For new followers: The yellow levels highlighted at the bottom left of the chart are the primary levels that I focus on intraday. My strategy for preventing impulsive decisions at unfavorable locations involves following a simple yet effective rule of exercising caution when initiating trades outside of the yellow levels. This implies that I am cautious chasing longs above the final yellow upside target and shorts below the final yellow downside target. It is crucial to understand that refraining from chasing a trade is not an automatic invitation to initiate a trade in the opposite direction.
Visual Representation
Contextual Analysis
The highlight of the previous week was undoubtedly the FOMC meeting on Wednesday, which triggered a significant move to the downside, effectively wiping out multiple weeks' worth of gains. The session formed a multi-distribution profile with three notably large sets of single prints, highlighting the emotional nature of the move.
On Friday, the market opened with a true gap down. Whenever the market opens outside the previous day's range, it signals a change in tone from the prior session. Our job is to observe whether this change will be accepted or rejected. By the B-period, the market had entered the prior day's range, thus rejecting the gap down and triggering a notable short-covering rally that partially filled the poor structure from Wednesday. The pivotal question now is whether the market will proceed to clean up Wednesday's profile or if the lack of fresh buyers (following Friday's short-covering) will lead to a continuation lower.
In terms of levels, the Smashlevel is at 6005, marking Thursday’s high which ended the daily one-time framing down after being breached on Friday. Holding below this level would target the HVN at 5960, with a final target at 5932 under sustained selling pressure. Failure to hold below 6005 would target 6045, with a final target at the HVN at 6063 under sustained buying pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 6005.
Break and hold above 6005 would target 6045 / 6063
Holding below 6005 would target 5960 / 5932
Additionally, pay attention to the following VIX levels: 19.52 and 17.18. These levels can provide confirmation of strength or weakness.
Break and hold above 6063 with VIX below 17.18 would confirm strength.
Break and hold below 5932 with VIX above 19.52 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.
Weekly Plan
Make sure to review the Weekly Plan, which provides a broader perspective and highlights key levels of interest to observe in the upcoming week.
Thanks!