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ES Daily Plan | September 4/5, 2023
The market is currently in balance across all time frames.
The general guideline suggests going with the break of the 3-day balance area and observing for continuation (Acceptance) or lack thereof (Rejection).
The market is currently in balance across all time frames, as sellers managed to break the low of Thursday's session on Friday, bringing an end to the daily one-time framing up. The main focus will be on the 3-day balance area in the short-term, where the market has paused following Tuesday’s breakout.
The general guideline suggests going with the break of the 3-day balance area and observing for continuation (Acceptance) or lack thereof (Rejection). In the case of continuation, the primary targets become the final intraday targets located outside the balance area 4555 and 4489, respectively. A strong breakout would involve maintaining above 4555, or below 4489. If there's a lack of continuation after a breakout attempt, the target is a rotation back to the middle and the opposite side of the balance area. The short-term value (5D VPOC) and medium-term value (20D VPOC) are both located within the 3-day balance area. As long as the market stays within this balance range, we can anticipate two-sided activity, emphasizing the need to remain adaptable and responsive. Both balance extremes are of great importance, as outlined in the Weekly Plan published during the weekend.
I've included the volume profile from the last four sessions, highlighting the market's formation of a P-shaped profile since the breakout on Tuesday. The key question is whether new buyers can emerge within the 3-day balance area for an immediate upside continuation, or whether a cleanup of Tuesday's breakout structure is necessary first. The purpose of a clean up would be to shake out weak late longs, and attract stronger buyers to enter at lower prices. Sellers are trapped from Tuesday’s session, which can generate responsive buying activity. The most bearish scenario would involve acceptance back within the prior multi-day balance area, below 4469, which would trap buyers from last week.
For tomorrow, the Smashlevel (Pivot) is 4524, representing the low volume node (LVN) from Friday’s session. Break and hold above 4524 would target 4540, as well as the final upside target of 4555. Holding below 4524, would target 4507, as well as the final downside target of 4489.
Going into tomorrow's session, I will observe 4524.
Break and hold above 4524 would target 4540 / 4555
Holding below 4524 would target 4507 / 4489
Additionally, pay attention to the following VIX levels: 13.84 and 12.32. These levels can provide confirmation of strength or weakness.
Break and hold above 4555 with VIX below 12.32 would confirm strength.
Break and hold below 4489 with VIX above 13.84 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.