Jan 17, ES Plan and Missal: Weakness?
A shadow or a killing
Image 1. Solving the 4800 mysteries. Lady On a Train (1945)
The 4800 has been a tenacious level from the perspective of both sides. Granted, 50 points on either side of this level can trigger covering by either side, so it’s no mystery that a major psychological inflection point can see so much trade. Especially after the historic ripper into the holidays.
We remain in longer 21 day balance, and neither side has the clear advantage. Tuesday’s session closed on heavy selling delta, indicating the presence of strong sellers. However a key requirement for more downside is a close below 4772. Until then, buyers are well supported. Refer back to the weekly plan for more detail.
rickier to play but offered opportunities on both sides.
Image 2. Friday, Monday (holiday) ETH, RTH and Tuesday ETH sessions as of 8h45EST
Minister’s Missal
My thesis this morning was a ‘look above and fail’ scenario which happened a couple of minutes into open, with the ONL ultimately taken out. However this immediately encountered my first planned area of support at 4785. Bids did come in and another secondary scenario - the look below and fail - unfolded to bring us back through the open. I think that by IB it was pretty clear we were headed for a day of two-way trade.
Indeed, my seller level to the upside at 4816 stayed offered, capping the day’s high. This was also a contingency in the plan. Here’s a recap of these two levels below.
Image 2. Jan 16 scenario recap
In fact, the E period opened at the pivot, only to reject further upside with a lower low, leading to a new low on the day. The overly short inventory saw a correction into close, settling just below 4799. A frustrating close for both sides.
Image 3. Tuesday Jan 16 ETH and RTH sessions
Tomorrow is another day and we’ve made it this far. If you missed the great setups today despite the churn, more good setups are around the corner. I do think we are at a critical junction for the next 100 points, and given the appetite of the dip buying I will be focusing on 4800 as the pivot heading into the next session.
Wednesday Plan and Levels
Pivot 4800. This is also Tuesday’s TPOC. I think at this point time (and a close) on either side of this level will lend the advantage to the next move. I tend to lean short until we see an hourly close above 4816. Plan is largely unchanged.
a) Bids at 4785 can see more aggressive buyers step in. A close above 4816 aims for 4826 (selling tail) which can induce short covering to the ETH high 4841.
b) Sellers defending 4816 (Tuesday high) can go on to challenge 4785. A break then can see trade to 4772 and 4762. Further below I may consider support at 4755.
c) Keeping an eye on the VIX - prints below 13.30 can signal strength while sellers benefit from the index over 14.40.
Image 4. ES levels
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