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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
Following Monday’s session, we noted that trading could be tricky after coming within reach of the Weekly Extreme High at 7855 as early as Monday. Tuesday then formed a weak high, potentially signaling buying exhaustion, while aggressive buying above 7838 was absorbed by passive sellers.
During the overnight session, buyers again struggled to gain traction above the prior ATH at 7838, eventually leading to a small liquidation break pre-open (see Figure 1).
Just before the flush, aggressive buyers were once again absorbed by passive sellers. Note how price failed to move higher between the highlighted lines despite heavy aggressive buying on the tape (see Figure 2).
This was also clearly visible on the Footprint chart (see Figure 3).
Without orderflow, this underlying activity can be difficult to see. Candlesticks show where price traded, but not the interaction between aggressive and passive traders, which can provide an extra layer of context.
The RTH session opened below Tuesday’s value area and immediately showed weakness, slicing through both 7816 (Smashlevel) and 7800 (DT1) in the process. Monday’s poor structure was almost completely cleaned up during the Initial Balance, the first 60 minutes of RTH. The auction found responsive buyers a couple of handles shy off 7775 (FDT), in confluence with VIX testing its resistance at 14.84. However, buyers were unable to reclaim 7800 (DT1), signaling continued weakness intraday. The 7775 level was then revisited, with VIX once again hovering around its resistance, making it rather unfavorable to press the short side. Despite this, sellers managed to break below 7775 and evidently triggered some stops, but we ultimately closed out the session back near 7775.
Session Recap
Following Monday’s notable trend day and Tuesday’s balanced session, which formed a weak high, we saw long liquidation today. The key question now, after fully cleaning up Monday’s poor structure, is whether today’s session was driven by stronger sellers or simply reflected a flush of weak-handed longs.
Today’s afternoon rally high at 7784 is a key reference I’m using to gauge the short-term state of the auction. Acceptance above 7784, and Monday and Tuesday’s HVN becomes a potential upside magnet. Sustained weakness below, and Monday’s gap could come into play.
In terms of levels, the Smashlevel is at 7784, the afternoon rally high. Holding below 7784 would maintain downside pressure, targeting today’s VAL at 7764 (DT1), where a potential LBAF is of interest. Acceptance below 7764 would signal intraday weakness, targeting 7739 (DT2), with 7718 (FDT), the unfilled bull gap, serving as the final downside target under sustained selling pressure.
On the flip side, reclaiming 7784 would shift focus to today’s excess base at 7805 (UT1), where a potential LAAF is of interest, with 7838 (FUT), the prior ATH and current HVN, 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 7784.
Break and hold above 7784 would target 7805 / 7838
Holding below 7784 would target 7764 / 7739 / 7718
Additionally, pay attention to the following VIX levels: 15.82 and 14.54. These levels can provide confirmation of strength or weakness.
Break and hold above 7838 with VIX below 14.54 would confirm strength.
Break and hold below 7718 with VIX above 15.82 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.
Thank you Smash!!
Thanks a lot, Smash!