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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
Today’s session provided great opportunities around our key levels of interest. Overnight, sellers stepped in and defended 7691 (Smashlevel), which was a contextually bearish development, as previously discussed. Failure to reclaim 7691 opened the door to a retest of the prior ATH at 7648 (DT1), which was ultimately achieved ahead of the RTH session. 7648, which of course is a pivotal HTF location, provided a couple of bounces both ahead of the RTH session and during the Initial Balance.
The RTH session opened with a true gap down, and notice the lack of trading activity above the opening level (A letter highlighted in green). Aggressive buyers didn’t have enough size to push through the passive limit orders, which resulted in sellers having firm control of the open. The D-period saw a Look Above and Fail (LAAF) of the Initial Balance range, resulting in notable weakness. The final downside target at 7633 (FDT) was tagged in the process, where downside momentum subsequently stalled.
The FDT is generally an unfavorable location to chase, making it particularly interesting to see notable aggressive selling activity emerge in that area. Passive buyers absorbed this selling effort and perfectly defended 7633, creating a beautiful setup that played against the poorly located sellers (see Figure 1). After holding 7633, the auction found two-sided trade around the 7648 level throughout the remainder of the session.
Session Recap
Heading into this week, the key for buyers was to defend 7691. Failure to do so was a bearish development, opening the door to a revisit of the prior ATH at 7648.
That revisit was achieved today following a sustained true gap down, bringing the auction once again to a critical HTF inflection point—the prior multi-week balance high. PPI data is on deck tomorrow.
Intraday strength would be indicated by a reclaim of 7672 (UT1), today’s true gap, while weakness would be signaled by a break and hold below 7633 (DT1), last week’s VAL.
In terms of levels, the Smashlevel is at 7654, the afternoon rally high. Holding below 7654 would maintain downside pressure, targeting last week’s VAL at 7633 (DT1). Acceptance below 7633 would signal intraday weakness, targeting 7610 (DT2), with 7589 (FDT) serving as the final downside target under sustained selling pressure.
On the flip side, reclaiming 7654 shifts focus to the unfilled bear gap at 7672 (UT1). Acceptance above 7672 would signal intraday strength, targeting 7691 (UT2), with 7711 (FUT) serving as the final upside target under sustained buying pressure.
Visual Representation
Levels of Interest
Going into tomorrow’s session, I’ll closely observe the behavior around 7654.
Break and hold above 7654 would target 7672 / 7691 / 7711
Holding below 7654 would target 7633 / 7610 / 7589
Additionally, pay attention to the following VIX levels: 17.26 and 15.64. These levels can provide confirmation of strength or weakness.
Break and hold above 7711 with VIX below 15.64 would confirm strength.
Break and hold below 7589 with VIX above 17.26 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.
Thank you
I knew you’d mention the setup during the D-period in FDT—thanks, Master.