ES Daily Plan | September 12, 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
Today’s session was eventful, to say the least. The overnight session saw an immediate test of the Smashlevel at 5502, which was rejected, leading to a move toward the initial downside target of 5480. For the most part, trading activity remained confined within yesterday’s value area, except for a brief price exploration higher following the CPI data release—which was also rejected.
The RTH session opened with an immediate sell-off (IBH: 5501.50), and the downside momentum quickly gained pace. All downside targets were met and exceeded as early as the B-period. When the market breached the final downside target of 5435, the VIX simultaneously breached its resistance level of 20.34, confirming the weakness. In such scenarios, I avoid looking for reversals due to the potential for further weakness. The market dropped another 23 handles to 5412, testing the 3-day balance low. Needless to say, as the market approached the balance low, it became less optimal to short. However, a safer approach would be to wait for the market to regain 5435, with the VIX falling back below its 20.34 resistance, before considering reversals. Fortunately, traders didn’t have to wait long for this, as the D-period regained 5435 and the VIX fell below 20.34 at the opening of the E-period. The rest of the session saw the market execute an absolutely vicious V-shaped reversal, leading to tagging and exceeding all upside targets. The most effective tool for risk management is trade location; therefore, I always exercise caution to avoid getting caught selling support and buying resistance during emotional periods. Selling the balance low at 5412 was just as suboptimal as buying at 5530, even though buyers ultimately got away with it today in the closing session.
An absolutely vicious v-shape reversal unfolded today from the 3-balance low, resulting in an outside day up. The closing session formed an upward spike, which is of interest in the short-term. The strongest response would involve establishing value within or above the highlighted spike area, suggesting potential for an upside continuation. Conversely, failure to do so would open the door for a cleanup of today’s poor structure, with the weakest response being a return within today’s initial balance range. PPI tomorrow.
In terms of levels, the Smashlevel is at 5548. Holding above this level signals strength, targeting the final weekly target at 5580 (prior-10-day balance low), with a final target at the breakdown single prints at 5603 under sustained buying pressure. Failure to hold below 5548 would target the 5530 HVN, with a final target at 5506 under sustained selling pressure—a crucial level for buyers to defend.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5548.
Holding above 5548 would target 5580 / 5603
Break and hold below 5548 would target 5530 / 5506
Additionally, pay attention to the following VIX levels: 18.78 and 16.62. These levels can provide confirmation of strength or weakness.
Break and hold above 5603 with VIX below 16.62 would confirm strength.
Break and hold below 5506 with VIX above 18.78 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.
Thanks Smash! Levels accurate as always!