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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.

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Be sure to review the Weekly Plan for a broader perspective, key levels, and market expectations for the week ahead.

Catalysts

Contextual Analysis & Plan

During the overnight session, the auction formed a balanced profile at the lower end of Wednesday’s range, with the most traded price by volume (VPOC) at 7745, our immediate downside level of interest (DT1). This was a short-term bearish development, given the lack of interest in even attempting to reclaim last week’s low at 7778 (Smashlevel).

Overnight weakness, or rather the lack of strength, led to the RTH session opening with a true gap down, just as it did on Wednesday. The early price action was also very similar, with the gap filling immediately in the A-period before sellers stepped in, triggering a classic gap-fill reversal. The key difference today was sellers’ inability to gain acceptance below the overnight low after the gap fill. Acceptance below the ONL is typically the most bearish outcome following a gap down. A Look Below and Fail (LBAF) of the overnight low, which came within a few handles of the Weekly Extreme Low and FDT at 7710, ultimately marked the session low.

There was a big battle at 7745 (DT1) during the B-period, with aggressive buying standing out in the delta profile shown on the chart. When gapping lower, the most bullish outcome is acceptance back into the prior day’s range, which made this activity an unfavorable sign for sellers. Buyers ultimately got rewarded for their efforts, triggering a squeeze in the C-period. In the process, the auction revisited last week’s low at 7778, where upside momentum notably stalled before buyers resumed their push higher in the L-period.

Session Recap

Sellers were unable to sustain a second consecutive true gap lower today, resulting in a double distribution trend day to the upside, with single prints in the C-period and a close back inside last week’s range.

The key now for buyers is to defend last week’s low at 7778 and reclaim last week’s VAL at 7807, which closely aligns with both the Weekly and Monthly VWAPs. This would set the stage for a return to the HVN, where value was established early in the week.

Failure to do so would open the door to a fill of today’s single prints at 7754, with acceptance within today’s lower distribution marking a bearish development.

In terms of levels, the Smashlevel is at 7778, last week’s low. Holding above 7778 would signal stability and target last week’s VAL at 7807 (UT1), where a potential LAAF is of interest. Acceptance above 7807 would signal intraday strength, targeting 7824 (UT2), with 7848 (FUT), the prior ATH, serving as the final upside target under sustained buying pressure.

On the flip side, failure to hold 7778 would shift focus to today’s breakout single prints at 7754 (DT1), where a potential LBAF is of interest, with 7726 (FDT), today’s excess base, 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 7778.

Holding above 7778 would target 7807 / 7824 / 7848
Break and hold below 7778 would target 7754 / 7726

Additionally, pay attention to the following VIX levels: 17.28 and 15.64. These levels can provide confirmation of strength or weakness.

Break and hold above 7848 with VIX below 15.64 would confirm strength.
Break and hold below 7726 with VIX above 17.28 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.

Smashelito’s ES/SPX Newsletter

ES Daily Plan | October 16, 2026