ES Weekly Plan | December 18-22, 2023
My expectations for the upcoming week.
Visual Representation
Market Structure
🟩 DAILY: OTFU | ENDS: 4757.25
🟩 WEEKLY: OTFU | ENDS: 4653
🟩 MONTHLY: OTFU
Contextual Analysis
During the previous week, our main level of interest was 4660. With the market showing limited interest in trading below that level, an upside continuation unfolded, resulting in the achievement of all weekly upside targets as early as Wednesday. The prior Weekly Extreme High of 4745 was taken out in the process, and it served as support for the rest of the week. I personally wrapped up the week early due to unattractive conditions for chasing, coupled with a lack of interest in attempting to pick a market top—a strategy I prefer to leave to other traders.
For this week, our main attention will be on the double distribution profile established last week, with a particular emphasis on its upper distribution, where Friday's session closed and the previous week's most traded price by volume (VPOC) is located. The market is currently one-time framing up across all time frames, indicating that buyers have full control of the auction, while the market actively searches for an opposite response. Friday’s session was an inside day, and while it doesn't technically end the daily one-time framing up, it suggests some form of balance in the very short-term, further emphasizing our attention on last week's upper distribution. Remaining within the upper distribution favors an upside continuation, with the main target set at the non-back adjusted all-time high (ATH) of 4808.25. The most favorable scenario for sellers would involve filling the low volume area separating the distributions and establishing acceptance within the lower distribution, effectively negating the FOMC move.
The weekly level of interest is 4750, which represents the lower end of the previous week’s upper distribution. Holding above 4750, favoring upside continuation, would target 4785, where aggressive buyers were absorbed by passive sellers on both Thursday and Friday. Break and hold above 4785 would target the non-back adjusted all time high (ATH) at 4808.25, as well as the resistance area from 4825 to the Weekly Extreme High of 4855, where selling activity can be expected.
Break and hold below 4750 would target fills of the low volume area from the previous week towards the support area from 4710 to the Weekly Extreme Low of 4680, where buying activity can be expected. Note how this support area coincides with the upper end of the previous week’s lower distribution. As I've mentioned in the past weeks, for any significant change to occur in the bigger picture, the sellers would need to break and hold below the Weekly Extreme Low. A preference is placed on achieving a weekly close below this level, as it would indicate the potential for a more profound decline.
As usual, a detailed daily plan will be published tomorrow. In the meantime, enjoy the rest of your weekend!
Levels of Interest
In the upcoming week, I will observe 4750.
Holding above 4750 would target 4785 / 4808 / 4825 / 4855* / 4880
Break and hold below 4750 would target 4710 / 4680* / 4653 / 4633 / 4607
*Weekly Extremes. I exercise caution when initiating trades outside the Weekly Extremes to avoid making impulsive decisions at unfavorable locations. Essentially, the Weekly Extremes serve as a safeguard against emotionally-driven trades, a state that is less than ideal for making well-informed trading decisions.
Economic Calendar
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.
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