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 trading activity during the overnight session remained within Wednesday’s range, with buyers managing to reclaim the 5990 level, followed by another test of the crucial resistance area between 6015 and 6025, where sellers emerged (ONH: 6014.50). As seen in prior overnight sessions, the market sold off ahead of the RTH session open.
Since hitting a new all-time high (ATH) on February 19th, the market has consistently opened the RTH session under immediate selling pressure, and today was no different. The initial bounce at the open was quickly sold, with sellers taking firm control of the auction after the market failed to hold 5990. The A-period, the first 30 minutes of the RTH session, was exceptionally volatile, printing a 60-handle range. The B-period sustained the downside momentum and tested Tuesday’s excess low, where buyers were active. After such a wild A-period, a bounce in the B-period was not surprising; however, the bounce was nearly as volatile, as the market retraced a significant portion of the downside move. The upside was capped by the Smashlevel at 5990 for the rest of the session.
After the initial volatility, the market experienced two-sided activity between 5990 and 5946 for a couple of hours before sellers initiated another leg to the downside in the K-period, forming single prints. Both the ES gap at 5909.75 and the SPX gap at 5871.92 were eventually filled, which had been our primary downside target for some time. Notably, the Weekly Extreme Low at 5900 was tagged and exceeded, making tomorrow’s session tricky. Reclaiming it would target technical fills of today’s breakdown structure, while holding below would signal weakness, though it’s not necessarily an ideal location to chase shorts. Stay very nimble tomorrow.
After a very volatile initial balance, two-sided activity took place within the prior day’s value area. Change took place in the K-period, when the second test of Tuesday’s excess low failed to find responsive buyers, resulting in a downside continuation. Both the ES and SPX gaps were filled in the process. Now, we monitor for continuation or a lack thereof, with immediate attention on 5889. Sellers remain in firm control of the auction, aiming to revisit the January lows, while buyers need to negate the closing weakness by reclaiming the 5930-40 area.
In terms of levels, the Smashlevel is at 5889, marking the M-period spike base. Holding below this level signals weakness, targeting the 5% correction level at 5858, with a final target at the support area between 5823 and 5813 (January low) under sustained selling pressure. Conversely, failure to hold below 5889 would target fills of the L-period single prints up to 5909, with a final target at the resistance area between 5930 and 5940 under sustained buying pressure, effectively filling the K-period single prints.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5889.
Break and hold above 5889 would target 5909 / 5930 / 5940
Holding below 5889 would target 5858 / 5823 / 5813
Additionally, pay attention to the following VIX levels: 22.36 and 19.88. These levels can provide confirmation of strength or weakness.
Break and hold above 5940 with VIX below 19.88 would confirm strength.
Break and hold below 5813 with VIX above 22.36 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.
Thank you! Weekly targets smashed!
Weekly Extreme Low 👀