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Smash ES Plan | December 15, 2022
Daily back to a 3 day balance after another volatile session. The last downside target hit and that was all sellers got. Additional VIX levels added for tomorrow's session.
Recap & Plan
Buyers attempted to establish acceptance above Smashlevel 4068 in the ON session to potentially target the high volume node around 4084. Note how sellers defended the entrance back within yesterday’s middle distribution and we rolled back down. Other than that, a fairly uneventful ON session that was holding within yesterday’s lower distribution, rotating around the prior most traded price by volume.
Buyers immediately regained the full session VWAP and tested Smashlevel 4068 during the the initial 5 minutes of RTH. We did get a minor 5 handle reaction where we could see some aggressive selling activity, but that effort was absorbed by passive buyers and the initial impulse move off open found continuation. The first upside target was one of the two HVN’s we had an extra eye on for today’s session, 4084. The other HVN to observe was around 4035. Note that the VPOC for the AM session was 4078 and it was 4033 for the PM session, meaning confirmed interest at both areas.
The price action stalled within that high volume node around 4084 ahead of FOMC and as always, it’s usually wise to flatten open trades prior to FOMC. We started with a fast drop, followed by some balance and another liquidation. That second liquidation tagged the last intraday downside target 4000 (LOD: 3997), and we reversed. If you were in a short position, that was an obvious level to book profit. We discussed a bit about the concept around the intraday levels in prior plan for those interested in how I apply them contextually. The reversal took us all the way back to 4068 in L-period, and found selling activity. Obviously very volatile price action to trade, but we did get fairly aggressive selling once 4068 hit. Go back and review.
We closed out the session back below MA200 within that high volume node around 4035. Daily is back to a 3 day balance and we managed to clean up some structure from not only yesterday’s session, but also the 12/12 session. We do have unfilled single prints left from yesterday’s B-period, meaning the look above the weekly balance and fail is still in play and the main main target is the downside magnet around 3960. Note the amount of confluences down there and note the last downside target for tomorrows session. The short-term level of interest is 4044. Break and hold above and the upper HVN can act as magnet, where we also have today’s VPOC, that didn’t migrate lower in the PM-session. Above that we have the Weekly Extreme High 4105, where we have the poor structure from 12/13.Sellers maintaining control below 4044 targeting today’s excess and the 3 day balance low around 3971.
Two additional VIX levels to observe for tomorrow: 22.22 and 20.06. VIX wasn’t on the side of sellers today and the lack of downside traction was clear. Use the levels as confirmation of strength/weakness. Example: Should we break 3971 tomorrow, you want to see a VIX >22.22 as confirmation. Lack of confirmation tells you not only to be cautious not to short in the hole (which you should be careful about anyway), but also the potential for reversals. Another example: Should we break and hold above 4084 with VIX < 20.06, you have bullish confirmation, meaning not optimal conditions to try and fade it etc. Track the correlation and remember, this is just a tool.
Disclaimer: Futures and options trading involve high risks with the potential for substantial losses. The information contained in this communication is for informational purposes only and does not constitute a trade recommendation and should not be construed as such. The reader bears responsibility for any investment decisions and should seek the advice of a qualified securities professional before making any investments. Owners/authors of this newsletter are not certified as registered financial professionals or investment advisers.
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