ES Daily Plan | October 3, 2023
The short-term consolidation remains intact, characterized by responsive sellers above 4350 and responsive buyers below 4305.
In order to see a stronger directional move, the value must firmly establish either above 4350 or below 4305.
Contextual Analysis
The overnight session kicked off with a gap up above the Smashlevel of 4340, and buyers effectively defended it throughout the Asian hours. However, progress above the 4350 level was limited, facing resistance from responsive sellers. This comes as no surprise given the recent session's value positioning, as discussed. In the European session, the 4340 level was breached, resulting in a traverse of Friday’s lower distribution, effectively testing the highlighted support area between 4315 and 4305. The VIX tested its resistance level of 18.46 (outlined in the previous plan) in both the ON and RTH session, reaching a high of 18.55.
The RTH session opened at the lower end of Friday’s range, and the AM session was mainly focused on filling the poor structure that emerged due to overnight weakness. After filling the two sets of single prints, sellers took control of the auction and made an attempt to establish momentum below 4305 during the PM session. Similar to the situation with buyers above 4350, sellers struggled to gain traction, leading to the formation of a poor low. As a result, the market experienced a squeeze in the final hour.
Overall, not much changed contextually after today’s session. All levels remain unchanged. The market is one-time framing down on the weekly and monthly, indicating that sellers are in control of the auction in a broader context. The daily has returned to balance following the break of Friday’s low, and today’s value remains unchanged in relation to the prior four sessions. As mentioned in the previous daily plan, buyers aim to establish value above the weekly level of interest at 4350, an objective that becomes apparent upon reviewing the Weekly Plan. Conversely, sellers aim to establish value below 4305 to maintain the downside pressure. The continuation of unchanged value is favoring responsive activity and is viewed as bearish in the context of recent market weakness. The primary objective for buyers is to end the weekly one-time framing down by breaching 4380.25, while sellers' main objective was to shift the medium-term value (20D VPOC) lower, and this was achieved today, currently at 4315.
For tomorrow, the Smashlevel (Pivot) is 4340, where selling activity emerged during Friday’s closing bounce. Break and hold above 4340 would target the significant weekly level of interest at 4350, coinciding with the upper end of Friday's lower distribution. Break and hold above 4350 would target a traverse of Friday’s upper distribution towards the 4366 level. Holding below 4340 would target the support area from 4315 to 4305. Break and hold below 4305 would target the final downside target of 4285.
Going into tomorrow's session, I will observe 4340.
Break and hold above 4340 would target 4350 / 4366
Holding below 4340 would target 4315 / 4305 / 4285
Additionally, pay attention to the following VIX levels: 18.56 and 16.66. These levels can provide confirmation of strength or weakness.
Break and hold above 4366 with VIX below 16.66 would confirm strength.
Break and hold below 4285 with VIX above 18.56 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.
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