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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
Early weakness overnight led to another test of last week’s low at 7659 (DT1), where responsive buyers stepped in once again. As discussed, sellers needed to gain acceptance below 7659 given Monday’s notable aggressive selling effort, and the failure to do so triggered a rotation higher. Reclaiming last week’s VAL at 7683 (Smashlevel) had the potential to trigger short-covering, which essentially played out during the European session. In the process, 7705 (UT1) was tagged, producing a Look Above and Fail (LAAF) ahead of the RTH session.
In contrast to the overnight session, the RTH session was rather uneventful in terms of trading opportunities. Generally, when the market remains within both the initial upside and downside targets, it reflects an auction lacking meaningful conviction in either direction. RTH opened with a true gap up, which was filled in the B-period. A potential gap-fill reversal was disrupted by headlines, triggering a liquidation break in the C-period. The drop was immediately retraced, after which the auction consolidated within a very tight range inside last week’s value area. In the Weekly Plan, we discussed that sellers need to defend the bear gap at 7720, while buyers need to defend the bull gap at 7637. Both remain untested, keeping the short-term context unchanged.
Session Recap
The market has established a well-defined distribution between 7720 and 7659, now forming a 4-day balance area. In other words, the auction is awaiting more information before making its next move. PCE data is on deck tomorrow, followed by NVDA earnings after-hours, both serving as potential catalysts.
Last week’s VAL at 7683 remains a key short-term reference, a level below which sellers struggled to gain traction following the liquidation break today.
In terms of levels, the Smashlevel is at 7683, last week’s VAL. Holding above 7683 would target 7705 (UT1). Acceptance above 7705 would signal intraday strength, targeting the unfilled bear gap at 7720 (UT2), with 7746 (FUT) serving as the final upside target under sustained buying pressure.
On the flip side, failure to hold 7683 shifts focus to 7659 (DT1), with 7637 (FDT), the unfilled bull gap, serving as the final downside target under sustained selling pressure.
Visual Representation
Levels of Interest
Going into tomorrow’s session, I’ll closely observe the behavior around 7683.
Holding above 7683 would target 7705 / 7720 / 7746
Break and hold below 7683 would target 7659 / 7637
Additionally, pay attention to the following VIX levels: 16.18 and 14.72. These levels can provide confirmation of strength or weakness.
Break and hold above 7746 with VIX below 14.72 would confirm strength.
Break and hold below 7637 with VIX above 16.18 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!
Thanks Smash!