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ES Weekly Plan | October 9-13, 2023
My expectations for the upcoming week.
🟨 Daily: BALANCE | 10D | H: 4380.25 L: 4251.25
🟥 Weekly: OTFD | Ends: 4358.50
🟥 Monthly: OTFD | Ends: 4562
Weekly Extreme High: 4455
Weekly Extreme Low: 4235
As usual, a detailed daily plan will be published tomorrow.
During the previous week, the market observed a downside continuation early on, after a break in the pattern of daily higher lows. The market formed a poor low just above the prior weekly support, sparking a vicious short-covering rally on Friday.
For this week, the main focus will be on whether the buyers can follow through to the upside after Friday’s short-covering rally. Their main objective is to put an end to the weekly one-time framing down by breaching 4358.50. Friday’s rally was initiated off a poor low on the daily. When analyzing the previous week’s volume profile, we can observe the lack of excess to the downside, suggesting that it's not a well-auctioned low. Short-covering rallies adjust inventory that has become too short after a period of strong selling activity. Generally, it weakens the market when the prevailing trend is to the downside by removing potential buying interest. With that in mind, it's crucial to monitor how well the market sustains Friday's rally in the early part of the week. While the weekly and monthly one-time framing down remains intact, buyers managed to break the pattern of lower highs on the daily, effectively shifting the daily to a 10-day balance. The immediate resistance to monitor in the short-term is the upper end of this balance area, ranging from 4350 to 4380. PPI/FOMC minutes on Wednesday, CPI on Thursday.
The weekly level of interest is 4350, which represents the prior 6-week balance low. Break and hold above 4350 would target the 10D balance high at 4380, which would effectively put an end to the weekly one-time framing down in the process (4358.50). Break and hold above 4380, indicating a successful breakout, would target the resistance area from 4425 to the Weekly Extreme High of 4455, where selling activity can be expected. Note how this resistance area coincides with the MA50, September VWAP (4435), and the unfilled daily gap at 4446, making it crucial for sellers to defend.
Holding below 4350, indicating a lack of stronger buyers on Friday, would target the value area high (VAH) of the previous week at 4305. Break and hold below 4305 would target a traverse of the previous week’s value area towards the support area from 4265 to the Weekly Extreme Low of 4235, where buying activity can be expected. Note how this support area coincides with the MA200, the unfilled daily gap at 4239.75 and the previous week’s VPOC, making it crucial for buyers to defend. Additionally, pay attention to the poor low formed by four consecutive daily lows. There's a significant high volume node (HVN) located at 4135, serving as a potential downside magnet for this correction. This aligns with the 100% range extension from the most recent weekly balance area. Nonetheless, we maintain our day-by-day approach without making anticipations.
🟩 Upside: 4380 | 4425 | 4455 | 4494 | 4523
🟥 Downside: 4305 | 4265 | 4235 | 4200 | 4170
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.