ES Weekly Plan | January 16-19, 2024
My expectations for the upcoming week.
Visual Representation
Market Structure
🟩 DAILY: OTFU | ENDS: 4802.25
🟨 WEEKLY: BALANCE | 4W | H: 4839.75 L: 4719.75
🟩 MONTHLY: OTFU | ENDS: 4552
Contextual Analysis
During the previous week, the key question was whether sellers could sustain downward pressure following the weakness observed two weeks ago. The lack of initiative sellers held the potential for a short-covering rally, as discussed. Monday’s session saw an absolutely vicious short-covering rally unfold, effectively taking out four daily highs in the process. By Wednesday, the Weekly Extreme High of 4825 was already attained, significantly stalling the upside momentum for the rest of the week and providing some solid short setups, as illustrated on X on Thursday (link) and Friday (link).
For this shortened week, our main attention will be on the multi-week balance high, marked by the current RTH ATH at 4839.75, and untested overnight activity at 4841.50, carried forward as unfinished business. The lack of excess to the upside adds an additional layer of unfinished business. The general guideline suggests going with the break of the highlighted balance area and observing for continuation (Acceptance) or lack thereof (Rejection). If there's a lack of continuation following a breakout attempt, it can trigger moves in the opposite direction. With Friday’s session closing near the upper end of the balance area, considered resistance, there is an immediate need for initiative buyers. The absence of such activity will attract responsive activity, echoing last week's price action when initiative sellers were notably absent at the weekly balance low, triggering a rotation. Overall, buyers maintain control as the market consistently builds value at higher prices following the FOMC breakout on December 13th. Trouble would only start to kick in with a weekly balance breakdown, negating the FOMC move. Sellers prefer resolving the unfinished business before that occurs.
The weekly Smashlevel (Pivot) is 4839-41, representing the current RTH and ON all-time highs, as well as the 4-week balance high. Break and hold above 4839-41, indicating a successful breakout, would shift the weekly to one-time framing up, targeting the resistance area from 4870 to the Weekly Extreme High of 4900, where selling activity can be expected. It's worth noting that the SPX has not yet reached its ATH, situated at 4818.62, which roughly corresponds to 4850 for ES. This is another level to monitor.
Holding below 4839-41, indicating a lack of initiative buyers, would target the most traded price by volume (VPOC) of the previous week at 4792, coinciding with the daily MA20. Break and hold below 4792, would target the support area from 4760 to the Weekly Extreme Low of 4730, where buying activity can be expected. Note how this support area coincides with the lower end of the main distribution on the included 5-week volume profile.
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 4839-41.
Break and hold above 4839-41 would target 4850 / 4870 / 4900* / 4920 / 4940
Holding below 4839-41 would target 4792 / 4760 / 4730* / 4700 / 4675
*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.
Quality work as always! Thank you!
Thanks, buddy! Wishing us an awesome week ahead.