ES Daily Plan | October 30, 2023
On Friday, the market saw a continuation of the daily downside imbalance phase, resulting in a double distribution profile with one set of single prints in the H-period.
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.
On Friday, the market saw a continuation of the daily downside imbalance phase, resulting in a double distribution profile with one set of single prints in the H-period. I posted a brief recap of Friday’s session on Substack for those curious, highlighting how passive sellers effectively absorbed the aggressive buying activity at Friday’s Smashlevel of 4175. Sellers successfully shifted the short-term value (5D VPOC) from 4265 to 4159.
As I mentioned in the Weekly Plan published yesterday, the market has reached an area of prior balance, characterized by the most traded price by volume (VPOC) for the year, situated at 4135. The YTD volume profile is provided on the chart, emphasizing the presence of this significant high volume node (HVN). The key question remains whether the market will continue its downside imbalance or take a potential breather. Buyers aim to re-establish acceptance within Friday’s upper distribution, with the primary objective of ending the daily one-time framing down. On the flip side, sellers aim to remain within Friday’s lower distribution, which would favor a downside continuation.
For tomorrow, the Smashlevel (Pivot) is 4145, which represents the low volume node (LVN), separating Friday’s double distribution profile. Break and hold above 4145 would target the 5D VPOC at 4159. Break and hold above 4159 would target the resistance area from 4180 to the final upside target of 4190. Holding below 4145, indicating continued weakness, would target a traverse of Friday’s lower distribution towards 4123. Break and hold below 4123 would target a downside continuation towards the unfilled gap at 4098.25, as well as the final downside target of 4083. Take note of the Monthly Extreme Low (October) at 4102.
Levels of Interest
Going into tomorrow's session, I will observe 4145.
Break and hold above 4145 would target 4159 / 4180 / 4190
Holding below 4145 would target 4123 / 4102 / 4098 / 4083
Additionally, pay attention to the following VIX levels: 22.58 and 19.96. These levels can provide confirmation of strength or weakness.
Break and hold above 4190 with VIX below 19.96 would confirm strength.
Break and hold below 4083 with VIX above 22.58 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.