s session saw a downside continuation as buyers struggled to regain control of the important 4343/4350 area. The daily is one-time framing down.
Visual Representation
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.
Contextual Analysis
The immediate area of interest, as outlined in the previous plan, was the 4343/4350 area, and it played a significant role throughout today's session as sellers defended it during both the ON and RTH sessions, providing multiple opportunities. The first downside target of 4326 was reached during the European session, accompanied by VIX testing its resistance level of 20.28 (20.29), leading to a strong bounce and a return to 4343/4350. Take a look at the Weekly Plan to refresh your memory on the significance of 4350.
The RTH session was undeniably challenging. Throughout the initial balance (A and B-period), sellers maintained their defense of the 4343/4350 area, ultimately prompting a retest of 4326. The market was establishing value at lower prices, an outcome in favor of sellers. Navigating the increased volatility that emerged from the F-period onwards was, to say the least, quite challenging. The F-period tested the resistance area from 4367 to 4377, and it was instantly met with selling, while the G-period tested the previous week’s low of 4316, encountering buying activity. This sequence marked the second instance of the VIX resistance level at 20.28 being tested nearly precisely (20.25). Despite the volatility and several attempts by buyers above 4350, the market failed to achieve a 30-minute bar close above it, which was noteworthy.
Today’s session saw a downside continuation as buyers struggled to regain control of the important 4343/4350 area. The daily is one-time framing down, with sellers successfully closing below last week's low of 4316, currently forming an outside week down. Today’s closing session was similar to that of yesterday, with initiative selling activity exploring lower prices to close at the lows. Given this, I plan to approach tomorrow's session in a similar manner as I did today. I will use 4301 as a short-term reference to gauge the market's strength or weakness. Buyers aim to reestablish acceptance above the immediate resistance area of 4316/4326, which can lead to a retest of 4343/4350. On the flip side, sellers aim to continue cleaning up the poor structure from the 10/6 session, targeting the unfinished business characterized by four closely clustered daily lows, which we have carried forward. Take note of the daily MA200 at 4255.
For tomorrow, the Smashlevel (Pivot) is 4301, which represents today’s spike base in M-period. Break and hold above 4301, indicating rejection, would target the resistance area from 4316 to 4325, which represents the previous week’s low and the 20D VPOC, which shifted lower. Break and hold above 4326 would target the still important resistance area from 4343 to 4350. Note how this area coincides with Monthly VWAP. Holding below 4301, indicating continued weakness, would target a cleanup of the structure from the 10/6 session towards 4277, as well as the final downside target of 4256. The Weekly Extreme Low is located at 4245, with an unfilled daily gap at 4239.75, in the case of continued weakness.
Levels of Interest
Going into tomorrow's session, I will observe 4301.
Break and hold above 4301 would target 4316 / 4325 / 4343 / 4350
Holding below 4301 would target 4277 / 4256
Additionally, pay attention to the following VIX levels: 22.70 and 20.08. These levels can provide confirmation of strength or weakness.
Break and hold above 4350 with VIX below 20.08 would confirm strength.
Break and hold below 4256 with VIX above 22.70 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
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.
Thanks Smash! I had a great session shorting 4350!
Thank buddy! A great day once again, had longs and shorts.