ES Weekly Plan | January 2-5, 2024

My expectations for the upcoming week.

Jan 01, 2024

Market Structure

🟨 DAILY: BALANCE | 4D | H: 4839.75 L: 4796.75
🟩 WEEKLY: OTFU | ENDS: 4796.75
🟩 MONTHLY: OTFU | ENDS: 4552

Contextual Analysis

During the final week of 2023, the market experienced a slow upward grind, reaching new all-time highs but falling short of a meaningful upside continuation. On Friday, a double distribution trend day was observed to the downside, which will be of interest in the short-term.

Outcome from ES Weekly Plan | December 26-29, 2023

For this shortened week, our main attention will be on the previous week’s range, highlighted as a 4-day balance (4DB) on the chart. This area holds significance for two reasons: its upper extreme is defined by the current all-time high (ATH) at 4839.75. It’s worth noting that we also have untested overnight activity at 4841.50, which we carry forward as unfinished business. The lower extreme is marked by the low of Friday’s double distribution trend day to the downside. Over the last three weeks, the market has established a P-shape, which can be observed in the included 3-week volume profile. Within the context of a prevailing uptrend, this suggests that the upward auction is not yet complete. The lack of excess to the upside adds an additional layer of unfinished business. Buyers aim to clean up the non-excess high, targeting the SPX ATH at 4818.62 (ES around 4868). On the flip side, the primary objective for sellers is to end the weekly phase of imbalance, initiated in early November, by breaking a previous week’s low.

The weekly Smashlevel (Pivot) is 4823, representing the upper end of Friday’s lower distribution. Break and hold above 4823, would target the current all-time high (ATH) from the regular trading hours and overnight session at 4839.75 and 4841.50, respectively. Break and hold above 4841.50 would set the stage for an upside continuation, 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 of 4818.62, which roughly corresponds to 4868 for ES and is in close proximity to the mentioned resistance area.

Holding below 4823 would target the 4-day balance low at 4796.75, which is the low observed in the previous week. Break and hold below 4796.75, would put an end to the weekly one-time framing up, with a target set on the support area from 4765 to the Weekly Extreme Low of 4735, where buying activity can be expected. Note how this support area coincides with the lower end of the prior 7-day balance. As I've been mentioning since mid-November, a significant change in the bigger picture would require the sellers 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 4823.

Break and hold above 4823 would target 4841 / 4870 / 4900* / 4920 / 4940
Holding below 4823 would target 4796 / 4765 / 4735* / 4710 / 4680

*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.