ES Daily Plan | January 18, 2023

We end up with a fairly quiet session, so my key levels of interest remain largely unchanged.

The pattern of higher highs and higher lows is still in place, which is something sellers would like to see change.

---

Recap & Plan

During the Asian trading session, buyers were unable to establish acceptance above Smashlevel 4016, leading to technical fills of the highlighted fill section from Friday's RTH session. There was not interest trading within Friday’s value area once the technical fills were complete, which was one of the scenarios outlined in previous plan as the “less bullish”. The best outcome for sellers was to break and hold below the weekly level 4002, but they were unable to do so in both the ON and RTH session. Sellers got too short around 4002, forming a poor low (ONL: 4000.50). This led to a reversal in which prices reached new highs during the ON session, as trapped sellers contributed to the upward momentum.

The RTH session opened above Friday’s spike base 4016, with a short-lived drop that filled the upper set of Friday’s single prints. Once 4016 was regained, we saw a decent squeeze of ~20 handles. During the B-period, there was strong buying with a +4681 delta while aggressive selling dominated the C-period with -5580 delta. There was notable orderflow activity at the 4020 level, which had a significant impact on the rest of the session. Despite intense selling pressure in C-period and at start of the D-period, sellers were unable to test the ON low, meaning unable to establish acceptance below the weekly level 4002. Similar to the ON session, the fills of the poor structure were sufficient. The remainder of the RTH session was trading within the range of the ON session, and the significant orderflow level 4020 was tested in the PM-session, with sellers successfully defending it. Throughout the session, the VIX was trading above the resistance level of 19.20. An interesting observation was that when the 4020 level was retested, the VIX was also testing its resistance level at 19.20, which acted as support (VIX LOD: 19.21). This sequence resulted in a significant liquidation in the J-period.

We end up with a fairly quiet session, so my key levels of interest remain largely unchanged. I will continue to observe the 4020 level, which was a notable level of interest today. The other level of interest is 4002, the weekly level. Break and hold above 4020 would target an upside continuation towards the prior Weekly Extreme High 4045, and should we see a trend day, potentially 4068, the last intraday upside target from previous plan. On the other hand, break and hold below 4002, would mean that the daily one time framing up ends, which would target a value traverse of Friday’s value and potentially test previous week’s VPOC 3960, which is also a cumulative high volume node. Tomorrow there is a significant amount of data to be released, including PPI, Euro CPI, and the BoJ meeting coming up shortly (9 PM Central time).

Tomorrow, pay attention to two additional VIX levels: 20.23 and 18.49. These levels can provide confirmation of strength or weakness. If we break and hold above 4045, a VIX below 18.49 would confirm strength. If we break and hold below 3960, a VIX above 20.23 would confirm weakness. Overall, it's important to exercise caution when trading outside of the highlighted yellow levels. A non-cooperative VIX may suggest possible reversals i.e trade setups.

---

Be sure to check out the Weekly Plan, which provides a broader perspective and highlights significant levels of interest to watch in the coming week.

Smash ES Weekly Plan | January 16-20, 2023

---

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.
Twitter: @smashelito | FAQ: smashelito.com