ES Daily Plan | September 5, 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 overnight session saw immediate weakness, leading to price exploration below Tuesday’s highlighted spike area. However, sellers struggled to gain meaningful downside momentum below the 5517 level, which was essential for sustaining a directional move.
The RTH session was characterized by two-sided activity—often seen after an emotional trading day—as the market processes the breakdown. The initial balance traded within the spike area, with the spike base at 5545 capping the upside. A poor low was formed just above Tuesday’s low, indicating that sellers may have moved too far too quickly, potentially opening the door for a short-covering counter move. Trading near the Weekly Extreme Low makes the trade location less favorable for sellers, as previously discussed. This creates a complex scenario—while sellers maintain short-term control, the trade location is far from ideal. Stay tight and disciplined. A short-covering bounce unfolded during the C and D-periods, but it was relatively weak, filling only one of the two single prints from yesterday between the middle and lower distributions. Patient sellers seeking a better trade location waited for the resistance area to be tested, but it was unfortunately front-run. The afternoon session mainly traded within the spike area.
Consolidating and building value at lower prices today is bearish in the context of Tuesday’s directional move from balance. For sellers, the primary objective now is to shift the 5D VPOC (short-term value) lower, currently at 5610, which would further indicate market acceptance of lower prices.
Tuesday’s highlighted lower distribution is the key battleground in the short term. The most bearish response would involve staying within the lower distribution and further accepting Tuesday’s breakdown, which could set the stage for a continuation to the downside. Conversely, a return within the middle distribution would be the most favorable outcome for buyers, potentially triggering a failed breakdown scenario.
In terms of levels, the Smashlevel is at 5545, marking Tuesday’s spike base and aligning with the MA50. Holding below this level signals weakness, targeting 5517, with a final target at the unfilled daily gap at 5487.75 under sustained selling pressure. Failure to hold below 5545 would open the door for a cleanup of Tuesday’s poor structure, targeting the resistance area between 5569 and 5579, with a final target at 5593 to complete a traverse of today’s middle distribution.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5545.
Break and hold above 5545 would target 5569 / 5579 / 5593
Holding below 5545 would target 5530 / 5517 / 5487
Additionally, pay attention to the following VIX levels: 22.84 and 19.80. These levels can provide confirmation of strength or weakness.
Break and hold above 5593 with VIX below 19.80 would confirm strength.
Break and hold below 5487 with VIX above 22.84 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.
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.
Super interesting. Appreciate you, Smash!
I can't make up my mind if I think today 5 SEP RTH action is bearish or constructive. On one hand the profile is "b" shaped with value moving lower and on the other the single prints leftover from the 1 AUG down day and almost filled the gap up from 14 AUG.