For new followers: the yellow levels highlighted at the bottom 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
During the overnight session before the CPI release, trading activity was characterized by a slow upward grind. This resulted in new all-time highs after initially holding our immediate level of interest at 5381 (ON low: 5380). Following the data release, the market exploded higher and never looked back. The final upside target of 5420 was met and exceeded before the opening of the RTH session. In situations where the market opens above the final intraday target, my primary focus shifts to monitoring its ability to maintain this level, as mentioned in the pre-open post on X. Holding above is a very bullish response, while struggling to hold above may provide potential short setups. Today, of course, was a situation where the market broke out of balance, making shorting less appealing. Personally, while shorting was not appealing, initiating longs was not of much interest either, given the significant overnight move.
Despite a significant overnight move resulting in a large true gap up, the market showed limited interest in any corrective activity, indicating a strong bullish response. The A-period quickly took control of the opening level and breached the overnight high, leading to an upside continuation toward the Weekly Extreme High of 5455, serving as the final weekly upside target based on my models. The C-period failed to sustain a range extension, reaching a high of 5453.50 before encountering some selling activity. During the afternoon session, buyers successfully defended the important 5420 level, preventing any potential weakness. Notice how the 5455 level was tested once again during the L-period, providing another solid downside reaction.
With a breakout from balance today following the CPI data release, the main focus for the rest of the week will be on monitoring whether these higher prices will be accepted or rejected. Higher or unchanged value would signal a bullish response, while sellers aim to establish value lower, immediately ending the daily one-time framing up and opening the door for a potential gap fill. The weakest response would involve filling the gap at 5385.25 and finding acceptance back within the prior multi-day balance area. PPI on deck tomorrow.
The Weekly Extreme High for RTY stands at 2091, and for NQ, it's at 19480. While ES and RTY did not manage to close above their respective levels, NQ successfully closed above 19480, a crucial level to monitor for the remainder of the week. The question now is whether NQ will lead ES and RTY higher, or if ES and RTY will pull NQ lower.
For tomorrow, the Smashlevel (Pivot) is 5421, representing today’s M-period spike base. Holding above 5421, signaling strength, would target 5440, as well as the resistance area from 5455 to 5465. Break and hold below 5421, signaling a less bullish response, would target the support area from 5395 to 5385.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5421.
Holding above 5421 would target 5440 / 5455 / 5465
Break and hold below 5421 would target 5395 / 5385
Additionally, pay attention to the following VIX levels: 12.56 and 11.52. These levels can provide confirmation of strength or weakness.
Break and hold above 5465 with VIX below 11.52 would confirm strength.
Break and hold below 5385 with VIX above 12.56 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
Be sure to check out the Weekly Plan, which provides a broader perspective and highlights significant levels of interest to watch in the coming week.
Disclaimer: Futures and options trading involves a high level of risk, with the potential for substantial losses. The information provided in this newsletter is for informational purposes only and is not intended to be a trade recommendation. It is the responsibility of the reader to make their own investment decisions and they should seek the advice of a qualified securities professional before making any investments. The owners/authors of this newsletter are not certified as registered financial professionals or investment advisers.
Thank you, very detailed and fantastic
Fantastic stuff!