ES Weekly Plan | May 8-12, 2023
Below are my expectations for the week ahead.
🟨 Daily: BALANCE | 3-Day | H: 4167 L: 4062.25
🟨 Weekly: BALANCE | 5-Week | H: 4206.25 L: 4062.25
🟨 Monthly: BALANCE | 4-Month | H: 4208.50 L: 3814.50
Weekly Extreme High: 4255
Weekly Extreme Low: 4055
As usual, a detailed daily plan will be published tomorrow.
Buyers made an immediate attempt to break the multi-week balance area on Monday, making last week quite eventful. The attempt failed miserably, as Tuesday's session opened with a true gap to the downside that remains unfilled (4182.25). The balance rules suggest that if there is a lack of continuation after a breakout attempt, one should consider fading and targeting the midpoint as well as the opposite side of the balance area. On Thursday, the entire weekly balance area was traversed as sellers made an attempt to break below, with the session concluding below the prior weekly support. However, just like the buyers earlier in the week, the sellers couldn't sustain the move away from value, and as a result, there was a short-covering rally on Friday back to the value. It's worth noting the yellow candle that represents an island reversal, where sellers got caught offsides. To prevent taking trades at unfavorable locations, it is essential to continuously monitor the various balance areas. During Thursday's session, when the weekly balance lows were reached, it was a time to book profits on any existing short positions and reassess, rather than to initiate new ones.
For this week, the main focus will be on whether buyers can break the 3-day balance to the upside for another attempt to attack the weekly and monthly balance highs. The market is currently in balance across all time frames, awaiting more market-generated information. Note how we are still trading within the recent weekly balance area, and essentially consolidating in the upper end of the 4-month balance area. Just like the previous week, 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 weekly level of interest is 4165, which essentially is the 3-day balance high. Break and hold above 4165 would target the weekly and monthly balance highs at 4208. Break and hold above 4208, indicating a successful breakout, would target the resistance area from 4220 to the Weekly Extreme High 4255, where selling activity can be expected. Note the weekly unfilled gap at 4220.75.
Holding below 4165 would target 4125, which is the top of Friday’s A-period excess. Additionally, notable orderflow activity occurred at that level during Friday's session. Break and hold below 4125 would target the support area from 4090 to the Weekly Extreme Low 4055, where buying activity can be expected. Note how this area coincides with the 5-week balance low and MA50. For any significant change to occur in the bigger picture, the sellers would need to break and hold below the Weekly Extreme Low, with a weekly close below it being preferred.
🟩 Upside: 4208 | 4220 | 4255 | 4280 | 4300 | 4335
🟥 Downside: 4125 | 4090 | 4083 | 4055 | 4020 | 3990
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.
This is a market with only active shorters., countered by passive buyers and volatility sellers. If there were buyers, we would be well above 4200 by now. We need some real bad economic data or fiscal cliff to hit to make the market sell off, make Fed pivot as implied in Fed futures and then break these resistances