ES Daily Plan | October 8, 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 immediate focus during today’s session was on Friday’s closing strength, with particular attention on the highlighted M-period spike area. Early price exploration above the spike in the overnight session was met with selling pressure, with sellers slowly gaining traction below the spike base at 5798 during the Asian hours. By the European session, the market retraced to Friday’s VPOC at 5772, our initial downside target. One set of single prints formed overnight around the 5785 level, coinciding with the area where change took place on Friday’s RTH session (L-period).
The RTH session opened within Friday’s value area and initially saw two-sided activity within a very narrow range, giving the impression that today’s session would be uneventful. However, momentum quickly shifted during the afternoon session. Before the shift, notable aggressive buying activity struggled around the 5785 level, where passive sellers were reloading. A replay of this order flow sequence will be available on Substack for reference. Notably, even before the RTH opened, there was significant aggressive buying on the tape, which was particularly interesting as the VIX held above its resistance level of 20.54. This means that if the buying effort fails to gain meaningful traction, there was potential for a flush. The initial four periods (A to D) had a positive delta of 10K, while the VIX remained above its resistance at 20.54 (LOD: 20.65). Ultimately, the passive sellers at 5785 emerged victorious as the market accelerated to the downside in the afternoon session, forming a double distribution profile. The final intraday target at 5753 was tagged and exceeded. Note how sellers defended the retest of 5753, particularly in the context of the elevated VIX.
This order flow sequence, characterized by notable aggressive buying efforts, was particularly interesting given the elevated VIX. A bullish development would involve the VIX returning below its resistance level of 20.56 while the market extends the initial balance to the upside. However, the bearish development unfolded with the VIX holding above 20.56 and the market struggling to gain traction above 5785.
Friday's closing strength, the main focus of today's session, was rejected overnight, resulting in a return to value. What initially appeared to be an uneventful session quickly shifted into a double distribution profile to the downside, following two sets of single prints formed during the K and J periods. A weak market will maintain within today’s lower distribution and attack the multi-day balance low, setting the stage for further weakness if breached. Failure to hold within the lower distribution or sustain a balance breakdown, would open the door for a rotation back to value, cleaning up today’s poor structure in the process.
In terms of levels, the Smashlevel is at 5755. Holding below this level signals weakness, targeting the support area between 5734 and 5724, with a final target at 5698 under sustained selling pressure. Failure to hold below 5755 would target the breakdown singles at 5767. Acceptance above 5767 would then target 5785, with a final target at 5798 under sustained buying pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5755.
Break and hold above 5755 would target 5767 / 5785 / 5798
Holding below 5755 would target 5734 / 5724 / 5698
Additionally, pay attention to the following VIX levels: 24.22 and 22.06. These levels can provide confirmation of strength or weakness.
Break and hold above 5798 with VIX below 22.06 would confirm strength.
Break and hold below 5698 with VIX above 24.22 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.
Love this stuff! Thanks!
Last night, I made a very foolish mistake. At 11:15, there was a large influx of aggressive buyers into the market, and the price was at 5785. The ask was 1412, and the bulls should have continued to hold the 5785 price position and pushed the price up again.
However, at 11:35, the 5-minute candle closed with a large bearish candle, which broke through 5785. At that time, I was thinking that there would be a large number of bulls trapped, and the market sentiment should have turned.
The most foolish part is that I saw the highest price at 11:20, 11:25, 11:35, and 11:40 was also 5786.75. I subjectively and stubbornly believed that even if the price fell, it should bounce back to grab these "liquidity".
Because the highest price at 10:25, 10:30, and 10:35 was also at 5785, the price fell and then rebounded, grabbing the "liquidity".
So when I saw the big bullish candle rebound in the demo account trading, I established a long position, subjectively and obsessively "hoping" the price to rebound and grab the "liquidity." Now, looking back, it's a pitiful suicidal act.