Smash ES Plan | December 8, 2022

Balanced session ending as an inside day, meaning main focus is on today's extremes. The general rule is to go with the breakout and monitor for continuation or lack thereof. Nimble until resolved.

---

Recap & Plan

Smashlevel 3940 was respected during the Asia session, but it was taken out after Europe opened, acted as resistance and a decent drop followed where we actually did price exploration below prior day's low. ON Low was 3914 and it was not taken out during the RTH session. A quick look below prior day’s range and fail took us all the way back to 3940 prior to RTH open. Review the ON low on the footprint, very nice exhaustion.

RTH opened within prior day’s range and value, meaning two-sided activity could be expected initially. If we take a look at today’s profile, it can’t get more balanced than this. We did get a test of the Weekly Extreme Low 3960 (HOD: 3961.50), which was and still is a level that sellers need to defend to maintain pressure. That buying effort was absorbed by passive sellers and when buyers ran out of juice, aggressive sellers jumped in resulting in a solid reversal. I published this sequence on Twitter for reference.

We end up with an inside day with value unchanged. The general rule is to go with the breakout of the inside day. 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 of. Lack of continuation (Failed breakout / Look above/below and fail), you want to fade and target other side of the inside day.

Obviously not much has changed from yesterday, sellers want to hold below 3960 to maintain the selling pressure, meaning a break of the inside day to the upside can potentially trigger short covering, which will target fills of the poor structure from 12/6. Daily is still one time framing down as inside day’s do not end it.

Did anyone track the Weekly Extremes for NQ (11549) and RTY (1826) from prior plan? RTY High today = 1827.6, tagged the same minute ES tested 3960, that’s strong confluence for a trade. NQ defended 11549 in the ON session and when it was taken out, ES lost 3940 in the same sequence. Keep tracking.

---

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.
Twitter: @smashelito | FAQ: smashelito.com