Trade Plan: Monday, August 7th, 2023

At an interesting spot

Hi all! Back with another trade plan. Friday was a fantastic day for me! Again I gave some back of the total wins due to poor execution, but still I’m focusing on every day as an attempt to do better than the last. You’ll note starting today I’ve also added a new section with the 5 day and 20 day value levels.

Timeframe Overview

Monthly OTF: up, ends: 4500

Weekly OTF: down; ends to the upside: 4505

Daily OTF: down; ends to the upside: 4570

Value Overview

Monthly value: above, VPOC 4604.25 (July) VPOC 4544.75 (August)

Weekly value: above, VPOC 4604.25

Friday’s value: above, VPOC 4544.75, TPOC 4540.00

Friday Session Recap

Friday presented us with a very interesting session, but overall very clean price action where many trading opportunities presented themselves. ES opened at 4538.75. A period opened with initial strong strength from buyers, but it was clear that after just 15 minutes, they were running out of steam (slowing lows and highs). While initially this looked simply like a pause before another leg higher, this ultimately led to some trapped inventory and a flush down beyond 4520 in B period. However, in B period this flush failed to take out the overnight low, and responsive buying was present. We went long on this reversal, ultimately paying handsomely for more than 25 points, exiting at 4552, just above a critical point for the session, the IB high at 4550.75 (we tried the same on MNQ but go stopped out twice, missing a 100+ point opportunity and taking another set of papercuts that limited our overall PNL).

Once the IB high was cleanly broken in F period, it was looking like a trend day was beginning to form — but this is not always the case, especially when a deep selloff is present as part of the IB (in B period). In a trend up day, you want at the very least the IB high to act as support. The trend up did continue into F and G period, but those gains were erased completely in H period, coinciding with a break of the IB high downward — not a good sign at all for buyers. Most interesting to me is that this break of IB high did not lead to a neutral structure day, but rather a neutral extreme (both sides of IB explored), whereby in J period, the IB low as broken, and strong sellign continued until the close, even having us break through that psych value of 4500. ES closed a hair below 4500 at 4499.50.

Market Structure

We are cleanly OTF down on both the weekly and the daily, as buyers were unable (though initially looked convincing!) to take out Thursday’s HOD at 4570. Looking at the TPO from Friday, we have a poor low below 4498, and above 4560. While there are no single prints present, there was quite thin volume traded 4507 and 4524.

Trade Plan

We find ourselves at a critical juncture. Buyers want to bring us back into value areas above established in late July and so far in August. Sellers want a clean break through and hold of 4500, which would also shift the monthly OTF to down, and would put us bank in the balance levels of late June, where we might traverse at least to the halfback of this region at 4545, and if traversing it fully, to 4370. This would be an overall huge change in market structure, as we haven’t had OTF down on the monthly timeframe since March! However, it’s looking like in the ON already the inventory here is seeming to be enough support for now.

Going into tomorrow’s session, I will observe this critical 4500–4498 area as my pivot. Holding above 4500 targets 4528, the session halfback. Further, I’d like to see us revisit the VPOC of Friday’s session at 4545. Beyond would require super bull strength, but then I am of course still targeting last Wednesday’s high at 4570. Below 4500 targets 4491, below Friday’s poor low, and then 4480, closing the overnight gap all the way back from July 11th. If even that gap is filled, then I would look for 4472 as a final support, as there is some significant inventory there from earlier in July.

Keep in mind VIX is up at 17 points — a strong break of that 4500 level and we could see 18+, volatility conditions not seen since May. Size appropriately and be extra patient with taking trades!

BONUS: An interesting thing I noted is that Friday’s session heavily resembled the session of July 7th:

Link: https://amtjoy.com/session-lab/?session=2023-07-07

This session is not both very similar at an intraday level, but also in context: it was a Friday session, it occured after a few days of sell off and trapped many bulls thinking the selloff was over. However, the following two sessions (Monday and Tuesday) were ultimately a slow grind up, returning 0.35% and 0.45% on the session respectively:

Link: https://amtjoy.com/session-lab/?session=2023-07-10

Link: https://amtjoy.com/session-lab/?session=2023-07-11

Will we see similar sessions in the coming days? Or have sellers really taken control of this auction?

Key Levels

Pivot: 4500

Bull Levels: 4528, 4545, 4570

Bear Levels: 4491, 4480, 4472

Notes: Consumer credit at 15:00 — I usually don’t take note of these since it is considered a low volatilty print, but everyone seems to be talking about it so I guess its worth mentioning. For me likely a nothing burger (in terms of how it affects the session).

Trade Review

-$94. No trade screenshots today, as after about 1PM EST I was done for the day after not seeing any decent setups and garbage price action. A challenging session for me. Once again, I was up meagerly in the beginning of the session, and then gave it back in the afternoon chop. Regardless, I think it was wise to use small size with Monday’s price action. I’m surprised I had any winning trades at all! My winning trade in the morning was a quick scalp on MNQ, and the trades that caused me to ultimately leave the session were getting stopped out twice on a short off the IB high in G period (which turned out to be nearly our first bull level, 4528, to the tick!). Typically when a position I take struggles to do absolutely anything even after nearly 15 minutes of being in the trade, and I get stopped out more than once, it’s the market’s sign to me the setup is ultimately not going to work well. Ultimately, I’m proud of today’s PNL and my ability to leave the session, as it looks like it would have extremely frustrating to try any positions — long or short — for the remainder of Monday’s session.

I will note two typical trade setups, both of which I missed, from Monday morning. The first is in C period, a classic look above IB and fail, rejecting us eventually down to the OR low by E period. Then, a second opportunity, though not as good a risk / reward would have been longs at the bottoms of E period (though here I would have liked a bounce of the IB low at 4510 as apposed to the OR low at 4513). Regardless, here are those two trade areas marked on the 30 minute chart:

Probably if I’d collected some longs at 4513 today I would have been much less worried about the chop in the afternoon, already being up a comfortable 10+ points!

Tomorrow’s another day.

Cheers and as always, good luck out there!

-Chris

A reminder that I am still ultimately a beginner to intraday trading and trading futures. This is not an alert service and none of this is financial advice.

Originally published at https://amtjoy.substack.com.