Discover more from Smashelito's ES/SPX Newsletter
ES Weekly Plan | August 28 - September 1, 2023
Below are my expectations for the week ahead.
🟨 Daily: BALANCE | 5D | H: 4468.75 L: 4365.25
🟥 Weekly: OTFD | Ends: 4468.75
🟨 Monthly: BALANCE | TBD
Weekly Extreme High: 4515
Weekly Extreme Low: 4315
As usual, a detailed daily plan will be published tomorrow.
During the previous week, the market mainly worked on cleaning up the structural deficiencies, established by the emotional price action witnessed the week before. On Monday, buyers achieved their main objective by ending the daily OTFD. On both Tuesday and Wednesday, the market continued the pattern of achieving higher highs and higher lows. Thursday’s session was highly emotional, driven by a gap higher in the overnight session due to the NVDA report. Consequently, this led to a test of the highly significant weekly resistance area outlined in the previous weekly plan, where selling activity was encountered. Thursday’s session ended as an outside day down, effectively breaking two daily lows. Buyers bought the dip on Friday; however, their efforts to break out from Thursday's lower distribution, where sellers were putting up a defense, remained unsuccessful.
I exercise caution when initiating trades outside the Weekly Extremes to avoid making impulsive decisions at unfavorable locations. Essentially, the Weekly Extremes help prevent me from making emotionally driven trades, which is a state that is not ideal for making informed trading decisions.
For this week, the main focus will be on the extremes of the previous week’s “inside week”. The weekly one-time framing down remains intact, as inside weeks technically do not bring it to an end. However, the inside week suggests that the market is in a short-term balance. The general rule is to go with the break of the inside week and monitor for continuation or lack thereof. An upside break will target the weekly resistance area, while a downside break will target the weekly support area. Lack of continuation can provide good reversal setups. The resistance and support areas hold exceptional significance this week. A weekly close above 4515 would negate the recent weakness, while a weekly close below 4315 would indicate a deeper correction is in play (7.5% or 10%).
The weekly level of interest is 4425, representing both the value area high (VAH) of the previous week and the upper end of the lower distribution from Thursday's outside day down. Break and hold above 4425 would target Thursday’s breakdown single prints at 4450. I’ve added Thursday’s profile on the chart. Break and hold above 4450 would target an inside week breakout towards the resistance area from 4485 to the Weekly Extreme High of 4515, where selling activity can be expected. Note how this resistance area coincides with the MA50. However, of greater significance is its alignment with the medium-term value (20D VPOC), making it a crucial area for sellers to defend and buyers to reclaim.
Holding below 4425 would target 4385, representing the value area low (VAL) of the previous week, and a high volume node (HVN) from the week before. Break and hold below 4385 would target an inside week breakdown towards the support area from 4345 to the Weekly Extreme Low of 4315, where buying activity can be expected. Note how this support area coincides with the June roll gap at 4325.50. ESM23 settlement is slightly below at 4304.75, in the case of continued weakness.
🟩 Upside: 4450 | 4485 | 4515 | 4555 | 4591 | 4604
🟥 Downside: 4385 | 4345 | 4315 | 4305 | 4275 | 4240
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.