ES Weekly Plan | November 13-17, 2023
My expectations for the upcoming week.
Visual Representation
Market Structure
🟩 DAILY: OTFU | ENDS: 4367.75
🟩 WEEKLY: OTFU | ENDS: 4357.75
🟨 MONTHLY: BALANCE | TBD
Contextual Analysis
During the previous week, the market experienced a very challenging, but not so surprising consolidation phase, following the significant rally observed the week before, which formed a triple distribution on the weekly profile. The market's refusal to engage in filling any of the poor structure below proved to be a bullish indicator, a point I consistently emphasized in nearly every daily plan throughout the week. On Thursday, the market formed a double distribution to the downside, taking out four daily lows in the process. This proved to be the break that buyers needed to kickstart a rally, which materialized on Friday. Sometimes the market has to break before it can rally. This break serves the purpose of eliminating weak long positions and attracting stronger buyers to enter at lower prices.
For this week, the main focus will be on buyers' ability to maintain above the prior 5-week balance high, following Friday's breakout. Monitor for continuation (Acceptance) or lack thereof (Rejection). The daily and weekly are one-time framing up, while the monthly has returned to balance after breaking the October high of 4423.25. The conditions are straightforward: buyers are aiming for acceptance by establishing value above the prior 5-week balance high. This would indicate that the upward auction is not yet complete, highlighting the ongoing strength in the market. Conversely, sellers aim to negate Friday’s breakout by re-establishing acceptance within the prior 5-week balance area, with the primary objective to end the weekly one-time framing up. CPI data is set to be released on Tuesday, followed by PPI on Wednesday.
The weekly level of interest is 4423, which represents the prior 5-week balance high. Holding above 4423, indicating a successful breakout, would target the unfilled daily gap at 4446. Break and hold above 4446 would target the resistance area from 4495 to the Weekly Extreme High of 4525, where selling activity can be expected. Note how this resistance area coincides with a high volume node (HVN), characterized by two weekly NVPOCs, which will act as a magnet in the case of an upside continuation.
Break and hold below 4423, indicating a failed breakout, would target the previous week’s VPOC at 4396. Break and hold below 4396 would target the support area from 4360 to the Weekly Extreme Low of 4330, where buying activity can be expected. Note how this support area coincides with the lower end of the previous week’s range, which is weak, and the unfilled daily gap at 4337.75. The recent rally off the YTD VPOC has left behind very poor structure, characterized by three unfilled gaps and five daily NVPOCs. However, these references only become relevant if buyers fail to hold the weekly support area.
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 4423.
Holding above 4423 would target 4446 / 4495 / 4525* / 4562 / 4591
Break and hold below 4423 would target 4396 / 4360 / 4330* / 4305 / 4275
*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.
Thank you, buddy! Let’s have another green week!
Thank you!