ES Daily Plan | March 16, 2023

The highly emotional overnight session failed to see a downside continuation in RTH after reaching the last downside target of 3890.

Now back within the "mini-balance", which has been the recent battleground.

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Contextual Analysis

During the Asian session, the market remained within a narrow range, resulting in a relatively quiet overnight (ON) session. Sellers were active within the highlighted resistance area of 3970-3960 (with an ON high of 3964). Things took a turn for the worse upon the opening of the European session. We witnessed a pretty nasty news-related liquidation that completely erased yesterday’s buying efforts. When ES was hovering around 3915, the VIX broke through 25.20, indicating that ES was likely to reach its last intraday downside target of 3890, which was ultimately achieved. The very emotional ON session also came down and filled some of the highlighted A-period excess from the 3/13 session.

Opening on a true gap down at the last intraday downside target of 3890, the RTH session proved to be a challenging one, with all downside targets being met and with the VIX confirming the weakness. The market was relatively uneventful during the session, as it remained mostly balanced around 3890 (today’s VPOC). The sellers were in control of the auction as buyers struggled to establish acceptance within prior days range following the gap-fill. However, sellers were unable to accomplish much. The inability to breach the ON low and attack the excess from the 3/13 session was quite disappointing. In the PM-session, buyers were finally able to gain traction within the prior day's range through an impulsive upward move. This move cleaned up some of the poor structure from the ON liquidation.

The daily has returned to a 3 day balance following the break of prior day’s low. The short-term value (5-day VPOC) has shifted from 3995 to 3920, which has been a crucial level this week and will serve as the Smashlevel for tomorrow. There hasn't been much of a change as we are back in the highlighted "mini-balance" area, which has been the recent battleground. The poor structure above persists and a new poor high was added today. Below, we have the excess from the 3/13 session, which sellers did not have interest in testing today, which is interesting. Buyers aim to establish acceptance back within the value area of the yesterday’s session, above the "mini-balance" area. On the other hand, sellers aim to establish acceptance back within today's value area, below the "mini-balance" area, to negate today’s closing upward move.

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Going into tomorrow's session, I will observe 3920.

• Break and hold above 3920 would target 3938 / 3960 / 3982

• Holding below 3920 would target 3900 / 3875

Additionally, pay attention to the following VIX levels: 27.75 and 24.52. These levels can provide confirmation of strength or weakness.

• Break and hold above 3982 with VIX below 24.52 would confirm strength.

• Break and hold below 3875 with VIX above 27.75 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.

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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.

ES Weekly Plan | March 13-17, 2023

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