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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
The question we asked last week following Wednesday’s failed breakdown attempt was whether that failure would increase confidence in a move in the opposite direction. The market is now nearing the all-time highs following today’s extremely one-sided auction. The overnight session gapped higher, heavily rejecting Friday’s after-hours weakness, before consolidating around 7556 (UT2), the immediate weekly resistance.
The overnight strength resulted in the RTH session opening on a small true gap up, 5 handles above Friday’s high. Just before the open, there was notable aggressive selling activity on the tape, but despite this, sellers were unable to fill the gap following a LBAF of the overnight low (see Figure 1). When the market gaps higher, if sellers are unable to establish acceptance within the previous day’s range and negate the gap, it is generally not optimal to fight the move. As mentioned, an extremely one-sided auction followed, clearing all intraday targets up to 7578 (FUT), before continuing to grind higher.
The market is approaching the upper end of the multi-week balance area, defined by the all-time high at 7648.75 (see Figure 2 on the chart). The upper extreme of a balance area is considered resistance until proven otherwise. Therefore, chasing new longs into the ATH, which closely aligns with the Weekly Extreme High at 7665, is unfavorable from a risk/reward perspective. The optimal scenario would see some consolidation within today’s value area, allowing the auction to build energy before making a breakout attempt. However, we don’t make the rules, the market does.
Session Recap
Friday’s initiative move away from the multi-day balance saw notable continuation today following a true gap higher. In the process, the session established a multi-distribution profile with three sets of single prints.
Keep in mind, we are now approaching the upper end of the multi-week balance area, which makes trade location a bit tricky in the short term.
Intraday strength would be indicated by a break and hold above 7648 (UT1), signaling a potential multi-week balance breakout, while weakness would be signaled by a break and hold below 7589 (DT1).
In terms of levels, the Smashlevel is at 7611, where notable order flow activity occurred today. Holding above 7611 signals stability and targets the ATH at 7648 (UT1). Acceptance above 7648 would signal intraday strength, targeting the Weekly Extreme High at 7665 (UT2), with 7694 (FUT) serving as the final upside target under sustained buying pressure.
On the flip side, failure to hold 7611 shifts focus to technical fills of structure toward 7589 (DT1), with 7567 (FDT) 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 7611.
Holding above 7611 would target 7648 / 7665 / 7694
Break and hold below 7611 would target 7589 / 7567
Additionally, pay attention to the following VIX levels: 16.66 and 15.08 These levels can provide confirmation of strength or weakness.
Break and hold above 7694 with VIX below 15.08 would confirm strength.
Break and hold below 7567 with VIX above 16.66 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 as always. I would’ve guessed that 7625 would’ve been the Smash level.
6% and over 400 points in less than 3 sessions. Nothing to see here folks.