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The yellow levels highlighted at the bottom left of the chart are the primary intraday levels I focus on. To avoid impulsive decisions at poor trade locations, I follow a simple but effective rule: exercise caution when initiating trades outside of these yellow levels.
This means I’m cautious about chasing longs above the Final Upside Target (FUT) and shorts below the Final Downside Target (FDT). It’s important to understand that not chasing does not imply initiating a trade in the opposite direction, discipline over impulse.
Be sure to review the Weekly Plan for a broader perspective, key levels, and market expectations for the week ahead.
Contextual Analysis & Plan
Responsive two-sided activity remains the dominant theme this week, leaving little of analytical interest, so this update will be brief. The overnight session saw a liquidation break early on, exploring prices below 7117 (DT2) before quickly fully retracing the drop. Overall, good reactions from our levels (see Figure 1).
Heading into the RTH session, buyers’ main objective was to build value above the Smashlevel at 7166, while sellers needed acceptance below 7117 (DT2) to potentially trigger a directional move from balance. Neither outcome materialized, confirming the responsive nature of the auction, with sellers active above value and buyers active below value, behavior that aligns with expectations in balanced market conditions.
The A-period offered a textbook Look Above And Fail setup from an order flow perspective (see Figure 2). A liquidation break unfolded during the afternoon session, eventually capped at the final downside target at 7092 (FDT). This marks the second time responsive buyers have stepped in within Thursday’s range from last week. Note how both the 5D and 20D VPOCs have converged, located within this today’s range. The market is coiling for a directional move, as such moves are often initiated from high volume nodes.
1. Excessive move above 7166 exhausts.
2. Aggressive sellers smash it.
3. Aggressive buyers absorbed and trapped on the 7166 retest.
Smashlevels Recap
The market continues to digest last week’s notably one-sided auction through consolidation, now forming a 5-day balance area. The million-dollar question is whether upside continuation is in play after rejecting Thursday’s range from last week twice, or if this market needs a larger liquidation break to attract stronger buyers. Use levels to gauge where the auction wants to resolve next.
Intraday strength would be indicated by a reclaim of 7172 (UT1), the multi-day value resistance, while weakness would be signaled by a break and hold below 7127 (DT1), the multi-day value support.
In terms of levels, the Smashlevel is 7151, the afternoon rally high. Holding below 7151 would target 7127 (DT1). Acceptance below 7127 would signal intraday weakness, targeting 7092 (DT2), with a final downside target at 7062 (FDT) under sustained selling pressure.
On the flip side, reclaiming and holding above 7151 would shift focus to 7172 (UT1). Acceptance above 7172 would signal intraday strength, targeting 7193 (UT2), with a final upside target at 7215 (FUT) under sustained buying pressure.
Visual Representation
Levels of Interest
Going into tomorrow’s session, I’ll closely observe the behavior around 7151.
Break and hold above 7151 would target 7172 / 7193 / 7215
Holding below 7151 would target 7127 / 7092 / 7062
Additionally, pay attention to the following VIX levels: 20.42 and 18.20. These levels can provide confirmation of strength or weakness.
Break and hold above 7215 with VIX below 18.20 would confirm strength.
Break and hold below 7062 with VIX above 20.42 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.
Thanks Smash. Do you short 7166 at “3” on your photo or wait a little to see buyers get absorbed and enter a bit lower?
Thanks Smash!