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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
The overnight session was marked by strength during Asia, leading to a reclaim of 7654 (Smashlevel) and a test of Wednesday’s true gap area. As discussed, buyers needed to reclaim 7672 to signal strength, while sellers remained in short-term control as long as the gap at 7672 remained unfilled. Sellers stepped in within the gap area and regained control of 7654, resulting in significant weakness during the Euro session.
The overnight weakness led to the RTH session opening with its second consecutive true gap down. The auction tagged our final downside target at 7589 (FDT) during the Initial Balance, from which a solid bounce followed. This marks the second consecutive session in which our FDT capped the downside. Trade location is edge.
As always, when gapping lower, only acceptance back into the previous day’s range would negate the shift in tone. This means that any bounce can be expected to find sellers as long as the gap remains unfilled. The bounces were sold throughout the session, leaving the gap unfilled at 7628.75. The VIX resistance at 17.26, which had already been breached overnight, provided strong confluence, as the level was defended during RTH (see Figure 1).
Both the daily and weekly timeframes are now one-time framing down, meaning sellers continue to maintain short-term control of the auction. Today’s session also decisively breached the prior ATH at 7648, opening the door to a meaningful shift in tone from a broader perspective as well. Buyers will want to avoid spending too much time below 7648, as sustained acceptance below this level would set the stage for further downside pressure. Refer to the Weekly Plan for potential downside targets if buyers are unable to reclaim 7648.
Session Recap
The pattern of lower highs and lower lows on the daily (and weekly) remains intact following another sustained true gap lower today, keeping sellers in short-term control.
The key question now is whether sellers can establish acceptance back within the prior multi-week balance area, which would add further downside pressure from a broader perspective as well.
The first order of business for buyers is to end the daily one-time framing down and negate today’s true gap at 7628. CPI data is on deck tomorrow.
In terms of levels, the Smashlevel is at 7610, today’s VAH. Holding below 7610 would maintain downside pressure, targeting 7589 (DT1). Acceptance below 7589 would signal intraday weakness, targeting 7567 (DT2), with 7540 (FDT), the Weekly Extreme Low, serving as the final downside target under sustained selling pressure.
On the flip side, reclaiming 7610 shifts focus to the unfilled bear gap at 7628 (UT1). Acceptance above 7628 would signal intraday strength, targeting the prior ATH at 7648 (UT2), with 7672 (FUT), the unfilled bear gap, 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 7610.
Break and hold above 7610 would target 7628 / 7648 / 7672
Holding below 7610 would target 7589 / 7567 / 7540
Additionally, pay attention to the following VIX levels: 18.82 and 16.86. These levels can provide confirmation of strength or weakness.
Break and hold above 7672 with VIX below 16.86 would confirm strength.
Break and hold below 7540 with VIX above 18.82 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.
The FDT acted as support and was invaluable for scalps long, even though we are in short term downtrend.
Whatever the CPI does, I suspect that nobody wants to be long over the weekend given that right now everything is about oil and Iran.
Thanks Smash......great stuff !! I'm not 100 per cent on this but I think we have a gap on the Daily around the 7540 area !!!