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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
Wednesday’s weakness carried into the overnight session, with sellers breaking below 7764 (DT1) and keeping pressure on the auction. As a result, all downside targets were cleared toward the final target at 7718 (FDT), where responsive buyers stepped in and excess formed. Within this excess, notable orderflow activity was observed at 7712, unusually large for the overnight session (see Figure 1).
The RTH session opened with a true gap down inside Monday’s gap area. As mentioned in the pre-open update, strength would be defined by a reclaim of 7764 (DT1), effectively negating today’s gap, while a weak market builds acceptance below 7718 (FDT). Immediate resistance was 7739 (DT2), which buyers managed to reclaim early on, with VIX dropping below its resistance level at 15.82. This triggered a gap-fill attempt, which ultimately failed as the auction came within three ticks of Wednesday’s low before a reversal unfolded.
Once buyers lost 7739 and VIX returned above 15.82, it looked like the auction was preparing to fill Monday’s gap at 7718 and repeat the overnight session. However, news headlines instead triggered a squeeze. This is part of trading and why it’s crucial to stay disciplined at all times. The news spike was capped by 7784 (Smashlevel), printing a high at 7783.50, after which two-sided trade developed for the rest of the session.
Session Recap
Despite notable overnight and early RTH weakness, today’s session ultimately closed back within Wednesday’s range after partially filling Monday’s true gap, helped by news headlines.
Wednesday’s low at 7758, which aligns with today’s Initial Balance high, is a key reference I’m using to gauge the short-term state of the auction.
A weak market builds value below 7758, rejecting both today’s and Wednesday’s VPOCs. This would once again open the door to a fill of Monday’s gap. Acceptance above 7781, ending the daily one-time framing down in the process, would be a sign of strength.
In terms of levels, the Smashlevel is at 7758, Wednesday’s low, which aligns with today’s IB high. Holding above 7758 signals stability and targets 7781 (UT1), where a potential LAAF is of interest. Acceptance above 7781 would signal intraday strength, targeting 7805 (UT2), with 7838 (FUT), the prior ATH, serving as the final upside target under sustained buying pressure.
On the flip side, failure to hold 7758 would target 7738 (DT1), where a potential LBAF is of interest, with 7718 (FDT), the unfilled bull gap, 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 7758.
Holding above 7758 would target 7781 / 7805 / 7838
Break and hold below 7758 would target 7738 / 7718
Additionally, pay attention to the following VIX levels: 16.42 and 14.92. These levels can provide confirmation of strength or weakness.
Break and hold above 7838 with VIX below 14.92 would confirm strength.
Break and hold below 7718 with VIX above 16.42 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.
For today 25th, the Smashline was hit and UT1 and UT2 were also hit. Bulls were in control and supporting the market post Monday's move.
Thanks Smash. Have a great weekend.