ES Weekly Plan | May 1-5, 2023
Below are my expectations for the week ahead.
🟩 Daily: OTFU | Ends: 4143.75
🟨 Weekly: BALANCE | 4-Week | H: 4194.75 L: 4068.75
🟨 Monthly: BALANCE | 3-Month | H: 4208.50 L: 3814.50
Weekly Extreme High: 4280
Weekly Extreme Low: 4095
As usual, a detailed daily plan will be published tomorrow.
During Monday's session, buyers struggled to break and hold above the prior weekly level of interest at 4160, resulting in weakness in the initial phase of the previous week. The main trigger for the weakness observed on Tuesday and Wednesday was the successful achievement of sellers' primary objective - ending the weekly one-time framing up. In the previous Weekly Plan, we discussed how this could potentially create downward pressure. As a consequence, three weekly lows were taken out, including the highlighted weak area at 4095, leading to a test of the prior weekly support area. The low of the week was at 4068.75, which was only 8.75 handles away from the prior Weekly Extreme Low of 4060. It was crucial for buyers to maintain this support area, which they managed to do, resulting in a vicious rally towards the end of the week.
For this week, the main focus will be on whether buyers can break the 4-week and the 3-month balance to the upside. The month of April has ended, and we observed the smallest monthly trading range in quite some time - 126 handles. Note how the market is currently trading at the upper end of the 4-week balance area, and for the past month, it has basically been consolidating in the upper end of the 3-month balance area, suggesting that a potential breakout attempt may be in play. Balance rules apply (See Substack for details).
Balance Rules: The general rule is to go with the break of the balance area. Break to the upside (Look above and go), you want to be a buyer. Break to the downside (Look below and go), you want to be a seller. Monitor for continuation (Acceptance) or lack thereof. Lack of continuation (Failed breakout / Look above/below and fail), you want to fade and target other side of balance.
As always, the upper end of a balance area is considered resistance until proven otherwise. Conversely, the lower end is viewed as support. The daily chart is currently one-time framing up, which is the primary goal of sellers to bring to an end.
The weekly level of interest is 4155, which essentially is where the medium and long-term value are located. Additionally, notable orderflow activity occurred at that level during Friday's session. Holding above 4155 increases the odds for a breakout attempt, which would target the cluster of references between 4195-4220 in the process. Break and hold above 4208, indicating a successful breakout, would target the resistance area from 4245 to the Weekly Extreme High 4280, where selling activity can be expected.
In the absence of a breakout attempt, the target is the very poor structure left behind by Thursday's multi-distribution trend day to the upside. Break and hold below 4155 would target the support area from 4130 to the Weekly Extreme Low 4095, where buying activity can be expected. Note how this area coincides with the VPOC of the previous week. For any significant change to occur in the bigger picture, the sellers would need to break and hold below the Weekly Extreme Low.
🟩 Upside: 4195 | 4208 | 4220 | 4245 | 4280 | 4300 | 4335
🟥 Downside: 4130 | 4095 | 4083 | 4055 | 4020 | 3990 | 3950
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.